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In the meantime, the cash must be kept in a safe deposit box that any one of the three of us can access. She has stated that anytime we need money to feel free to help ourselves, and she reserved the right to do the same. None of us have ever indulged. In no year did she ever give us more than $10,000, and over the years the amount has become more than $100,000. The lady has unfortunately been diagnosed with a terminal illness, and our question is, what do we do with that amount of cash when she dies? Banks must report cash transactions over $10,000, and I can't see the IRS viewing this as honest money, albeit every cent was honestly earned. I'm certain you feel as I do the money should have been invested over the years, but the lady was adamant. We fortunately do not need the money but feel it should be invested for her great-grandchildren's education. Any thoughts as to how we could go about investing this amount without causing the IRS' radar to rise? — K.M., via e-mail DEAR K.M.: You have a serious problem. There is no way you are going to persuade the federal government this is "legitimate" money. Nobody with a halfway decent handle on things would simply take money that taxes have been paid on and stash it away in a safe deposit box. At least that is the position the IRS will adopt. Your observation about the $10,000 in cash is also completely accurate Banks are required to report transactions of this kind. You mentioned there are three families involved, which works out to a little over $30,000 a family. Assuming this is legitimate money, there is nothing to prevent the three families from splitting the cash and spending it in relatively modest amounts. As far as "investing," I don't know how you could go about that. I suppose you could pay a lot of bills in cash and invest income from other sources, if you choose. The reality is, you'd have a very difficult sales job persuading the authorities this is, in fact, post-tax money. The easiest remedy without causing a big stir would be just to pay the bills — restaurants, groceries, gas, etc.-- in cash until the money has been spent. DEAR BRUCE: I have a grown daughter from a previous marriage, and my wife has two children of her own, also from a previous marriage. We currently rent our home and do not own any property jointly or individually. We have been told we need to draw up separate durable-power-of-attorney documents to control our spouse's finances in case of an emergency and either of us become mentally or otherwise incapacitated. Advertisement Our issue is, we are reluctant to open joint savings and investment accounts because we do not want the money, in the various investment and savings accounts, to pass on to our spouse's children from the first marriage. We want them to go to our own children. Would the funds in a regular joint account pass through to each other's children or only to those designated as beneficiaries to the spouse who outlives the other? Would we need a separate power-of-attorney document drawn by a lawyer, or can we just have the bank or investment institution designate our accounts as power-of-attorney accounts? What's the difference? Since we hold NO joint property, is it even important to draw up a power-of-attorney document? — Reader, via e-mail DEAR READER: Your situation is not uncommon. You both have financial assets acquired during your other marriages and would like to keep these separate. I don't see a problem, but you should be talking to an attorney. A durable power of attorney is allowed so that someone, either you or the respective children, could handle the finances of the person who is no longer able to do so. Further, if one of you passes away, the other will have at least a one-third interest in the estate of the decedent. All of this can be circumvented with pre- or post-nuptial agreements spelling out your requirements and wishes. This is not a case of going to the stationary store and trying to find a form. You guys are trying to protect your children from your first marriages and have your wishes carried out. You need to get a competent attorney for EACH OF YOU rather than one attorney for both of you, even though you sign-off on any arrangements. If your estates are substantial, this is the best way to go. DEAR BRUCE: I have a modest IRA account of about $30,000 and since I am over 65 can withdraw at any time. The IRA pays 4.25 percent. I have very little other savings. I do have an equity line of about $23,000, on which I am paying $500 per month. At times, I pay $600 or more. Minimum payment is $356. The interest rate is currently 7.5 percent, and I have considered paying off the equity line with money from the IRA. But it appears the tax I would pay on the withdrawal would more than wipe out what I would save in interest. My monthly income is $3,728 from two pensions and Social Security, plus I am back to working full time and that brings in another $2,000 per month. What do you suggest? — F.W., via e-mail DEAR F.W.: Since there's a 3 percent spread on what you're paying and what the money is earning, I would pay off the loan. You mentioned the tax would wipe out what you would save in interest. That may be the case, but you are overlooking the fact that, sooner or later, the tax has to be spent anyway. The tax has to be paid on the money in the IRA. Given the fact that this, too, would be to your benefit (rather than your estate's benefit somewhere down the road), I would close out the IRA, include it in my earnings and pay off the loan. I do realize you're a relatively high-income retiree, which could put you in a higher tax bracket, making it to your advantage to hold off on this until you retire permanently. This is a question of doing the math. My statement stands that this is using the money to your advantage, rather than your estate's, and that makes a lot of sense to me. DEAR BRUCE: When a person visits a doctor and has more than one ailment, is it customary for the doctor to give a bill for each complaint? In other words, the patient goes to see his family physician for ear pain and while there says his finger also hurts. If their co-pay is $20, is that then doubled to $40? Does this have a name, if it happens at all? — C.C., via e-mail DEAR C.C.: While I'm sure there have been some places where a physician has done what you've described, it has never come to my attention. Further, would an insurance company pay for multiple inquiries from the same patient from the same office visit? Generally, you pay for the office visit, not by the question. If a physician was billing that way, he would be my "ex" physician. Send your questions to: Smart Money, P.O. Box 503, Elfers, FL 34680. E-mail to: [email protected]. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided. Advertisement Copyright © 1997-2006 Mail Tribune, Inc. All rights reserved. Privacy Policy | Terms & Conditions | Website Feedback online casinos news Home Security Systems California Casinos Men's Clothing Southern Oregon Loans --> GMAT Prep Fundraisers Send Flowers Texas Electric Choice Entertainment Guide --> Casinos Canada Trunks, Footlocker Online Casino Reviews