Last time we discussed how the tax-free growth of an individual retirement account (IRA) has made the golden years of many Americans truly pleasurable. Congress, however, never intended that these retirement plans become inheritance plans.
Imagine the shock to retired friends when they discover that the plan so highly praised by certified public accountants and other financial advisors can decline by nearly 80 percent through cumulative taxation, especially if their plan is transferred to children or other nonspousal heirs.
Listed here are four estate planning methods useful to lessen the tax hits on your IRA:
- To spouse and charity
- Testamentary unitrust benefitting surviving spouse and charity
- Testamentary unitrust benefitting children and charity
- Bequests to charity
Of course, there are many more options, depending on your circumstances, that may be attractive to you. Be sure to talk with your attorney, CPA, estate planner or trust officer, all of whom will be glad to share with you other ways of distributing IRAs.
This educational illustration is not professional tax or legal advice. Consult a tax advisor about your specific situation. If you would like a personal visit from a field representative who could explain these documents to you, please complete and submit the following online form: