Short version: I have (for example) $50K of assets in pre-tax accounts, e.g. a traditional IRA, and $50K of assets in my Roth IRA. When I die, I want to leave $70K to charity and $30K to my siblings (I have no spouse or children).
I've read several articles that say it's inadvisable to leave assets in Roth accounts to charity because, for tax reasons, those assets are more useful as estate planning tools. In my case, after allocating the $50K in non-Roth assets to charity, does it make more sense to leave the remaining $20K allocated to charity to my heirs/siblings, with instructions that it be donated to charity? Are there any drawbacks if I leave the $20K to charities directly?
I might be overthinking this, but I wanted to get some feedback here so I'm informed when I speak with an estate planner.
While researching estate planning, I came across an article1 that said
One account you don't want to leave to charity, however, is your Roth IRA. Instead, you should leave Roth IRA balances to your human heirs by designating them as the account beneficiaries. That's because a Roth IRA — unlike a deductible or nondeductible IRA — is a great estate-planning tool.
A Fidelity article adds more detail to this:
be aware that if you’re planning to leave assets to a charity rather than to your heirs, conversion to a Roth IRA has the potential to be disadvantageous. This is because in many cases IRAs can be left to a charity directly, without any tax liability to either the IRA owner or the charity. In such cases, a conversion would incur taxes that could be avoided.
as does a Morningstar article:
Charity is not an income tax-favored choice of beneficiary for a Roth plan. Because distributions from a Roth plan are generally income tax-free anyway, there is no advantage to leaving this asset to an income tax-exempt entity. Thus, [the decedent] should leave the Roth plan either to his spouse or to the children.
So, as I understand it, if I want to donate to charity when I die, I should donate my assets in pre-tax accounts (or generally, other non-Roth assets) before donating my Roth IRA because assets in pre-tax accounts can be left directly to charity without incurring taxes. Converting these assets to a Roth account would needlessly incur taxes.
That brings me to my question. Based on the logic above, the assets I intend to leave to my siblings and their children will come from my Roth account first. However, is it inadvisable to simply leave the rest of my Roth assets (in addition to all my non-Roth assets) to charity?
The articles make it sound like leaving Roth assets to charity is a bad idea because Roth accounts could be used more effectively as estate planning tools, but if after planning and allocating Roth funds in my estate, I still have some left over, I don't think the above logic applies to my case. Are there any other drawbacks to leaving assets in a Roth account to charity directly?
Another option would be to simply name my siblings as contingent beneficiaries to my Roth assets; I prefer not to use this option because I prefer that these assets be left to charity automatically, not at the discretion of my siblings or anyone else.
1) I didn't include a link to the article because the website looked suspicious to me; I can include it if necessary.