Ask Liz Weston

Get smart with your money

Q&A

Q&A: Don’t get creative with mom’s money

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Dear Liz: My 91-year-old mother lost her mobile home (and everything else) in a fire. I was able to put her in assisted living and she is actually doing better than when she was by herself. There was insurance money, which is now in a joint account, but considering her age, we have decided not to buy another place. Is there something I should do with this money? Friends have told me I should invest it. Her new home will keep her whether she pays or is (eventually) on Medicaid.

Answer: You should talk to an elder law attorney before doing anything with the money. Typically, your mom wouldn’t be able to get on Medicaid until she spends virtually everything she has. If she tries to avoid spending her money by transferring it improperly, the transfer could delay her eligibility. You can get referrals from the National Academy of Elder Law Attorneys.

Q&A: Her dead ex’s kids can’t dictate benefits

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Dear Liz: My husband and I were living apart but not legally separated when he passed away. He was receiving disability benefits. His children, who are grown, tell me I am not eligible for widow or survivor benefits and that only they can collect his benefits. I am disabled myself and 51. Do their claims hold any weight? Could he have removed me as a recipient?

Answer: No and no. The children are wrong, not just about your eligibility for benefits but also about their own. Social Security survivor benefits typically aren’t available to children over 18, but they are available to widows and widowers starting at age 60, or starting at 50 if the spouse is disabled.

As long as you weren’t divorced, you would be eligible for survivor benefits. And if you had divorced, you could still be eligible for survivor benefits if the marriage lasted at least 10 years.

You can call the Social Security toll-free number at (800) 772-1213 for more information.

Q&A: When your friends seem to have more money than you: Getting over money envy

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Dear Liz: I am a 41-year-old man who is married with small children. I have finally reached the point financially where I am meeting or exceeding personal goals for retirement, college savings and reduced monthly expenses. I have a high income. I drive a piece-of-crap car because it’s paid for, but I am still hemorrhaging cash! Yet my peers are buying second homes at the lake or in ski country. What am I doing wrong?

Answer: Congratulations! You’re doing a lot right with your money, and you may not be doing anything wrong. To borrow a phrase, you can’t judge your insides by other people’s outsides.

Some of your peers may have inherited money, or received infusions from generous parents. More likely, they’re not saving enough, or at all, for retirement or their children’s educations.

They also may be deeply in debt. Although their lives may look good on the outside now, their futures may be a lot less flush.

You can’t know how other households conduct their financial affairs, so keep focusing on your own situation and how you can make it better. If you feel like you’re hemorrhaging cash, track where the money is going for a while. If you discover as a family that you’re spending on things that aren’t important to you, you and your spouse can look for ways to redirect spending to better support your values.

Q&A: Are those 529 college savings plans still a good idea?

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Dear Liz: Last week we had an infant come into this world and we’re already thinking about college. I know you’ve addressed this before, but things change and I was wondering if the 529 plan is still the way to go. If our son decides not to go to college, what are the tax consequences?

Answer: Congratulations! Yes, state-sponsored 529 college savings plans are still a great way for many families to save for future college costs. The money grows tax deferred and withdrawals are tax free when used for qualified education expenses.

Even if your son opts not to go to a four-year college, he will probably need some kind of post-secondary education. Withdrawals from 529 plans can be used to pay for any accredited school in any state, including community college and trade schools.

On the off chance that he doesn’t get any kind of schooling, or conversely gets a full ride, you can change the beneficiary so that the money pays for the education of a sibling or other close relative, including yourself. And if nobody wants to use the money for schooling, you can simply withdraw it. The earnings will be taxed and subject to a 10% penalty.

Q&A: A collection of advice on selling collections

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Dear Liz: I concur with your advice regarding selling collections. I am a retired licensed marriage and family therapist. I’ve witnessed clients struggle with caring for a loved one and their things. One family started taking photos of their loved one with much-treasured collectible objects, and recording the stories told about them. This offered increased connection and understanding across the generations. With this recorded story, it was easier to release and sell the things. And there were a few treasures that family members asked to keep, pleasing their elders immensely!

Answer: What a lovely idea! As collectors know, it’s all about the story, and many would embrace the chance to share theirs.

Dear Liz: A friend collected and has some wonderful pieces of Japanese items such as antique tonsu chests and porcelain, some of which are quite valuable. When she was updating her estate plan, her attorney suggested she ask me, as a friend and fellow collector, to be an advisor to her family about disposing of these items after her death (assuming she predeceases me). My contact info was then shared with her loved ones. Another trick I have seen is to have copies made of receipts with identifying information and prices paid placed inside drawers of valuable furniture. Whether these items are sold at auction, estate sale or upscale consignment, the information is extremely valuable in helping to determine authenticity. Naturally, this information should also be stored with legal documents. Prior to a recent surgery I also shared my information with my sister and went over the location in my files for all pertinent information. It can be difficult for heirs to differentiate Baccarat crystal, vintage Wedgwood china and top-quality French copper from goods sold in discount chains. Once they know what the items are, the internet and EBay make it easy to get a sense of the value of items for sale. Hope you find this helpful.

Answer: Very much so, and I’m sure readers will as well. Thanks for the tips!

Dear Liz: Regarding your advice to the collectors and the impact on the executors, there can be another wrinkle: disagreements on valuations among the heirs.

I’m the executor for my parents’ estate and my mother spent a considerable amount of time and resources collecting art. Unfortunately there is little documentation on the art and it is in a niche market where it will be hard to get accurate values.

I’ve decided that when the time comes, I will use what little documentation my mother had to establish values and then divide the art collection among the heirs. If the heirs want to liquidate the art, that is their choice. It takes me out of the middle of squabbles over whether or not I got a “good” price for something. And it gives me time to decide for my portion of the collection what pieces I want to keep for myself and what I want to sell. This obviously only works when the heirs are people and not organizations and they have the ability to take the collection rather than a check.

Answer: Oh, boy.

If you are the executor, you will have a fiduciary duty to the estate. What that means is that you will be legally required to act in the estate’s best interests, rather than in your own. Cherry picking a collection is an excellent way to violate that duty and potentially get yourself sued. Another way to invite lawsuits is to rely on scanty, out-of-date documentation to establish values without attempting to get current appraisals.

If you really don’t want the hassle, ask your mother to designate, in writing, who gets what. She should discuss this with an estate planning attorney to see if her estate documents need updating or if she can include a letter detailing her bequests.