Money Management Q&As

November 17, 2006

Car donation; power of attorney; renter's insurance

Making a home more appealing to buyers

My home has been on the market for a couple of months, and I'm beginning to wonder whether it's overpriced. How can I tell, and what can I do to make it more appealing to buyers without cutting the price?

Two months may not be unreasonably long, depending on the state of the housing market in your area; your real estate agent can give you a sense of what's normal at this time. But if you've had several open houses and a couple dozen showings but no offers, the price could be the culprit. Pay attention to unsolicited comments from buyers' agents, to see if they confirm your suspicion.

Boosting the deduction when you donate a car

I want to give my 6-year-old car to one of my two favorite charities but can't decide which one. I'm sure either organization would sell the car, so at most I could deduct whatever amount the charity gets for it. But a colleague says I should ask if the charity would use the car before selling it. Why should that matter?

The IRS has outlined a few exceptions to the sale-price deduction rule. One is that you can deduct the vehicle's fair market value even if the charity gets less than that amount from the sale, as long as it makes "significant intervening use" of the car before selling it. How much usage is enough? Driving the car 10,000 miles within a year to deliver food to the poor is one example, says the IRS. If you can't take advantage of that exception, ask the charity if it will make major presale repairs or improvements to boost the car's value, or if it will give the car (or sell it at a bargain price) to someone in need of it. Either of those scenarios would also allow you to deduct the fair market value.

To back up your deduction, get a letter from the charity confirming that the amount either reflects the actual sale price or that one of the three exceptions applies.

What to do with a power of attorney

My mother is facing serious surgery, so she drew up a durable power of attorney giving me the authority to take over her financial affairs if something goes wrong. Do I need to do anything with this, or can I just file it until I need it?

Don't file it yet. Some banks, brokerages, and other financial firms use their own power of attorney forms and may not trust that the one your mother drew up is valid-particularly if they don't know about it before you try to use it. To avoid that hitch, ask her to send a copy of her POA to all the financial firms she deals with, along with a letter asking them to contact her with any concerns they may have. If your mother's too ill to handle this, do it yourself; it's worth the effort.

The shortcomings of performance-based fees

I'm interested in a Janus mutual fund that ties the manager's fee to the fund's performance, but I remember hearing the SEC had investigated some funds that do this. How could performance-based fees hurt investors?