Estate Planning with Roth IRAs

Estate planning countsLegacy and estate planning with a Roth IRA may sound like a no-brainer. Roth IRAs intrinsically make phenomenal transfer of wealth vehicles. With reduced estate taxes and no income tax for heirs to pay on withdrawals, establishing a Roth IRA or even converting to one from a Traditional IRA seems to be a simple decision. However, as with most things financial, estate planning is not as simple as it is often portrayed. Below are three tidbits to keep in mind when planning for the financial security of future generations.

A recent Benzinga article, titled “Legacy And Estate Planning With A Roth IRA, says you should think about not only the account holder's tax situation, but the heir’s as well and consider the tax burdens your heirs may inherit. When estate planning, keeping all parties in mind is important.

The article recommend converting to a Roth when the estate owner's standard of living seems secure without the IRA. When an IRA is more of an emergency fund and a wealth-transferring vehicle, the objective is to try to ensure the maximum after-tax wealth for heirs. Only when this happens does the objective shift from personal security to the security of future generations.

Along with this, know that IRAs are controlled by regulations to ensure that the account contents are properly accounted for and the taxes paid. Inherited retirement accounts fall under a different set of regulations after the original account holder passes away. Even though the basic differences between Roth IRAs and Traditional IRAs remain, it’s critical to know that second-generation accounts are not treated exactly the same as first-generation accounts. Coupled with this is the fact that not all Traditional IRAs or all Roth IRAs are identical. As a result, you need to understand the specific regulations of your individual account. You can’t just rely on these typical situations described. So individual results may vary!

The most important thing to remember when planning your financial future, according to the original article, is that the more you know and understand regarding your particular financial situation, the better informed your decision-making process becomes.  Take the time now to invest in yourself and take ownership of your financial health.

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference: Benzinga (January 30, 2015) “Legacy And Estate Planning With A Roth IRA”

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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.