Good question. When we were working, Roths were not available to us. So, our retirement savings and investments were in 401ks and traditional IRAs. Now that we’ve entered RMDs, our taxes have soared. I didn’t, and still don’t, think that rolling tax deferred investments into Roths later in life and solidifying the taxes on them were a good economic decision for us. We are using QCDs heavily now and our charitable account will be the recipient of whatever remains in our IRAs when we’re done.
Jimtoo - one of my husband’s friends arranged to have money paid directly from his retirement account to the Scholarship fund at a university that was established to honor the memory of my deceased husband for that reason.
I keep a Net Worth statement that I provide to all of my real estate lenders every year. I just list everything at market value, even though that may not be what is realized. For example, my house maybe worth $300k, but I might only net $290k after a sale. Its not really that much different that your pre-tax account scenario…the tax implications are not predictable.
I am in the process of changing my will and had thought about creating a trust for my daughter and grandson. Money from the sale of my house would go in with no problem - but my IRA’s pose a problem…and boy do they get you. I thought about creating a trust to hold the money from the IRA. Suffice it to say that I guess I need a tax lawyer as a taxes on a trust would require copious amounts of vaseline as everything over $14500 is taxed at almost 40%. That’s one place where having a Roth IRA would have been better for my daughter and grandson.
Yep, that’s generally a bad idea and one has to be very careful mixing an IRA and a trust… You can name a beneficiary for the IRA and that beneficiary has to withdraw the funds within 10 years. That’s likely because the feds need the tax revenue. You can name a charity as a beneficiary and no funds are taxed.
Estate planning was part of my wife’s practice, and we worked together for awhile. People would go to the free lunches and dinners and then call wanting a trust. Probably 20% needed one but the other 80% didn’t, and could accomplish the same result with a good will and, especially today, transfer on death deed and financial accounts.