Money Talk: How to make sure your money-distribution wishes are followed after you die
Dear Liz: My first husband died when my oldest child was 1. I remarried and had another child (they’re 5 and 3 now). My husband and I prepared a trust in which I have him and my sister as beneficiaries of my assets. But my husband regrets that he is not the only beneficiary.
My argument is that if I pass away and he remarries, I want my oldest son (not his biological son, nor has my husband adopted him yet) to get what I saved for him, and that my sister will make sure this happens. What would you recommend? Should I have him as the only beneficiary?
Answer: No. But your sister probably shouldn’t be a beneficiary either, given your aims.
Any parent who wants to get money to a child should do so with a properly drafted trust, rather than trusting someone else — even another parent — to “do the right thing” by the child. All too often, they don’t. A new spouse, a change in financial circumstances, ill will or basic selfishness can tempt people to justify raiding funds intended for others.
A better way to benefit your children is to set up trusts to receive the money. You can name your husband as the trustee for the younger child and name your sister as the trustee for the elder. Trustees have the legal responsibility to act as fiduciaries, which means they have to put the beneficiaries’ interests first.
You can either create these trusts with your will or they can be part of your living trust if you live in a state with high probate costs, such as California. The advantage of probate is that the court can provide some oversight of the trustee, but that typically involves some additional costs. Your estate-planning attorney can offer guidance about which approach may be best for you.
Are credit checks a scam?
Dear Liz: In July last year, I accessed the website for my free credit report before applying for a car loan. I have also been in recovery from cancer treatment and haven’t been great about checking my Visa statement until now. For the past year, my credit card has been charged $19.95 each month for some kind of “credit check” service. I never authorized this, nor did I request this service. I contacted the site, and they will refund me only one month of billing. Is this some kind of scam? How do they get away with this, and what can I do?
Answer: It may not technically be a scam, but the site’s business model profits from people’s confusion about how to get free credit reports.
The site you used is not the federally mandated site for free credit reports. It’s likely one that you found by typing “free credit reports” into a search engine and then clicking on one of the first results, which was probably an ad. To find the real site, you need to type www.annualcreditreport.com into your browser. You won’t need to give your credit card number to get your reports.
You may be able to get another month’s fee refunded by contacting your credit-card issuer and disputing the charge. By federal law, you’re supposed to make such disputes within 60 days after the statement containing the disputed charge was sent to you. Write to the issuer at its address for billing inquiries (not the address where you send your payments) and send it certified mail, return receipt requested.
Don’t miss out on spousal Social Security benefits
Dear Liz: How far back can Social Security go for someone who did not know to apply for spousal benefits? I’m 69, still working and did not know I was eligible for spousal benefits from my retired wife when I turned 66. Social Security is indicating six months of retroactive benefits is the maximum.
Answer: Unfortunately, that’s correct. You’ve missed out on at least two and a half years’ worth of spousal benefits based on your wife’s work record.
You still can file a restricted application for spousal benefits only and get a lump sum payment for the previous six months. You also still have the option to switch to your own benefits when they max out at age 70. These strategies aren’t available to younger people because Congress changed the rules last year.
Social Security rules can be complex, and the penalty for misunderstanding or missing deadlines can be huge. “Get What’s Yours,” a book about Social Security-claiming strategies that recently was updated, should be required reading for anyone approaching retirement age.
Liz Weston is a personal finance columnist for NerdWallet. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the "Contact" form at asklizweston.com. Distributed by No More Red Inc.
