A cardinal rule of assetprotection planning is the more assets you have,the more you have to lose. And if youhave accumulated savings in an IRA, then you should be aware of the assetprotection allotted for your IRA.
As recently reported by the Slott Report, the IRA bankruptcyexemption has just increased. The article is titled â€œIRA Bankruptcy Exemption Amount Increases.â€ Background: the Bankruptcy AbusePrevention and Consumer Protection Act of 2005 (BAPCPA) cleared the way andexempted the first $1 million of IRA funds (including Roth IRAs) in the eventof bankruptcy.
Fortunately, this amount issubject to cost of living adjustments. Accordingly, the new number as of April1, 2013, is $1,245,475. This is great news for most American savers, since theaverage IRA is less than $1 million. Still, itâ€™s also a figure worth knowingfor larger IRAs given the important function they serve in many retirementand/or estate plans.
Caveat: what is just asimportant as the exemption are the limitations to the exemption. The safety ofthe exemption is only afforded in the case of filed bankruptcy, and might bevoided in certain instances even then, but other events like divorce may easilytrigger a levy on the IRA.
The important lesson to rememberis that there are existing IRA protections to be understood, but they need tobe considered as part of a comprehensive asset protection strategy. Such astrategy will necessarily involve considerations of state law protections, assettitling and insurance coverage.
Be sure to engage competent legal counsel, as properasset protection planning is not a do-it-yourself project.
Understanding the complexities of TaxPlanning is just a part of successful estate planning. To ensure a successfulplan, we at IdahoEstate Planning will: 1) educate youand your helpers; 2) take the time to get to know you, your family, yourdesires, your concerns, your goals, and your potential problems; 3) gladly andpatiently answer questions until you understand the concept or issue; and, 4)based on experience with the problems and results caused by poor planning, helpyou design and implement the plan that fits your concerns and goals. Remember, goodplanning is no accident.