Ask Liz Weston

Get smart with your money

Q&A

Q&A: What to do when you’re mad at your credit card company

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Dear Liz: This past summer I was traveling in a foreign country and the email alert that a credit card payment was due did not reach me. Upon returning to the U.S. and attempting to use the card, I was verbally assaulted over the phone by a credit card company representative demanding payment. I’m 80 and have never missed paying off any credit card charge at the end of the billing cycle or paid a penny in credit card interest. The card company reported the missed payment, lowering my credit score 133 points.

This is no way to run a business! I’ve cut up both cards and closed all accounts I had with this company. I had no problem getting a card from another issuer. I’d think that best practice in my case would have been a flag raised on their computers that the missed payment was unusual. A polite contact could have been made, the check would have been in the mail the next day and the company would still have a customer.

Answer: Being verbally assaulted after a one-time lapse suggests either a poorly trained representative or a company that doesn’t care much about customer service. Unfortunately, your leverage to get the missed payment taken off your credit reports pretty much disappeared when you closed your accounts. Some card issuers will make such “goodwill” adjustments to keep longtime customers, but others won’t. It’s always worth asking before you take your business elsewhere.

Now that you have your new card, please consider setting up some kind of automatic payment so this doesn’t happen again. Credit card companies typically offer the option to have your minimum payment, your full balance or a dollar amount in between pulled from your checking account. Making sure that at least the minimum is paid can prevent further damage to your credit scores.

Q&A: The gift of organization

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Dear Liz: You recently responded to a widow whose pension income stopped on her husband’s death. She was told the company had no record that he had chosen a “joint and survivor” option that would have continued the pension for her lifetime. This is outright fraud and elder abuse. My mother was given the same answer by an insurance company when my father died after collecting his pension for 25 years. If someone signs up for a “single life” pension that ends at death, the company will always have a record.

If you select the surviving spouse option, their standard operating procedure is to say they have no record. They prey on the elderly hoping the surviving spouse has dementia or lost their contract. Before my father died, other surviving spouses told my parents and me about this practice, so my parents kept all their retirement papers in a safe place. When I told the insurance company representative that I had the contract in front of me, her attitude changed from combative to helpful. She said, “I will mail you the paperwork to sign, and include a copy of the contract when you mail it back.”

Answer: Having a copy of the contract seems to be key in getting such conflicts resolved. Let’s hope the original letter writer still has this essential document that can prove her case.

Many people hang on to way too much paperwork because most of it will never be needed or can be retrieved or re-created. Documents relating to pension choices are among the exceptions. To be useful, though, important documents must be not only kept but also accessible. A contract buried in a pile of utility bills may never be found. Having an organized filing system and keeping it maintained can be a gift to yourself and your family.

This year’s natural disasters, including hurricanes and fires, remind us that just having paper versions of documents isn’t enough. It’s a good idea to scan important documents and store copies at another site, on a secure internet site or (preferably) both.

Q&A: What to consider before becoming an estate executor

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Dear Liz: A lifelong friend has made me executor of his will. He has one brother who is named in the will only to be told that he is not included. My friend’s estate is left to two other lifelong friends. If his brother protests the will, what are my duties or liabilities? Can I be pulled into court at my own expense and time? Should I tell my friend that I don’t want the role?

Answer: Being an executor can be a huge hassle, but it’s also an honor and a way to offer a final, loving gesture to your friend. Learn as much as you can about the situation before deciding whether to refuse.

If the brother does contest the will, typically your friend’s estate will pay the legal fees and other expenses. Executors also can be compensated, with the amount determined by the will. If there’s no mention of a fee in the will, state law determines how much the executor can be paid. The fee would be taxable income to the executor. It’s certainly worth discussing the potential costs and fees with your friend before you decide whether to take on this role.

Family members and friends often waive the executor’s fee as a gesture of goodwill, but there’s no requirement to do so. The job typically requires considerable time and effort, even when unhappy relatives aren’t threatening lawsuits. Also, executors can be held legally and financially liable for mistakes. If you do take on this role, consider hiring an attorney to guide you through the process. The attorney’s fees also can be paid by the estate.

Q&A: Social Security benefits confusion

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Dear Liz: In a past column, you discussed a potentially advantageous option for people who started Social Security early. You wrote that when they reached full retirement age, they could suspend their benefits and allow them to grow by earning delayed retirement credits. I am turning 66 this month and have been collecting Social Security benefits since age 62.

I went to a local Social Security field office to request the suspension but was told this option is not available. They couldn’t provide definitive documentation to support their statements but said that by starting benefits at 62 the option to suspend and earn delayed credits from 66 to age 70 doesn’t apply. Can you please clarify your comments and, if correct, suggest how I might be able to convince the representatives at the local office that it is still an option? I have been speaking to a supposed “expert” at the office, not the first person screening my request.

Answer: Unfortunately, the advice you get from local Social Security offices isn’t always accurate.

The representatives you talked to may be confusing benefit suspension with the so-called “file and suspend” option, which Congress eliminated a few years ago. With file and suspend, a higher wage earner could file an application for benefits and immediately suspend it. This allowed a married partner to start claiming spousal benefits while the higher earner’s benefit could continue to grow. Under current rules, partners can claim spousal benefits only if the primary earner is actually receiving retirement benefits.

For those not familiar with Social Security claiming strategies: It’s generally advantageous to wait as long as possible to apply for retirement benefits. The amount you can get grows at roughly 7% annually between age 62, which is the earliest you can apply, and your full retirement age, which is currently 66 but which will gradually rise to 67 for people born in 1960 and later. Between your full retirement age and age 70, you can earn so-called “delayed retirement credits” that further boost your check by 8% each year.

If you start early and realize you made a mistake, you can suspend your benefits at your full retirement age. Your checks will stop, but you don’t have to repay past benefits. And the amount you receive — although still reduced by your early start — can earn delayed retirement credits.

This probably isn’t a good option if you have other people drawing benefits based on your record, such as spouses or dependent children, because the suspension would stop their benefits as well.

Suspension also is different from the “do over” option that allows you to repay any benefits you’ve received and completely restart the clock on your benefits, as if you’d never started them. That option is allowed only in the first 12 months after your initial application.

Given that your local reps are confused, you should point them to the Social Security Administration’s web page on the matter.

It couldn’t be clearer. The first sentence reads: “If you have reached full retirement age, but are not yet age 70, you can ask us to suspend retirement benefit payments.” The page goes on to say your benefits will be automatically restarted at age 70, when those benefits max out, but you can restart at any time before that if you want.

Q&A: A gift annuity needs more thought

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Dear Liz: I am 93 and caretaker of my developmentally disabled daughter, who is 64. She’s in poor health and lives with me but is still able to be fairly independent. I am in good health and still able to drive and so forth. Being newly widowed, I would like to increase my monthly income. I have a reverse mortgage on my home but need money for upkeep. Besides Social Security, I have a small savings account and an annuity payment of less than $500 a month. Do you think a gift annuity that pays 9.5% is a good option?

Answer: A charitable gift annuity typically requires that you give a charity a sizable sum of cash, securities or other assets in exchange for a partial tax deduction and a lifetime stream of income. The amount that’s paid out depends in large part on your age — the older you are, the bigger the payout since your life expectancy is shorter.

Gift annuities may be a good fit for affluent people with charitable intent who can use the tax deduction. From what you’ve written, that doesn’t seem to describe you. If you do have a sizable sum you can tap, it may be better to do so directly rather than involving a charity.

You could benefit from some objective guidance, not just for improving your own financial situation but to provide for your daughter. She may be in poor health, but she still could outlive you and almost certainly will need ongoing support. That probably will include a new place to live, because the reverse mortgage will have to be repaid at your death, and that typically means the sale of the home.

A fee-only financial planner can help review your situation and connect you with other experts, such as an estate planning attorney. You can get referrals from the National Assn. of Personal Financial Advisors at www.napfa.org and the Garrett Planning Network at www.garrettplanningnetwork.com.

Q&A: Watch out for scams when trying to dump a timeshare

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Dear Liz: How do I get out of a timeshare contract? A few years back, we signed up for one that’s associated with a major hotel chain. Promises were implied but not kept. Since then, I continually receive notices from legal groups that say all laws favor the timeshare developer and that my kids will take over my debt unless I pay the attorney thousands of dollars to get out of the contract.

Do you know of legitimate ways to sever the ties? I know I will lose my investment but would rather be out of the contract “for eternity.”

Answer: Timeshares typically include “in perpetuity” clauses meant to keep owners on the hook indefinitely for annual maintenance fees and other charges.

That doesn’t mean their heirs have to be on the hook, however. Your kids can “disclaim” — essentially, refuse to inherit — the timeshare on your death, as long as you haven’t put their names on the deed.

If you’re not happy with your timeshare, though, consider getting rid of it before your death. Check to see if the developer will take it back or if you can sell it on a site such as RedWeek or Timeshare Users Group. Don’t expect to get much, if any, money out of the deal. In fact, you may have to pay a year or two of maintenance fees in advance as a sweetener. That could be a relatively small price to get out of what otherwise might be a lifetime obligation.

It’s unfortunate that most timeshares don’t offer a simpler way out for owners. The difficulty in getting rid of timeshares opens the door for all kinds of scams and shady behavior, with companies charging thousands of dollars and often not delivering the exit they promise.