Bankruptcy Case Gets Ruling From Supreme Court
Anna Nicole Smith’s bankruptcy set a number of precedents in bankruptcy law. Now the U.S. Supreme Court jhas ruled on a similar case, deciding in favor of the federal bankruptcy judges. This ruling is in conjunction with similar decisions made in 2011.
Read more from The Wall Street Journal:
At the heart of the matter is the different status of bankruptcy versus district judges.
While both preside over federal courts, bankruptcy judges aren’t so-called Article III judges who are confirmed by the Senate and serve for life. Instead, bankruptcy judges are appointed by federal appeals court judges and serve 14-year terms. This inferior status is what caused the Supreme Court to rule, in 2011, that bankruptcy courts didn’t have the constitutional authority to issue final rulings on certain legal claims.
In an opinion delivered by Judge Clarence Thomas, the court said the bankruptcy court may propose a ruling for review and final judgment by the district court.
In an opinion delivered by Judge Clarence Thomas, which affirmed the lower courts’ rulings, the court said the bankruptcy court may propose a ruling for review and final judgment by the district court. Continue reading…
Which IRAs Are NOT Protected In Bankruptcy?
The Supreme Court just clarified when an IRA is and is not protected in bankruptcy. if the IRA was established as part of an individual’s retirement assets, it is protected. If it was inherited from another, however, it is not.
Read more from USA Today:
For individuals, the ruling means that they should rethink any asset protection plans they have in place, says Ray Ferrara, a financial planner in Clearwater, Fla. “You need to think about withdrawing the funds, paying the taxes and putting the money into other vehicles that might be protected in bankruptcy,” he says.
Those investments have to be compatible with your overall financial goals, Ferrara says. An annuity would be protected in bankruptcy, but having an inherited IRA isn’t a reason in and of itself to buy an annuity. Another suggestion: You could give the money to children or invest in a 529 college savings plan to keep the money in the family.
The 2005 case, Clark v. Rameker, was a dispute over the bankruptcy of a pizza-shop owner in Soughton, Wis. Continue reading…