
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: MONDAY, February 4, 1991                   TAG: 9102050424
SECTION: BUSINESS                    PAGE: A-9   EDITION: METRO 
SOURCE: Mag Poff
DATELINE:                                 LENGTH: Long

YOU SHOULD HAVE POWER OF ATTORNEY

Q: Two people who are married both receive federal government checks, such as Social Security and pension checks. If one or the other person becomes incapacitated and cannot sign the checks to help the other one pay bills, can the one who isn't incapacitated cash the other's federal checks legally? If it cannot be done, what can be done? Do you think it would be a good idea for each one to have a power of attorney and, if so, could the checks be cashed legally then? I have heard of a revocable living trust, but I also heard they are quite expensive and require the bother of letting bill collectors and others know.

A: You cannot legally cash somebody else's check. As a practical matter, however, you can run a joint checking account, depositing each other's checks and each writing checks against the account. If you don't raise questions about the arrangement, the chances of your bank doing so are slim to nil.

Even so, you should have a durable power of attorney along with your wills. A durable power of attorney survives the incapacity of the maker. Suppose you must sell a house owned in your joint names, but one of you is suffering from mental incapacity. Without a durable power of attorney, you would be forced to seek guardianship in a court. How will you sign a joint tax return? If you wish, you can arrange to have the power of attorney come into play only if the person becomes incapacitated.

Barring a special family situation, revocable living trusts are economical only if you have a large amount of money. A minimum would be $100,000 to $200,000 because of the fees involved.

Jackpot backup

Q: Are winners of the Virginia lottery required to name a beneficiary?

A: Yes. They sign a form naming someone to inherit the remaining checks in case a winner dies before collecting all 20 annual payments.

Know the risk

Q: What do you think of Hong Kong Shanghai Banking ADR? They sell for about 60 cents. I wanted to buy 2,500 for a grandson who will go to college in 10 years.

A: An ADR is an American Depository Receipt, or an American share in a foreign company.

I know nothing about Hong Kong Shanghai Bank or its shares. Richard Wertz, assistant manager of the Roanoke office of A.G. Edwards & Sons, couldn't find out anything about them either.

By the time your grandson goes to college, however, Hong Kong and its banks will be part of the Peoples Republic of China rather than of the British empire.

Wertz also warned that so-called penny stocks are cheap because they are high risk.

You can buy a safe U.S. Treasury zero coupon bond due to mature in 10 years at a cost of $435 per thousand. For less than the $1,500 you propose for the Hong Kong investment, you could buy $3,000 worth of bonds.

Ten years is long enough to go for growth, so you could put the same money into a stock mutual fund. If you believe the greatest potential lies overseas, you could buy shares in a fund that invests in foreign shares. This would spread the risk.

Taxing your estate

Q: Please give me information on the Virginia state inheritance or estate tax. I need to know exemptions and tax rates.

A: Ann Myers, spokeswoman for the state Department of Taxation, said you must first prepare your federal estate tax return because Virginia charges an adjusted share based on the federal figures.

As a general proposition, she said, you take the federal taxable estate minus $60,000 to get the adjusted taxable estate in Virginia. You then use a tax table to figure the credit and tax rate.

Virginia's death tax credit table lists 21 separate rates ranging from zero on adjusted taxable estates under $40,000 to 16 percent on amounts exceeding $10.04 million.

You can obtain tax forms and tables for estates by writing the Virginia Department of Taxation, P.O. Box 1317, Richmond, Va. 23210. You can also order them by phone at 804-367-8205.

If you need assistance with questions involving an estate, write to the department at P.O. Box 6-L, Richmond, VA 23282. That phone is 804-367-0768.

Those boxes and phones reach the section in the department that deals with estate taxes. The department has no toll-free numbers.

This insurance safe

> Q: I have a deferred annuity through a Crestar Bank group policy with Bankers Security Life Insurance Society of Arlington. I am 66 years old. I have not had need to draw upon this policy. Since some insurance companies are in difficulty, my husband and I are wondering about the safety of this insurance company.

A: The company's executive offices are in Arlington, but Bankers Security Life has its headquarters in New York, where insurance regulation is especially tough.

Best's Insurance Reports, a copy of which is available at most public libraries, gives Bankers Security Life a rating of A or excellent, the second-best grade. Best says that 98 percent of the company's long-term bonds are of investment grade.

by CNB