Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, February 22, 1993 TAG: 9302220027
SECTION: BUSINESS PAGE: A-6 EDITION: METRO
SOURCE: MAG POFF
DATELINE: LENGTH: Medium
COUPLES WHO HAVE CHILDREN URGED TO SIGN AGREEMENT
Q: I have four children by my previous marriage, all over 18 years of age. My husband adopted the youngest at the age of 8. My husband has a daughter we pay to support but who doesn't live with us. She is 17 years old.I had a house before we were married which I sold after we got married at a profit of more than $22,000. We bought a house about two years ago, and we put the house in only my husband's name.
Where do I stand if something should happen to my husband? Can my husband tell me to leave the premises at any time? How much right will his daughter have to everything?
A: If you and your husband should file for divorce, the judge would distribute the assets based on a great many factors such as the length of the marriage and the assets each contributed. That might very well include your $22,000 as well as his house.
You would also have to seek protection from a court if your husband attempted to throw you out of the house.
As a general proposition, a spouse in a second marriage would receive a third of the estate while the children would share the other two thirds. The spouse, however, is entitled to some enhancements that might allow him or her to live in the house for a period of time. The children in your case would be his daughter and, if she was legally adopted through a court, your youngest daughter.
Every person who has assets or existing children when they marry should enter into a written agreement. It is not too late for you and your husband to sign a post-nuptual agreement setting forth your financial understandings. Everyone should also have a will, especially in the circumstances you describe.
Insist that your husband accompany you on a visit to a lawyer. After all, what will happen to the $22,000 and your other assets if you are the one to die first?
IRAs insured separately from other accounts
Q: My wife and I each have an Individual Retirement Account at a local bank. The combined total is more than $100,000. We also have a savings account at the same bank in joint ownership with survivorship. Are we at risk because of the $100,000 cap on FDIC insurance? Or are our own IRAs exempt from the $100,000 cap?
A: Individual Retirement Accounts are insured separately from regular savings accounts. And the IRAs are covered independently in your own names.
Thus each of you has $100,000 protection on your own IRA. You have another $100,000 in FDIC insurance on your savings account.
Diversification should be goal of savers
Q: I have payroll deduction and now have over $25,000 in a tax-sheltered annuity. The agent who handles this locally has been trying to get me to switch to mutual funds. He has handled American Funds, Oppenheimer Funds and G.T. Global. He has stated that now that I am closer to retirement age (54) the annuity is not doing enough with interest rates down.
Is the money I have in the annuity safe? Are they in any financial difficulty? Am I making any money by keeping it in the annuity? Is it safe to switch to mutual funds or to begin a new account and stop investing in the annuity? He very strongly recommends American Funds, and the returns he lists look good.
A: The insurance company which holds your annuity has been listed in the past as one of those on shakier ground. However, the situation for the industry as a whole has been improving. You should ask your agent for its current rating by Standard & Poors and by Moody's.
You may not be able to switch out of your annuity without a heavy withdrawal penalty. Check the policy to determine if there are any withdrawal fees.
The goal of any savings program is diversification. You should not have all of your money in any one type of investment, especially one that offers no hope at all for growth. You should, therefore, stop investing any more money in your annuity.
With 11 years to go before retirement, you have time to ride out downturns in the market. You should invest in stock mutual funds which have potential for a gain in value.
Are you required to deal with the agent? American Funds and the others are solid, but no better than many no-load funds. If you buy from him, you will pay him 4.5 percent to 8.5 percent of your money up front. This is the reason he is pushing you so hard. If you are free to do so, start reading Money, Forbes, Kiplinger's and similar magazines. Look for good no-load funds that charge fees but not sales commissions.
Mag Poff covers banking and finance for the Roanoke Times & World-News. She will help find answers to your personal finance questions. Send them to her at the Roanoke Times & World-News, P.O. Box 2491, Roanoke, Va. 24010.