July 18, 2014
On June 12, 2014, the Supreme Court issued its decision in Clark v. Rameker. The question in this case is whether an individual retirement account that a debtor has inherited is exempt from the debtor's bankruptcy estate under Section 522 of the Bankruptcy Code, which exempts "retirement funds to the extent that those funds are in a fund or account that is exempt from taxation" under certain provisions of the Internal Revenue Code.
Justice Sotomayor delivered the opinion for a unanimous Court, which held that funds contained in an inherited IRA do not qualify as "retirement funds" within the meaning of the Bankruptcy Code exemption. The judgment of the Seventh Circuit was affirmed.
To discuss the case, we have Jennifer Spreng, an associate professor of law at the Arizona Summit Law School.