Are the assets in your IRA protected from creditors? They may be, under state law. Indeed, even your beneficiaries might enjoy this protection, after they inherit.
A few states such as Florida and Arizona specifically protect IRA owners as well as individual beneficiaries from the claims of creditors. Most states, though, are silent on this issue. As a result, what creditor protection do individual beneficiaries have? There are two broad categories of claims.
Claims against the decedent, the original owner of the IRA. Beneficiaries probably will not be liable for those claims, except in the case of taxes owed to the IRS.
Claims against the IRA beneficiary himself. Suppose Ken Williams inherits an IRA from his mother and causes a tragic auto accident. Can the inherited IRA be tapped to pay any damages? Except in those few states with specific protection, that’s an open question. However, it’s likely that individual IRA beneficiaries in states without specific protection may be vulnerable to creditors’ claims.