A husband handles the investing. What happens when he’s gone?

Dear Liz: My husband has always handled our investments. He doesn’t think it makes sense to pay someone 1% to do what he can do on his own. As we’re getting older, I’m starting to worry about what I would do if he dies first. We also have a friend who got scammed, and it’s made me wonder whether that could happen to us. I would like to talk to a fee-only advisor like you always recommend, but I’m not sure how to get him on board.

Answer: Start with your concerns about having to take over the finances should he die or become incapacitated. Having someone trustworthy to help you through this process can be incredibly valuable, and it doesn’t need to be someone who charges 1% to manage your investments.

You can get referrals to fiduciary, fee-only planners who charge by the hour at Garrett Planning Network. The XY Planning Network and the Alliance for Comprehensive Planners represent fiduciary, fee-only planners who charge retainer fees. (Fiduciary means the planner is committed to putting your best interests first. Most advisors are held to a lower suitability standard, which means they don’t have to put your interests ahead of their own.)

Researchers have found that our financial decision-making abilities peak at age 53. Unfortunately, our confidence in our financial acumen remains high even as our cognition declines. The growing gap between our self-regard and reality can leave us vulnerable to bad investments, bad decisions and bad people.

An advisor could take a look at your portfolio and recommend ways to make it easier to manage as you age. The advisor also could discuss strategies and safeguards to protect you from mistakes and predators. Once you have established the relationship, you should be able to get more help down the road if you need it. (Consider the advisor’s age and status, though; a younger advisor or one who’s part of a large practice might be a better idea in this scenario than a solo practitioner who is approaching retirement age.)

Giving your money away? The IRS wants to know about it.

Dear Liz: You recently wrote that “the only givers who have to pay taxes are those who have given away millions in their lifetimes.” I tend to be generous with my offspring who are the beneficiaries of my trust. For example, I gave a down payment on a house to my son last year. Because of long-held rental property investments, my estate is probably close to the $13-million lifetime limit. Since lifetimes don’t expire until we die, and I plan to live to 120, does this mean that until I give away over $13 million in cash, I don’t have to report or pay taxes in any given year on gifts?

Answer: Not quite.

You have to file a gift tax return to report any gift over the annual limit, which in 2018 was $15,000 per recipient (it rose to $18,000 this year). Gifts don’t have to be in cash to be reportable. If you’d given your son a house instead of a down payment, you’d still need to file a gift tax return.

Reportable gifts are deducted from your lifetime gift and estate exemption, which is $13,610,000. Once you deplete that exemption, you would have to pay gift taxes on any gifts above the annual limits. Even if you don’t deplete the exemption, reportable gifts will reduce the amount of your estate that can avoid estate taxes. You’d be wise to get advice from an estate planning attorney about how to handle gifts.

Taking half your spouse’s social security payment can be better than taking your own.

Dear Liz: My bookkeeper cousin told me I could get half my husband’s Social Security instead of my own. I took Social Security at 66, when my benefit was $1,300. My husband waited until 70, when his was $3,295. Does that mean I could be getting a monthly check for $1,600?

Answer: Probably not. Spousal benefits can be up to 50% of the benefit your husband had earned as of his full retirement age, not the amount he claimed at age 70. You can check with Social Security, but your own benefit is likely more than your spousal benefit would have been.

Liz Weston, Certified Financial Planner, is a personal finance columnist. Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.