Posts by SmartAsset Team
Tax Planning
Do You Have to Report Inheritance on Your Taxes? Rules for Beneficiaries
Whether you have to report an inheritance on your taxes depends on what you inherit and the subsequent handling of that inheritance. While inheritances themselves are often not subject to federal income tax, certain inherited assets can generate taxable income once they begin producing interest, dividends or distributions. Because inheritance decisions can affect long-term tax… read more…
Tax Planning
Tax Implications of Adding a Child to a Deed: Rules and Tips
While adding a child to a deed may seem straightforward, the tax implications can be complex and long-lasting. Depending on how you structure the transfer, it may affect gift taxes, capital gains taxes, and future estate planning outcomes. State laws and ownership structures can also influence the results. A financial advisor can help you evaluate… read more…
Tax Planning
Tax Implications of Adding a Spouse to a Deed: Rules and Tips
While the process of adding a spouse to a deed can be relatively simple, there are some tax implications that make it more complicated. Depending on how you handle the property transfer, it can affect gift taxes, capital gains taxes, and estate planning outcomes later on. State laws and ownership structures can also play a… read more…
Retirement Planning
5 Investments That Can Add Income After You Retire
Once you retire, the purpose of your investment portfolio often changes. Instead of concentrating primarily on growth, many retirees focus on generating reliable income to supplement Social Security, pensions or other sources of income. Choosing the right investments to add income after retiring can help support day-to-day expenses while managing risk in a portfolio that… read more…
Derivatives Markets
Collar Options Strategies: Pros, Cons and Examples
A collar options strategy protects stock holdings from significant losses while limiting potential gains. Investors create a collar by owning shares of a stock. They then purchase a put option below the current price and sell a call option above it. The premium collected from selling the call option typically offsets most or all of… read more…
Tax Policy
Excise Tax vs. Sales Tax: How Are They Different?
Excise taxes and sales taxes both generate government revenue, but they work in fundamentally different ways. Sales taxes apply broadly to most retail purchases at a uniform percentage rate, appearing as a line item at checkout. Excise taxes, by contrast, target specific goods, like gasoline, tobacco and alcohol, and are often incorporated into the product’s… read more…
Retirement Planning
5 Investments to Consider 10 Years Before Retirement
At 10 years before retirement, investment priorities often begin to shift. The focus typically moves from maximizing growth to protecting accumulated savings while managing risk and preparing for future income. Portfolios at this stage commonly combine growth-oriented assets with stabilizing investments to help limit volatility and support a smoother transition into retirement spending. No matter… read more…
Retirement Planning
5 Investments to Consider Midway to Retirement
Being midway to retirement means you may still have years of earnings ahead. However, the margin for error is smaller than it was earlier in your career. Choosing investments typically involves balancing continued growth with a growing emphasis on risk management and future income. At this stage, you want to protect your progress while positioning… read more…
Trusts
Tax Implications of Transferring Property into a Trust
Transferring property into a trust is an estate planning decision that can affect taxes during your lifetime and beneficiaries later. The tax treatment depends on how the trust is structured and how the property is classified. Gift taxes, capital gains and estate taxes may apply differently depending on the situation. Understanding how property transfers to… read more…
Annuities
How Much Monthly Income Could a $400,000 Annuity Provide?
Imagine turning a single $400,000 investment into a steady monthly paycheck that lasts the rest of your life. For many retirees, that kind of predictable income can feel like a financial safety net in an otherwise uncertain retirement landscape. Annuities provide exactly that, but the amount of income they generate, and whether they make sense… read more…
Roth & Traditional IRAs
What Happens to Your IRA When You Die? Beneficiary Rules and Taxes
An individual retirement account (IRA) can be a significant estate asset. How the account is handled depends on whether a beneficiary is named, who that beneficiary is and which distribution rules apply at the time of death. These factors affect how and when the account is distributed, how withdrawals are taxed and whether probate applies.… read more…
Tax Planning
Tax Implications of Co-Signing a Mortgage: Rules and Tips
Co-signing a mortgage can affect your taxes in several ways, depending on the loan’s structure and the property’s use. In general, being a co-signer does not automatically give you the right to claim mortgage interest or property tax deductions. Those tax benefits typically belong to the person who actually pays the expenses and has an… read more…
Financial Planning
Can I Retire at 60 With $1 Million? Income, Expenses and Example
Retiring at 60 with $1 million is possible for some people, but the outcome depends on how long the money needs to last, how much is withdrawn each year and what other income sources are available. A portfolio of that size may support annual withdrawals of roughly $40,000 to $50,000, before taxes and inflation adjustments.… read more…
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…
Financial Advisor
Tax Implications of Selling a House Below Market Value
Selling a home below its fair market value can trigger tax considerations beyond those of 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 the market value as a gift. In turn, this can affect gift tax reporting… read more…
Financial Advisor
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…