Dear Liz: You recently answered a question about closing credit cards and mentioned the “mental load” of managing too many cards. That got me thinking about when is the right time to start simplifying my finances. I have lots of rewards credit cards and have opened several bank accounts to get bonuses, but I wonder at what age I should start consolidating so everything’s easier to track.
Answer: Simplifying our finances can allow us to better monitor our accounts, helping to avoid mistakes and fraud. Reducing the number of accounts we have also makes it easier for our trusted people to take over for us, should we become incapacitated.
But consolidating gets particularly important as we age and start to face cognitive deficits. Our financial decision-making abilities peak in our 50s, after all, and can really drop off in our 70s and 80s.
You can get ahead of this curve by consolidating accounts as you go along. When you leave a job, for example, consider rolling your old retirement account into your next employer’s plan or an IRA so that you don’t lose track of the money. If you’re thinking of opening a new bank account, consider whether there’s an old one you can close. Shuttering credit card accounts can affect your credit scores, so open new accounts sparingly and think about closing any that you’re not using, particularly if they’re newer or lower-limit cards.
Your 60s may be a good time to get serious about winnowing the number of accounts and institutions you’re juggling. Many people find it’s much easier to have one bank, one brokerage and a few credit cards than to have accounts scattered across the financial landscape.
This is good advice in general (“Many people find it’s much easier to have one bank, one brokerage and a few credit cards than to have accounts scattered across the financial landscape”), but there is one important consideration. If you have large enough amounts of money, remember the FDIC insurance limits for applicable accounts. You will have to have enough accounts to keep them all under the limits and thus insured.
My sister and I who are seniors own a rental property consisting of two units that our mother deeded to us over 20 years ago. Using the county form “parent to children” avoiding any tax consequences.
Now years later, I am considering moving into one of the units to get the 250K exemption. Would the amount be reduced to 125K as I hold 50%?
Another possibility is that my sister moves in with me for the next two years. Would this be acceptable? And claim this new residence with this years tax return.
I own several properties. I have a living trust and will naming my two minor children as beneficiaries. I am conflicted and troubled with my living trust attorney.
I have stated to my attorney that I want to transfer the properties to my children using the parent to children transfer using the county form. This will give my children who are under 10 years of age ownership as tenants in common with right of survivorship. I believe this avoids any tax consequences. I live in Los Angeles County. I will still keep my living trust and will and make some adjustments per this change.
My attorney states I will lose the step up in basis if I do this. As I see it, this may not be a concern as my primary goal is to give my children these properties in the event of my passing. Because frankly, I do not trust anyone who I name as trustee to my living trust. I do not care of the step-in-basis as doing it this way avoids delays, assures ownership, avoids fraudulent named trustees that may comingle my wishes. And actually, what may occur, the trustee could sell the properties and spend the monies. Keep in mind my children are minors as of this date. Sure, they could file a lawsuit, but you need money to file an action and once the money is long gone, good luck in getting it back. This way it gives immediate ownership to my children, and I avoid these problems that may occur.