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The coronavirus could actually help your estate plan

On Behalf of | Mar 13, 2020 | Estate Planning |

The coronavirus has placed the world on alert. It has hurt stocks and shocked Wall Street. There is a silver lining to this economic frustration, though, and that is that it can be helpful in some ways.

Stocks are declining, and that can be scary for people with significant investments. However, it could be good for your estate plans. How? This is a financial planning opportunity that you might not see again soon.

This would be a good time to start investing by converting your traditional IRA to a Roth IRA. How does that help? You’ll be taxed on the income that you convert, but with the low stock prices, now is a good time to save money. As the economy recovers, the stocks will increase again, only they’ll be in your Roth IRA.

Paying taxes now creates the opportunity to reduce lifetime taxes for your family and yourself. Income and gains that you get in a Roth IRA compound without taxation, and they are not taxed upon distribution. If you choose to distribute the principal, it is also done tax-free.

Setting up an estate plan that reduces your taxes is helpful, especially if you want to save your family trouble later on. Taxes can add up and be a frustration with any estate plan, but with early planning, even unusual situations like this can work out for the best. Your attorney can talk to you more about estate planning, your IRA options and what you might want to do to reduce the taxes that may affect your estate plan.


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