Long Island Elder Law & Estate Planning

Intelligent estate planning will involve looking at a holistic picture. It is not always as simple as drawing up a last will that splits up a pie made of liquidity. The wise course of action is to discuss everything with a licensed estate planning attorney who can evaluate your situation and make informed recommendations.

With this in mind we would like to examine the estate planning benefits of a Roth individual retirement account. Because this is technically a retirement account you may automatically assume that it has no estate planning value. Let’s take a closer look.

Conventional Individual Retirement Accounts

When you contribute assets into a conventional individual retirement account you can deduct the contributions from your taxable income. However, you have to pay income taxes when you take money out. And, you are required to take distributions when you become 70.5 years of age.

Because of the above you can’t choose to leave the money in the account for the benefit of your heirs.

Roth IRAs

Roth IRAs are set up in an entirely different manner. You cannot deduct the contributions that you make into a Roth individual retirement account. But, you have already paid taxes on the earnings that you placed into the account. As a result you don’t have to pay taxes when you start to take distributions.

The estate planning benefit lies in the fact that you do not have to take distributions. You may leave the funds in the account untouched, and the growth is not taxed.

You name a beneficiary when you originally open the account. This beneficiary will inherit the account after you die. He or she will be forced to take mandatory minimum distributions.  But if the beneficiary does in fact extract the minimum, he or she can take advantage of the tax-free growth for a maximum period of time.

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About Mark S. Eghrari, Estate Planning Attorney

Mark S. Eghrari is an attorney in private practice in Smithtown, New York. He has been in practice since 1988. Mark S. Eghrari provides extensive estate and tax planning services to individuals and businesses. Mr. Eghrari’s primary focus is helping clients avoid probate, minimize or eliminate Federal and State Estate taxes and protect their assets from the high cost of nursing care, if they become ill.