Q&A

Q&A: Who is responsible for the costs of settling an estate?

January 26, 2026 By Liz Weston Leave a Comment

Dear Liz: Our dad is 93 and has a reverse mortgage on his house, where he lived until recently with my brother and my brother’s friend. In August, we had to move Dad into assisted living. Shortly after that, the “friend” locked my brother out of the house and has been a squatter ever since.

We hired an attorney, and the case was reviewed by judges near the end of last year, but we still don’t know the outcome. Hopefully, we will get him out, but the house has so many costly repairs required, even before the squatter, that we don’t think we would clear enough from selling it to pay what is owed to the bank. Probably the most that we could get for the contents is $5,000 to $10,000.

The question is: once the house is gone, are there many fees we will need to pay to settle our dad’s estate? He has named my brother and me as co-executors. Since we both still work full-time, is there a way to avoid being the executor? What happens if there is no executor named?

Answer: What a nightmare. If it helps, take comfort in knowing that you won’t be on the hook if the house doesn’t sell for enough to pay off the loan. That’s part of the deal with a reverse mortgage. If there’s equity left over, the borrower (or their heirs) can keep it. But if the debt exceeds the sale proceeds, that’s the lender’s problem.

In fact, you may not have to deal with a sale at all. Once you get rid of the squatter, your dad can sign over the deed to the lender (a recourse known as “deed in lieu of foreclosure”) rather than go through the hassle of selling the property. Discuss the situation with your attorney — who should be keeping you updated about the status of the eviction, by the way — and contact the lender to find out its process for this option. The lender needs to be informed anyway since reverse mortgages come due when the borrower dies, sells or permanently moves out.

You also won’t be on the hook for settling the estate once your dad dies. That can be costly, but the expenses come out of the estate itself, not the heirs’ or executors’ pockets. If there isn’t enough left over to pay all the bills, there’s a legal process for prioritizing what gets paid and how much.

As mentioned in previous columns, no one can be forced to be an executor. The probate court can appoint someone to settle the estate if necessary. Serving this function, though, can be a way to honor our loved ones.

Q&A: Should I close paid-off, high-rate credit cards?

January 19, 2026 By Liz Weston 1 Comment

Dear Liz: I paid off my high-interest credit cards. Should I close the accounts or leave them open? I heard a long time ago that closing the accounts will affect my credit score because less credit is available to me. But I don’t want to use these credit cards anymore because they have a high interest rate.

Answer: A card’s interest rate is irrelevant if you pay off your balances in full each month, which is the best way to use credit cards.

Closing a bunch of your credit cards at once can have a negative impact on your credit scores. That’s why the general advice is to leave cards open if possible, making a small charge once in a while so the issuer doesn’t close them.

If you can’t trust yourself to use the cards responsibly, though, closing them may be the best option. Or you can ask the issuers for a “product change” to a lower interest card.

Q&A: Tuition payments could require filing gift tax return

January 19, 2026 By Liz Weston Leave a Comment

Dear Liz: I have been paying college tuition for my grandson: $20,000 per semester for the last three years. He has used the university’s online option to pay the tuition by transferring the money from my bank checking account. Am I entitled to a tax exemption? How should I claim it when I return my tax return?

Answer: There’s no tax exemption or other direct tax break for paying someone’s tuition. If the money went directly from your account to the school, however, you don’t need to file gift tax returns to report your generosity. The tuition gift tax exclusion allows you to pay an unlimited amount of tuition as long as it’s paid directly to a qualified educational institution. A similar exclusion exists for paying medical bills for someone else, as long as the payments go directly to the medical providers.

If the money went from your account to his and then to the school, however, you would be required to report the amounts you gave above each year’s annual gift tax exclusion amount using IRS Form 709. (The exclusion amount was $17,000 in 2023, $18,000 in $2024 and $19,000 in 2025 and 2026.) If that’s the case, contact a tax pro for help in catching up on this paperwork. You won’t owe gift taxes until the amount you give away above those annual limits exceeds your lifetime gift and estate tax exemption amount, which is $15 million in 2026.

Q&A: Should I tap retirement savings for home repairs?

January 19, 2026 By Liz Weston Leave a Comment

Dear Liz: We had a plan to make our retirement savings last until our mid- to late 80s. Now we have unanticipated house repairs that could amount to tens of thousands of dollars. Should we draw down our retirement savings and pay the associated taxes at a 22% rate, or take out a home equity loan, or some combination of that? Or are there other ideas?

Answer: Obviously, money that you spend can’t generate future returns to help fund your retirement. Liquidate too much of your nest egg, and you could find yourself short of funds long before your retirement ends.

But loans require paying interest, increasing your living costs and causing you to draw down your retirement funds faster than intended. Which is the better option depends on the details of your situation. A fee-only financial advisor or accredited financial counselor could give you personalized advice.

They will also be able to discuss additional options. A reverse mortgage could allow you to tap your home equity without having to repay the loan until you move out, sell the home or die. Or maybe it’s time to sell the house and move to a lower-maintenance living situation, such as a condo or retirement community. There’s no one-size-fits-all solution, but discussing the possibilities will help you clarify which is the best approach for you.

Q&A: “Superfunding” a 529 account requires filing gift tax returns

January 12, 2026 By Liz Weston Leave a Comment

Dear Liz: You wrote that people could contribute up to five times the annual gift tax exclusion to a 529 college savings plan without having to file a gift tax return. People can contribute that much without the gift reducing their lifetime gift and estate tax exemption amounts, but they must file annual gift tax returns to report the gift.

Answer: To recap, few people will ever have to pay gift taxes, but gifts over the annual exclusion amount (which is $19,000 in 2026) usually require filing a gift tax return. Gift taxes aren’t owed until the amounts in excess of the annual exclusion total more than the giver’s lifetime gift and estate tax exemption amount (which in 2026 is $15 million).

Generous givers can “superfund” a 529 college savings plan by contributing up to five years’ worth of annual exemption amounts at once. In 2026, that would be $95,000. To keep the gift from counting against your lifetime limit, however, you must file gift tax returns annually to indicate the gift is to be spread over multiple years.

It’s also important to know that any other gifts you make to the same beneficiary during the five-year period will reduce the allowance for 529 gifting. And if the giver dies during the five-year period, some of the gift will be added back into their estate.

There are other rules that apply to superfunding a 529, so anyone considering this option should discuss their situation with a tax pro and likely will want to consult an estate planning attorney as well.