---
url: 'https://www.fmjlaw.com/are-inherited-iras-protected-from-creditors/'
title: Are Inherited IRAs Protected from Creditors?
author:
  name: Heather Morrison
  url: 'https://www.fmjlaw.com/author/hmorrison/'
date: '2014-09-15T20:22:18+00:00'
modified: '2025-09-30T18:23:18+00:00'
type: post
categories:
  - 'Trusts & Estates Blog'
published: true
---

# Are Inherited IRAs Protected from Creditors?

In one word, no. Recently, in a unanimous decision, the U.S. Supreme Court held that inherited IRAs are not “retirement funds” within the meaning of federal bankruptcy law; therefore, they are available to satisfy creditors’ claims. This means that, if you pass IRA funds to a child, and that child has financial difficulty and files for bankruptcy, the IRA funds you left to your child could be used to pay creditors.

If this could be a concern for you or someone you know, please feel free to give us a call to discuss options. One recommended option for protecting an inherited IRA is to create a standalone retirement trust for the benefit of all intended IRA beneficiaries. This allows your beneficiaries to receive funds from the trust, while protecting the trust from any potential claims by future creditors of your children.

*Please do not hesitate to contact our [Trusts & Estates](https://www.fmjlaw.com/practice-area/trusts-estates/) attorneys and [David Ness](https://www.fmjlaw.com/professional/david-m-ness/) and at 952.995.9500. *

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