Banks Are Up to Speed on Y2K, but Get Your Records in Order
Q. I am about to renew a certificate of deposit, and the 12-month offer concerns me because of the year 2000 issue. Is it unwise to renew accounts in that time frame now?
A. Banks seem to be doing a pretty good job of updating their computer systems so that Jan. 1, 2000, won’t be read as Jan. 1, 1900. They’ve had some help from regulators, who in the past year have been all over banks like a cheap suit, demanding tests and retests of their systems.
Of course, nobody knows what will actually happen when the clock strikes midnight, but rather than getting in a dither--and putting your financial life on hold--why not take all that worry energy and channel it into getting your records in shape?
Problems that may crop up in January will be more easily solved if you have your financial information at your fingertips. Keep copies of forms you sign and of your bank statements, so you can reconstruct your account if necessary.
Readers also have asked how much money they should pull out, in case ATMs fail. Here the answer isn’t Y2K-specific; anyone who’s been through an earthquake, flood or widespread electrical blackout knows that it’s nice to have enough cash to cover a few days’ worth of expenses.
A Gift of Cash to His ‘Grandchildren’
Q. I am 82 years old and very close to a couple that I consider to be like my own family. They take care of me when I need them and I consider their children to be my grandchildren. Quite a few years ago I put aside some money in certificates of deposit for the children. I take the interest out to live on, and occasionally add more money, so the total is now about $15,000 each. When I die, will they have to pay tax on this money that I gave them?
A. What a kind and generous gesture. The family is lucky to have you, as you are to have them.
If the CDs are in your name, you haven’t really given the money to them yet. Be clear in your will where the money is to go, and while the children are minors, you should name their parents as custodians. Even without a will, you can make the accounts payable on death to the parents as custodians for the children. Ask your bank for details on how to set this up.
If you have put the money in the children’s names already, you probably have created tax and possibly legal problems for yourself by taking out the interest. Check with a professional tax advisor for help. Your adopted grandchildren won’t have to pay taxes on money they inherit from you, but they will have to pay income taxes on any interest the money earns after they get it.
There’s Humor in the Details Too
Q. I usually enjoy your Q&A; column, but I must make a strong objection to part of your May 2 response to the question about wealth. In your answer you state, “And one man (an engineer, I’m sure) wanted to know precisely what income levels qualify one as poor, middle class and rich.” As an engineer, I am deeply insulted. Your comment consists of nothing more than occupational racism. We engineers have other things to worry about than the definition of poverty levels. Keeping a job while the financial people try to get rid of us has been one of them. Keep up the good work in your column, but I think you owe the engineers of this country an apology.
A. Ah, there’s that famous engineer sense of humor. Occupational racism, indeed.
I did not mean to offend when I suggested that engineers tend to be precise about numbers. Heaven knows that’s a rather important trait, given that our bridges and airplanes would fall out of the sky if our engineers were lax about carrying the 2. I do wonder if you would have reacted as strongly if I had told a lawyer joke. (I would tell journalist jokes, but I don’t think I’ve ever heard any, which may be a sign of reverse jobism. Sigh.)
Tell you what. I’ll cut back on the occupational gibes if you promise to lighten up a little.
Liz Pulliam is a personal finance writer for The Times and a graduate of the certified financial planner training program at UC Irvine. Questions can be sent to her at liz.pulliam@latimes.com or mailed to her in care of Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, CA 90053. She regrets that she cannot respond personally to queries. For past Money Talk questions and answers, visit The Times’ Web site at https://www.latimes.com/moneytalk.
