When it comes to investment accounts, there are a lot of dos and don’ts. The same can also be said about estate planning and how you set up your investments as part of your estate plan. Anyone in the Lee County area, who has investments accounts or other valuable assets, should take the time to come up with an estate plan, no matter what stage of life he or she is in.
Smart investing takes a lot of work and sometimes just a little old fashion good luck. However, when it comes to investing on behalf of one’s heirs it’s important to take certain steps to see that one gets it right. There is no one right answer to leaving investment money to heirs, as everyone’s situation is different. However, in general, Roth IRAs are usually a good account to leave for a person’s family members and/or other loved ones.
The reason for this is that these distributions are typically free of tax, which is very helpful for one’s beneficiaries. Another bonus is that these distributions can also be spread out over time, which means one’s beneficiaries can continue to see the investment earn interest. On the other hand, a traditional IRA, like a 401K can be very expensive for one’s heirs. Ordinary income tax rates apply to that money, which can cost one’s beneficiaries thousands of dollars.
Estate planning for your investment accounts can be tricky, which is why if you need help planning for your loved one’s financial future, then you might want to meet with an experienced estate-planning attorney.
Source: The Wall Street Journal, “The most valuable assets to leave for your heirs,” Andrea Coombes, June 2, 2014.