Money Management Q&As

Protecting privacy when giving to charity

Q I donate regularly to a few favorite charities. I'd like to add others to my list, but I worry this would expose me to a flood of solicitations if word of my generosity gets around. Is there a way to prevent that?

A One precaution is to direct your gifts to organizations that have written commitments to respect donors' privacy. Charity Navigator ( http://www.charitynavigator.org), a free service that monitors more than 4,100 charities, lists organizations guaranteeing not to sell or trade donors' personal or contact information with anyone else. The service also rates charities on how efficiently they use their financial resources, based on an analysis of the information returns they file with the IRS.

If you sell your home after a divorce

Q My former husband held title to our home in his own name and transferred ownership to me under our divorce settlement. Is my tax basis the market value of the house at the time of transfer?

A No. Such a step-up is available only on inherited property. If you sell the house, you'll have to figure your gain using your ex-husband's adjusted basis-generally, the purchase price of the house plus the cost of subsequent improvements. The IRS states that he must give you the records necessary to determine this.

Assuming you live in the home for at least two of the five years before you sell it (including the period prior to the divorce), your gain will qualify for the home sale exclusion, provided your husband owned the home for two or more of those five years. You can claim the exclusion even if you yourself aren't on the title that long.

Downside of working past retirement age

Q I probably won't retire until the end of the year, although I became 65 in March. Will this cost me any Social Security benefits for 2005?

A Yes. Your benefits start in September (six months after you turn 65), but you'll lose $1 in benefits for every $3 you earned above $31,800 before then. Earnings after Aug. 31 won't reduce your benefits in this or future years.

Will your beneficiary get all of your IRA

Q I understand that I can't designate a pension beneficiary other than my wife without her consent, but I didn't think that rule applied to IRAs. However, the custodian of my IRA asked me for my wife's written consent when I named my nephew as beneficiary on an IRA. Is that necessary?

A Not under federal law, but it might avoid problems if you live in a community-property state. In that case, each spouse generally owns a half share of the marital assets. This includes IRA funds, even though only one spouse is the listed owner. So your nephew would get only your share of the money if your wife chose to exercise her rights.

Even more trouble could lie in store if your wife dies before you. Depending on the wording of her will, her heirs might be able to claim her share of the IRA immediately. Think that's far-fetched? Well, a court has ruled that way in Texas, a community-property state. You needn't worry about this if you live in one of the 41 common-law states.

Do you have a money management question that may be stumping other doctors, too? Write: MMQA Editor, Medical Economics, 5 Paragon Drive, Montvale, NJ 07645-1742, or send an e-mail to memoney@advanstar.com (please include your regular postal address). Sorry, but we're not able to answer readers individually.