Q: If a son who is married leaves his 401K to his mother?
My son a couple years ago not sure why but, laughed and told me one day when he passed i would become a rich woman because, he had just made me beneficiary to his 401 k. i ask this because he passed from cancer recently . during a conversation with his wife who told me he had left his 401 k to someone else. she hired a lawyer and everything is settled now. My concern is mainly for my 2 grandchildren that belonged to him he knew i would divide the money between my 2 grandchildren and felt his wife would give most of it to her family. his wife is not very stable. her mother abused her all her life and in turn she abused my grandchildren which i would had done all i could to take and raise them but, didn't have the money.
A: You have multiple options, but there is not enough information here to suggest the one that is optimal. My best advice would be to contact an estate planning attorney for assistance. He or she will want to take into account your age, the ages of the children, their maturity and financial acumen, your tax bracket, and many other things. You could withdraw the money all at once and then put it in a trust for your grandchildren, under the control of a responsible trustee and invested with a responsible financial advisor, but that would have both immediate gift tax and immediate income tax consequences for you. It might be a better choice to withdraw the money and place it in trust over time for the tax savings, but that all depends on facts that we don't have. Also, you will want to consider what kind of investment and distribution standards are appropriate. This can be done, and this is not a difficult project for an experienced estate planning attorney, but this would be a daunting tax for a non-lawyer.
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