When choosing a beneficiary for a retirement plan, it’s important to understand how your spouse will be treated under the plan. The rules are different for 401(k)s and IRAs. With a 401(k) plan, a surviving spouse is the automatic beneficiary of the plan. If you want to name someone other than your spouse as a beneficiary, your spouse must agree to this in writing. There are some exceptions; for example, the rule might not apply if

In a recent case, a Texas man inherited $400,000 in cash from his aunt. The man’s ex-wife went to court and claimed that as a result, his child support payments should be increased. The Texas Court of Appeals agreed with the ex-wife. It said that even though the $400,000 wasn’t wages or earnings, it was still a “resource” that had to be considered in determining how much the father had to pay for his two children.

The new tax law, which temporarily raises the estate and gift tax exemptions to $5 million, has many important implications. Almost everyone should have their estate plan reviewed in light of this significant change. Here are just a few of the other important consequences:  Many wills that were drafted years ago need to be revised right away. Frequently, these wills were set up to avoid taxes by giving children an amount of property equal to the

Congress has created a temporary “window” – between now and the end of 2012 – in which many people can save a lot of money in estate and gift taxes. You might be able to take advantage of this opportunity by transferring significant assets to a trust. But as they say on TV, hurry – this is a limited-time offer from the federal government. During 2011 and 2012, the federal estate tax exemption will be $5

A new idea for people who set up long-term trusts is that of the “trust protector.” A trust protector is different from a trustee. A trustee’s job is to administer the trust on a day-to-day basis according to how it is written. A trust protector’s job is to “protect” the trust by making very occasional changes to its rules as needed to further its goals. The idea is to keep a long-term trust serving the purposes

Clarence Smith Sr., a Florida resident, decided he no longer wanted to have to manage his finances. He signed a power of attorney document authorizing his son to handle his affairs. Clarence owned a bank account jointly with a female friend from his retirement community. His son became suspicious about some withdrawals from the account and contacted the bank. He asked the bank to transfer $64,000 from the joint account into an account owned solely by

If you or an elderly relative is hiring someone to provide care in their home, you should be aware that the “nanny tax” may apply. Generally, the tax applies if you hire someone and pay them $1,700 or more a year. Here’s what’s involved: You must pay the employer’s share of Social Security and Medicare taxes for the employee. That’s 6.2% of wages for Social Security and 1.45% for Medicare.