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Sunday, September 20, 2015

You Should Always Name a Family Member as Your Personal Representative**

Until a recent death in the family abruptly dragged me into the executor/executrix ("Personal Representative" in Oregon) world, I had no clue how humongous and complex a job you assign to someone by making them your Personal Representative in your will. ORS 114 gives you a pretty good idea.

I did not know, for example, a Personal Representative must comply with these two requirements:

  1. You are required to hire an attorney
  2. As of 2/2/2015 you are required to take a "Non-Professional Fiduciary Education & Training" course within 60 days of being appointed as Personal Representative by the court.
And there's more.  As Personal Representative:
  • You must immediately take possession of all decedent's assets & file an inventory- including estimated values -with the court within 60 days.  This may not be a fun job if significant property is on "loan" to friends or family.
  • You must not commingle the decedent's assets with your own or anybody else's.  So don't transfer that bank account to yourself just yet (unless you are a TOD beneficiary).
  • You cannot loan estate money to anyone without the court's approval.  And never to yourself.
  • You must set up a separate checking account in the name of the estate & keep detailed records of every deposit and disbursement
  • If you pay certain documented estate expenses out of your own pocket, such as funeral expenses, you may reimburse yourself from the estate.  If you were owed money by the decedent, you can't pay yourself without written permission from the court.
  • You can't give estate property to anyone without permission from the court.
  • You have the authority to ""discontinue and wind up any business or venture in which the decedent was engaged at the time of death" (114.305(23).  Since your primary obligation is to preserve and enhance the value of the estate, what if you unwittingly unwind a profitable venture that might continue adding cashflow to an estate?
Having dug deeper into the role of Personal Representative, I recommend that you:
  • Give careful thought about who you know that can be trusted, competent and willing to go through all this.
  • Possibly designate a lawyer and/or other professionals (CPA, investment adviser, realtor) to work with your Personal Representative.

Your Constructive Comments are Welcome!

**The furthest intention of this post is to be legal advice.  It is not, nor intended to be.  It is no more than the conveyance of the author's personal experience and layman's view of the ORS.  Consult with your estate planning attorney in all such matters.

Tuesday, September 15, 2015

Why the Fed Won't Raise Interest Rates This Week, But Who Would Win If They Did

Before we step into this Alice-In-Wonderlandish warehouse of paranoia and mystery, I'll give my opinion on the second topic in this post title, which is not a myth by the way.  So far.

Who wins when the Federal Reserve raises the short term rate it charges banks?  (And that's an important point; the Fed doesn't- and can't -alter the rate you pay on your mortgage, credit cards or car loan.  It can only raise the overnight rate banks earn or pay, as the case may be, on their surplus or short balances.  The current rate is 0.25%.).  Historically, and oddly, big banks, brokerages and insurance companies win when short term rates rise.  Suppose the Fed triples the Fed fund rate from 0.25% to 0.75%.  Although still essentially zero, borrowers become psychologically fertile for similar rate increases.  "Oh, the Fed tripled interest rates!  But my bank only raised my credit card rate from 8% to 12%.  Lucky me".  So rather than suffering from an increase in short term rates, the big lenders actually cash in.  That's my theory, anyway, and that's why I think there is substantial pressure from that community on the Fed to raise its rate.

Theoretically the Fed only raises rates in the face of an improving economy to moderate the effects of inflation.  We don't really have an improving economy.  And we certainly wouldn't have one if the cost of capital increases right now.  So no rate increase this week.

Your Constructive Comments are Welcome!

Monday, September 14, 2015

There is One Best Trick for Maximizing Social Security Benefits

Do you get a lot of emails with the words "trick", "weird" "secret", "epic" and so on to the ends of hyperbole & hubris?  I do.  So I remind you again that the title of this blog- like all my titles -is a big, fat MYTH.  There are two moving parts to Social Security benefit optimization:

  1. Social Security regulations, and,
  2. Your life
And the most important part of that equation is Your Life, more specifically:
  • Your age
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  • Your marital status
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  • Your current and future budget
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  • Your past, current and future income sources
  • How long and how much you expect to keep working
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  • Your current health & genetic health history
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Social Security is an important but relatively small puzzle piece.  It's worth a $25, ninety minute class and a free hour with me to be sure you have an unbiased and holistic picture of your future.

Your Constructive Comments are Welcome!