Cashing in Bonds Bought as Gifts
Q: Many years ago, my husband bought a $50 U.S. Savings Bond to give to his young nephew. But he forgot to do it. We found the bond recently. Can we change the name on the bond to our name so we can cash it in? If so, how? Also, I lost some bonds my father bought for me when I was a child. Now I hear from the government that the bonds have been cashed--but by someone else. What can I do? --L.J.M. A: To cash in a bond you intended to give someone else as a gift, ask your bank for the form titled “Request for Refund of Purchase.” Complete it and follow the other instructions and you will receive a refund of the amount you paid for the bond, plus any accumulated interest.
To start an inquiry into the disposition of your bonds, you must contact the Bureau of the Public Debt, 200 3rd St., Parkersberg, W. Va. 26101. Give them as much information as you can about the bonds: serial numbers, dates of purchase, where the bonds were bought. If the bureau knows your bonds were cashed, it is entirely possible for them to track down who redeemed them and where. If the government determines that the bank who cashed them failed to verify the identity of the bond holder, the bank could be forced to refund the bonds’ value to you.
How to Benefit From Ex-Spouse’s Home Sale
Q: My ex-wife and I have been divorced for five years, and she has been living in our former home with our children. Now that the kids are out of school, the house is being sold. However, now I am told I will owe taxes on my share of the gain and will be unable to roll it over toward the purchase of a new home because the family home is no longer my principal residence. This hardly seems fair. Is there anything I can do to avoid this mess? --J.A.L.
A: You have a problem, and our experts have only two--admittedly weak--solutions that require the full cooperation of your ex-wife. The only way for you to claim the home as your principal residence and be entitled to roll over profits from its sale to a new residence is to move in. Our experts say your stay would have to last a minimum of six months and preferably a year. Can you live under the same roof as your ex-wife to avoid the pain of a heavy tax penalty? Only you can decide.
Another potential solution is to sell your half of the home to your ex-wife on an installment sale and report your taxable gain as the note is paid.
Social Security: Payments at 62 vs. 65
Q: Many months ago, I read about the differences between beginning Social Security payments at age 62 versus age 65. I thought I read that it would take 12 years to make up the difference between the two payment schedules. Is this true? --M.O.
A: Yes. We’ll explain why. If you start collecting Social Security payments at age 62, your monthly checks will be about 20% lower than what you would receive if you started drawing benefits at age 65. In exchange for the lower monthly benefit, the recipient collects an additional 36 payments.
For example, let’s say a retiree is entitled to an $800 monthly benefit at age 65. If he retires at age 62, that benefit would be reduced to $640, a difference of $160 per month. Not taking into account cost-of-living adjustments, the 62-year-old beneficiary would collect a total of $23,040 by the time he reached age 65. Again, not taking into account any annual adjustments, it would take 12 years for the benefits received by the 65-year-old retiree to catch up with those received by a 62-year-old retiree. After age 77, a taxpayer who waited until age 65 to begin drawing benefits starts reaping the benefits of the delay.
Searching for Financial Help After a Divorce
Q: I am a 35-year-old woman going through a fairly amicable divorce. My soon-to-be “ex” handled all the finances during our marriage. Now that I am on my own, I need help handling my finances. Where do I go? --F.G.
A: Getting a divorce is more than severing the emotional ties of marriage. You are also dissolving an economic partnership.
Ask your attorney for the name of a financial planner or accountant who specializes in the economic issues surrounding divorce. For a less expensive alternative, check the books available in your local library or bookstore. A couple of possibilities are “The Divorce Handbook” by James T. Friedman and “Women and Money” by Mary Rogers and Nancy Joyce. Both books are in print. Out-of-print titles that might still be available in libraries include “Women, Divorce and Money” by Mary Rogers and “Everything You’ve Wanted to Know About Your Husband’s Money . . . and Need to Know Before the Divorce” by Shelley Aspaklaria and Gerson Geltner.
Also, don’t forget the Internal Revenue Service. The IRS offers Publication 504, “Tax Information for Divorced and Separated Individuals.” To order the free booklet, call (800) 829-3676.
Deduct Refinance Fees From New Mortgages
Q: I know that when you refinance your house, you are allowed to deduct the points over the life of the mortgage. But what happens when you refinance again before all the points are written off? --D.R.
A: Any remaining financing fee balance from the first deal may be written off at one time. Now you begin again to deduct the refinancing fees from your new mortgage over its life.
