Get smart with your money
Many people are frightened of long-term care costs — for good reason.
Most people over 65 eventually will need help with daily living tasks, such as bathing, eating or dressing. Men will need assistance for an average of 2.2 years, while women will need it for 3.7 years, according to the U.S. Department of Health and Human Services’ Administration on Aging.
In my latest for the Associated Press, the high cost of long-term care and why planning ahead is essential.
Today’s top story: 5 reasons to line up a loan before visiting a car dealer. Also in the news: 6 things to know about student loans before you start school, 5 tips to boost your credit card rewards, and why investor interest in CDs is rising.
5 Reasons to Line Up a Loan Before Visiting a Car Dealer
Protecting yourself from the finance department.
6 Things to Know About Student Loans Before You Start School
Important details.
Watch Your Credit Card Rewards Pile Up With These 5 Tips
Even more rewarding.
Why Investor Interest in CDs is Rising
Choosing the security of fixed-interest.
Dear Liz: My mother recently died, leaving a house to my three siblings and me. We had the house appraised in February. My sister is buying the rest of us out. We decided to give our sister a break and sold her the house below the appraised amount. As the “selling price” (which will be a public record) will be below the appraisal, can I take my “loss” on my taxes this year? I gave her a $25,000 reduction, so I assume I can take $3,000 a year for eight years. Is this true?
Answer: Probably not.
The sale to a family member probably dooms any chance of taking a capital loss, said Mark Luscombe, principal analyst for tax and accounting at Wolters Kluwer.
“The law is not entirely clear on this topic with the IRS perhaps taking a more severe stand than the Tax Court, but both seem to frown on any use of the real estate for personal purposes after the death of the parent,” Luscombe said.
For a capital loss, the IRS appears to require that the inherited property be sold in an arm’s length transaction to an unrelated person, Luscombe said. The IRS also requires that you and your siblings did not use the property for personal purposes and did not intend to convert the property to personal use before the sale.
Even the Tax Court cases appear to at least require a conversion to an income-producing purpose before the sale and no personal use of the property after the death of the parent.
“The reader may find a court willing to say that personal use by a sibling is not personal use by the reader, and, from the reader’s perspective, it was converted to investment property,” Luscombe said. “However, since this was a sale to a sibling and not an unrelated person, I think that the IRS would disagree with that position.”
Dear Liz: Your column on delaying Social Security suggests using a certified financial planner on an hourly basis to review one’s retirement plans. I have struggled to find one who charges this way. They almost all want to control your money for a fee. The one I found after some effort charges $500 to $600 an hour. Please make some recommendations. I don’t mind if the CFP is not local. I just want someone who is certified, reputable, with a reasonable hourly fee.
Answer: There are a growing number of options for people who want “advice only” financial planning from a fee-only, fiduciary advisor:
XY Planning Network is a network of planners who offer flat monthly fees in addition to any other options, including hourly or assets-under-management fees. Monthly fees are typically $100 to $200, with some planners requiring an initial or setup fee of $1,000 to $2,000.
Garrett Planning Network represents planners willing to charge by the hour, although many also manage assets for a fee. Members are either certified financial planners, on track to get the designation or certified public accountants who have the personal financial specialist credential, which is similar to the CFP. Hourly fees typically range from $150 to $300, with a consultation on one topic such as Social Security-claiming strategies or a portfolio typically taking two or three hours. A comprehensive financial plan may require 20 hours or more.
Advice-Only Financial is a service started by financial blogger Harry Sit to connect people with fee-only advisors who just charge for advice and don’t accept asset management fees. Sit charges $200 to help people find fiduciary CFPs who are either local or willing to work remotely. The planners typically charge $100 to $400 an hour.
Another option for those who don’t have complex needs would be an accredited financial counselor or financial fitness coach. Those in private practice typically charge $100 to $150 an hour, although many work on a sliding scale, said Rebecca Wiggins, executive director of the Assn. for Financial Counseling & Planning Education.
Today’s top story: Stressed to Pick the Best? Try ‘Good Enough’ money decisions instead. Also in the news: How to get your credit disaster-ready, 7 budgeting tips for every type of budgeter, and 9 money moves every new grad should make.
Stressed to Pick the Best? Try ‘Good Enough’ Money Decisions Instead
When good is good enough.
How to Get Your Credit Disaster-Ready
Be ready for emergencies.
7 Budgeting Tips for Every Type of Budgeter
Finding the right approach.
9 Money Moves Every New Grad Should Make
Welcome to the beginning of your financial life.
Today’s top story: How to extend your (working) life. Also in the news: Renaming your budget, growing your garden with only a little green, and why you should check your investment portfolio once a month.
How to Extend Your (Working) Life
Preparing to work past retirement age.
If ‘Budget’ Sounds Like a Bummer, Try Renaming It
Whatever helps you stay on track.
Grow Your Garden With Only a Little Green
It could save you money at the grocery store.
Check Your Investment Portfolio Once a Month
Ignorance isn’t bliss.