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Old 06-06-2019, 02:31 PM
 
164 posts, read 177,649 times
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Shared my investment strategy with someone and they were like ... yea, yea, that's great, better have it all in a Trust Fund or you medical bills will eat it all alive.

Thoughts?

Thank you.
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Old 06-06-2019, 02:40 PM
 
148 posts, read 104,037 times
Reputation: 528
Many with huge unpaid medical expenses go the bankruptcy route. It's my understanding that IRAs and 401(K)s are protected assets in a bankruptcy filing and can't be touched by creditors.
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Old 06-09-2019, 08:28 AM
 
978 posts, read 297,496 times
Reputation: 2136
Depending on the state where you live, your IRA may be garnished by a number of creditors. Unlike 401(k) plans or other qualified retirement savings vehicles, individually established traditional or Roth IRAs are not covered under ERISA. While employer-sponsored retirement plans are 100% protected from creditors, individual IRA accounts are not granted the same protection.

Federal Exemption
Other than a partial exemption for bankruptcy, there are no federally mandated exemptions from IRA garnishment. Therefore, your retirement savings can be garnished to satisfy any federal debts. The most common federal debt satisfied by the seizure of IRA funds is back taxes owed to the IRS.

Bankruptcy Exemption
There is some federal protection for your IRA if you declare bankruptcy. However, an unlimited protection encourages those in danger of bankruptcy to put all their money into an IRA to avoid paying creditors. To prevent this abuse, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 limits the IRA exemption to $1 million, which is still a tidy sum.

State Exemptions
States can choose to adhere to the federal exemption system or create their own, so specific exemptions for IRA garnishment can vary widely by state. Aside from the IRS or other federal creditors, states can restrict any and all creditor access to IRA funds. In some states, such as New York and New Jersey, IRAs are fully exempt from any nonfederal garnishment.

In many other states, IRAs are exempt under certain conditions. One common requirement is the exemption only applies to funds deposited more than 120 days prior to bankruptcy declaration. Another exemption applies to the amount of your IRA deemed necessary to support you, your spouse and your dependents. Some states impose a cap on this amount, while others do not. In most states, there is also no protection for IRA funds if the account owner owes money in relation to a judgment pertaining to domestic relations debt.

Domestic Relations Debts
There are a number of domestic relations debts that may result in IRA garnishment depending on your state. Child support is one of the most common causes of permissible IRA seizure. In many states, including Kentucky, Colorado and Louisiana, IRA funds are provided no protection from court judgments in relation to overdue child support or maintenance.

In other states, your IRA may also be garnished to satisfy other types of domestic relations judgments. In addition to child support arrears, Kentucky, Louisiana and Rhode Island also allow garnishment to fulfill alimony requirements. Wisconsin allows for the seizure of IRA funds to fulfill court orders related to marriage annulment or divorce.

https://www.investopedia.com/ask/ans...ish-my-ira.asp
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Old 06-09-2019, 09:19 AM
 
Location: Florida
4,355 posts, read 3,689,532 times
Reputation: 4074
What type of trust. A living trust has you still owning the assets to do what you want. I do not think this type of trust would give any protection to your assets. I think the advantage of this type of trust is to simply probate and in most cases naming beneficiaries on the financial instruments is probably better.

An irrevocable trust would give you protection as you transfer the assets to someone to manage in accordance with the trust. When you die the assets do not get a step up in basis. Not sure if it is easy to have the irrevocable trust give you money for day to day expenses.

I would like to know what he thinks the trust will do and the state.
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Old 06-09-2019, 09:23 AM
 
Location: San Angelo, TX
1,780 posts, read 2,983,903 times
Reputation: 1928
Liquidate all assets slowly into cash, gold, and a few guns. Don't tell anyone. Travel. Enjoy life.
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Old 06-09-2019, 10:39 AM
 
11,118 posts, read 8,523,617 times
Reputation: 28059
Quote:
Originally Posted by Pianist718 View Post
Shared my investment strategy with someone and they were like ... yea, yea, that's great, better have it all in a Trust Fund or you medical bills will eat it all alive.

Thoughts?

Thank you.
Protect from what? So, if you incur medical costs, you plan on mooching off of taxpayers?
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