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Liz Weston

Tuesday’s need-to-know money news

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Today’s top story: Do you need a grad degree to compete right now? Also in the news: What to do when a loved one owes you money, the best cities for freelancers, and how to avoid a last-minute extra baggage fee at the airport.

Do You Need a Grad Degree to Compete Right Now? Probably Not
More U.S. workers than ever hold a graduate degree.

A Loved One Owes You Money. Now What?
How to tackle an uncomfortable topic.

The 10 best cities for freelancers who can work from anywhere
These places have rich, active environments for self-employed gig workers and independent contractors

How to Avoid a Last-Minute Extra Baggage Fee at the Airport
One thing to add to your bag so you never wind up paying for that extra weight again.

Dealing with death? There’s an app for that

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Before the pandemic, entrepreneurs Liz Eddy and Alyssa Ruderman had trouble getting venture capitalists to invest in their end-of-life planning app Lantern. Potential business partners were skeptical as well.

“We would hear, ‘Oh, this is really a niche issue,’ which I think is pretty hilarious,” Eddy says. “Death is quite literally the only thing on the planet that affects every single person.”

The past two years have highlighted the importance of such preparation, even for younger people. Abigail Henson, a 31-year-old college professor in Phoenix, says she started using Lantern about 18 months ago to plan her funeral, tell her executor where to find her passwords and explain what she wanted to be done with her social media accounts.

“I’m a planner, and I have control issues, so the idea of being able to have a say in what happens following my passing was appealing,” Henson says.

Planning for death and navigating life after a loss can be difficult, complex and sometimes expensive. In my latest for the Associated Press, a look at several apps that promise to help.

Monday’s need-to-know money

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Today’s top story: How to save more when inflation makes your money count less. Also in the news: A new episode of the Smart Money podcast on choosing the best crypto and Bitcoin coming to 401(k) plans, what to do if your car is stolen, and understanding the role of a power of attorney agent.

How to Save More When Inflation Makes Your Money Count Less
You can adjust your spending and saving strategies to help lessen the impact of inflation.

Smart Money Podcast: Bitcoin 401(k)s and Choosing the Best Crypto
Cryptocurrencies coming to Fidelity 401(k) plans.

What to Do if Your Car Is Stolen
Here’s when to call the police, what your insurance covers and more.

What Is a Power of Attorney Agent (and How Do You Choose One)?
If you’re aging independently, it’s important to have someone you trust in charge of your affairs.

Q&A: Should this couple leave their estate to kids who don’t share their values?

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Dear Liz: My husband and I are in our 60s and have two grown children. There are no grandchildren, and it’s not looking like there will be any. Sadly, our children do not share our values. We don’t want to leave them our estate because it will end up being given or bequeathed to charities of their choice. They are doing well and don’t “need” the money. However, we also don’t want to “cut them out.” I was thinking about a charitable remainder trust so they could have income during their lifetimes and the assets will go to our charities when they die. Can it be funded with what is left when we die or do we have to put some or all of our assets in it now? Is our estate sizable enough for such a trust? Our assets total about $3 million. A less complicated solution would be to leave them the house and bequeath the cash to charity. What are your thoughts?

Answer: Consider going with the less complicated solution.

Charitable remainder trusts are typically created while you’re alive. You contribute assets to an irrevocable trust and get a tax deduction for the contribution plus an income stream for life. At your death, the charity keeps the remaining assets — the remainder. Because the trusts are irrevocable, you should have careful counseling from an accountant, financial planner, the charity and an attorney before you sign away your assets, said Jennifer Sawday, an estate planning attorney in Long Beach.

You could create a trust that at your death pays income to your children and then contributes the remainder to a charity when they die. Such a trust probably would have to be administered for decades, so you’d need a corporate or other institutional trustee — and those aren’t cheap.

Also, keep in mind that a lot of things could change between now and your deaths. The kids who don’t “need” the money could suffer reverses, or you could. Opinions also can change; they might come closer to your point of view, or you could decide that the issues that divide you are less important than the bond you share. An unchangeable trust may not be the best option in a world that’s constantly changing.

Q&A: Friend’s write-offs might be fraud

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Dear Liz: I have a friend who is driving me crazy because she keeps telling me that I need to start a company. She claims she writes off “everything” from her two companies and a nonprofit. She says her accountant encourages this and that she doesn’t pay taxes. However, when my friend had to claim unemployment benefits during the pandemic, her weekly amount was very small. She kept complaining that she “paid into the system” but thought she should get a higher amount. Maybe she didn’t pay into the system, or isn’t paying enough?

Answer: People who write off “everything” are often committing tax fraud. Although businesses can write off a number of different expenses, those expenses must be both “ordinary” — common and accepted in the business’ specific industry — and “necessary,” or helpful and appropriate for that particular business or trade. Nonprofits, by IRS definition, are supposed to be organized and operated exclusively for religious, educational or charitable purposes — not the benefit of a single individual.

Your friend could face a substantial tax bill plus serious penalties if she’s audited. She may be counting on the IRS not noticing, but all it may take to trigger an audit is a tip from a disgruntled employee or someone who hears her bragging about not paying taxes. If her accountant is in the habit of filing dubious returns, the IRS might catch on to the pattern and start looking more closely at all that accountant’s customers.

Your friend’s strategy of minimizing her taxable income has already bitten her once when she applied for unemployment and may bite her again when she applies for Social Security. If she doesn’t pay Social Security taxes, or pays only a small amount, her retirement benefits will reflect that. By the time many people realize the enormity of that particular mistake, it’s too late to fix.

Friday’s need-to-know money news

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Today’s top story: What to do if a loved one owes you money. Also in the news: How to save more when inflation makes your money count less, how to visit Hawaii on a budget, and 9 ways to bolster financial intimacy in a new relationship.

A Loved One Owes You Money. Now What?
What should you do when they don’t pay you back?

How to save more when inflation makes your money count less
During inflation, consumers can adjust their spending and saving strategies to help lessen the impact that inflation has on the value of their money

Save on Hawaii Travel Even as Demand Soars
With the lifting of COVID restrictions, vacationers are once again flocking to the Aloha State.

9 Ways to Foster Financial Intimacy in a New Relationship
https://lifehacker.com/9-ways-to-foster-financial-intimacy-in-a-new-relationsh-1848878428