Harry Gross: Ethical wills can guide heirs to high-minded living

Dear Harry

: Yesterday, I overheard some friends talking about an "ethical will." I know about regular wills and I just wrote a living will regarding end-of-life issues, but I never heard of an ethical will. Is this something I should be involved in?

What Harry says: Ethical wills go back many centuries. Essentially, they are letters to heirs advising them about how the testator (the legal term for the person who leaves the will) feels regarding many things together with specific advice on how he or she would want the heirs to behave. A person may have very strong views about giving to charity, participating in politics, investing only in certain types of companies, personal spending, donating blood or organs, etc. Leaving such a will may very well encourage the heirs to act in high-minded ways. Of course, there's nothing legally binding in such documents, but they may have a profound effect on the next generation's behavior. I see many reasons for everyone to prepare one. There are no legal fees involved, and you can get ideas from your own behavior and philosophy. You may choose to involve religious beliefs as well.

Dear Harry: I was just laid off during this tough economic climate, but I'm thinking of making lemonade out of the lemons I was just handed. I intend to start two businesses that I will operate from my home. One is an electronic device repair service, including computers and hand-held devices. My work experience was in a related field. The second is a retail business that will sell unique products through the Internet. I am having some difficulty lining-up a single insurance policy to cover both companies. The insurance brokers tell me that I can't get one policy for two separate businesses. I am now considering one corporation to operate both business activities. Is it true that I must have two corporations for two separate businesses?

What Harry says: In Pennsylvania, a corporation can be set up to operate many businesses as a single entity. For example, I knew of a company that operated a specialty advertising agency and manufactured candies. However, there are many reasons to keep different operations separate. Different insurance rates is one reason. Another is the possibility of one of the operations doing poorly while the other prospers. The bad operation could kill the entire company if they're run through a single corporation. I don't look upon the insurance companies' refusal as an obstacle. They could have pushed you into making a better decision on how to run your companies. Good luck!

Dear Harry: I recently saw several ads in newspapers about selling old gold and silver objects for immediate cash. They were scheduled for various times at local hotels. Today's high prices got me interested. I did go with some old jewelry that I have had for years and no longer wear. I observed several people selling their stuff. They were required to leave a thumb-print and a photo of their driver's license! I left after getting their appraisal because I've read so many warnings about identity theft. What do you think of this? Is it OK to give them this information and print?

What Harry says: Before you do this, get at least one more appraisal. That will help to ensure that you're getting a fair price. What these people are doing is protecting themselves. It is a criminal offense to purchase stolen goods, and thieves may very well try to use these buyers instead of going to a regular "fence." Using the measures you cited will enable the buyers to identify their sellers for the police, if necessary. Could they steal your identity with this information? Sure, but I don't think there's a real danger here. If you're still concerned, however, I'm sure there are other buyers who won't insist on this type of security.

Dear Harry: Please help me to understand what's going on with this credit crisis. I bought my home four years ago with more than 20 percent equity. Since then, the value of the house has dropped about 15 percent so my equity is almost gone. To compound matters, my wife was ill for quite a while last year and had to leave her job. She can now only work part-time. That put us in a tough bind. With hospital debt, credit-card debt, car debt, a college tuition and the mortgage; we're having trouble staying ahead. Then, I read in the papers about the government bailing out a multibillion dollar company, and I ask, where's the help for me? The Congress won't permit the courts to give me a break on my mortgage if I go bankrupt. The creditors, including my mortgage company, won't budge on making adjustments in my interest rate or the other terms, and I'm getting angrier by the minute. The guys on Wall Street still have many millions left. I'm fighting to stay alive. There has to be some way I can get help even if Washington is favoring the rich. I'm getting desperate.

What Harry says: There are many who believe that the failure of a big bank-brokerage firm will hurt the economy of the nation severely. The failure of a little guy like you won't. Not a very compassionate view. They even blocked help through bankruptcy-law modification. At this point, there's no guarantee that you won't get hurt more than you have been already. But that doesn't mean we shouldn't try. Step one is to call 888-995-HOPE. This is a voluntary organization that may be able to get some loan modification for you. Second, contact your Congressman. This is an election year, and your Representative should be willing to spend the effort necessary to get some mitigation of the monthly demands on your checkbook.

Dear Harry: About three years ago, my wife and I got a mortgage loan of $30,000 for 30 years at 5.99 percent. In addition to the regular monthly payment of $291.41, we have been paying an extra $200 a month to reduce the principal. The problem is that the bank sends us a form at the end of the year telling us of the amount of interest paid, but no statement about the principal balance due. I have spoken with the bank's customer service manager and a number of other people, but I can't get them to give me the information. What can I do?

What Harry says: I have a number of problems with the information you sent me. A $30,000 loan at 5.99 percent for 30 years requires a monthly payment of only $179.67 to cover both principal and interest. Is there something else included in your payments? Paying $291.41 would pay off a principal of $30,000 in just over 12 years. Put another way, if your numbers are correct, your interest rate is 11.25 percent. I urge you to go over your loan documents carefully to see just what the score is. Regarding your concern about a statement of the amortized principal amount, contact the Department of Banking in Harrisburg by calling 1-800-PABANKS. One other point for your consideration. It is almost never wise to pay additional principal in round dollar amounts. If you get an amortization schedule (as required in any such loan), you will be able to track the balance easily if you make additional payments of principal as they appear in the month or months following your last payment. If you send me a self-addressed-stamped envelope, I'll send you a detailed description of the method together with a clear example of how it works.*

Write Harry Gross c/o the Daily News, Box 7788, Philadelphia, PA 19101. Harry urges all his readers to give blood - contact the American Red Cross at 800-GIVE LIFE.