Here is how the scheme works. Investors are promised high returns. As the profits come in many investors choose to have them reinvested for even greater returns. Thrilled with their profits the investors spread the word among their family and friends.

Profits are paid out from new money, as there is no real investment vehicle. It is a classic “Rob Peter to pay Paul” scenario.

The scheme comes to an end when one of three things happens. Regulators may step in to shut it down. The scheme may collapse under its own weight, as payouts cannot keep up with inflows. Finally the promoters may simply choose a good point in time to disappear with all the money. Since a Ponzi scheme focuses on getting people to reinvest their profits, very little real money actually gets paid out. This allows these schemes to carry on in many cases for years.

A few warning flags should help protect you from these schemes. Be careful of investments that focus on testimonials. Just because “everyone else” is supposedly receiving huge returns, does not make it a good idea. Be cautious of promoters who push you to re-invest dividends. Verify that your funds will be held at a legitimate bank or trustee. Modern computers make it very easy to generate fancy looking statements. Beware of promoters who claim some secret investment or idea “your broker doesn’t know about.”

Finally, ask yourself if the returns are reasonable. In my experience the best way to detect a scam is by the promised rate of return. If someone claims to have access to some secret formula for generating unreasonably high returns, maybe you should ask yourself from whom they might be keeping it a secret – perhaps the regulators?

Should you list your child as a joint tenant with you on your home? It is true that if your child survives you as a joint tenant on your home, your home will not have to be probated. At your death, your child would immediately become the sole owner of your home.

Although owning property as a joint tenant with another person is probably the simplest method of transferring the property at your death, there are risks of owning your home with a child as a joint tenant. Below are some of the disadvantages:

A creditor of your child may try to seize the child’s interest in your home, or file a lien against your home.

Once your child’s name is on the deed to your home, you can only sell or refinance your home if your child cooperates with you and signs the necessary paperwork. Your child can effectively cancel your own decision to deal with your home as you deem appropriate.

If your child survives you, that child may claim that you gave the house to him or her alone, and not to your other children. Since that child is the only one named on the deed, your other children will have an uphill battle to clear the title. One alternative is to name all of your children as joint tenants with you on the deed, but in that case only your surviving children will share in the home after your death. If any child dies before you or before the home is sold, his or her interest in the home will be gone. No interest in the home would “trickle down” to that deceased child’s children.

If you and your child were to die in a common accident, special problems arise. Finding out whether you or your child died first will determine who is entitled to your home. If you live longer than your child, you will be the surviving joint tenant and your “estate” would own the house. In that case your house would be given to your heirs. If the joint tenant child lived longer than you, that child would be the surviving joint tenant, and when he or she died, that child’s estate would own the house. In that case his or her spouse and children would be entitled to your home, not your heirs.

A costly and time-consuming lawsuit may be required to fix any of the problems listed above. Avoiding probate is not worth the cost and family tension that would be created if one of these scenarios took place.

Unless you have truly exceptional circumstances and have discussed your situation with an experienced estate planning attorney, you should leave your home in your name only. With a valid will and a simple probate procedure, or better yet, a properly prepared trust, you can ensure that your house is disposed of as you truly intend at your death. You will also keep control of your home during your lifetime and avoid all of these and other potential problems.

If you are a business owner over age 70½ and are still working for your firm, you may be able to avoid a lump-sum distribution on long-held assets in a profit-sharing plan until you retire. Doing so could potentially mean a few more years of tax-deferred growth for these assets and a reduced tax bill upon retirement.

It all depends on whether you made a “242(b)(2) election” before January 1, 1984. A 242(b)(2) election allowed business owners who held a 5% or greater stake in the firm to defer lump-sum distributions from profit-sharing plans past age 70½ until a future retirement date, as long as the business owner outlined when and how the profit-sharing plan assets would be distributed. The 242(b)(2) election and the January 1, 1984 deadline were established by the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA).

More recently, the IRS clarified how business owners who made the 242(b)(2) election could make their lump-sum retirement plan distribution in a Private Letter Ruling dated March 11, 2005. In the ruling, the IRS stated that a business owner could upon retirement after age 70½ elect to “rollover” plan assets into an IRA, instead of taking a full lump sum distribution on the account.

Rolling over the retirement plan assets into an IRA could potentially give a business owner more years of tax-deferral. However, required minimum distributions would have to begin by April 1st of the year following the rollover, based on the current life expectancy tables. The ability to rollover these assets allow the business owner to avoid the income taxes that would result from a large lump-sum distribution at retirement.

For business owners over age 70½ who made valid 242(b)(2) elections prior to January 1, 1984, this Private Letter Ruling creates an opportunity to manage your retirement plan distributions more efficiently and lessen your tax liability.

To answer the above question, I must first tell you what I mean by “the box.”

When I say “the box,” I am referring to the beneficiary designation box found in many financial instruments. For example, life insurance policies, annuity contracts, IRAs (individual retirement accounts), and other retirement plans allow the owner to designate (usually in a box or line on the form agreement) who is to be the beneficiary or recipient of the proceeds upon the owner’s death.

In addition to the above categories of beneficiary designations, many bank accounts, investment accounts, stock certificates and CDs (certificates of deposit), allow for a POD (Pay On Death) beneficiary. As with the insurance, annuity and retirement account beneficiary designations, the designation of the POD beneficiary is usually done by inserting one or more names in a box or line on an account agreement.

Now that I have explained the question, what is the correct answer? If someone has designated a former spouse as the beneficiary on a life insurance policy or retirement plan, can a new will designating a new spouse as the beneficiary of all the individual’s assets supersede the earlier designation? In other words, does the designation in the will supersede the designation in the box? The answer is no. In almost all cases, the will does not supersede the contractual designation.

Many people mistakenly believe that the will controls the distribution of all their assets and supersedes any earlier beneficiary designations. It is understandable that many people have this mistaken belief. First, a will has many formalities associated with it. A will generally has to have the signatures of at least two unrelated witnesses. An attorney normally prepares the will. It is usually notarized. Often much time and thought accompanies the signing of the will, as well as other formalities. On the other hand, the beneficiary designation is usually very simple. Usually, it involves nothing more than printing or typing a name in a box.

Another matter to be considered with regard to beneficiary designations is that they are limited. If the beneficiary designation is just a line or box, there is no opportunity to describe how the proceeds should be used or who should receive the proceeds if one of the named beneficiaries predeceases the owner. It should be noted that if the beneficiary designated in the financial instrument has predeceased the owner and there is no surviving contingent beneficiary or if the named beneficiary is designated as the “estate,” the terms of the will or state statute governing the distribution of assets when there is no will will govern the distribution of the proceeds.

In conclusion, proper estate planning involves a thorough review of all assets and beneficiary designations. It is very important that beneficiary designations be coordinated with an individual’s estate plan.