October 26, 2020 By

Q&A: A look at property title

Dear Liz: You’ve mentioned that in community property states, a couple’s primary residence gets a full step-up in tax basis when one spouse dies. Does this require that the title to the property specify that it is community property? My husband and I purchased our home about 6 weeks before we were married, so we hold title as joint tenants with rights of survivorship. Should we get the title changed?

Answer: The answer is probably yes, said Mark Luscombe, principal analyst for Wolters Kluwer.

The title to your home does not have to specify that it is community property for it to be treated as community property, Luscome said. If you live in a community property state and are married, the property you acquire and the income you earn during the marriage are generally considered community property regardless of how you hold title. However, property acquired before the marriage would not generally be treated as community property, he said.

The title to your home does not have to specify that it is community property for it to be treated as community property, Luscome said. If you live in a community property state and are married, the property you acquire and the income you earn during the marriage are generally considered community property regardless of how you hold title. However, property acquired before the marriage would not generally be treated as community property, he said.

Each way of holding title has its advantages. Joint tenancy with right of survivorship avoids probate and offers protection from creditors. Community property offers the tax advantage you mentioned: The whole property gets a new basis for tax purposes at the first spouse’s death. That means all the appreciation that occurred before the first death is never taxed. In non-community property states, only the deceased partner’s half gets that new value. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. Alaska is an “opt-in” community property state.

Some community property states offer the best of both worlds by allowing real estate to be titled as community property with right of survivorship. Those states include Alaska, Arizona, California, Idaho, Nevada and Wisconsin, according to self-help site Nolo.

Filed Under: Q&A, Real Estate Tagged With: , ,
October 26, 2020 By

Q&A: What to consider when deciding whether to buy or rent a home

Dear Liz: I’m just turning 70 and am on my own for the first time in my life. In the last three years I took care of both my 100-year-old mother and my husband as their health failed. My daughter and son-in-law live in Colorado and are going to have a baby, and I plan on moving there in the near future.

I had originally planned to move into a senior living apartment complex. Then my children said I should buy a condo for the freedom, privacy and potential investment. They found a condo building under construction with units I could afford, plus a mortgage company willing to take me on and help with the down payment.

I’m torn about what to do. Because of both bad luck and bad decisions, currently I have only about $18,000 in savings. Between my pension and Social Security I make about $47,000 a year.

Do I invest in the condo and use up a good chunk of my savings? It’s on the second floor (the steps aren’t very steep, fortunately) and I’m strong and in good shape, but I’m also 70 and things can go south quickly. But, as the kids have said, I could live there for 10 years and make a good profit from the sale.

Or do I move into the senior living apartment and keep my savings but face regular increases in rent (thus “throwing my money away”)? The senior complex has amenities and activities and elevators but lots of people around all the time (thus sacrificing some privacy). Having a place of my own would be so wonderful, but I need to be smart about this decision.

Answer: Younger people often don’t understand about stairs. No, they’re not a big deal now, but even a few steps can become a huge barrier if you have mobility issues — and those issues become more likely the older you get. Having an elevator or a unit on the ground floor, preferably with a zero-step entry, is a good insurance policy against the vicissitudes of aging.

Besides, you aren’t necessarily throwing money away when you rent. You’re buying freedom. You don’t have to worry about paying for repairs and other unpredictable costs, and you can move more easily if your circumstances change. People are often advised to rent first when they move to a new area, just so they can get a better idea of the advantages and disadvantages of various neighborhoods before they commit. Renting also could give you a chance to build up your reserves so that if you do decide to buy, you won’t be quite so
house poor.

Having more people around isn’t necessarily a bad thing, either. You’re newly widowed, and moving to an area where you presumably don’t know many people. The senior complex could make it a lot easier to make friends. A good social network is essential to staying mentally and physically healthy as we age.

Filed Under: Q&A, Real Estate, Retirement Tagged With: , ,
October 22, 2020 By

Thursday’s need-to-know money news

Today’s top story: Why playing the market right now is an especially bad idea. Also in the news: Is student loan discharge in bankruptcy within reach, the difference between being preapproved and prequalified for a credit card, and how your credit score is determined.

Playing the Market Is a Bad Idea, Especially Now
Brokerages have reported a surge in day trading, but the vast majority would be better off in low-cost funds.

Is Student Loan Discharge in Bankruptcy Now Within Reach?
Recent court rulings and lawmakers’ support to expand relief could help borrowers meet the stringent standards.

What’s the difference between being preapproved and prequalified for a credit card?
An unsolicited approval from a credit card issuer can be a red flag—they could be trying to sell you on a card you don’t need or want

How Your Credit Score Is Determined
Unraveling the mystery.

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October 21, 2020 By

Wednesday’s need-to-know money news

Today’s top story: Are you saving money in the right place? Also in the news: Why it’s time to dump home buyer love letters, can you be denied life insurance for smoking weed, and 5 fresh kitchen backsplash ideas.

Are You Saving Money in the Right Place?
What to consider when you’re stashing your savings.

Why It’s Time to Dump Home Buyer Love Letters

Can You Be Denied Life Insurance for Smoking Weed?
You might have to shop around.

5 Fresh Kitchen Backsplash Ideas
A stylish and functional backsplash can breathe new life into your kitchen.

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October 20, 2020 By

Tuesday’s need-to-know money news

Today’s top story: Suddenly retired? What to do next. Also in the news: 9 low-cost ways to make virtual learning easier for kids, the safety of air travel right now, and how to get a stimulus check if you’re a low-income earner.

9 Low-Cost Ways to Make Virtual Learning Easier for Kids
A few relatively inexpensive items, such as blue-light glasses and kid-size headphones, can help your child focus during remote learning.

Suddenly Retired? Here’s What to Do Next
If you retire earlier than planned, you may need to cut expenses, find health insurance and talk to an advisor.

How Safe Is Air Travel Right Now?
Some preliminary data suggest COVID-19 is rarely spread in an airplane cabin.

You Can Still Get a Stimulus Check If You’re a Low-Income Earner
The deadline has been extended.

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October 20, 2020 By

Playing the market is a bad idea, especially now

The current day trading boom will end as these frenzies always do: in tears. While we wait for the inevitable crash, let’s review not only why day traders are doomed but also why most people shouldn’t trade, or even invest in, individual stocks.

Day trading basically means rapidly buying and selling investments, hoping to profit from small price fluctuations. Brokerages have reported a surge in trading and new accounts this year, starting with March’s stock market crash when investors rushed in looking for bargains. As pandemic lockdowns kept people from their jobs and classrooms, trading continued to soar, especially among young adults. In my latest for the Associated Press, why playing the market, especially now, is a bad idea.

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October 19, 2020 By

Monday’s need-to-know money news

Today’s top story: Surprising things renters insurance covers — and leaves out. Also in the news: A new episode of the SmartMoney podcast tackles sudden retirement and finding lost money, using a crisis to help build helpful money habits, and why Powerball and Mega Millions aren’t reaching giant jackpots anymore.

Surprising Things Renters Insurance Covers — And Leaves Out
You may think buying renters insurance means you’re covered for just about any disaster, but that’s not the case.

Smart Money Podcast: Sudden Retirement and Finding Lost Money
What to do when you’re forced to retire sooner than you expected.

You Can Use a Crisis to Build Helpful Money Habits
Making the best of a bad situation.

Here’s why Powerball and Mega Millions jackpots aren’t reaching giant amounts anymore
It’s not just the pandemic.

Filed Under: Liz's Blog Tagged With: , , , , , , ,
October 19, 2020 By

Q&A: Older parents and retirement: What about child benefits?

Dear Liz: I am trying to decide whether to take Social Security at my full retirement age (66 years and four months) or wait and take it at 70. I am 64 and have two children, 13 and 11. My older child could get the child benefit for 24 months while my younger one would receive it for 41 months. Currently I am scheduled to receive about $2,600 a month at full retirement age or $3,500 at 70. My family maximum is $4,668 per month. I am having a hard time finding out what each dependent would earn monthly. Also, when my older child turns 18, does my younger child’s payment increase?

Answer: Starting Social Security earlier than age 70 means giving up the delayed retirement credits that otherwise would boost your checks for the rest of your life, and potentially those of a surviving spouse. As mentioned in an earlier column, though, child benefits complicate the math that typically favors waiting to claim Social Security.

Once you start your own Social Security benefit, each eligible child could get an amount up to 50% of your benefit. Eligible children are those who are unmarried and younger than 18, or under 19 if they’re still in high school, or 18 or older with a disability that began before age 22.

There’s a maximum a family can receive based on one worker’s earning record, however. The family maximum is 150% to 180% of the worker’s benefit. If your family’s total benefit would exceed that maximum, the children’s checks would be reduced, but yours would stay the same.

If you were receiving $2,600 a month, and your family maximum is $4,668, your children would split the remaining $2,068 and get $1,034 apiece. Once your older child is no longer eligible, your younger child’s benefit would increase to equal 50% of what you receive ($1,300, plus any cost of living adjustments).

If you were to start your benefit now, before your full retirement age, these checks would be subject to the earnings test that reduces the benefit by $1 for every $2 earned over a certain limit, which is $18,240 in 2020. The earnings test doesn’t apply after full retirement age.

Free Social Security claiming calculators typically don’t include child benefits as a variable, so you’d be wise to invest $20 to $50 in a more sophisticated calculator, such as Maximize My Social Security or Social Security Solutions.

Filed Under: Q&A, Social Security Tagged With: , , ,
October 18, 2020 By

Q&A: Downside of unused credit cards

Dear Liz: In the past, you have recommended not canceling credit cards because doing so can hurt credit scores. Over the years, my husband has signed up for at least a dozen credit cards, eight of which we never use and have not used for as long as 10 years. He signed up for another card recently because it offered attractive cash rewards. Is having so many credit cards advisable and safe? Does it make us more vulnerable to identity theft? Without hurting our credit scores, may we discontinue the older cards we have stopped using? Is there any drawback to having multiple, perhaps dozens, of credit cards, especially if some are older and never used?

Answer: The biggest downside to having a bunch of unused credit cards is having to monitor all those accounts for fraudulent transactions, and perhaps paying unnecessary annual fees. The unused accounts add to the amount of available credit you have, which is a positive factor for credit scores.

If you’re concerned about identity theft, your best move would be to freeze your credit reports at all three bureaus. Such freezes are now free, and you can easily “thaw” the freeze temporarily if you want to apply for credit.

Credit freezes make it harder for criminals to open new accounts in your name. If a criminal uses one of your existing accounts, you’re typically protected. The vast majority of credit cards offer “zero liability,” which means you won’t be held responsible for fraudulent charges. Even without zero liability, federal law limits your liability to $50.

If monitoring multiple accounts is too much hassle, though, then he should consider closing some of the cards. If he’s paying fees for cards he’s not using, another option is to ask the issuer for a “product change” to a card that doesn’t charge fees.

Filed Under: Credit Cards, Q&A Tagged With: , ,
October 16, 2020 By

Friday’s need-to-know money news

Today’s top story: 3 strategies on how to invest in CDs. Also in the news: Using a crisis to build helpful money habits, ten theme parks celebrating Halloween, and how to sell your car safely.

How to Invest in CDs: 3 Strategies
CD ladders and CD barbells aim for higher rates over time; CD bullets focus on a future purchase.

You Can Use a Crisis to Build Helpful Money Habits
Hone your budget skills.

Is Halloween Canceled This Year? Not at These 10 Theme Parks
Disney World and other theme parks are still having spooky celebrations with some COVID-19 safety modifications.

How to Sell Your Car Safely
Protect yourself from scammers.

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