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  • Writer's pictureJill Schlesinger, CFP

Jill on Money

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Summer Mail Bag—Estate

As we close out the last weeks of the summer, my in-box is begging for responses. I will spend the next few weeks plowing through a bunch of your great questions. This week, we are concentrating on estate issues.

Question: I’m 80 years old, retired, and single and have an updated simple will, executor and health care directive. I have consolidated most of my investments and also have some CDs and annuities with designated beneficiaries. I also own a condo with a transfer on death deed.

My net worth is roughly $3,000,000. My question is simple: Is there any reason why I would need a trust?

Answer: There’s no reason why somebody in your situation needs either a revocable (changeable) or irrevocable (not-changeable) trust. Trusts can be helpful when you have an estate tax liability (for federal taxes, the threshold is $12,920,000), have a closely held business or you want more control over the disposition of your assets. However, they can be costly to establish.

Question: My friend’s father passed away. She and her three brothers are his closest relatives. One of her brothers claims to have a will, and that he is the executor, but nobody has seen a copy of it—what should my friend do?

Answer: This could get messy, which means that it’s essential that your friend finds a qualified estate attorney. If there is indeed a will, it’s going to have to be filed with the state and when that happens, your friend should have the opportunity to contest the will, hence the need for a qualified estate attorney.

Question: My husband recently passed away and when we refinanced our mortgage in 2020, we applied for it in my husband’s name only, because I had just started a business and we didn’t want to jump through all of the hoops associated with small businesses. Now I have a house that is in my name, but a mortgage that is in my deceased husband’s name. I am scared because the current rate is so low (3 percent) and if I have to refinance in my own name, the rate would be 7%. What should I do?

Answer: Many surviving spouses have had this problem and the good news is that most banks have updated their policies around this very topic. You should contact the lender, send them the death certificate, and let them know the situation. In many cases, the bank will allow you to be the successor on the loan. That means that as long as you stay current and make the scheduled payments, there will be no need to refinance.

Question: I’m 85 years old and have been told that I should transfer ownership of my $600,000 home into my children’s names now, to protect it, if I need to go into a nursing home and also to avoid probate.

Answer: If you transfer the house now, you will also be transferring your cost basis to them. So, when they eventually sell it, there could be a hefty capital gains tax due. Conversely, if they inherit the house after you pass, then they would be entitled to a “stepped-up cost basis,” meaning that when they sell it, the IRS will look to the date of death valuation as the basis, not the original purchase price.

Jill Schlesinger, CFP, is a CBS News business analyst. A former options trader and CIO of an investment advisory firm, she welcomes comments and questions at Check her website at ©2023 Tribune Content Agency, LLC.


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