Clarke v. Rameker

In this instance, Clarke and Rameker were the parties

In Clark v. Rameker, Clarke was the plaintiff and Rameker, the trustee, was the defendant. (13-299). In order to find out whether an inherited retirement account could be deemed retirement funds and thus be exempt from being considered as a separate asset during bankruptcy proceedings, these parties brought the case before the United States Supreme Court.

The primary issue in this case

Whether an inherited retirement account should have been shielded from a beneficiary's bankruptcy-related creditor claims. The court stipulated that they were not protected retirement funds under the bankruptcy code, explaining that retirement funds were those set aside for use when one stopped working. These three distinctions tore the line between an Inherited Retirement Account and Retirement funds. First, an owner of an Inherited Retirement Account is not allowed to contribute anything to the account. Secondly, the account holder is required to start using the funds in the account almost immediately the person dies; he or she should not stay for more than a year without withdrawing the money. Lastly, the court allows the owner of an Inherited Retirement Account to withdraw all the funds in the account with no case to answer. In this regard, Inherited Retirement Accounts are neither a place to hold wealth for use after the owner's retirement and nor savings reserved for use after the owner stops working.

The United States Supreme Court arrived at the decision

That the funds in an Inherited Retirement Account were not protected in bankruptcy. Justice Sotomayor brings out these majority opinions. Bankruptcy laws specifis exemptions for retirement funds, but do not require those funds to belong to the debtor. A creditor needs to get back his or her assets. Likewise, debtors need to protect their wants to enable them cater for their basic needs when they retire. The court arrived at a consensus that an Inherited Retirement Account does not contain anyone's retirement funds because unlike the traditional Inherited Retirement Accounts, the funds are not discriminated to meet the needs of any person. The court also concluded that regardless of the qualification of funds in the Inherited Retirement Account as retirement funds, it is not exempted from taxation under any Internal Revenue Code. Debtors are also allowed to elect claim exemptions under the law.

The court also explained that the main goal of bankruptcy exemptions was to provide a debtor with the basic necessities of life in future to avoid frustrations.

Petitioners argued that inherited Retirement Accounts were similar to traditional ones to qualify as retirement funds because owners of the traditional Inherited Retirement Accounts were allowed to withdraw the funds without penalties.

The opinions of the petitioners and the Supreme Court concur and dissent at the same time.

The concurrence comes in where petitioners liken the Inherited Retirement Accounts to the traditional Inherited Retirement Accounts, where they both qualify as retirement funds considering the fact that, in both, owners can withdraw their contributions without penalty. They dissent when they bring out the idea that the funds in Inherited Retirement Account are retirement funds because, at some point, they were set apart for use in retirement, hence the name retirement funds. The court opposed that notion by declaring that the funds in Inherited Retirement Accounts were not retirement funds, therefore, not exempted from consideration in bankruptcy proceedings. The reason behind the court's decision was based on the fact that the purpose of exempting retirement funds in the bankruptcy code was to balance the creditor's interest in receiving payment with debtors need to sustain themselves during retirement days.

The court considered a direct meaning of retirement funds

Defining it as the money set aside to be used after one goes for retirement. Its assessment to determine if the legal composition of the account holding money was the one needed to keep funds to be used during the retirement period. The differences between Inherited Retirement Account and Retirement fund led to the court's declaration that the two were not the same.

As a legal practitioner, I am certain that Inherited Retirement Account and the Retirement Funds are the same.

In light of this, I beg to disagree with the majority opinion. In both accounts, the savers aim at receiving support during their retirement period. Just as someone can add funds to retirement funds, so should they do to Inherited Retirement Account, and the luxury of time required for withdrawals left at the luxury of the account holder. I agree with the dissenting opinions, which argue that since the funds in the Inherited Retirement Account were originally set aside for use during retirement, they are the same as retirement funds. They both provide financial support to the account owner after retirement. Regardless of the fact that the amount is inherited, the beneficiary uses it at the end of the owner's employment, making the two accounts similar.

Works Cited

Clark v. Rameker (13-299). Supreme Court of the United States. 26 Nov. 2013. Print.