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Liz Weston

Thursday’s need-to-know money news

September 26, 2013 By Liz Weston

Chevy VoltPlaying mortgage tag, how to protect your accounts from cyber spies, and surviving the dreaded audit.

The bank that rejects the most mortgages
A rejection at one bank could still mean approval at another.

3 Accounts That Could Hurt Your Credit Score
Looking beyond credit cards.

How to prevent financial snooping
How to keep your accounts safe from prying eyes.

How to survive an IRS audit
Tips on getting through the financial turmoil of an audit.

The Pros and Cons of Assuming a Car Lease
Weighing your options before you get behind the wheel.

Filed Under: Liz's Blog Tagged With: audit, car leasing, Credit Score, cyber theft, mortgages, real estate

Wednesday’s need-to-know money news

September 25, 2013 By Liz Weston

Zemanta Related Posts ThumbnailMythbusting disability insurance, how to protect the finances of someone with Alzheimer’s disease, and what Mike Tyson and retirement planning have in common.

5 Myths About Disability Insurance
Mythbusting an essential.

Steps to Protect Finances of Those with Alzheimer’s
Help for those in the difficult role of being a financial caretaker.

How to Develop the Hireable Skills You’ll Actually Need After College
Learning skills that will pay off in both the job and the real world.

What Mike Tyson Can Teach Us About Retirement
The important of keeping your guard up.

Does Getting Approved for a Credit Card Help Your Credit Score?
How opening a new credit card can help your credit score.

Filed Under: Liz's Blog Tagged With: college, Credit Cards, Credit Score, disability insurance, employment, financial caretaking, job skills, Retirement

Tuesday’s need-to-know money news

September 24, 2013 By Liz Weston

Offering AdviceControlling shared credit card use, the pros and cons of a high-deductible health plan, and ways to save while grocery shopping.

What to Do if an Authorized User Is Abusing Your Credit Card
Setting boundaries for shared credit cards. r

6 Tips for Navigating the New Health Insurance Exchanges
Don’t be intimidated by the new health exchnages.

Is a high-deductible health plan right for you?
When choosing a high-deductible plan makes the most sense.

Break the spell of spending mindlessly
Tips on how to become a conscious spender.

How to Trim Your Food Budget
Ways to save at the grocery store.

Filed Under: Liz's Blog Tagged With: affordable care act, Credit Cards, grocery savings, Insurance, obamacare, spending

Helping family led to unpayable debts

September 23, 2013 By Liz Weston

Dear Liz: I have $40,000 in credit card debt due to home healthcare I had to provide for my mom, who lived with me for six years before she passed away in 2011. I filed a Veterans Affairs claim on her behalf but just got a VA check for $344 with no explanation about whether this was all it was going to allow. If it is, I need to file for bankruptcy. I owe $18,000 on my mortgage and $32,000 on a home equity loan I took out in 2001 to help my son get on his feet after he finished graduate school and had his first child. I also had some credit card debt from helping my brother in 2009 when he had cancer and could not work and his wife left him so he had no income. I also have $20,000 in a money market account that I call my retirement fund. Is it protected if I were to file for bankruptcy? The economic downturn caused me to have to take a $700-a-month pay cut the first of this year that will reduce my annual salary to $55,000 if there are no more cuts or layoffs. If they were to close the business completely, my Social Security benefit will be $1,900 per month, compared with $3,400 that I take home now. I have always paid my bills, but Mom’s medical expenses really have taken a toll on my finances.

Answer: Your debt exceeds your income, and few people in that situation manage to pay off what they owe. But bankruptcy isn’t a get-out-of-jail-free card. Your home equity and your savings could be at risk. Had you actually put your money into a qualified retirement account, such as an IRA or a 401(k), it would have been protected from creditors. Just calling an account your retirement fund offers no protection whatsoever. A bankruptcy attorney familiar with the laws of your state can tell you what to expect. You can get a referral from the National Assn. of Consumer Bankruptcy Attorneys at http://www.nacba.org.

You also need to call the VA at (877) 222-VETS, or (877) 222-8387, to find out whether you can expect any more help. The VA does offer some long-term care benefits to veterans and their spouses who qualify for the aid. The time to request help, though, was when your mother was still alive.

Which leads us to the problem of your spending money you didn’t have to help people who may well have had other options. If your mother couldn’t get VA help, she may have had assets that could have paid for assistance. If not, she might have qualified for long-term care benefits through Medicaid, the federal healthcare plan for the indigent. Your brother also may have qualified for federal or state benefits. Your son may have had a rough time getting established, but he had a degree and a working lifetime ahead of him.

That doesn’t mean you should have thrown family members to the wolves. But it’s not clear you considered any other options before turning to credit. Sites such as Benefits.gov and the Eldercare Locator at http://www.eldercare.gov could have connected you and your family to resources that might have helped. Other family members may have been able to pitch in, or the people involved may have had assets to tap. If there truly were no other options, your assistance should have come out of your current income. If you have to borrow, then you really can’t afford to help.

As it is, your generosity has left you at the threshold of retirement with little savings and big debts. Let’s hope your family is as willing to help you in your old age as you were to help them.

Filed Under: Credit & Debt, Elder Care, Q&A Tagged With: Bankruptcy, Benefits.gov, Credit Cards, debt, Debts, elder care, Elder Care Locator, Eldercare Locator, family gifts

Who owes taxes after death?

September 23, 2013 By Liz Weston

Dear Liz: My brother passed away, and for one of his bank accounts, he had named me as his beneficiary. Do I have to pay taxes on the $100,000 I received? Is it subject to a gift tax?

Answer: Estate taxes are paid by estates, not by inheritors, said estate attorney Burton A. Mitchell of Los Angeles firm Jeffer Mangels Butler & Mitchell. The vast majority of estates don’t owe taxes anyway, now that the estate tax exemption limit is over $5 million.

Some states have estate taxes with lower exemption limits, and a few have what are called “inheritance” taxes, which are levied based on the relationship of the heir to the deceased, Mitchell said. The more distant the relation, the higher the tax rate. Siblings typically face a higher rate than spouses or children. Ask the executor of your brother’s estate whether any of these taxes apply.

Gift taxes, meanwhile, are the responsibility of the giver and again aren’t an issue for the vast majority of people. Your brother would have had to give away more than $5 million in his lifetime for federal gift taxes to be an issue.

Your inheritance may, however, be subject to creditors’ claims if your brother didn’t leave enough money to satisfy his debts, Mitchell said. Check with the executor of his estate and consult an attorney if necessary.

Filed Under: Estate planning, Q&A, Taxes Tagged With: estate tax, estate taxes, gift tax, gift taxes

Monday’s need-to-know money news

September 23, 2013 By Liz Weston

Zemanta Related Posts ThumbnailThe best college savings plan, why credit card companies want to take back your reward points, and the money lessons hidden in your favorite TV shows.

What’s best for college saving: ESA or 529?
Choosing the right college savings plan.

Five Ways Your Can Lose Your Credit Card Rewards
Credit card companies would love nothing more than to snatch your rewards back.

Tips to Negotiate Your Medical Bills
Carefully scrutinizing your medical bills could save you money.

Five Wealth-Building Tips Most People Overlook Five Wealth-Building Tips Most People Overlook
Looking for wealth in all the wrong places.

11 Money Lessons From Breaking Bad, Modern Family, And Other Emmy Favorites
What would Walter White do?

Filed Under: Liz's Blog Tagged With: 529, College Savings, credit card rewards, ESA, medical bills, wealth bui

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