IRA and debt

[Guest lskin]

Person dies with an IRA and some bills to pay (payments to friends, credit cards). IRA bene is the daughter. Will the daughter need to pay those bills from the IRA? How does payment of bills usually work when a person dies without money other than an IRA in which a beneficiary is named?

[Guest mjb]

Since the nonalienation provisons of ERISA do not apply to IRAs, you need to check state laws for protection of IRA from creditors of the decedent. Some states (NY) extinguish the claims of the creditors of the decedent upon death when non probate assets are transferred to a beneficiary. Other states allow creditors to collect the debts of the decedent from IRAs. Case could be complicated if beneficary lives in another state which does not allow collection of debts from person who inherits IRA since beneificary becomes owner of non probate assets by law upon death. Daughter needs to consult with counsel.

[Guest lskin]

Thank you for your help