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Property obtained by will rather than gift does not suffer this consequence. Your tax basis is the market value on the date of death or six months later (depending on which value method is used by the executor of the estate).

Many people choose to name more than one beneficiary of an IRA. For example: you have several children and you name each of them as beneficiary, intending to divide the account evenly among them. Most IRA beneficiary designation forms provided by the financial institution state that if a beneficiary dies before the IRA owner does, all of the IRA funds will pass to the surviving beneficiaries on the IRA owner's death. That means that nothing will pass to the family and heirs of the deceased beneficiary. If that is your intent, fine. Otherwise, you should change it.

When a minor child inherits an IRA directly, a court-appointed legal guardian must be named to administer the IRA funds on the child's behalf. As a result, your family may get tied up in the court system with all the cost and aggravation that goes along with it - and with outsiders making decisions that affect your family's welfare.

Many old IRA beneficiary forms provide room to name only two beneficiaries, and some allow only one. But for an IRA holding significant funds and/or in a complex family situation, it is very unlikely that such a form will meet your family and tax objectives. If the form does not have enough room for your needs, add an attachment that names the beneficiaries and explains your intentions.

It is important to name a person to take the place of a primary beneficiary who may die before you or with you. If you name a contingent beneficiary to take the place of your spouse, the IRA may remain intact and earn tax- deferred investment returns for many years longer. Even if you have multiple primary beneficiaries, you will want to put thought into naming contingent beneficiaries for each to assure the funds will be passed along as you desire.

It is possible that you will inherit an IRA as a beneficiary. In that case, you should name beneficiaries to the inherited IRA to keep it intact should you die during the payout period. Making the right beneficiary selection is vital to getting the most out of your IRA. It may sound simple, but it isn't. As much thought and planning should go into making IRA beneficiary designations and elections as go into drafting a will. You do have a will, don't you?

Whether you're saving to buy a house, send your children to college or secure your retirement, you need a member of the Massachusetts Society of CPAs to assist you. Roger A. Kahan is an active member of the Massachusetts Society of CPAs.

In other words, if the spouse never got around to changing her name when she got married (or divorced), then the IRS will disallow the spouse's exemption on the tax return. We could likely end up with hysterical and irate clients. For those who are electronic filing, the return will be immediately rejected. Think about it!

Life insurance can be used to: create an estate; pay death taxes and other estate settlement costs; fund a business transfer (buy-sell agreement); create a college fund for children or grandchildren; pay off the home mortgage; supplement retirement funds; replace a charitable gift; pay off loans; equalize inheritances; accelerated death benefits; and pension maximization.

There are several types of life insurance coverage you should consider.  They are: decreasing term, annual renewable term, long-term level premium term, whole life, universal life, variable life and variable universal life, single premium whole life, split dollar insurance, joint first-to-die and survivorship life insurance (second-to-die).

Talk to an insurance broker or advisor and gain knowledge of how life insurance can help you meet your goals, both now and later in the future.  I am licensed in this area and available to work with you, your family or your business partners.

ANSWER:  As long as the full amount of the funds that you withdraw from your IRA are rolled back into another IRA within 60 days, you will incur no income tax, no required withholding tax or the early withdrawal penalty - even if you use the money for personal use during the 60 days.

Remember, the sixty-day rule is specific and rigid. A delay of one day will bring the taxman to your side, and you may have an income tax and possibly the early distribution penalty assessed. As you can see, timing is important.

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In more than 60% of the married-couple households today, both marriage partners work outside the home. Often the financial requirements to run the household substantially exceed the income of either spouse alone. If an untimely death were to occur, the inability to meet financial obligations with the single remaining spouse's income might require the hasty sale of assets or even worse, the bank foreclosure on the family residence.

Life insurance is an excellent means of providing money when it is needed in these traumatic moments.

It is obvious that the loss of a "breadwinner" would create a financial calamity. What would happen if the non-breadwinner should die unexpectedly? How would that upset the family home? Without the deceased spouse, the surviving spouse working outside the home could face new expenditures for child-care (either in the home or at a baby-sitter or day care center) or someone to take the children to the doctor, dentist, piano or dance lessons, etc.

Perhaps the surviving parent could take time off from work to fulfill these obligations, but this time off from work would also amount to a financial loss.

Most families can help effectively remove this potential financial emergency by acquiring a life insurance policy on each spouse.

Talk to an insurance broker or advisor and gain knowledge of how life insurance can help you meet your goals.

If your accountant isn't a Certified Public Accountant, think twice about where you are getting your advice. Who do you want handling your financial and business matters?

If your accountant isn't a CPA, it's time to seek professional help.

TAX TIPS AND FACTS is published periodically by Roger A. Kahan, CPA. Subscription is free to clients, prospective clients and friends of Roger A. Kahan, CPA. If you know of someone interested in a subscription to TAX TIPS AND FACTS allowing him or her to obtain valuable comments on national, Massachusetts or local tax issues, call (781) 963-RAK-1.