Liz Weston

Q&A: Bad advice about closing credit accounts?

December 1, 2025 By Liz Weston 1 Comment

Dear Liz: Recently, you advised someone that it was OK to cancel a credit card. When someone responded saying they did just that and got a 4-point hit on their credit rating, you again stated it was nothing more than a short-term glitch and not to worry.

And you call yourself a “certified” financial advisor? You have no idea what you are talking about. Maybe you should confine your answers to what you know. Just who are you “certified” through?

If a cardholder chooses to cancel a credit card, they have to be specific and firm with the card issuer that THEY canceled the card. The cardholder also has to demand that the card issuer send them, in writing, a letter stating that effect. Card issuers have no problem canceling cards. However, card issuers will post on credit reports that THEY canceled the card, which makes the cardholder look like a bad credit risk, whether that is the case or not. That will be posted on the cardholder credit reports for years. Which in turn, allows current and future card issuers to the cardholder to increase their interest rates and/or deny them higher credit limits or even a credit card. That makes it more challenging for cardholders to get decent rates on mortgages, auto loans and more.

You know nothing about credit cards, much less the credit reporting agencies. Stop giving people false information.

Answer: Your email address indicates you may be in the business of providing financial advice to others. If that’s the case, it’s critical that you keep up to date. Much of what you’ve written either isn’t true or hasn’t been true for decades.

The credit scoring formulas used by lenders don’t distinguish between accounts that are closed by the consumer and those that are closed by lenders. There’s no need to add a note to your credit reports explaining the decision was yours. No one would likely read it anyway, as lending decisions are highly automated.

You can learn more about credit scoring at a number of reputable financial sites, such as NerdWallet or Bankrate. Experian, one of the three major credit bureaus, also provides solid information for consumers. And you may be able to find my book “Your Credit Score” in your local library or online. Initially published in 2004 and updated four times, it was one of the first books to explain credit scoring to the public.

As for the certified financial planner designation, it’s offered by the CFP Board of Standards and is one of the more rigorous certifications financial advisors can get. You can learn more at https://www.cfp.net/.

Q&A: How can a family break a dynasty trust?

December 1, 2025 By Liz Weston Leave a Comment

Dear Liz: My mother recently died at the age of 93. My sisters and I are her beneficiaries, and all of us are in our 60s. Unbeknownst to us, one of her assets is a “dynasty trust,” established in 1964, that can only be used for “care” and “education.” The lawyer never told us this and we could have used the trust to pay for her assisted-living care, all of our college education costs, and the college education costs of our children.

According to the trust, the restrictions don’t end until 21 years after our deaths. Two of us have two children each, and one sister has no children. None of the grandchildren plan to have children of their own. With these terms, and assuming we live into our early 90s, the grandkids will be in their late 70s before they can access these funds. Is it possible to “break” this trust so that we can make use of these funds while we are all alive and able to use the funds effectively?

Answer: Dynasty trusts are designed to pass wealth down through multiple generations. They’re irrevocable, which means the person who created the trust gives up control of the assets.

That doesn’t mean the trust can’t be changed, says Los Angeles estate planning attorney Burton Mitchell. He recommends getting a complete copy of the trust and asking an experienced trust and estate attorney to read it. The trust may include language allowing an early termination. If this is truly a dynasty trust, “back doors” to allow changes are usually built in, Mitchell says.

If not, there may be a way to terminate or modify the trust by agreement of the beneficiaries.

If all else fails, you may be able to go to court to modify the trust provisions based on changed circumstances, provided all beneficiaries agree, Mitchell says.

Q&A: Foreign tax credit delays substantial IRS refund

November 24, 2025 By Liz Weston Leave a Comment

Dear Liz: My tax professional submitted amended tax returns for 2023, 2022 and 2021 a year ago. I’m supposed to receive a nice refund for those years but I have heard nothing from the IRS and cannot get any information from its website. I asked my tax professional about it and she said the foreign tax credit claimed on the amended returns must be reviewed by the foreign tax department, which is very far behind. This just feels like a black hole. The IRS wants me to pay my taxes but drags its feet on giving me my refund.

Answer: The foreign tax credit is designed to prevent double taxation. If you earn income abroad, you may be able to deduct taxes paid to another country on your U.S. tax return.

Unfortunately, this is an area where there has been substantial fraud and noncompliance. That raises the odds of a manual review and potential audit. The fact that you’re claiming large refunds, and doing so by amending returns, also increases the chance your filings will be scrutinized.

Still, a year is a long time to wait. Consider reaching out to the Taxpayer Advocate Service, which may be able to help you break the logjam.

Q&A: What do you do when an ex takes out a credit card in your name?

November 24, 2025 By Liz Weston Leave a Comment

Dear Liz: My ex-husband took out a credit card in my name without my knowledge. By the time I discovered it on a credit report, he had over $14,000 in charges on the card. I was able to close the credit card, but cannot remove my name and Social Security number from the account. My ex refuses to pay off the credit card nor does he make payments on the card as a judge ordered him to do in court six months ago. I have called the issuing bank, visited in person, spoken with everyone that I can, to no avail. The best they can do is flag the card for fraud. Since the credit card is not being paid off, it is damaging my credit score. Do you have any advice?

Answer: Report the crime to your local police and file an identity theft complaint with the Federal Trade Commission at IdentityTheft.gov. The police report means your ex could be arrested and prosecuted for his crime, but without it you may not be able to get your credit restored.

Submit copies of the police report and the FTC affidavit to the bank, along with a letter explaining the situation. Make it clear that you are the victim of identity theft, that the account is fraudulent and that the bank should remove your personal identifying information when reporting the account to the credit bureaus.

Next, dispute the account with each of the three major credit bureaus. You can get free access to your credit reports at AnnualCreditReport.com. (Type the full address into your browser to make sure you don’t land on a lookalike site.) While you’re at it, freeze your credit report at each bureau. There’s no better way to prevent criminals from opening new credit accounts in your name. Freezing your credit report is free, and you can temporarily remove the freeze without cost whenever you want to apply for credit.

Q&A: What does a successor trustee do?

November 17, 2025 By Liz Weston Leave a Comment

Dear Liz: My older brother and his wife recently told me they made me the executor of their living trust. I have no experience with this. They live in Maryland and I’m in California. Can you please let me know what I can do now to make the process simpler when the time comes?

Answer: Your brother and his wife should have asked you if you would be willing to take this role, which is called “successor trustee” rather than executor when a living trust is involved. Just because they put your name in their document doesn’t mean you are required to serve. Their trust should name other people who can serve. If not, the court can step in to name someone.

Being either a successor trustee or an executor is often a big commitment that may last for years. You’ll be required to manage the trust assets, pay final bills and creditors and communicate with beneficiaries. Successor trustees may have added responsibilities, since they typically have to step in if the trust creators become incapacitated.

If you’re willing, though, agreeing to this role can be a way to honor the people you love by making sure their wishes are followed. Being asked to be a successor trustee or executor is an honor, since the trust creators believe you are honest, trustworthy and diligent enough to handle this enormous responsibility.

You’re allowed to, and probably should, hire legal and tax help using estate funds. The estate should also pay for your travel to fulfill your duties.

You can do some research before deciding. Ask for a copy of the trust so you can start to familiarize yourself with the trust assets and what will be involved in settling the estate.