Building up a large balance in a health savings account can be a smart financial move to cover medical expenses in old age.
But dying with a hefty HSA can pose tax problems for heirs — specifically, non-spouse heirs like children, grandchildren, friends and others, according to financial planners.
It’s the “big unknown” that people don’t understand about the tax-advantaged accounts, said Carolyn McClanahan, a certified financial planner and founder of Life Planning Partners in Jacksonville, Florida.
The good news is: There are some ways to avoid the snafu.
HSAs offer a three-pronged opportunity for tax savings: Contributions and growth are tax-free; withdrawals are, too, as long as used for qualifying medical expenses like doctor visits and prescriptions.
