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On May 31, 2011, Florida Governor Scott signed into law House Bill 469. The law overturns the 2009 Second District Court of Appeals ruling in Robertson v. Deeb, (2D08-6428) which had held that when an IRA is distributed to its beneficiary, upon the death of the account owner, its tax exempt status changes. The court interpreted that the legislative intent of exempting individual retirement accounts, to allow debtors to preserve assets designated for retirement, would not be served by protecting an inherited IRA too.
In the 2009 case of Robertson v. Deeb, the creditor (Deeb) obtained both a judgment and writ of garnishment against Robertson on an unpaid promissory note. In response to the writ, RBC Wealth Management ("RBC") identified an inherited IRA with cash and securities. Robertson claimed the inherited IRA was exempt from garnishment pursuant to section 222.21(2)(a) of the Florida Statutes. The trial court found that section 222.21(2)(a) was not applicable to an inherited IRA and denied the claim of exemption. Subsequently, in 2010, the Bankruptcy Court for the Middle District of Florida, ruled similarly in the case of In re: Ard, 435 B.R. 719 24 (Bkrtcy. M.D. Fla. 2010).
By signing the law, Governor Scott clarified that the Florida legislature intended section 222.21(2)(c) of the Florida Statutes to exempt from creditor claims the owner, beneficiary, or participant of a regular and inherited individual retirement account. In addition, the law applies retroactively to all inherited individual retirement accounts without regard to the date an account was created.
View more information from Marc J. Soss at Florida Estate Planning and Florida Wills & Trusts. Marc Soss' practice focuses on estate and tax planning; probate and trust administration and litigation; guardianship law; and corporate law in Southwest Florida. Marc is a frequent contributor to LISI and has published articles and been quoted in the Florida Bar, Rhode Island Bar, North Carolina Bar, Association of the United States Navy, Lawyers USA, Military.Com, Forbes.Com, and CNN Business. Marc also serves as an officer in the United States Naval Reserve.
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