2 in 3 Americans Want to Leave an Inheritance Behind. Here's a Great Account for Doing That

When you have children, it's natural to want the best for them. And you might also have the goal of setting them up financially even once you're no longer around to offer that kind of support.

Recent data from Empower finds that 67% of families say they want to leave an inheritance to loved ones. And if that's a goal of yours, there's one retirement account in particular it pays to focus on.

You'll get flexibility with a Roth IRA

The nice thing about traditional individual retirement accounts (IRAs) is that the funds you contribute go in tax-free, saving you money upfront. With a Roth IRA, there's no tax break on the money you put in. However, unlike traditional IRAs, you're not taxed on Roth IRA withdrawals. And investment gains in a Roth IRA are tax-free. With a traditional IRA, those gains are only deferred, so you pay taxes eventually -- specifically, when you take withdrawals.

Another key difference between a traditional and Roth IRA is that with the latter, you're not forced to take required minimum distributions, or RMDs. RMDs are designed to get you to spend down a lot of your tax-advantaged savings in your lifetime.

See, the IRS doesn't necessarily want its tax-advantaged retirement plans to serve as a vehicle for the well-off to pass wealth down to their heirs. As such, it imposes RMDs on savers so they remove funds from their accounts on a yearly basis once they reach a certain age.

But Roth IRAs don't impose RMDs. If you don't end up needing all of your savings in retirement, you can reserve some, or even all, of that nest egg for your children. And the nice thing is that because Roth IRA income is tax-free for retirees, your heirs will have the option to take that money tax-free as well.

It pays to consult an estate-planning attorney either way

All told, a Roth IRA could serve as a great savings tool that allows you to build a retirement nest egg and arrange for some of that money to be left behind for the people you care about the most. But the rules of inherited Roth IRAs can be a bit complex. And there may also be an alternative means of setting up an inheritance that's more financially advantageous to you and your children.

So for that reason, it's a good idea to consult an estate-planning attorney if you know for certain that you want to leave an inheritance behind. A professional in that realm can walk you and your children through your options and help you arrive at the best solution.

For example, an attorney might advise you to consider a living trust for your children as a means of passing along wealth. Or, they might suggest a combination of accounts.

An attorney can also make sure that your children know what to do with an inherited Roth IRA when the time comes to use it. That alone might give you more peace of mind.