Protect Your IRAs, and Update to the New POA Health Care
I really don’t like when someone says to me (especially my wife) if you would have only done it this way…The U.S. Supreme Court and the 7th Circuit Court of Appeals did this to a Heidi Heffron-Clark who inherited an IRA from her sister. Heidi fell ill, and incurred so much medical debt that she had to file bankruptcy:
“Sometimes assets are exempt in bankruptcy because of how they function in someone else’s hands. Suppose Heidi Heffron-Clark were the trustee of a retirement account for the benefit of her sister. Trustees are legal owners of the assets they administer, but the Clarks’ creditors could not reach retirement assets that Heidi was holding as trustee.”
In other words, the Court is saying that if Heidi had only received the IRA within a trust, she would have been able to protect her inheritance.
The takeaway here is that we strongly recommend that you create trusts for your children or beneficiaries no matter how old they are, and consider updating the beneficiaries on your IRA or retirement accounts.
Finally, Illinois has changed its health care power of attorney. Your old power of attorney is most likely still effective. We still recommend that you update to the latest version.
You can schedule a time to meet at our Hoffman Estates office using the following link: Schedule a time to review and update your estate plan.