A self-directed IRA can benefit your estate plan - but know the risks

IRAs can be powerful estate planning tools. With a “self-directed” IRA, you may be able to amp up the benefits of these tools by enabling them to hold nontraditional investments that offer potentially greater returns. Examples include real estate, closely held business interests, commodities and precious metals. From an estate planning perspective, self-directed IRAs have considerable appeal. Imagine transferring real estate or closely held stock with substantial earnings potential to a traditional or Roth IRA and allowing it to grow on a tax-deferred or tax-free basis for the benefit of your heirs. However, a self-directed IRA may present pitfalls that lead to unfavorable tax consequences.
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