ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Tuesday, June 18, 1996 TAG: 9606180101
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: Money Matters
SOURCE: MAG POFF
Q: A neighbor passed along to me the enclosed information about Fortuna Alliance, "a world-wide cooperative profit-sharing association." The payoff sounds good, but I don't understand the product and the details are vague. Is it worth the investment?
A: The leaflet you enclosed about Fortuna Alliance, "a 21st Century concept - now," contains no specific information about the business it conducts. The 24-hour message telephone line mentioned in this flier contains no specific information either, although it sounds at best like a multilevel marketing operation. These have been around since before either of us was born and are not creations of the next century.
The only clear message is that you will have to pay $250 a month to become a "member" of this business. In return, Fortuna Alliance seems to promise that you will receive $5,250 a month, although it never says how this will happen. This return seems too good to be true, and you know what people say about that.
Fortuna Alliance, however, admits that it is under a temporary restraining order from the Federal Trade Commission, which alleged that its home page on the World Wide Web used unfair and deceptive practices. The FTC also alleged that Fortuna Alliance was operating an illegal pyramid scheme. Fortuna Alliance denies this allegation and promises to fight the FTC charges. Its flier says that Fortuna Alliance is a "legal pyramid."
Do you want to be involved in such a business? The information made available by Fortuna Alliance never states the nature of its operations. It only promises an unbelievably high return on your money.
Setting up accounts for widowed mother
Q: My father recently passed away. My question involves how to set up my mother's accounts for checking, certificates of deposit and Individual Retirement Accounts for beneficiaries at this point.
My name was already on everything except the IRAs. Should they be set up with right of survivorship or just to allow me to conduct business for my mother if she should become unable?
There are two beneficiaries, my brother and me, for all of these accounts. My mother is a resident of North Carolina.
A: There are several ways of handling these accounts, and no one way is necessarily the right way.
Your mother should have a will that provides for distribution of her assets after her death. A companion document should be a durable power of attorney allowing you (or your brother) to act on her behalf in case of her incapacity.
If your name is on your mother's accounts, and if you hold these joint accounts with right of survivorship, the money would pass to you on her death regardless of what the will states. Your brother might object to such an arrangement, however, because he would get no share of this money.
Even if the money is in a joint account with right of survivorship, it would be subject to the estate tax if the value of your mother's estate exceeds $600,000.
If your mother doesn't need the money in the IRAs but is approaching the age of 70 1/2 when she must withdraw it, she can stretch out the pace of the withdrawals by naming a younger beneficiary. The money would then be paid out on the basis of the joint life expectancy.
Your mother would benefit by consulting a lawyer who specializes in wills and estate planning.
Determining face value of EE savings bond
Q: When will a government EE savings bond, with a face value of $10,000 and a purchase date of October 1986, be worth its face value?
A: Larry Harding, coordinator of U.S. Savings Bond sales in the Roanoke region, said the bond just slightly exceeded its face value in April of this year.
The bond will continue to earn market interest, however, and the interest will keep compounding. You can cash in bonds prior to their maturity, and you can keep holding them for years past their maturity dates.
U.S. Savings Bonds issued prior to December 1965 earned (or are still earning) interest for 40 years. Bonds purchased starting in 1966 have a so-called final maturity after 30 years.
Older Series E bonds purchased in 1956 and earlier reach final maturity this year. So do Series EE bonds purchased in 1966. If no action is taken, those bonds stop earning interest and the deferred taxes come due. Such expiring bonds either should be cashed in and the money reinvested or they should be converted into Series HH bonds. The latter course would further defer taxes because holders are taxed only on semiannual interest payments.
In your particular case, however, you can keep the bond until October of the year 2016 and still earn interest.
LENGTH: Medium: 88 linesby CNB