Question: What do you get when you cross the Godfather with a lawyer?
Answer: An offer you can't understand.
An inherited Roth IRA is truly a "gift that keeps on giving." It is an exceptional estate planning tool. When deciding whether or not to convert your traditional IRA to a Roth IRA, most people (or their advisors) "run the numbers." The cost and benefits of a Roth conversion is compared to the status quo - maintaining the traditional IRA. Assumptions are made about investment returns, future income tax rates, life expectancy, etc.
The question of what a surviving spouse inherits from a deceased spouse is a complicated one. The answer is the typical lawyer's response, "It depends." Some scenarios can help to illustrate the issues. To keep the examples simple, I am going to assume that the husband dies before the wife - forgive me, all you husbands out there.
You probably heard that there is no federal estate tax in 2010 (at least so far). But did you hear about carry-over basis?
"Big Daddy... What is it that makes him so big? His big heart, his big belly, or his big money?"