March 29, 2020

Check Is in the Mail? For Many Bill Payers, It Won’t Be

Progressives, including Representative Alexandria Ocasio-Cortez of New York, have called for moratoriums on rent and other financial obligations. And even conservatives, despite concern about government initiatives already costlier than those in the 2008-9 financial crisis, have said this is a case where it makes sense to provide grants — not merely loans — to individuals and businesses.

Michael R. Strain, director of economic policy studies at the right-leaning American Enterprise Institute, said that corporations might be able to afford to take on extra debt to carry them through a period of lost revenue, but that most small businesses, particularly in the service sector, could not.

“A manufacturing company could come back to a backlog of orders, but if you’re a services business, you’ve just lost this revenue,” he said. “People are not going to go out to eat six times as often when this is over.”

If businesses have to take on huge debt burdens to survive the crisis, Mr. Strain said, “that situation leads to a much more prolonged downturn.”

For workers, weathering more than a few weeks without pay may be a challenge. The 11-year economic expansion left record low unemployment, but it did less to ensure financial stability. The Federal Reserve reported last year that four in 10 Americans would have difficulty covering an unexpected expense of $400.

Cori Aitken, 34, lost one job as a sales representative at Temescal Brewing, a small brewery in Oakland, Calif., and another job tending bar. Now she’s looking to cut her $1,900 monthly expense budget, which includes about $1,000 in rent and $300 for utilities, along with a phone bill, car insurance and loan payments.

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How Philanthropists Are Helping During the Crisis

“Go ahead and start paying those out,” said Carla Wigen, managing director of fiduciary strategy at Laird Norton Wealth Management, which is based in Seattle. “Don’t let the money sit there now.”

Emptying those funds is an immediate, easy way to create a lot of change. And donors seem to being doing just that: Schwab Charitable said its clients had increased giving from their funds 31 percent from mid-February until Thursday, compared with the same time last year, with some 3,400 grants going to coronavirus-related charities.

This is no time for charities to be putting funding reports together or sticking to guidelines. Ms. Ballmer said that when grantees asked to redirect funds to other areas, she immediately agreed. “Our mantra is to be flexible,” she said.

Long-term goals do not change, but adaptability is important, said Jeff Raikes, a former senior Microsoft executive and the founder of the Raikes Foundation, which focuses on education and youth homelessness. He said the foundation was loosening or eliminating restrictions on grants and looking at making new unrestricted grants.

“The key thing is to send a message to all of our partners and those communities that are the least well heard,” he said.

Not all philanthropists are comfortable talking openly about using the influence their wealth buys them to reach politicians. But Ms. McCaw said this was the time for philanthropists to stop being coy about their clout and use it to advance the social good.

“I used to avoid all the campaign calls, but now I’m talking to them,” she said. “My money has given me access to them, and I’m using that to make them aware of what needs to be done.”

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When Romance Is a Scam

The median loss for romance fraud victims in their 20s was $770. People in their 50s reported losing twice as much. The losses reached $3,000 for victims in their 60s and $6,450 for those in their 70s.

“We’ve heard of people refinancing their homes and cashing out retirement accounts,” Ms. Nofziger said. “Scammers go where the money is, and criminals know that older adults have the majority of assets in the United States.”

Last year, federal prosecutors brought a number of alarming romance cases. A 76-year-old widow in Rhode Island transferred more than $660,000 to bank accounts she thought belonged to a U.S. Army general in Afghanistan. (Posing as a military member is another red flag, along with overseas locations.)

In Oklahoma, 10 Nigerian and United States citizens were indicted in a fraud ring targeting multiple victims in three states. A grand jury in Georgia indicted a man accused of bilking a Virginia woman, who had a large trust, of $6.5 million.

Ms. Floren may qualify as one of the luckier victims. As “James Gibson” was leaving for Europe, he suddenly called, saying his Netflix card had expired. “He really wanted to be able to watch movies on the plane,” she recalled. “Would I please go to a Walmart and buy him a $100 Netflix card?”

Gift cards, untraceable and available everywhere, have become the currency of choice for scammers, Ms. Nofziger said. But they may also ask victims to open a bank account and provide access to it, or to ship iPhones.

Ms. Floren bought a gift card, reading her apparent suitor the number. Three days later, he called again, claiming to have left a bag of expensive tools in a cab. “He was hysterical on the phone,” she said. The tools were worth $4,000, but he’d found replacements for just $2,600. Would she send him the money?

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What Is a Will and What to Know About Making One

Besides needing notarizations, however, wills executed in New York require two witnesses to be in the room when the document is signed. So does a health care proxy, which appoints an agent to make medical decisions if someone is incapacitated.

On Wednesday, Ron L. Meyers, an estate planning lawyer in Manhattan, adjusted his practice to the times. From home, he used FaceTime to watch two clients and their witnesses more than 100 miles away sign new financial powers of attorney and health care proxies. He used his laptop to record a video of the proceedings. His clients used their phone.

The clients, Phyllis Diamond, 74, a psychotherapist, and her husband, Peter Dignazio, 79, a retired engineer, bundled in coats and scarves, sat on the enclosed porch of their friends’ house in Columbia County, outside New York City, where the couple live. The couple have a second home nearby.

Ms. Diamond and Mr. Dignazio, wearing vinyl gloves, signed the papers at a large table, while their two friends, both witnesses, stood six feet away. When the couple finished signing, they moved away and their friends moved in, Ms. Diamond said.

“We thanked them profusely,” Ms. Diamond said of her friends. “We said we would have a virtual cocktail party.”

Ms. Diamond said she scanned the documents, which she sent electronically to Mr. Meyers, who notarized them. She is also sending him the paper copy, which he will authenticate.

In New Jersey, where notaries need to be present, Wynne Whitman, an estate planning lawyer with Schenck Price in Florham Park, also found a creative way to deal with social distancing. A friend told her that two emergency room nurses, who were single mothers and handling coronavirus cases, had posted a Facebook notice: They had downloaded estate planning documents from an online service and could not find a notary to authenticate their signatures.

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How to Build an Emergency Fund in the Middle of an Emergency

Next, take stock of possible sources of cash and credit. It’s not advisable to open new credit card accounts, but knowing the credit limit on each card already in your wallet can help you get an idea of what you can draw on if needed, Mr. Thompson said.

If you are expecting any sort of lump sum — whether a bonus or a commission, or an income tax refund — set aside as much of it as you can. Many Americans are now receiving tax refunds, and the amounts can be substantial, in part because of the earned-income tax credit, which particularly benefits families with children.

Among families getting a refund, the average is more than $3,000, or the equivalent of nearly six weeks of take-home pay, according to a study of millions of customer accounts by the JPMorgan Chase Institute, the research arm of the big bank. (The study looked at data from 2015, 2016 and 2017. According to I.R.S. statistics, the average refund as of March 5 was $3,012).

That could help provide a financial lifeline for the difficult weeks ahead — but it isn’t a panacea, Mr. Thompson said.

That’s because many people have earmarked their refunds for specific expenditures, like paying down credit card debt or buying household items. “For many people, the money is already spent,” he said.

Still, families getting tax refunds had, on average, more than a quarter of their refunds remaining six months after receiving them, the Chase research found. “A few hundred dollars can make a substantial difference,” Mr. Thompson said.

Next, scrutinize spending, and cut where you can. It may feel harsh, but belt tightening is the idea. Can you postpone a (no doubt much anticipated) spring trip? Are there subscriptions you can do without temporarily? (Many publications are offering online coronavirus coverage free of charge.) Can you switch to a less expensive cellphone plan for a few months?

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Once Scrutinized, an Insurance Product Becomes a Crisis Lifeline

“To the extent they’re incurring out-of-pocket expenses, we’ll pay those more quickly,” Ms. Euteneuer said. “It will cause their net loss to decrease, so we’ll provide coverage for mitigation expenses. Those are some of our best success stories.”

There are other ways a captive could help a struggling business now.

Business owners normally keep the captive policy at arm’s length to preserve its legitimacy and to maintain its tax benefits (collected premiums grow tax deferred). But a captive could invest its assets in the business itself if the business owner needed the infusion to keep operating.

The captive policy could be used to buy stock in the business or make loans to the business, said Jay Adkisson, a lawyer who specializes in these vehicles. “That is ordinarily not a good practice because it might destroy any tax benefits of the captive, but in that scenario, the business probably isn’t generating much in taxable profits anyway.”

A business owner could also take a distribution from the captive policy. Depending on its size, a distribution may require approval from the insurance regulator, but it cannot risk the solvency of the captive. The owner could also borrow from the captive.

“A well-financed captive can act as a hidden pool of ‘rainy day money’ should the business need it,” Mr. Adkisson said. “A lot of these captives have been very well-financed over the years. Those companies won’t have their backs as close to the walls as companies that don’t have them.”

With all of these strategies, a wealthy business owner needs to be aware of tax consequences. In taking a distribution, the business owner would have to pay capital gains taxes on the money. “There is no way to avoid paying taxes when you get out of the captive,” Mr. Adkisson said.

If the money came in the form of a claim for business interruption, Mr. Slenn said, the business owner would need to seek advice on what was taxable and what was not.

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Your Money: A Hub for Help During the Coronavirus Crisis

Many financial advisers are offering free phone sessions to people whose incomes have fallen, no matter where they live.

The XY Planning Network of advisers has a spot on its search webpage for “Coronavirus help” and will be adding names to it as people sign up. There are already dozens.

We’ve heard from the following planners or firms who want to help as well: Daren Blonski, Wesley Botto, Jill Isbell, Fairlight Advisors, Ted Klontz, Andrew Komarow, Brandt Kuhn, Anna N’Jie-Konte, Elizabeth Lundstrom, Kevin Mahoney, Howard Morin, Maddi Napier, Kimberly B. Ogden, Alan Rhode, Matt Rinkey, Dawn Santoriello, Chris Saxton and Alex Wilson.

We’ve included links to their sites so you can see their experience and credentials. Nearly all of them are certified financial planners, a designation that requires continuing education and passing a difficult exam.

On Sunday, Goldman Sachs and Apple told Apple credit card customers facing hardship that they could skip this month’s payment. They won’t have to pay interest, either.

We asked the biggest card, mortgage and auto lenders whether they would allow customers to do the same thing. American Express and Capital One said they would. If their customer service representatives claim ignorance, point them to this item and let us know if they still don’t help.

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What You Need to Know About Unemployment Insurance

Unemployment benefits provide temporary cash benefits to workers who lost their jobs through no fault of their own, while they search for a new one. Each state administers its own program but follows federal guidelines. Benefits are generally a percentage of your income over the past year, up to a certain maximum, but some states are more generous than others. Typically, though, unemployment replaces about 45 percent of your lost income.

States have their own eligibility rules about how many hours you must have worked or how much you must have earned, and over what time span. That so-called base period is usually the first four of the previous five calendar quarters. The hour and pay requirements vary, but in some states only full-time workers are eligible.

Benefits are subject to federal income taxes and most state income taxes, according to the Department of Labor, and must be reported on your tax return.

Most states pay benefits for 26 weeks, but some have cut their benefits: Michigan, Missouri and South Carolina pay benefits for 20 weeks; Arkansas pays for 16 weeks; and Alabama pays for 14 weeks. Five states — Florida, Georgia, Kansas, Idaho and North Carolina — have sliding scales tied to unemployment levels, said Michele Evermore, a senior policy analyst for social insurance at the National Employment Law Project.

If you’ve been unemployed for so long that you’ve exhausted your benefits, you may become eligible for extended benefits, which may become available during periods of high unemployment. States with 26 weeks of benefits generally offer an additional 13 weeks, but states with shorter periods typically have shorter extensions, Ms. Evermore added. Extended benefits are paid at the same rate.

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Coronavirus Is Closing Social Security Offices. Here’s How to Get Benefit Help.

Current Social Security leadership has been skeptical of remote work arrangements.

In November, it terminated a work-from-home pilot program that allowed 12,500 employees to work remotely one day per week. As the coronavirus crisis has unfolded, a small number of offices were closed in areas experiencing a high number of infections, and a limited amount of remote work was permitted. Employees at some Social Security sites, including back office operations, were still reporting for work Tuesday.

But the agency had not announced plans to shutter its field office network until midafternoon Monday, when it held a conference call with union leadership.

If you need to visit a local Social Security office for in-person services, call the office to request an appointment. You can find the closest office using an office locator tool on the Social Security website, where the agency is also providing updates and information on services.

If you already have an office appointment or disability appeal scheduled, Social Security will contact you by phone to reschedule or to handle the matter by phone. The agency cautions that this call may come from a private phone number, not a government phone. That’s because not all employees have government-issued phones that can be used for business from remote locations, Mr. Couture said.

Social Security generally only contacts people who have recently applied for benefits, or to update the records of those who are receiving benefits, a spokeswoman says. The agency also calls people who have requested a callback, including those with scheduled appointments. The agency will never call to tell you that your Social Security number has been suspended or to demand payments or ask for credit card information.

The number of Social Security identity theft phone scams has been rising, with robocalls and live callers posing as government employees. The agency generally reaches out by mail and will call only if you’ve just recently applied for benefits or have requested a callback.

Social Security fields 75 million calls annually, and long wait times are typical. Getting through can be difficult — in 2018, 15 percent of callers heard a busy signal, according to the National Council of Social Security Management Associations, an organization of field office and telecommunications service center managers.

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Which Consumer Lenders Are (and Aren’t) Helping the Most

At Ford Credit, according to a spokesman, people can call and pause this month’s car payment, but interest will continue to accrue.

Barclays has the same policy for its U.S. cardholders (and will not charge late or nonpayment fees even as interest does pile up). Bank of America will also allow skipped payments while still keeping the interest clock running for auto loan, credit card and mortgage customers.

I’m still trying to find out more from other lenders.

PNC Bank did not reply at all to my inquiries about a one-month waive. I’m awaiting more detailed information from Citibank, Santander and Wells Fargo. Discover said that it would match the Goldman Apple move for most cardholders in terms of the ability to skip a payment, but customers who already have too many late payments may not be eligible. It would not commit to waiving the accrual of interest though.

The New York Times Company is handling hardship requests from subscribers in distress on a case-by-case basis, according to a spokeswoman. Much of the coronavirus coverage is not behind its subscription paywall.

A one-month pause — for bills of all kinds — might not be enough for people whose incomes fall to zero. The longer the virus shuts down large swaths of economic activity, the more the government will need to consider moonshot ideas.

What could those be?

The federal government could declare it will stop collecting money on any bills from consumers, and possibly some businesses, too. That could include student loan payments and Medicare premiums.

The Internal Revenue Services could allow people not to pay their taxes for now, including freelancers and any entity with quarterly payments due April 15. This might already be in the works. And there is the possibility the government will have to hand out stimulus checks — large ones — to individuals. On Monday, Senator Mitt Romney, Republican of Utah, suggested sending $1,000 to every American adult as soon as possible. But it would probably take many weeks for something like that to become a policy reality and to figure out a way to distribute money to so many people.

Until then, many vulnerable people are at the mercy of banks, some of whom were saved from oblivion just a dozen years ago. They need to do more and do better. Now.

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