Magazine article Medical Economics

Money Management

Magazine article Medical Economics

Money Management

Article excerpt

Why you might prefer a trust to a power of attorney

Q I've read that putting your assets into a revocable living trust makes it possible to avoid a court proceeding if you become unable to manage your financial affairs. Wouldn't a power of attorney accomplish the same objective with less trouble and expense?

A You could draw up a general power of attorney naming someone reliable to act as your agent if you're ever incapacitated. (This is called a "springing" power of attorney, because it takes effect only under that condition.) However,- some financial institutions may reject your agent's instructions if the document conveying the power is outdated or its wording doesn't conform to their requirements.

By contrast, if a trust holds title to a bank account or other asset, the trustees control over it isn't subject to question. If you like, you can appoint yourself as trustee and specify the circumstances in which a person you designate can substitute for you. Be sure that title to every asset you'd want your potential substitute to manage is formally transferred to the trust.

Perils of trading in metals futures

Q A salesman has been trying to persuade me to invest in precious metals futures. He's very convincing, but I'm worried about being scammed. How can I tell?

A You're right to be suspicious, according to the US Commodity Futures Trading Commission, the federal agency that oversees such transactions. A scammer typically promises quick riches, offers to arrange financing for purchases on margin to boost profits, and discourages customers from taking delivery of the metal. Then the company fraudulently charges interest and storage fees, which diminish a customer's account equity until the investor must deposit additional funds or have the account closed out at a total loss. The fees are phony because no metal has been purchased or stored.

As a safeguard, the CFTC recommends that you check whether the company and salesperson are members of the National Futures Association and have ever been subjected to disciplinary action. …

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