Smart Money: Court action may be necessary to force home sale

Bruce Williams is a national radio talk show host and syndicated columnist.

Dear Bruce: My parents both died unexpectedly and without wills. At the time of their death, my brother was still living in their home. It has been more than two years and he is still occupying my parents' house. My siblings and I have given him the option of 1) buying the house, 2) paying us rent or 3) putting the house up for sale and dividing the profit. He has made no attempt to do any of the above. We do not want any ill feelings among us, but we feel he is just being very unfair and selfish. We have given him every opportunity to "make a move" but he's still living there rent-free. He has a good job so there's no reason for him to drag his feet. What legal options do we have? We don't want to throw him out or damage our relationship but this has gone on long enough. P.P.

Dear P.P.: You can't all have it both ways. Your brother is taking advantage of the situation and you guys are letting him wipe his feet on you. If you wish to maintain his good will, then give him the house. That's what it comes down to. The alternative, which somebody should exercise, is to apply to the surrogate court to become administrator for your parents' estates. This will require the affected heirs, including your brother, to sign off. If he refuses to do that, then a court action is likely to follow. This guy is probably not going to do anything unless he's forced. Whether you can maintain a cordial relationship is yet another matter, but I doubt it.

Dear Bruce: I recently ran across a stock certificate that my Dad had in his papers when he died. It is dated Nov. 4, 1935 for $25. Is it worth anything? How do I go about finding out? G.G. Bertrand, Colo.

Dear G.G.: You could contact the Stock Search International in Tucson, Ariz. (800-537-4523). The company charges $85 to do a search plus 30 percent of any investment value. It's a fairly substantial investment to find out whether or not your stock has a value or not. You also can check with your stockbroker. They may have the information you need.

Dear Bruce: I am 65 and living with a man who is 60. I have a $500 monthly pension plus Social Security and he gets about $1,300 a month. He works an extra job in construction so that we can meet our living expenses, but we're getting tired. We bought a home two years ago for $179,000 and we are paying $1,100 a month. We know he can't keep up with the construction job. We have $110,000 left on our mortgage and we could sell it for $210,000. Should we pursue a reverse mortgage? Should we sell and rent a townhouse or apartment? I have already taken my one-time tax deduction. We are in a desperate situation. We'd like to sell but are afraid of the tax position. Reader, Littleton, Colo.

Dear Reader: It seems to me that you are better off than you might think. You said that you paid $179,000 and the home is worth $210,000, which only leaves you with a $30,000 gain unless you are rolling it over. By the time you get done with the expenses that an accountant will find, I think you'll find that your taxes will not be enough to get excited about. If you do sell you will wind up with about $100,000 in cash over and above your other funds, which should be able to buy you a small condo or townhouse. Alternatively, the $100,000 prudently invested would yield you another $7,000 to $10,000, which would pay the rent, and then you would not have the $1,100 a month you have going out now in addition to the upkeep. In short, I'd get rid of the house, either rent or buy a small condo, and get on with my life. You guys are in a far better position than many seniors.

Dear Bruce: I'm a 62-year-old woman who owns her home free and clear. My son, the father of three boys, has multiple sclerosis. If something should happen to me, my will leaves everything to him. To avoid probate, I obtained a quitclaim deed and had it notarized. I have not taken the deed to have it formally registered. Friends tell me that if my son should encounter financial difficulties, my house could go to his creditors. Do you think it is wise for me to continue in this fashion? L.P., via e-mail

Dear L.P.: No, I do not. Up until now, no damage has been done. Only you know the fact that you have executed the quitclaim. I don't think this is a wise move. First of all, you are a relatively young person. Why tie a big chunk of your assets to someone else's financial future? In the event that the home becomes his asset, and he does have difficulties, his creditors would attempt to foreclose upon that asset. An attorney should handle these things. You do have a will, and he is beneficiary. I think that is sufficient.

Dear Bruce: I have stocks that, at one time, were valued at $26,000. They dropped as low as $15,000, now fluctuating at $20,000. I owe about $24,000 on my home at 7-3/4 percent. The home is worth around $269,000. My payments are $550 a month. I have a couple hundred dollars in my savings and a retirement fund and one annuity worth about $5,000. I'm a paycheck-to-paycheck person working for the county. I'm 62-1/2 and thinking of getting out of the stock market and paying off my house. I think I'll have to pay off the house to retire but that's scary, too, because there are no raises involved with my retirement. I would appreciate your opinion. J.F., via e-mail

Dear J.F.: For a comfortable retirement you may have to consider selling your home. You are assuming that your home is worth $269,000; at the very least your money would bring you something on the order of $12,000 to $15,000 a year. If you add that to the cost of carrying the home, it would seem to me that you would be far better off in a rental environment. But that may not fit into your lifestyle. You mentioned that your stocks were worth $26,000 and dropped to $15,000. The time to sell is not at the bottom and now that the market seems to be recovering and you've taken the hit, why not stick it out? As long as you are working you can handle the payments per month. Why make a decision about paying off the house or moving before that decision has to be made? Two years from now when you are getting ready to retire would be a more appropriate time to consider radical changes.

Dear Bruce: We recently sold our business, and want to pay off our house and buy another. Our advisors want us to invest the money. We are in our 60s, retired and think our money is much safer invested in our home. We will have about $400,000. What is the safest investment for that money, since we are not interested in making it grow, we just want it to be safe. We have nursing-home insurance and no other debts. What do you think? J.B., via e-mail

Dear J.B.: Technically, your advisors are correct. However, there is a value in knowing that your home is paid for, even though money may still be leveraged. When one reaches the golden years, that warm-and-fuzzy feeling is certainly valuable. Being able to sleep nights is yet another. Regarding the "safest" investment, real estate would certainly serve your needs, but government bonds, which are absolutely safe, would also give you a fair amount of return on your dollar and perhaps, most important, require no maintenance.

Dear Bruce: Is it better to pay taxes before you put money in a Roth IRA, or wait to pay the taxes upon retirement? Which method will let my money work the hardest? M.L., Danville, Ky.

Dear M.L.: What is your current income? If it's relatively modest and the tax deduction has little or no value, then why bother? This will result in your paying taxes on the principal amount as well as the interest it earns over the years. Put the money into a Roth IRA while you will have no tax benefit now, you may not need one. That money and any money it earns are totally free of any future taxes. Until you factor in that third ingredient, there is no way to determine which is the better way to go.

Dear Bruce: I just moved to Las Vegas, but had my will done in Florida before I moved. Is my will valid here in Nevada? E.L., Las Vegas, Nev.

Dear E.L.: The will is satisfactory. However, you failed to mention the size of your estate. If it is substantial, there may be state or local tax considerations. You'll note I said "may." This is a matter that you should run past a tax specialist in Nevada. Since your domicile changed, it's worth considering a new will. The cost is modest. If there are difficulties, they will cost significantly more to fix after your death than making sure that everything is correct before you pass.