Smart Money: Attorney remains responsible for actions of paralegal

Dear Bruce: My daughter lives in California and has been in the process of getting a divorce for two years. Her attorney charged big bucks, but was always getting a continuance because his office was not prepared. Apparently there was a lot of office turmoil, and the attorney was not getting the information from my daughter through his paralegals. My daughter fired him, and now he is suing her for $5,000. Who is in charge of the attorneys? Who should she report him to?

She believes that he has been giving information to her husband's lawyer, because they have information that could have only come from her attorney. What do you suggest? M.S., via e-mail

Dear M.S.: I suspect that there is another side to this that either your daughter does not understand or that she is not sharing with you. The attorney will expect to be paid for things he has completed on your daughter's behalf. If he is excusing his shortcomings because of problems with his paralegals, he is not the individual to use. He is the boss, and he must share the responsibility.

There is an ethics committee of the local bar association in the county where this individual practices. Your daughter may want to contact them; there may be some room for negotiation there. Until I had the whole story, I would be very careful what I said to whom.

Dear Bruce: We are retired and, like a lot of seniors, have a lot of our money tied up in a mortgage-free home. Our largest bill is property taxes and medical expenses. We have two married daughters with substantial incomes who will inherit the house.

It seems to me that we should take out a reverse mortgage, so we can get use of this money. The alternative might be if our daughters paid us a fixed monthly amount for us to pay our bills. They would get their money back when we pass away. E.K., Nashua, N.H.

Dear E.K.: The problem with your proposed scenario is that you may live a long time and outlive the value of your home. I have no problem with the idea if your daughters have the resources and staying power to help you each month.

The reverse mortgage (borrowing against your equity) makes a whole lot of sense, because it keeps you totally independent from your offsprings' finances. If you borrow the maximum and you are still with us, you will have life rights in the home. On balance, unless you have an extraordinary relationship with not only your daughters but with their spouses, I would opt for the reverse mortgage.

Dear Bruce: I am a 29-year minister who also works as a manager for a local company. I earn $30,000 a year, and my wife earns $15,000. We have two children. Our ministry does not pay well, but the benefits are out of this world. We pay $460 a month for housing, but we need more space.

Considering our income and our calling, we could move or stay, depending on which direction the ministry takes us. Would it be wise to find something larger to rent, or should we buy? If you think we should buy, what size loan should we be looking for? J.G. via e-mail

Dear J.G.: You are essentially in a transient environment. I would not think about buying. In many parts of the country, a house can be difficult to sell and would impede you in accepting a calling elsewhere. When the time comes that you intend to stay in an area for at least three or four years, then buying would make sense.

Dear Bruce: I have a $25,000 CD that will be maturing soon. There is a small bank in my neighborhood offering a higher rate than the bank I am currently with. The bank has FDIC insurance. The bank that I am currently with is part of a large chain, but it is paying less. Is it safe to invest with the small bank? N.R., via e-mail

Dear N.R.: As long as your neighborhood bank is FDIC-insured and your deposit does not exceed $100,000, there is no difference in safety between the two banks. Frequently, smaller institutions that have less overhead can afford to pay a little more in interest, and their ability to loan to the community can command a somewhat higher rate. In today's world, I would grab every percentage point I could get.