Clark v. Rameker: A Troubling Tale with a Happy Ending

Dec 19, 2014 2:55:00 PM


I’ll admit to some real surprise when I learned how frequently our Supreme Court reached unanimous decisions in their last session – nearly two-thirds of the time. Hard to believe that disparate bunch could find so many things to agree on, but in case after case they did. And Clark v. Rameker was one of them.

In the wake of their unanimous decision, inherited IRAs have been stripped of their protective status under bankruptcy law and are now open – naked, shivering and vulnerable to the claims of creditors.

Fortunately, that’s the beginning of this story – not the end.

Call it an unintended consequence, if you like, but what the Clark decision succeeded in doing was to shed new light on an old solution: the Standalone Retirement Trust.   

And that’s where this story starts getting better. Properly structured, the Standalone Retirement Trust is uniquely designed to receive and protect assets for a Beneficiary IRA. Frankly, when it comes to protecting inherited retirement assets in this post-Clark world, you’re not going to find a better solution.

My advice:  Reach out to your clients now, not later. Advise them of the critical importance of safeguarding IRAs and other retirement accounts they will be passing on to beneficiaries some day. Why the urgency? Simple. Once an inherited IRA has been inherited, the die is cast and the options are few. Napoleon said it well:  “Those who fail to plan, plan to fail.”

Looking a little farther down the road, I see the Standalone Retirement Trust taking on a larger, foundational role in estate planning strategy – right there on the checklist along with Will, Revocable Living Trust, Power of Attorney, etc. Given its protective advantages in our post-Clark world, I think it’s earned a place at the table. After all, who doesn’t like a story with a happy ending?

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