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Jewish World Review August 30, 1999 /18 Elul, 5759

Bruce Williams

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Beware of shady viatical investments -- DEAR BRUCE: When it comes to investing, my wife is more aggressive than I am. She wants to invest in viaticals. We found this nice young man who was more than willing to help us out. He promised us at least 12 percent earnings that can go up to 30 percent. I was interested but very nervous. I don't see much information about viaticals, and none of my magazines discuss the topic. What do you think? -- L.K., Las Vegas, Nev.

DEAR L.K.: In my view, the concept of viaticals makes a lot of sense both from the financial and the moral perspective. Viatical companies simply say to people who have life insurance that will pay upon death, that if the they have an illness with a predictable time of passing (i.e., advanced cancer, etc.), the viatical investor will put a substantial amount of money up-front so that the money can be used for their own comfort and care instead of it going to their heirs when they pass away. As far as that goes, viaticals are a decent idea. The problem is that in addition to some very good companies, many rascals have invaded this industry as well.

When anyone starts talking about a 30 percent return, I get very, very nervous. Thoroughly investigate the firm that this "nice young man" represents. It may well be that it is a decent one, but until you are persuaded of their credentials, no matter how good the deal seems, I would take a pass.

DEAR BRUCE: My brother and I have a 90-year-old mother. She seems to be in good health, has a clear mind and lives alone. She considers herself independent, but she does depend on us to take her to the store, church and various other places. She recently sold her home and has put her profit of $22,000 in cash in a safe deposit box. She has refused to put either of our names on the box so that we could gain access in the event that she becomes incapacitated. If this were to occur, what are our options in securing the contents? She refuses to have a will or any other legal papers drawn up. My brother and I are financially independent and have no need for her money. -- T.L., Crystal River, Fla.

DEAR T.L.: Because you live in a state without income tax, the state has no interest in the safe deposit box. In most states where there is income tax, if your mother were to pass away, you would have to go to court and get a release to have the box opened in the presence of a representative of the state. Any money in there would be considered hidden unless you can prove otherwise and would be subject to taxes. In Florida, because there is no income tax, this shouldn't be a problem. If you and your brother are your mother's only living relatives, then, through the laws of intestacy, her estate and the safe deposit box will fall to you. Getting it opened is a matter of spending $100 and doing the appropriate paperwork. It's a shame that she can't be encouraged, at the very least, to have a simple will drawn up and a durable power of attorney. If she is not amenable to that, I guess you will just have to do it the hard way.

DEAR BRUCE: I am a single male with about $85,000 in stocks that I would like to use for the college education of my great-grandchild, something which will take place in three years. What should I be doing to get the ball rolling? -- C.A., Olathe, Kan.

DEAR C.A.: Given the fact that this great-grandchild is college-bound, I suspect you're on the wrong side of 70. It might be wise for you to talk to an estate attorney about a trust arrangement in which this money could pass to your great-grandchild (in the event that you pass away in the next three years) and escape any possible inheritance tax and/or capital gains tax. You might consider establishing a trust now that would benefit your great-grandchild with whatever restrictions you choose to impose, i.e., that the money must be spent for education. A good trust attorney can steer you in the right direction.

Send your questions to JWR contributor Bruce Williams by clicking here. (Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.) Interested in buying or selling a house? Let Bruce Williams' "House Smart" be your guide. (Sales of the book help fund JWR).


08/26/99: Landlords vary on security deposits
08/25/99: Educational IRAs must be spent on education
08/23/99: Finding out the value of old stocks
08/20/99: How to get an FHA refund
08/19/99: 100 percent financing is a scam
08/16/99: Will I have to pay a capital gains tax?
08/16/99: Thinking about PMI
08/13/99: Short-term mutual funds a-OK
08/11/99: It's your job to shop around
08/10/99: Sometimes, roots need to be uprooted
08/09/99: 'Pre-approved' doesn't mean a thing
08/06/99: Only you can determine your investments
08/04/99: Bank IRA the lowest-risk option
08/03/99: Reverse mortgages good for the elderly
08/02/99: Get the survey BEFORE you buy the house!
07/28/99: Get a lawyer -- it's worth it!
07/27/99: If it ain't broke...

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