Florida Banking November 2021

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Clarifying IRA Transfers in Divorce Another case of RPPTL interest which dealt with a creditor’s ability to reach an IRA was a 2018 U.S. Bankruptcy 8th Circuit case titled, In re: Lerbakken . This case involved a divorced couple where an IRA was transferred from one spouse to another spouse, as part of the divorce settlement decree. The 8th circuit’s appellate panel found that the interest in the debtor’s ex-wife’s IRA to be transferred to the debtor pursuant to the couples’ stipulated property settlement was not exempt from the claims of the debtor’s creditors in bankruptcy. While the debtor argued that his interest in the IRA was exempt under the federal bankruptcy law exemptions, the court rejected that argument. Florida has no such current legal controversy regarding this area of law, however, the RPPTLs have proposed that Section 222.21(2)(c) of Florida Statutes clarify that when an IRA is transferred in a divorce, it specifically retains creditor exemption status after the transfer. This proposal has been filed but failed as legislation during the previous two legislative sessions although it has passed out of its assigned committees without much discussion. We expect this proposal will be filed again during the 2022 Legislative Session.

Your Impact The issues detailed above are only the ones that we are aware of at this time. There will undoubtedly be unexpected issues which will be raised to our attention as the beginning of Session quickly approaches. No matter the issue, FBA’s team is always working hard to represent the trust and wealth management industry in Tallahassee. But to maximize our advocacy efforts, we also need your individual help. Please join us for our annual Capitol Day + Capitol Night this year which will be held in Tallahassee on January 19. You will hear from state legislative leaders and have the chance to directly impact how policymakers see our industry. For more information and to get registered for this special FBA event, go to www.floridabankers.com. Please know that you can also have a major impact on our work by helping to provide our lobbying team with new ideas and suggestions for legislative proposals. If there are issues which inhibit your service to your clients, you are always welcome to reach out to me at kpratt@floridabankers.com. If there is a legislative solution which may be helpful to your trust company and our other FBA members, we would be happy to help. In the meantime, be on the lookout for Anthony DiMarco’s weekly session email updates on the issues above and other important banking issues followed by FBA.