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Defusing a potentially contentious estate settlement

By HELEN HUNTLEY

© St. Petersburg Times,
published October 21, 2001


Q. I have an estate worth about $750,000 and a couple of children in their 40s who cannot speak to each other in a respectful manner. I suspect life would be better for them if I were to appoint someone else as an executor to divide things after my death. Which would be a better choice, the lawyer who wrote my trust or the CPA who does my taxes? What would be a ballpark fee for such a service?

A. Hiring a professional to handle your estate sounds like a smart idea under the circumstances.

Talk with your lawyer and your CPA about their interest, if any, in taking on this position, which in Florida is called the personal representative. Ask about their fees. Mention to them the conflict between your children and ask how they handle disagreements among beneficiaries. By going through this process you may find you are more comfortable turning over the job to one rather than the other. Or, if you find neither one of them is satisfactory, broaden your search to other professionals.

Keep in mind that getting your estate properly probated and distributed is not necessarily a one-person job. A lawyer who serves as personal representative may end up hiring an accountant to help out, while an accountant who takes on the job may end up hiring a lawyer. Personal representatives who provide special services to an estate often are compensated separately for those services. Also, assets titled in the name of your trust will be distributed by your trustee, who might be someone other than your personal representative.

Under Florida law, a commission of 3 percent of the first $1-million in estate assets is presumed to be reasonable compensation for a personal representative handling an estate worth $1-million or less. However, you and your personal representative could contract for a different payment schedule. For example, you might agree that services would be provided for an hourly fee. A personal representative might even serve without pay, although only relatives or close friends are likely to do that.

Q. Six years ago we paid $13,750 for an equity membership in a country club. Yearly dues are charged against the equity value of the membership, so by the end of 2003, our equity will be wiped out. The membership can only be sold by the club, but we are about 100th on the resale list and there are no buyers. We will have a 100 percent loss. Can I charge each year's dues as depreciation of an asset on my income tax return?

A. Not likely. The key is whether you bought and used this membership for business purposes, Tampa CPA Gilberto Hernandez said.

"If you're a corporate executive and you use the facilities to entertain customers and potential clients, then there is a business purpose," he said. "When you cease to be a member, you can write off the (equity) cost. If it is a purely personal membership and there is no business purpose, I think you're out of luck."

Q. Why don't brokerage firms let people "buy into America" free for a week? If you could get everybody in America to spend $50 in the stock market, it could have a big effect. The brokerage firms would make money when the people sold.

A. It would have a big effect, but not necessarily a positive one!

"It would be better if they took the $50 and went out and bought something and helped the retail industry," said Lawrence Silver, spokesman for Raymond James & Associates in St. Petersburg.

The problem is that it costs a brokerage firm $30 to $35 to open an account and process the first trade, Silver said. After that, the company has to produce and mail quarterly statements even if there are no more transactions.

Many brokerage firms offset these costs by levying fees on small accounts. That makes the arrangement a bad deal for small investors. If someone has just $50 to invest, a U.S. savings bond would be a better choice.

Online money map

Should you refinance your mortgage? Run the numbers through the "mortgage refinance calculator" available from the American Bankers Association (www.aba.com). Click on "consumer connection" and look under "interactive tools."

-- Helen Huntley writes about investing and markets for the Times. If you have a question about investments or personal finance, send it to On Money. We'll try to answer those we think are of greatest reader interest. All questions must be submitted in writing, but readers' names will not be published. Send questions to Helen Huntley, Times, P.O. Box 1121, St. Petersburg, FL 33731.

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