There are many types of estate planning tools available for consumers. However, the best options for estate administration plans depend upon a Maryland resident's individual circumstances. These types of considerations can be essential in attempting to decide whether to utilize a Roth IRA or a traditional IRA when planning an estate.
With the recent decrease in estate taxes, as well as no income taxation for heirs when they withdraw funds, many people have made the decision to create a Roth IRA. Many are also converting their traditional IRAs to Roth IRAs. However, one should not automatically decide on a Roth IRA without considering several important factors.
The account holder should not only take into consideration intended beneficiaries, but should also assess his or her own financial situation before making a decision. If the account holder's livelihood is significantly affected by a conversion to a Roth IRA, it may be best to choose to stay with a traditional IRA. On the other hand, if his or her financial situation is generally stable, a person may want to go with a Roth IRA to minimize tax liabilities for heirs.
In conclusion, the interests and benefits to all parties involved should be considered when making estate administration planning decisions in Maryland. However, there are various other important aspects of estate planning which need to be addressed. These aspects include the creation of a will, a power of attorney and possibly other legal documents. Failure to include these other essential parts of an estate plan can cause serious problems for intended heirs in the future.
Source: benzinga.com, "Legacy And Estate Planning With A Roth IRA", Rebecca Sheppard, Jan. 30, 2015