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Bank is not unfair to charge for acting as executor of will

DEAR BRUCE: My husband and I had our will drawn up. Because all of our relatives live states away, we put our bank as the executor of our will.

We are both in our 60s.

When we contacted the bank to give it a copy, the bank informed us there would be a fee involved in handling our will when we both passed on.

The fee would be based on a percentage of the value of the estate.

We have no children, and we want charities that we have named to receive our house. We have no debt; everything is paid for. Is there a better way to handle this? Should we keep the bank as our executor? We do not want to burden our faraway relatives. — Reader, via email

DEAR READER: It is not unreasonable for a bank to charge a fee for handling your estate once you both have passed away. It seems to me like you have things under control. Considering the geographic distance that you say there is between you and your relatives, it would be unfair to expect them to handle your estate without paying them a fee as well. The only other alternative would be to make your attorney your executor. You might ask how much of a fee he or she would charge and compare it with the bank's fee. It may be that because you have already engaged the services of the attorney in writing your will, he or she may charge less of a fee than the bank would.

DEAR BRUCE: My friend and I are having a disagreement. She says you should pay off a house as fast as you can, even pay cash if you can. My opinion is that if you can get a good deal on a mortgage, take the loan and use the tax deduction every year. Who is right? — S.P., via email

DEAR S.P.: If the money you would use to pay cash for the house is earning more than what your interest rate would be for the mortgage, then by all means, get a loan. Keep that money earning the higher percentage instead of paying cash for the house.

On the other side of that, if your credit is a little bit shaky, or if you are risk-averse in terms of investments and your savings earn very little, it may be to your advantage to pay cash and then claim the deduction on your taxes.

Another variable is your age. Many people who are along in years like to have the home paid for in full and enjoy not having to worry about a mortgage. The math is simple to figure out; just figure what works best for you.

DEAR BRUCE: Over the years, my husband and I have put about $5,000 in savings bonds to help a bit with our granddaughter's college expenses. We are risk-phobic, so this seemed the best way to assure her a little help. She is a high school senior and has not chosen a college yet, but she should be assured of one or two small scholarships. We want the money to help defray tuition, books or board. Do colleges generally have accounts that can be deposited into for just these specifics? Do we need to write checks as needed? We have no wish to micromanage her, but neither she nor her parents have good money skills. This money, little though it seems, was put aside especially for education, and we don't want it dribbled away on "incidentals." — S.C., Shinglehouse, Pa.

DEAR S.C.: You mentioned that you put your money into "savings bonds." I think you mean federal savings bonds. This would not be my choice. Furthermore, there are accounts that any broker can explain to you into which you can deposit the money, and if the money is spent for college, there is no tax liability. That said, since the amount is relatively small (less than $13,000), there is really no need to do anything other than convert the bonds to your name if your name is not on them already. This way, you can write checks for specific expenses.

It's not a question of micromanaging: This is your money, and you're able to help her. Books alone could cost upward of $5,000 over the four years. You could give her your credit card to go to the bookstore and charge the books. You then deduct it from the account that's in your name.

I have no problem with you being in charge of the money, especially when you have people who, in the past, have not shown good money-management skills. You worked hard for that money and you should have full control over how it's spent. If someone doesn't like those conditions, keep that money and take a vacation.

Send email to bruce@brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.