Roth IRAs are amazing tools. Almost everyone should fund a Roth and often fund a Roth even when they can’t afford it. The benefit of Roth IRAs comes from their long standing tax-sheltered status. You pay income taxes on the way in and then distributions from the Roth IRA, regardless of if they are earnings or principal, are tax-free after age 59 1/2. Furthermore, distributions from an Inherited Roth IRA are also tax-free for the hears.

Unlike brokerage accounts which are burdened by the head wind of capital gains taxes or Traditional IRAs which are quartered by the income tax, the growth in Roth IRAs is worth exactly what it says it is. Having $100 of growth is worth only $85 in the brokerage (15% capital gains tax) and $75 in the Traditional IRA (25% income tax), but $100 of growth is worth $100 in the Roth IRA.

For this reason, the longer the money can stay in a Roth account, the more money you — the IRA owner or beneficiary — will have.

However many executors, trustees, or even estate plans in general make careless mistakes which end up in Roth IRAs being distributed too quickly. Here’s a list of ways to prevent your estate plan from ruining your Roth.

Never transfer or lump-sum distribute a Roth IRA.

This is the saddest and most preventable mistake.

Having just gotten a big Roth IRA inheritance, some beneficiary’s don’t understand the tax-advantaged gold they have just received. Instead of responsibly letting the inheritance grow and provide for their spending needs as the last account they touch, they think, “Dad would have wanted me to buy a (boat) with this money.” So they distribute their Roth IRA in a lump sum instead of using other funds to make the purchase or curbing their impulsive spending. Inheritance, like any found money, can be hard for beneficiaries to handle wisely. Educate your heirs so they don’t waste a Roth by taking a lump sum distribution.

Even sadder is that some IRA assets are distributed by accident. For example, when a Trust is the beneficiary, if you transfer the Roth IRA to the trust account this is treated as a distribution, stripping the assets of their Roth IRA status to put them in a plain Trust brokerage account. What a sad mistake!

The right way to pass IRA assets to a trust as the owner (or anyone as owner) is to open an Inherited IRA owned by the beneficiary and inherit the funds into that IRA. You do this step even if the trust is going to turn around and allow the trust’s beneficiaries to open yet more Inherited IRAs to receive their funds.

The bottom line here is to never “transfer” or distribute an IRA to the beneficiaries. Always “inherit” it into an Inherited IRA owned by the beneficiary.

Do not leave your Roth to charity.

Charities do not pay taxes. A Roth is all post-tax funds. Literally anyone except a charity can reap amazing benefit from a Roth IRA whereas it is just a pile of cash to a charity.

Remember how I said having $100 of growth is worth only $85 in the brokerage (15% capital gains tax) and $75 in the Traditional IRA (25% income tax), but $100 of growth is worth $100 in the Roth IRA. Well, to a charity having $100 of growth is always worth $100 of growth! Leave them the Traditional IRA or the brokerage assets with the most gain after the stepped-up basis. Those are the taxation hot potatoes the human beneficiaries don’t want. Do not leave a charity your Roth IRA.

Always create separate accounts.

You have until Dec. 31 of year following the year of IRA owner’s death to split the IRA into separate Inherited IRAs, one for each beneficiary. If you don’t split the accounts by that date, then you have to use the Inherited Divisor of the oldest beneficiary to calculate all RMDs for those funds. This hurts all the younger beneficiaries by a factor of the difference in their ages.

This is easy to prevent in most cases by the beneficiaries or trustee simply taking the estate maintenance process seriously and splitting out each share. Every now and again though the trust fails your Roth IRA here by having some provision which requires the trust keep the assets combined. A “common pot” trust, where beneficiaries are all equally entitled to the funds according to their needs not shares, is an example of an estate plan in which, if you put your Roth IRA, your beneficiaries would not be able to split it back out. This is not technically always a mistake, but shouldn’t be done by accident.

Designate beneficiaries.

Beneficiary designations are as easy as filling out a simple form, and yet many people do not have them set on their retirement accounts. If you fail to have beneficiaries set, the assets are left to your estate and the probate process to distribute.

Probate is the place your will is read, so if you have a will, your Roth IRA would, like all the rest of your probated assets be subject to probate fees and taxes and distributed on public record to the beneficiaries in your will. The court almost always recommends liquidating everything, as they know the accounting required in probate is harder when you don’t, and somehow the Roth IRA along with any other IRAs often gets liquidated, often for a completely unnecessary reason.

That being said, assuming your Roth IRA survives probate intact (Congratulations!) and the assets are inherited in the heir’s Inherited Roth IRA, the heir is then faced with the most unfortunate Inherited RMD rules. Because they did not inherit the IRA from a beneficiary designation, they must distribute their RMD the under the 5-Year Rule, meaning 1/5 of the initial account value each year so that the whole account is distributed in five years.

Do not put a Roth IRA in a locked trust.

Trusts are often bad to IRAs when they are the final heirs. The average trust is really just a will substitute, designating beneficiaries and allowing the assets to pass on to new owners almost immediately. These will-like trusts normally handle Roth IRAs just fine, assuming you follow the previously mentioned principles.

However, when the trust is the final owner, meaning the IRA is going to be held or owned in trust, it matters how your trust is written whether this will ruin your Roth.

If your trust does not allow distributions of any kind to the beneficiary or beneficiaries, then it is not a “qualified trust” according to the 401 rules and any IRA assets must be distributed according to the 5-Year Rule. To qualify as a look-through trust (one that looks through the legality to see who the “real” IRA beneficiary is), the trust must allow “the entire interest of each employee …be distributed” to the beneficiary.

In general, maximize the time spent in Roth.

In general, you should make estate planning decisions which maximize the time the assets spend in Roth IRA because the growth and distributions are both tax-free.

This means if your wishes include leaving assets to multiple generations, leave your Roth IRAs to the youngest generation because they will have the smallest RMDs and thus the best stretch provisions. If you have grandchildren, for example, leave your Roth IRA as a Custodial Inherited Roth IRA to them. Make your child the custodian. The custodian is then allowed to use the money for the grandchild’s benefit — such as buying clothes and food for the grandchild — while the RMD is calculated based on the young grandchild’s age.

There are many creative ways asset distribution can maximize the after-tax inheritance you leave to your heirs. Your Roth IRA is an important piece of that puzzle that I’d hate to see your estate plan or the important fiduciaries implementing it mess up.

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