Class-action lawsuit outcome hard to predict

Dear Bruce: I have 50 shares of stock in a company that recently had a class-action lawsuit filed against it. The lawsuit includes anyone who has owned or purchased stock during a certain time frame, which I did. I have received communications from the attorneys, and they say all I have to do is sign and I’m part of the class-action lawsuit. How much can I expect to receive on the small amount of shares that I own? – D.L., Detroit

Dear D.L.: You have neglected to tell me what the lawsuit is all about. What are the plaintiffs claiming the company has done? In the absence of that, nobody can tell you what kind of money is involved.

If the attorneys handling the suit have contacted you, and you have filled out the appropriate forms, I’m confident you are in. Whether or not you will make any important money in this matter is another question.

Title insurance highly recommended

Dear Bruce: We are buying a new home in a subdivision that was once a farm. The subdivision is in its fifth phase, so it has been around for several years. My husband and I understand the need for title insurance on existing homes that are purchased. However, I’m not certain of the need for it on the purchase of a new home when the developers have already had the title evidence examined.

Additionally, my husband and I plan to have an attorney perform a title search for us. Do you think it is a wise investment to purchase title insurance on a new home? – N.D., via e-mail

Dear N.D.: Under almost any circumstance I can imagine, I would recommend title insurance. The fact that the developer did it doesn’t necessarily demonstrate he didn’t make an error. The same thing is true if your attorney makes a search. Title insurance is one of the few types of insurance where you make one payment, and it lasts for as long as you have an interest in the property. In all of the properties I have purchased in my lifetime, each has had title insurance placed upon it.

Where there’s a will, check the law

Dear Bruce: Our question concerns a will made in our home state. Would this will cover property we own in other states? – B.W., via e-mail

Dear B.W.: This is another instance in which it is absolutely imperative that you consult an attorney in the state where you are currently living and in the states where you hold real property. You may have to make the effort to meet what may be conflicting laws in several states. It would serve no positive purpose to try to give you a quick answer. I urge you to seek counsel in your home state first. Have the lawyer then discuss the matter with counterparts in the states where your property is located, to be certain that you meet whatever conditions are required in those states. In the absence of that, it may be considerably more expensive for your executor to sort things out.

Bankruptcy as a necessity?

Dear Bruce: My 83-year-old mother needs your advice. My dad died leaving her with many debts, mostly credit cards. She tried to keep up with the payments, but can’t anymore. She only has Social Security, and it is so small she can only pay her mortgage and utilities. She receives phone calls daily. These harassing calls are causing her depression and a nervous condition. There is no way to talk to these people. We need help. She had to re-mortgage her home due to my father’s medical condition before he died. She has considered bankruptcy. What do you suggest? – D.O., via e-mail

Dear D.O.: Your mom’s situation is not unique. The answer, very likely, would be bankruptcy. This way the house would be protected and the obligations would be cleared up. In the short term, I am not enthusiastic about recommending this, but because of your mother’s age and the inability to handle the collection calls, perhaps the easiest thing would be to get a new unlisted phone number.

I’m not encouraging people to avoid debts or collections, but there are limits, and in this case, the money is not there. In order to protect what few assets she has, which is the home, it would seem bankruptcy would be the way to go. There are some modest costs involved, and you might be able to help with that. She will need an attorney.

Will can serve as backup

Dear Bruce: My mother-in-law is 72, and she may be going into a nursing home soon. She refuses to have a will made, saying it is unnecessary because everything is in my wife’s name or held jointly. I question this. I feel there is always a need for a will. – Reader, via e-mail

Dear Reader: You and I are together on this one. There is no excuse not to have a properly drawn and executed will. It’s entirely possible that everything will pass directly to your wife through these joint-tenancy and right-of-survivorship accounts. In the event that isn’t the case, the will serves as backup. If everything passes satisfactorily, the will can be discarded or just filed, not probated.

Attorney can clear up tax questions

Dear Bruce: My mother has quite a few Series E bonds that are 20 years old. She owns her home and has no income other than Social Security and other investment accounts.

The interest earned from cashing in just a few of these bonds puts her in the 28 percent tax bracket. Is there a better method for redeeming these where she won’t get hit with such a tax burden? – Reader in California

Dear Reader: Please have your mother consult an accountant or an attorney who specializes in tax matters. This looks to be a simple case of you paying your dues on investment income. It is likely your mom will be responsible for the taxes if she chooses to cash in. It may be that, with proper estate planning, the taxes can be avoided by passing them to the next generation.

Sewer issue mucks up home purchase

Dear Bruce: Last week, we were supposed to close on our new home. The house was built in a subdivision, and the developer was the only builder on the various sites. At the walk-through, it was casually mentioned there was a sewer easement directly in back of the home. It shouldn’t cause us any difficulties, but if the pipe were ever to break, the government authorities that operate the sewer system would have the right to come onto our property with a backhoe and start digging. No one ever mentioned this to us, and it only came up because I looked at a copy of the survey and saw a couple of dotted lines across the backyard. We refused to close until we sorted this out. My lawyer said they had an obligation to tell us, but at this point the only thing we can do is to ask for our money back. We really like the house. What should we do? – S.G., via e-mail

Dear S.G.: You are correct in having an attorney represent you, and you are correct that they had an obligation to tell you. That said, if you want this particular house, you are stuck with this situation. If the line is in such a place where there would be absolutely no need to ever add on to the house or build a garage, I don’t think this is too troublesome. Pipes rarely have to be dug up. If that does happen, the sewer people have an obligation to restore your property to its previous condition. This would not stop me from purchasing a home that otherwise was satisfactory. If, however, the line is put in such a place that it would preclude any legal additions to the home, I would have to think this one over very carefully, and perhaps ask for a different home or a price concession.

Dealing with a house divided

Dear Bruce: My elderly father and his sister own a family house together. My aunt, who has never married and has no children, has left three-quarters of her half of the house to outsiders, including her best friend, an animal shelter and a church. Our grandfather built this house with his own hands during the Depression. We would like to keep it in the family. What strategy can you recommend? – L.B. in Pennsylvania

Dear L.B.: The only strategy would be to persuade your aunt to assign her interest in this house to either your dad or some other member of the family. Someone should point out to her that this is a screwball proposition. If she does what she intends, the result may substantially diminish the value of the property. This will be a house owned by committee, and getting people to agree is almost impossible. I hope someone can persuade her that this is a very bad course. If the only choice you have is to do this or sell the house and distribute the cash, I strongly urge both sides to consider selling. If your aunt persists with this bad idea, I would go to the courts to get relief.

Time share may bring legal woes

Dear Bruce: We have fallen into the time-share trap, and I hope you can help us. Are we destined to pay $500 a year (although the price goes up annually) for maintenance fees for the rest of our lives? Is there any way we can get rid of this condo? – F.T., via e-mail

Dear F.T.: You are a member of a large fraternity of people who have purchased time shares to their everlasting regret. Several things can be considered. There are legitimate companies that resell time shares on a national basis, with the average being 15 percent to 20 percent on the dollar. Say, for example, you paid $10,000; if you were very fortunate, you would get $1,500 to $2,000. You might be able to find a charity to which you could donate the time share and then claim the entire $10,000 as a gift. Aside from that, the only other alternative is just to stop paying. The likelihood is that they may fuss a little, but they will foreclose and that might be the end of it. However, there is no guarantee they won’t pursue legal action, especially if they think there’s a possibility of collection.

Living trust not always needed

Dear Bruce: I know you have answered this question before on living trusts. We checked with our attorney, and the cost to create one is $750 to $1,000. We have simple assets: a house, car and some money in certificates of deposit (payable upon death). Are there alternatives besides working with an attorney that could lower this cost? Please help – our will is outdated, and we do not want our children to have to go through probate. – E.B., via e-mail

Dear E.B.: I don’t understand why you are so intent on having a trust. You mentioned your assets are simple. I see no reason why you should not just have a simple reciprocal will, with your wife succeeding you or you her and your children as contingent beneficiaries.

You say you don’t want your children to go through probate. Why is that such a problem? In a simple estate, it is a relatively easy process and does not have to be costly. The one asset for which details should be spelled out is the home. Whether you use a trust or a will, it should be clearly stated how it’s to be disposed of, rights of first refusal et cetera, so there are absolutely no shared decisions to be made by the children. One of your kids might want to keep it, the other sell it, which could cause a great deal of disharmony.

Bruce Williams is a national radio talk show host and syndicated columnist. He can be reached at bruce@brucewilliams.com.