In an opinion issued December 11, 2019, the Rhode Island Supreme Court held that inherited individual retirement accounts (“Inherited IRAs”) are not subject to the reach of creditors UNDER Rhode Island law. Captioned In re: Lynette Kapsinow (No. 2018-94-M.P.), the Court’s complete opinion is available by [ Clicking Here ]. The Court’s decision delivers a victory to Rhode Island debtors on an issue of first impression in this state. McLaughlinQuinn LLC congratulates tax planning partner Cory J. Bilodeau, Esq., LL.M. for his tax consulting work assisting Ms. Kapsinow’s bankruptcy counsel, Christopher Lefebvre, Esq., in achieving this favorable decision.

The Rhode Island Supreme Court was presented with a certified question from the United States Bankruptcy Court. Can a debtor in a federal bankruptcy proceeding claim an exemption under Rhode Island law for an Inherited IRA, including one inherited from a non-spouse? Under federal bankruptcy law, debtors are permitted to exclude (i.e., protect) specified assets from the reach of creditors. In Rhode Island, debtors may choose to apply either federal statutory exemptions or exemptions created by state law. Ms. Kapsinow elected to apply Rhode Island exemptions in her bankruptcy as Rhode Island’s statutory exemptions are generally more favorable to debtors. Ms. Kapsinow sought to exempt an Inherited IRA under R.I.G.L. § 9-26-4(11). The Inherited IRA would not have been exempt under federal bankruptcy exemptions.

Rhode Island’s exemption statute, R.I.G.L. § 9-26-4(11) exempts “[a]n individual retirement account or individual retirement annuity as defined in the Internal Revenue Code, 26 U.S.C. §§ 408 and 408A….” The question before the Rhode Island Supreme Court was whether an Inherited IRA is, in fact, included in Rhode Island’s statute. Ms. Kapsinow’s counsel convinced the Court that an Inherited IRA is included in Rhode Island’s statutory exemption, successfully navigating the Court through the applicable provisions of the Internal Revenue Code.

In re: Lynette Kapsinow marks an important victory for Rhode Islanders facing bankruptcy. McLaughlinQuinn LLC congratulates Ms. Kapsinow’s counsel, Christopher Lefebvre, Esq. and tax planning partner Cory J. Bilodeau, Esq., LL.M. for their collaborative work in a case navigating a complex intersection between tax and bankruptcy law.

The tax and bankruptcy attorneys at McLaughlinQuinn LLC regularly represent clients in connection with the complex interplay between bankruptcy, financial workout and tax law. For more information on this newsletter, contact Thomas P. Quinn, Esq., Managing Partner at (401) 421-5115 ext. 218 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it., or Cory J. Bilodeau, Esq., LL.M., Tax Planning Partner, at (401) 655-2203 or via email at This email address is being protected from spambots. You need JavaScript enabled to view it. .