Posts by SmartAsset Team
Financial Planning
What Does a Family Financial Planner Do?
Managing money as a family is rarely simple, especially when multiple goals and life changes collide. From saving for college to planning for retirement, financial decisions can feel overwhelming without a clear roadmap. A family financial planner can help bring structure and confidence to those choices—but understanding what they actually do is the first step.… read more…
Inheritance
Do Bank Accounts With Beneficiaries Go Through Probate?
When someone dies, even seemingly simple assets like bank accounts can become complicated fast. Whether those funds can get transferred to loved ones or go to probate often comes down to a few small details most people overlook. Understanding how beneficiaries, account ownership and probate rules work can help you avoid surprises while ensuring your… read more…
Tax Planning
Who Pays Taxes on a Custodial Account
Custodial accounts are a common way for parents and grandparents to save or invest on behalf of a minor, but they often raise tax questions. The IRS generally treats the minor as the taxpayer but special rules, such as the kiddie tax and optional parent reporting, can complicate things. A financial advisor can help you… read more…
Tax Planning
Who Is Exempt From Paying Taxes on Lottery Winnings
Winning the lottery can create instant wealth, but it also introduces immediate tax considerations. U.S. tax law generally treats lottery prizes as taxable income at both the federal and, in many cases, state levels. Winners may qualify for certain deductions that decrease how much they owe, but full tax exemptions are relatively rare. The amount… read more…
Advisor Basics
Is Breach of Fiduciary Duty a Crime?
Whether or not a breach of fiduciary duty is a crime depends on the facts of the situation, the intent behind the actions taken and whether the conduct violates criminal statutes in addition to civil law. In many cases, breaches of fiduciary duty are resolved through civil lawsuits. However, certain behaviors can expose fiduciaries to… read more…
Tax Policy
Tax Implications of Selling a House Below Market Value
Selling a home below its fair market value can trigger tax considerations that go beyond a standard real estate transaction. When a property is sold at a discount, the IRS may treat part of the difference between the sale price and market value as a gift, which can affect gift tax reporting requirements. Capital gains… read more…
Tax Planning
Tax Implications of a Parent Living With You
The tax implications of a parent living with you depend on several factors, including financial support, income levels and household arrangements. In some cases, you may be able to claim a parent as a dependent, which can affect credits, deductions and filing status. Shared housing can also influence eligibility for benefits related to caregiving, medical… read more…
Advisor Basics
What Are Fiduciary Funds?
Fiduciary funds are assets that one party manages on behalf of another under a legal obligation to act in the beneficiary’s best interest. These arrangements are common in estate planning, retirement accounts, employee benefit plans and situations involving minors or incapacitated individuals. Because fiduciary fund management involves strict duties and oversight, these arrangements can affect… read more…
Financial Planning
Is HELOC Interest Tax Deductible? IRS Rules and Limits
Tapping into your home’s equity can feel like a smart financial move, especially when interest rates on other types of debt are higher. However, when tax season rolls around, many homeowners are surprised to learn that HELOC interest isn’t always deductible. Knowing these rules can help you avoid incorrect assumptions and plan borrowing more carefully.… read more…
Inheritance
What Happens to Your 401(k) When You Die? Beneficiary Rules and Taxes
A 401(k) can be one of the largest assets in an estate, but its treatment after death is governed by specific rules. Beneficiary designations determine who receives the account, while federal distribution rules affect how quickly inherited funds must be withdrawn and how they are taxed. Knowing these rules ahead of time can help you… read more…
Tax Planning
Capital Gains Tax on Equities: Rules, Rates and Calculation
When you sell stocks, exchange-traded funds (ETFs) or other equity investments for more than you paid, the profit is generally subject to capital gains tax. The capital gains tax on equity depends on how long you held the investment, your taxable income and whether the asset was sold in a taxable or tax-advantaged account. Federal… read more…
Financial Planning
Financial Advisor for Annuities: Services and When to Hire One
Annuities are commonly used to provide retirement income and may offer guaranteed payments or tax-deferred growth. However, annuity contracts differ widely in structure, costs and payout terms. A financial advisor can explain how a specific annuity works, how it fits into your overall financial plan and how it relates to other retirement income sources. What… read more…
Tax Planning
Who Is Exempt From Federal Income Tax: Individuals and Groups
Federal income tax applies to most people who earn income in the U.S., but the tax code includes limited exceptions. Whether someone is exempt from federal income tax depends on factors such as income level, filing status, age, disability status, religious affiliation and the type of income received. In some situations, individuals are not required… read more…
Banking Basics
What Happens to a Joint Bank Account After Death?
Joint bank accounts are useful financial tools that can simplify the management of shared funds between two parties. When one account holder dies, what happens next depends largely on the account’s title. Often, a joint account with rights of survivorship allows the surviving owner to assume full financial control. In other situations, the deceased owner’s… read more…
Inheritance
How to Claim a Deceased Bank Account Without Probate
When someone dies, their bank accounts do not always have to go through probate before the money becomes accessible. Many accounts pass directly to a named beneficiary through tools like payable-on-death (POD) designations or joint ownership with rights of survivorship. In other cases, small estate laws may allow heirs to claim funds using an affidavit… read more…
Tax Filing
Can You Still Get Your Tax Refund During an IRS Audit?
If the IRS notifies you of an audit, and you expected a tax return, you probably have a lot of questions. Will you ever get your tax refund? Does the audit automatically stop it? The answer depends on the IRS’s review and whether the items under audit affect the refund total. Some situations follow normal… read more…
Investing for Beginners
Emerging Market Funds: What They Are and Examples
Emerging market funds are investment funds that allocate capital to stocks, bonds or other securities issued by companies and governments in developing economies. These markets are typically characterized by faster economic growth, expanding consumer bases and evolving financial systems, alongside higher political, currency and regulatory uncertainty. Investors often use emerging market funds to gain diversified… read more…
Brokerage
Bid Ask Spread: How It Works in Investing With Examples
The bid-ask spread describes the gap between the price buyers are offering for a security and the price that sellers are willing to accept. This difference develops from supply and demand, trading activity and the presence of market makers who provide liquidity by standing ready to buy and sell. When these participants purchase at the… read more…
Tax Filing
Can You Claim an Adult Child as a Dependent on Your Taxes?
Whether you can claim an adult child as a dependent on your taxes depends on their age, income and living situation, as well as the level of financial support you provide to them. The IRS allows parents to claim certain adult children if they meet the criteria for either a “qualifying child” or “qualifying relative.”… read more…
Trusts
Can a Trust Buy Real Estate? Pros, Cons and Steps
A trust can buy real estate just like an individual or business can. In many cases, people title property in the name of a trust to efficiently manage assets, reduce probate exposure or maintain privacy. When a trust purchases a home, the trustee handles the transaction on behalf of the trust’s beneficiaries. The process is… read more…
Trusts
What Happens to a Trust After the Grantor Dies?
A trust is used to control how assets transfer after death. When the grantor dies, the trust becomes an active legal entity. The trustee follows the trust terms, manages assets, distributes property to beneficiaries and handles required tax filings. How this process works depends on the trust type and the instructions in the trust document.… read more…
Trusts
Can You Put a Mortgaged House Into a Trust? Pros, Cons and Steps
Putting a home into a trust can be part of an estate plan and may help transfer the property to heirs with fewer delays. A mortgage does not always need to be paid off first. In many cases, a mortgaged home can be placed into a trust without affecting the loan, as long as legal… read more…
Retirement Taxes
Do Seniors Over 80 Have to Pay Income Tax?
Reaching your 80s doesn’t automatically mean saying goodbye to income taxes. Many retirees live on fixed incomes and may owe little or nothing to the IRS. However, others with pensions, investment income or retirement withdrawals may still face tax obligations. The key to understanding your tax situation in your later years lies in knowing which… read more…
Roth & Traditional IRAs
Do Roth IRA Gains Get Taxed?
How Roth IRA gains are taxed depends on when and why you withdraw the money. You can typically withdraw growth inside a Roth IRA completely tax-free if you meet certain IRS rules. However, early withdrawals or non-qualified distributions may trigger income tax and even penalties. It can be extremely beneficial to understand the distinction between… read more…
Tax Planning
Are Unemployment Benefits Taxable Income?
The IRS generally treats unemployment compensation as taxable income. If you don’t plan for this, or don’t withhold money from your weekly payments, you may owe money when you file your tax return. State tax rules vary, too, which can further impact your final tax bill. Knowing how to report unemployment correctly and how withholding… read more…