September 25, 2023 By Leave a Comment

Q&A: Death and document retention

Dear Liz: After a spouse’s death, I am wondering if there is some guidance on how long to keep items such as a driver’s license, Social Security card, Medicare and health plan card, passport, veteran’s information and so on. I haven’t seen this addressed in your column.

Answer: Guidance about what to keep and discard after a death can vary widely, so you may want to ask your estate attorney for help. In general, though, you can begin to dispose of many documents three years after the estate is settled, said Jennifer Sawday, an estate planning attorney in Long Beach.

In some cases, you can shred them sooner. Social Security numbers are often printed on the death certificate, so the card can be shredded once you verify the number on the certificate is accurate, Sawday said. You also may wish to shred the passport as soon as possible to avoid it falling into the hands of an identity thief. Another option is to mark the passport “void” and keep it as a family history item, she says.

The driver’s license is another possible family history item — and boon to an identity thief — but it can be discarded at the three-year point, Sawday said. Veteran’s information can be kept for family history purposes or discarded three years after any death VA benefits are claimed.

Medicare and health plan cards should be kept in case any medical billing issues arise and then discarded when those issues, if any, are resolved, she said.

Filed Under: Couples & Money, Legal Matters, Q&A, Social Security
September 18, 2023 By Leave a Comment

Q&A: What happens when your unmarried life partner dies without a will?

Dear Liz: A close friend recently lost her partner of many decades. The partner left no will or trust or anything in writing. The partner owned many properties and had a huge IRA and lots of money in the bank, but all in the partner’s name alone. My friend asked an estate lawyer and the lawyer said she had no legal right to anything, even the home she has lived in for many years. Can anything be done?

Answer: The lawyer is probably correct. Without estate documents, beneficiary designations or some kind of written agreement, unmarried partners typically can’t inherit, said Jennifer Sawday, an estate planning attorney in Long Beach.

But your friend should consider talking to a family law attorney to see if she has any recourse, Sawday said.

In California, for example, she may be able to make a “Marvin” claim against the estate. (Marvin claims stem from a 1976 California Supreme Court case between Michelle and Lee Marvin, which established that unwed partners could sue each other over property divisions after a relationship ended.)

Filed Under: Couples & Money, Inheritance, Legal Matters, Q&A
May 8, 2023 By

Q&A: This spouse wants to keep an inheritance secret from the other spouse. Here’s a better idea

Dear Liz: A good friend is leaving me money from her IRA after she dies. I have asked that the gift be designated as “sole and separate property” to me. As I am married and file joint state and federal taxes, can this money be kept separate for my use only? I prefer that my spouse not be made aware of this as they have different ideas about how to use our money.

Answer: Inheritances can be kept as separate property even in community property states where other assets acquired during marriage are considered jointly owned. Community property states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

An inherited IRA, however, would be tough to keep secret if you file taxes jointly with your spouse. You’ll be required to take yearly minimum distributions to empty the account within 10 years, and those withdrawals will be taxed as income.

Few couples are entirely on the same page about money, but keeping financial secrets from each other generally isn’t the best way to cope with these differences. Instead, many people find it helpful to have some “no questions asked” money that they can spend as they please without consulting their partner.

Filed Under: Couples & Money, Inheritance, Q&A, Taxes
May 16, 2022 By

Q&A: How to kick your ex off the credit cards

Dear Liz: My divorce was final in 2016. My ex and I divided our credit cards as part of the settlement. I have several joint credit cards with high credit limits and zero balances. I have used them once a year to keep them in active status. Do I consider canceling them or do I risk lowering my credit score if I do?

Answer: If these truly are joint credit cards, then your ex potentially could run up a balance and default, damaging your credit. Obviously, that’s not ideal. With joint cards, neither party can be removed by the other, so the best option may be shutting down the account.

But joint credit cards are increasingly rare. Most cards used by couples have a primary cardholder and an authorized user. The authorized user is not responsible for paying the bill and can be removed at any time.

Contact the issuers to find out your status on each card: Are you a joint account holder? Primary or authorized user?

If you’re the primary holder on a card and your ex is still an authorized user, ask that your ex be removed. If the account truly is joint or if you’re the authorized user, consider opening one or two cards in your own name before taking any further action.

Your credit scores may still take a hit when you close accounts or get removed as an authorized user, but the additional lines of credit may limit the damage and ensure you still have access to credit.

Filed Under: Couples & Money, Credit Cards, Q&A Tagged With: , ,
February 1, 2021 By

Q&A: Couples and their accounts

Dear Liz: You’ve been writing about things people should do after a spouse dies. May I recommend that before your spouse dies, be sure every account is in both your names.

It took six months to cancel my landline phone after my husband died and I moved out of our home. Apparently when we moved in 30 years ago, the service was in just my husband’s name. (I finally reached someone who said, “I don’t know why you’re having so much trouble with this!” and fixed it.)

Also, it took 1½ years, plus hundreds in lawyer fees, to get access to the safe deposit box that he’d had with his parents. This is despite a trust and will leaving everything to me. I was told that “banks don’t care about wills.”

Answer: That’s an excellent suggestion. It’s a lot easier to add a spouse to an account while you’re both alive. It’s a good idea to review all your accounts periodically to make sure the right people are on them, either as joint account holders or as beneficiaries.

Not every account can or should be in both spouses’ names, of course.

Modern credit card accounts, for example, typically aren’t jointly held but instead have a primary cardholder and an authorized user. Also, retirement accounts are in one person’s name alone, although the spouse typically is the beneficiary.

Banks aren’t the only entities that can ignore wills. Typically a payable-on-death account will go to the beneficiary, regardless of what a will or trust says. And speaking of estates, sometimes accounts will be held separately for estate planning purposes.

If you have an estate planning attorney, check with that person before changing how accounts are held.

Filed Under: Couples & Money, Q&A Tagged With: ,
March 2, 2020 By

Q&A: Different approaches to marital finances

Dear Liz: Thank you for mentioning that many couples like to keep their finances entirely or mostly separate. Our solution was to create a joint bank account just for paying joint expenses, such as rent, food, entertainment together, vacations and so on. We each funded this account proportionately, based on our income (for example, the person earning 65% of the total income contributed 65% of the funds). Expenses, such as gifts to our separate children, entertainment on our own, car payments and all personal expenses were paid out of our own separate accounts. Each year at tax time, we’d revise the proportion of the joint account, if necessary, based on our separate tax return figures. It was so simple and tension-free. This was a second marriage for both of us, and we never had disagreements about money.

Answer: Congratulations for finding an approach that worked so well for both of you. As you demonstrate, there’s no one right way for couples to handle their money. Some prefer to have everything in joint accounts, others keep everything separate, and most are somewhere in between.

Filed Under: Couples & Money, Follow Up, Q&A Tagged With: , ,
February 17, 2020 By

Q&A: Handling money after marriage can be complicated. Mom and Dad should butt out

Dear Liz: My son just married. He and his wife are keeping totally separate finances, though he makes much more than she does. She is spending way more than she should on household items and services. Is this the new norm for relationships? What kind of professional do we contact that could help them with merging their finances?

Answer: You don’t contact any kind of professional. Your son and his wife can find help on their own. If your son starts complaining about his wife’s spending again, you might gently suggest that before changing the subject.

In answer to your first question, though, separate accounts aren’t the norm but they’re quite common. A 2018 Bank of America study found 28% of millennial couples kept their finances separate. Many prefer the sense of control and privacy that separate accounts offer.

But of course it’s still important for couples to work out budgets and joint goals together. That can take time, a lot of discussion and the willingness to compromise. It wouldn’t be fair for your son to dictate what they spend just because he makes more, just as it wouldn’t be fair for your daughter-in-law to purchase whatever she wants and assume he’ll chip in.

Again, however: It’s not your business, it’s theirs, and it will be better for all concerned if you keep out of it.

Filed Under: Couples & Money, Q&A Tagged With: ,
August 26, 2019 By

Q&A: Can this marriage’s finances be saved?

Dear Liz: I am 64 and my husband is 63. I retired five years ago after a 30-year professional career. My husband is an executive and plans to work until 70. We own two homes and one is a rental property. Both our boys are successfully launched. Currently, 67% of our retirement money is in stocks and stock index funds. The rest is cash and IRAs or 401(k)s. I am working on re-allocating that 67% to safer investments, but our two investment advisors don’t even agree on what that would look like. And my husband does not want to leave potential stock market gains. Help! I think it is time to switch to more conservative investments. What do you think?

Answer: Many financial planners would say you should only take as much risk as required to in order to reach your goals. Exactly what that looks like depends on how much you’ve saved, how much you spend and how much guaranteed income you expect to receive from Social Security, pensions and annuities, among other factors.

Most people need a hefty exposure to stocks in retirement to get the returns they’ll need to beat inflation, but whether that proportion is 30% or 60% depends on their individual circumstances. Your current allocation could be fine if your basic expenses are entirely covered by guaranteed sources (Social Security, pensions, annuities) and you want to leave a substantial legacy for your sons. Or you could be way overexposed to stocks and vulnerable to a downturn if you’ll need that money for living expenses soon.

Your IRAs and 401(k)s are not investments, by the way. They’re tax-deferred buckets to hold investments. How that money is allocated among stocks, bonds and cash matters as much as how your other investments are allocated and should be included when calculating how much of your portfolio should be in stocks.

If neither of your investment advisors is a certified financial planner, consider seeking one out to create a comprehensive financial plan for you and your husband. The plan should consider all aspects of your finances and give you a road map for investing and tapping your retirement savings. You can find fee-only financial advisors through the National Assn. of Personal Financial Advisors, the XY Planning Network, the Alliance of Comprehensive Planners and the Garrett Planning Network.

Filed Under: Couples & Money, Investing, Q&A Tagged With: , ,
April 1, 2019 By

Q&A: Here’s a big mistake to avoid when planning your wedding

Dear Liz: Would you advise taking money out of your 401(k) for your wedding if you’re getting a lump sum of money within the same year and can pay the full amount back?

Answer: How about postponing the wedding until you can pay for it in cash?

That would be so much better than starting your life together “betting on the come” — in gambling parlance, counting on cards that haven’t yet been dealt into your hand. There are so many ways that can go wrong and only a few where it can go right.

The most obvious risk in borrowing from your 401(k) is that you will lose your job and won’t be able to pay back the money before the balance is deemed a withdrawal, incurring taxes and penalties. Plus, you can’t put the money back, so you’ve lost all the future tax-deferred compounding those savings could have earned.

You’re also setting a seriously bad precedent for your marriage when you borrow money for a luxury, which is what a wedding is. (You also might want to read the Emory University study that found the duration of a marriage was inversely proportional to how much was spent on the engagement ring and wedding. The more spent, in other words, the shorter the marriage.)

It’s easy to get in the habit of borrowing rather than making hard choices or having hard discussions. But a good marriage, and sound finances, requires plenty of both. Give yourselves the gift of a wedding you can afford, when you can afford it.

Filed Under: Couples & Money, Q&A Tagged With: , ,
August 20, 2018 By

Q&A: When the path to the altar is littered with old debts

Dear Liz: My fiancee has incurred a lot of medical debt during the course of our relationship. She works 13- to 14-hour days at two jobs so she can start saving for the wedding and our shared goals, which include buying her a car, sending me to grad school without incurring more student debt, creating a real emergency fund for us, and moving out of my apartment into a new one.

She thinks her credit is horrible (though she has never checked it) and she knows with the medical bills, it is getting worse. She doesn’t think she can move in because she can’t buy a car.

What should I do? Should I help her with her debt so we can actually plan for the wedding scheduled next July? Or should I let her deal with it herself?

My biggest concern in all of this is that I have significantly better finances. I worked hard in college and have a full-time job that pays a living wage. I’ve been in my own apartment for two years.

Sometimes I feel resentful of the fact that she cannot contribute to our household like I can, and I worry that I will have to shoulder our shared goals. I am particularly worried I will have to pay for the wedding, which I am finding more and more ridiculously expensive every day (we’re only spending $5,600), while not being able to save for grad school.

I really am not sure how to give up my frustration and face reality, and our reality is that medical debt is holding up our plans.

Answer: It’s understandable that you’re frustrated. But please don’t take it out on your fiancee, who sounds like a hard-working person who had the bad luck of getting sick.

Working 13-hour days isn’t sustainable, particularly for someone with health issues. She may already have more medical debt than she can reasonably repay, and continuing to struggle with these bills may make achieving other goals impossible.

Encourage her to make an appointment with an experienced bankruptcy attorney. Bankruptcy may not be the right choice for her, but the attorney should be able to assess her situation and discuss her options.

Her debt may be manageable with some help from you. In that case, you two need to discuss how to handle this and your finances in general.

Don’t listen to people — or your own preconceptions — telling you there’s only one way couples should handle money. Some married couples keep their finances entirely separate. Some combine everything — all assets and income are joint, and so are all debts. Most take a middle path, combining some accounts and obligations while keeping others separate.

Finances can also evolve. You may be able to contribute more now, but your fiancee may become the primary breadwinner when you start graduate school. When that happens, would you expect her to help you pay the student loan debt you acquired before marriage, or will that be your obligation?

What’s most important is that you figure out how to work as a team, without resentment and unspoken expectations. It may help to schedule a visit with a fee-only financial planner to discuss your shared goals and how you’ll fund them. You can get referrals to fee-only advisors who charge by the hour at the Garrett Planning Network, www.garrettplanningnetwork.com, and to those who charge monthly fees at the XY Planning Network, www.xyplanningnetwork.com.

Filed Under: Couples & Money, Credit & Debt, Q&A Tagged With: , ,