Ask Liz Weston

Get smart with your money

Q&A

Q&A: Timing on Social Security survivor benefits depends on dependents

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Dear Liz: My husband and I were married for 23 years before his passing in 2009. I am now 58 and have been told that I can only receive survivor’s benefits at the age of 60. However, an earlier question from a woman stated she and her son received benefits when her husband passed after 13 years of marriage and she was only 34 at the time. I’m aware that the child would receive benefits as he is a dependent but how did she receive benefits also? I’m confused, should I already be receiving as well?

Answer: Only if you’re caring for your husband’s child and the child is a minor or disabled. Surviving spouses can receive Social Security benefits at any age if they are caring for a child under 16 or a child who was disabled before age 22. Otherwise, survivor benefits can begin at age 60, or at age 50 if the survivor is disabled.

Q&A: For estate executors, unpaid medical bills can be daunting

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Dear Liz: My wife is in the process of being named executor for her late sister’s estate. There are several medical bills, including some that have been sold to collection agencies. Our understanding is that any negotiations or settlements should be done with those agencies as opposed to the original medical organization. Is this correct in general as well as in probate situations?

Answer: If a bill has been sold to a collection agency, that’s the entity your wife will have to contact. However, not all medical bills are sold. Sometimes collection agencies work on behalf of healthcare providers. When that’s the case, your wife may want to contact the original provider.

As executor, your wife can and should hire an attorney to advise her on administering her sister’s estate. The estate will pay the cost for this advice and your wife will receive helpful, personalized counsel on dealing with every aspect of being an executor, including this one, which is particularly fraught.

The Consumer Financial Protection Bureau recently warned that some medical debt collectors are violating federal law by inflating bills, trying to collect on debts that aren’t owed, demanding payment for services insurance has already covered and lying about consumers’ rights to contest bills. The attorney can help your wife verify the bills are accurate and negotiate settlements.

Q&A: After creating a living trust, don’t forget to review it

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Dear Liz: My husband and I created a living trust about six years ago. How often do we need to review it with an attorney if we’ve had no major life changes?

Answer: You’re already overdue.

The standard advice is to have your attorney review your trust every three to five years or after major life events, including marriage, divorce, a birth, a death, a change in your financial status or a move across state lines. You also should review and update your schedule of assets to reflect accounts you’ve opened and closed in the intervening years.

Q&A: Skipping Medicare drug coverage now can mean paying more later when you do sign up

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Dear Liz: I did not enroll in Part D prescription coverage when I enrolled in Medicare in 2005 because I was not taking any prescriptions at the time. When I enrolled a few years later, I was penalized $11 per month for late enrollment and I must pay this penalty until I die. What is the reasoning and logic behind this rule except to benefit the insurance companies? I’ve complained to Medicare.

Answer: You can complain until you’re blue in the face, but this is how insurance works.

Insurers — and the largest payer of healthcare services, Medicare — need a large pool of healthier people paying premiums to offset the costs incurred by the sicker ones. If only sick people bought insurance, premiums would skyrocket, making healthcare even more expensive than it already is.

Q&A: Changing jobs? Think about transferring your retirement fund

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Dear Liz: I’m a government employee with a 403(b) supplemental retirement plan. I’m taking a new job out of state and wonder what to do with the money in this account. Should I leave it in the plan, which has been doing great, or transfer it to my new employer’s plan? Also, I have a little money, about $8,000, in a 457(b) deferred compensation plan that I would like to remove for simplicity. Can I transfer this into a brokerage IRA without any tax hit?

Answer: You mention that your current plan has been “doing great,” but it would be surprising if that weren’t the case. As of mid-October, the one-year return for the Standard & Poor’s 500 market benchmark was about 34%.

If your new employer’s plan is a good one, then transferring your money there could be a great option since you’d have fewer accounts to manage and monitor. How can you tell if a plan is good? You’ll see a number of low-cost investment options with expense ratios well under 1%. If you’re a teacher, you can find ratings of school district 403(b) plans at the nonprofit 403bwise (https://403bwise.org/).

You’re allowed to roll your deferred compensation plan into an IRA or your new employer’s retirement plan. You may want to keep the money where it is, however. Once you leave an employer, you’re allowed to access a 457(b) plan at any age without paying a 10% early withdrawal penalty. That could be a perk worth keeping.

Q&A: Big banks can cause big headaches when it comes to retitling accounts

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Dear Liz: Someone recently asked whether to make a bank account “payable on death” or put it in their living trust. Our bank has refused to allow us to retitle our accounts so we can have them in our trust. Is “payable on death” our only option?

Answer: No, but you may need to move your accounts to another firm.

Some large national banks do balk at retitling bank accounts, notes Jennifer Sawday, an estate planning attorney in Long Beach. By contrast, many smaller banks, credit unions and big brokerage firms have no problem retitling accounts to living trusts.

If your bank isn’t willing to help you now, just imagine how difficult it will make matters for your loved ones after you die and they need to access your accounts, Sawday says.

If you’re reluctant to leave your big bank entirely, consider keeping a small amount of money in a day-to-day checking account while putting the bulk of your cash in a more trust-friendly bank.