Q: A recent column on this page discussed small claims filings but did not cover the plight of persons who win their judgments but are unable to collect what is due them. Is there anything we can do? -- R. C. K.
A: The euphoria of winning a judgment in small claims or even municipal or superior court can quickly evaporate in the face of the harsh reality that the court will not collect your money for you. If the debtor doesn't pay voluntarily, you must somehow collect the debt yourself or turn the matter over to a collection agency or attorney in exchange for as much as 50% of the proceeds.
A book from Nolo Press, a Berkeley publisher specializing in legal affairs, could help you take matters into your own hands. The $24.95 book details how to locate debtors and their assets and gives step-by-step instructions and forms for getting what is owed you. The book can be used to collect most California judgments as well as most out-of-state judgments involving assets or debtors located in California.
The book is available at bookstores or can be purchased directly from the publisher by calling, from within California, (800) 640-6656. Residents outside the state can call (800) 992-6656.
Adding Your Child as Joint Tenant Is Risky
Q: I put my son on the title to my home and we hold it as joint tenants. I am confused about the tax basis of the share my son owns. Would his basis receive a "step-up" to its value on my date of death? How would he calculate his gains if he were to sell the house immediately after my death? --\o7 M. E. S.\f7
A: The tax basis of jointly held assets can \o7 only \f7 be "stepped up" to the value on the date of death of one of the owners when those assets are held as community property in California and other states that allow such vesting. In those states, assets may only be held as community property between husband and wife.
When assets are held between spouses as joint tenants, the portion owned by the deceased is valued as of the date of death. The portion owned by the survivor keeps its original tax basis.
When assets are held in joint tenancy by siblings, parents and children or unrelated parties, the primary issue becomes who paid for what share of the assets at their purchase. (Husbands and wives are automatically assumed to own assets equally.) In these cases, the share of the deceased is set as of his or her death, and the remainder keeps its original tax basis.
In your case, without evidence to the contrary, it would be assumed that you purchased your home on your own and that your son paid nothing. Therefore when you die, the property's value would be set as of your date of death. However, this is just how the house would be valued if you had not put your son's name on the title and simply willed the house to him because the value of assets bequeathed at death is set as of the donor's date of death.
Of course, a will must be probated. But there are other issues to consider, as well. For example, if your son were to die before you, you would have to prove that you had paid for the house entirely to avoid some nasty tax consequences. Furthermore, by adding your son as a joint tenant, you expose yourself to the asset's being attached in the event your son is held financially liable for some accident or problem. You might want to weigh the cost and hassle of probating a will against these potential problems before adding a child as a joint tenant on your house.
There Are Many 'Ifs' in Sharing Benefits
Q: I am divorced and want to file for Social Security. My ex-husband's benefits are larger than those I would be entitled to on my own. May I file on his account, or must I file on my own first to get anything from his account? He is still working. --\o7 A. R.\f7
A: We assume that you were married at least 10 years and that you are at least 62 years old. Unless you meet both criteria, you are ineligible to make a claim as an ex-spouse. In addition, because your ex-husband is still working, you must have been divorced for two years to qualify for payments on his account.
If you meet those requirements, go to your nearest Social Security office and make your claim. The claims officer will review your account and determine the level of benefits for which you are eligible. You don't file on either your account or your ex-husband's. You just file. The Social Security Administration calculates your benefit entitlement based on the higher of your own contributions or your share of your ex-husband's.
Example: Say you are 65 and your work experience would entitle you to benefits of $350 per month. But as an ex-spouse, you could receive instead 50% of your ex-spouse benefits. Let's say his benefit level is $900 per month. Your half would be $450. The Social Security Administration would set your benefit level at $450 per month. Remember, you get the higher amount--not both!
As far as you're concerned, you are getting a single payment after having made a single application. However, for accounting purposes within the Social Security Administration, your monthly check of $450 is divided between the two accounts: $350 from yours, and $100 from you ex-husband's.
Carla Lazzareschi cannot answer mail individually but will respond in this column to financial questions of general interest. Please do not telephone. Write to Money Talk, Business Section, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.