Ex-wife started court action to get money owed to her by Ex-husband. The money was for attorney’s fees from Ex-husband for Ex-wife. The court had ordered the Ex-husband to pay a share of Ex-wife’s attorney fees.
Ex-wife sent out 3 documents (citations to discover assets) to the trustee of an IRA. Ex-husband objected to the citations. Ex-husband had inherited the IRA from his deceased mother. She had been the original owner of the IRA account.
He claimed that the money in his inherited IRA was exempt from collection. Husband argued that retirement plans are exempt from collection. Ex-wife argued that this IRA was not a retirement plan. She said it is different because he inherited it. The trial court agreed with Ex-husband.
Ex-wife appealed. On appeal, Ex-wife claims that such an IRA does not meet the definition of a “retirement plan”. Therefore, she says, she should be able to get paid from it.
In order to be exempt from collection, the retirement plan must be “intended in good faith to qualify as a retirement plan”. Ex-wife argues that Ex-husband’s inherited IRA is a “retirement account” in name only. She says it does not qualify as a “retirement plan”.
This IRA had been inherited after its owner’s death. The court said that an individual may withdraw funds from an inherited IRA at any time, without paying a tax penalty. The original owner cannot withdraw money unless taxes are paid at the time.
“Retirement funds” are “sums of money set aside for the day an individual stops working.”
The appellate court said that Ex-husband’s IRA was fair game for a creditor to go after.
In re Marriage of Branit, 2015 IL App (1st) 141297
Share This Story, Choose Your Platform!