Clark v. Rameker - Not a Surprise

A unanimous Supreme Court has held that inherited IRAs don't qualify for an exemption from the bankruptcy estate and are not protected from bankruptcy creditors. In Clark v Rameker (2014 S.Ct.), the Supreme Court finalized a finding by the bankruptcy court that was reversed and reaffirmed several times on its journey to the highest court. A daughter inherited her mother's IRA and later, with her husband, filed for bankruptcy. The debtors attempted to assert the exemption under the Bankruptcy Code for retirement funds and were successful in a federal district court but not in the bankruptcy court, the Seventh Circuit or the Supreme Court.

The Supreme Court agreed to hear the case to resolve conflicting holdings on the topic in the Seventh and Firth Circuits. Justice Sotomayer delivered the opinion which stated that inherited IRAs were not "retirement funds" for purposes of the Bankruptcy Code Sec. 522(b)(3)(C) exemption using a strict definition of "retirement funds."