(Just make sure your revocable living trust has an
incapacity clause.) Second, when you die, a trust will
make life so much easier for your beneficiaries. As
you note, if you have just a will it is likely the estate
would first have to go through the probate court process. There’s no probate with a revocable living trust.
I think it is smart to have your trust be the owner
of your home. Retirement accounts, such as 401(k)s
and IRAs, can’t be owned by the trust, but the trust
can be the beneficiary of those accounts. Because
you are married, you each should be the primary
beneficiary for your retirement accounts. But you
can make the trust the secondary beneficiary. For
readers who are single: Go ahead and make your
trust the primary beneficiary of your retirement
accounts, and place your non-retirement investments inside your trust as well.
A company my husband worked for five
years ago gave him and other employees a
company credit card; the company went under and everyone was let go. However, for a
couple of years we were pestered by collection agencies trying to get us to pay the balance on the card account. My husband did
not sign for the card personally and the collection companies would never send us verification showing how he was responsible
for this debt. [The collection efforts] finally
ended, but it still is affecting his credit score.
Is there anything we can do?
MOST LARGE CORPORATIONS assume 100
percent liability for charges on a business card, but it
is important to realize that businesses can also
choose a corporate card where liability is shared
between the corporation and the individual using
the card. It sounds like your husband unwittingly
fell into the latter category. That should be a wake-up call to all readers with a corporate card: Check
what your liability is. Your business office should be
able to get you a copy of the card agreement (or
point you to where to find it online).
At this point, time is your best help. Negative
information on a credit report is never permanent.
With each passing month and year from the time a
negative event enters your file, its impact fades. So
the impact should already be receding as a factor in
your husband’s credit score. As unfair as this is,
focus on what you can do to help his score rebound
even faster. Not carrying credit card balances always
boosts a score, so if you have some unpaid balances,
get that under control right now. And pay every bill,
not just your credit cards, on time every month. C
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What is the best way to cancel my credit
card, which charges a fee? I hate paying the
fee, but I understand canceling credit cards
hurts your FICO score. I do have a very good
credit score. Also, should I open a card that
has no fee?
YOU ARE CORRECT that canceling the card can
hurt your FICO score. But there is a work-around.
Thirty percent of your FICO credit score is based on
amounts owed. A key part of that looks at how much
of your total credit card limit on all your cards you are
using. The lower the better. It is best to aim for a
credit utilization of 30 percent or lower.
So let’s say you have two cards, each with a $5,000
credit limit, for a total credit limit of $10,000. You use
only one of the cards, and the balance is $3,000. That
means you are utilizing 30 percent of your total credit.
If you cancel the card you don’t use, your total credit
limit will decrease to $5,000, so with the same $3,000
balance your utilization ratio has shot up to 60 percent. That can hurt your FICO score.
Before you cancel a card, apply for a new no-fee
card with the same credit limit. Then, when you cancel the fee card, your credit utilization ratio will not
change. Or, you can ask that the credit limit on any
card you are keeping be raised to offset the impact of
the lost credit limit on your canceled card.
We are senior citizens, still working. We have
no debt (houses and cars are paid off). Most
of our money is in an IRA or 401(k). There are
some regular savings and CDs.
Should we put everything in our revocable living trust? (We have a separate trust
account.) I heard that IRAs and 401(k)s are
trusts already; can they be put in the revocable living trust? Should we just put our
houses and savings and CD in the trust? If
something happens to us, can our children
get the money from our revocable living
trust easily, as if they are not in the trust?
Robert and Ann L.
WITH A REVOCABLE living trust you have complete control over how the assets inside the trust are
used. You can sell them, spend them or just leave
them be. It is not at all difficult accessing money in
a revocable living trust.
The advantage of funding the trust with certain
assets is twofold. First, if you become incapacitated
and need someone you have appointed to step in and
handle your estate, it can be seamless with a trust.
account.) I heard that IRAs and 401(k)s are
; Living trusts
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Canceling credit card