April 23, 2013
Are You Responsible for Your Loved One's Debts?
It was a wild, wild week.
Last Monday, bombs exploded near the finish of the Boston Marathon. Not long after, media outlets let the public know letters to President Obama and a senator from Mississippi contained the poison ricin. On Wednesday, the town of West, Texas was flattened by an explosion at a fertilizer plant. By the end of the week, a man had been arrested for sending the ricin letters, the city of Boston had been locked down, the bombing suspects had been captured, and folks were returning to their homes in West, Texas.
The week's economic news wasn't all that encouraging. The pace of economic growth in China slowed unexpectedly, the International Monetary Fund reduced its 2013 growth forecast for the United States for the fourth time, earnings results were mixed, and an index of leading economic indicators in the Unites States unexpectedly moved lower. On the plus side, new home construction hit a five-year high. All three major indices - the Dow Jones Industrials Index, The Standard & Poor's 500, and the NASDAQ - finished the week down more than 2 percent.
The most significant move of the week took place in the gold market which lost about 9 percent on Monday. That was the biggest one day fall in 30 years. The market recovered some value later in the week, finishing down about 8.5 percent. According to The Economist, "The usual explanation for sharp price movements, when an economic rationale seems lacking, is that someone is selling off their holdings at any price. Some have pointed at Cyprus which may have to sell gold in response to its debt crisis. Although Cyprus' gold holdings are small, the fear is that other troubled eurozone nations may follow suit."
Will this week be calmer? It's possible, but economic news will include the first estimate of U.S. GDP growth for first quarter. According to Reuters, GDP growth is forecast at 3 percent annualized even though fourth quarter's GDP growth was 0.4 percent annualized.
|Data as of 4/19/13||1-Week||Y-T-D||1-Year||3-Year||5-Year||10-Year|
|Standard & Poor's 500 (Domestic Stocks)||-2.1%||9.1%||13.0%||9.1%||2.3%||5.7%|
|10-year Treasury Note (Yield Only)||1.7||N/A||2.0||3.8||3.7||4.0|
|Gold (per ounce)||-8.5||-17.0||-14.8||7.4||8.9||15.4|
|DJ-UBS Commodity Index||-1.8||-5.4||-4.4||-0.4||-9.1||1.3|
|DJ Equity All REIT TR Index||-0.3||12.5||22.6||18.3||6.7||12.4|
Notes: S&P 500, Gold, DJ-UBS Commodity Index returns exclude reinvested dividends (gold does not pay a dividend) and the three-, five-, and 10-year returns are annualized; the DJ Equity All REIT TR Index does include reinvested dividends and the three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance, Barron's, djindexes.com, London Bullion Market Association.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
ARE YOU RESPONSIBLE FOR YOUR LOVED ONE'S UNPAID DEBT? It's never easy when someone dies. Grief is a powerful, and sometimes debilitating, experience that often leaves next of kin vulnerable. Unfortunately, there is a group that sometimes tries to take advantage of family members in mourning. No, they're not scammers or confidence men. They're debt collectors who try to persuade family members to accept responsibility for hospital bills, credit card balances, auto loans, and other debts incurred by the deceased even though family members have no legal obligation to pay.
People don't always know when someone dies, their debts die with them. There are exceptions to this, particularly for spouses. If you live in a community property state, typically, spouses share property and debts equally. Non-spouse family members, however, have no obligation to pay outstanding debts of the deceased unless they have co-signed a debt agreement.
Regardless of these facts, debt collectors may contact you after the death of a loved one. The AARP Bulletin reported "debt collection agencies frequently employ specially trained representatives who make sympathetic calls to husbands, wives, children, and other family members to urge them ever-so-gently to pay what the loved one owed." The Bulletin advised family members who receive these calls to hang up. There is an established procedure for collecting debts from a deceased person. It's called probate, and it is the appropriate way for debt collectors to pursue collections after death.
After receiving numerous complaints about death-collections practices, the Federal Trade Commission (FTC) investigated the situation by listening to recordings of calls between collectors and mourners. The FTC determined that some debt collectors misled relatives into believing they had to pay the deceased's debts. As government agencies are apt to do, the FTC issued new guidelines. Debt collectors should discuss a dead person's debt only with the spouse or someone chosen by the estate to discuss the matter.
The next time you revise your will, you may want to designate
someone to discuss any outstanding debts after your death. It could
save your spouse some unnecessary heartache.
Weekly Focus - Think About It
"Everything has beauty, but not everyone sees it."
Sean M. Dowling, CFP, EA
President, The Dowling Group Wealth Management
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- The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general.
- The DJ Global ex US is an unmanaged group of non-U.S. securities designed to reflect the performance of the global equity securities that have readily available prices.
- The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
- This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.
- Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.
- The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
- The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
- Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
- Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
- Past performance does not guarantee future results.
- You cannot invest directly in an index.
- Consult your financial professional before making any investment decision.
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