In other words, which comes first...income taxation then estate tax exemption from the tax paid amount, then estate taxation on the remainder. Or is it estate tax exemption, then estate taxation on the remainder followed by income taxation on the remainder. Anyone know the answer? eagleputt68 All of your assets are totaled to equal your gross estate. You then deduct debt (not taxes), funeral exp., legal fees etc and then pay the estate tax. The beneficiaries then get the IRA and have to pay the income tax. I forget the total potential tax but it could go up over 80% so if you are thinking this is a problem area for you it could be.If you were to convert to a ROTH then the taxes on the IRA would be out of your estate because you paid the tax while you were alive. The growth is then tax free. My rule of thumb is that you do not want to die with a convential IRA or annuity in your estate due to the income tax due.
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