Homeowners considering short sales in California are starting to wonder if their other assets are exposed to potential deficiency judgments.
Here is an L.A. Times story on the subject. Please note - the IRS may be able to collect in situations where a third party creditor might not.
IRAs Could Be Fair Game in Lawsuits - Los Angeles Times: "Wong was all set to do just that when a co-worker warned him that, in California, IRAs were more vulnerable than 401(k)s to lawsuits. 'He said a qualified 401(k) plan is safe from any court taking it in the event of a personal liability case, such as if someone slips and falls on your property, whereas IRAs are subject to available assets to pay out such claims,' Wong said. Actually, California law does shelter money in IRAs and Roth IRAs that is deemed necessary to support the saver and his or her dependents in retirement, said Bill Norman, a certified tax specialist and estate planning attorney in Century City. Any excess, however, is indeed subject to creditors' claims in a lawsuit or bankruptcy. Exactly how much would be protected is open to a judge's interpretation, Norman"
