QUESTION: I recently became the executor of my best friend's estate. It wasn't something I could turn down, but I'm really worried about botching this up over something simple, like forgetting to file something with the government. Does the IRS provide any kind of reminder service to people in situations like mine?--D. E. K.
ANSWER: Unfortunately for taxpayers, Internal Revenue Service computers aren't set up to send reminders or bills. So, you'll have to find a way to remind yourself of your obligations. You could, of course, hire a lawyer or accountant to handle this for you. A slightly cheaper option would be to subscribe to a tax newsletter providing periodic rundowns of impending tax due dates. Many stock brokerages, public accounting firms and private research institutes--notably the New York-based Research Institute of America--publish such newsletters.
Short of that, you might consider visiting your local IRS office and asking for a list of due dates pertaining to the payment of income taxes by estates. (Income taxes, by the way, must be paid by any estate having annual gross income of $600 or more.)
Heeding the dates is important for someone in your position. If, for example, you choose to pay the estate's tax bill on the installment plan and miss even one deadline, you needn't bother making excuses. The entire unpaid balance immediately becomes due.
The installment plan is a good deal, by the way. Instead of paying the tax bill in one lump sum, an estate is entitled to make four equal payments over the course of a year--interest free. To do this, you don't even have to declare your intention. Just pay 25% of the bill by the due date. The IRS automatically assumes that you are paying on the installment plan. The other three payments then become due every three months.
So, in effect, you are getting an interest-free loan from the IRS for as long as nine months.
Q: Your column on comparison shopping for life insurance policies saved me a lot of money--I think. I had been shopping for a term life policy and was just about to buy one. But based on a fee illustration in your column, I realized that the price I was quoted was way too high. So, I'm shopping again. But is there any easier way to compare prices than to go through the yellow pages of my phone book and call them all?--A. C.
A: If you have definitely settled upon buying a term life insurance policy--that is, pure life insurance, not twinned with a savings account--there are a couple of companies that can speed your pursuit of the best insurance deal. Insurance Information Inc. in Lowell, Mass., and SelectQuote Insurance Services of San Francisco both provide computerized search services for consumers interested in term life insurance.
Here's how the services work: You tell them your name, address, date of birth, smoking habits and size of policy that you're interested in. They feed the information into a computer and send you a list of five insurance companies and their rates. These are the companies considered by the computer to offer the best deals for your insurance needs.
The two services differ in the size of their data banks and in their subsequent use of the information that they feed consumers.
Insurance Information's computer sifts through some 800 insurance policies when a consumer requests price and coverage information. The computer selects the five that it considers the best priced and best tailored to the inquiring consumer's needs. For each of the five, Insurance Information details the rates for five years and provides the phone number and address of the insurance provider.
Insurance Information charges $50 for its service. But if it isn't able to save customers who already have life insurance at least $50 in policy fees in the first year of the policy's life, there is no charge.
Insurance Information claims that its customers have been able to cut their life insurance bills by an average of 40% to 50% by using this shopping service.
To get a computer-generated list tailored to you, call the company's answering service at (800) 472-5800 with your name, address (some policies aren't offered in certain states), date of birth, sex, smoking habits, current state of health (excellent, good or fair) and amount of term insurance you want.
That's the quickest way. If you have questions for the company, use this number: (617) 453-2557. You also can write, if you prefer, to Insurance Information Inc., 45 Palmer St., Lowell, Mass. 01852.
SelectQuote keeps a much smaller bank of policies--25, mostly because it also serves as an insurance broker for them. All 25 are term life policies rated A or A-plus by A. M. Best Co., a national insurance rating company.
This company charges no fee for its list, which details the annual fees for 20 years on each of five policies. A description of the company and its Best rating also is provided.