Your dead ex-spouse's debt can become your problem

Divorce doesn't put an end to your liability for joint debt accrued while you were married, even if the court rules your ex should pay it. If he or she dies before doing so, then creditors can come after you.

NEW YORK (CNNMoney)

After all, you assumed you were safe because your divorce settlement explicitly stated who should pay which debts accrued during your marriage.

But guess what? That was an agreement between you and your ex, not between the two of you and your creditors.

"No one asked the [creditors] to sign off on that," said Los Angeles bankruptcy attorney Leon Bayer.

This is especially a problem in the nine community property states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

With only some exceptions, community property states treat whatever is acquired after marriage and before legal separation as belonging to both spouses equally.

That means both property and debt.

Related: Can you inherit your dead parent's debts?

And in a divorce, all community assets and debt are split between the two of you.

For example, say you and your ex-husband owed money to a creditor while you were married. The divorce settlement may have assigned payment of that debt to your ex. But if he dies before paying up, the creditor could come a-knockin' on your door.

Your only recourse then is to pay the bill yourself, file a claim against your ex's estate, and hope it's not insolvent.

Such a situation may be averted, but only if you thought ahead.

At the time of the divorce, to erase your liability for the debt assigned to your ex, you could try to enter into what's called a "novation" or "accord and satisfaction" with the creditor, said Utah-based estate planning attorney Geoff Germane of Kirton McConkie.

Such agreements effectively can release you from any further obligation to pay the debt.

But, Germane said, "a creditor is unlikely to be interested" in playing along unless the spouse assigned to pay the debt clearly has the money and can offer assets as collateral.

Have you ever had problems with the debt of a deceased parent, spouse or even ex-spouse? Please tell us about your experience at #YourEconomy.

First Published: June 25, 2014: 7:09 AM ET

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Google to focus more on wearable devices

Google co-founder Sergey Brin rocks Google Glass.

SAN FRANCISCO (CNNMoney)

Google's annual I/O conference for software developers and designers begins on Wednesday. The company is widely expected to showcase its new smartwatch-ready "Android Wear" software.

Google (GOOGL, Tech30) revealed plans for Android Wear in March, but developers are anxious to get details on its planned features and specifications.

The rumor heading into the conference is that Samsung, whose Galaxy phones already run on Google's software, is set to introduce its first Android Wear smartwatch at the event.

Other firms, including Motorola and LG, are also scheduled to release Android smartwatches this year.

Last year's I/O event was a showcase for Google Glass, the company's head-mounted computing device. But Glass should be in the spotlight again at this year's conference.

Related: Smartphones are fading -- wearables are next

There are several sessions focused on wearable devices. The company will likely discuss new features for Glass and could reveal plans for its expanded sale to the general public.

Google recently announced a series of "developer partners" for Glass, including companies working on medical, business and media applications. It's currently seeking other partners as well.

Aside from wearables, Google may announce an expansion of its TV efforts beyond the basic $35 Chromecast streaming device.

It's also pushing hard to break into the "connected home" business, having acquired smart appliance maker Nest Labs earlier this year and home security firm Dropcam last week. So expect some updates on that front as well.

The I/O conference has also tended to be a lot quirkier than events hosted by Apple (AAPL, Tech30), Microsoft (MSFT, Tech30) and other rivals.

In addition to the product-focused events, this year's gathering includes sessions ranging from the offbeat (a briefing on Google's Santa-tracking technology) to the futuristic (a lecture from Ray Kurzweil, the sci-fi author and inventor who heads Google's machine intelligence efforts). Stay tuned.

First Published: June 25, 2014: 7:11 AM ET

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Squandering the family fortune: Why rich families are losing money

In 90% of cases, the family fortune is squandered by the third generation. Here, New York City mansions built by the Vanderbilt family -- a classic example of wealth made and lost.

NEW YORK (CNNMoney)

Nearly 60% of the time a family's money is exhausted by the children of the person who created the wealth, according to Roy Williams, president of wealth consultancy The Williams Group. In 90% of the cases it's gone by the time the grandchildren die.

"It goes back to the Biblical story of the Prodigal Son," said Williams, referring to the free spending child who blows his father's inheritance yet is welcomed back anyway. "We haven't changed in 2,000 years, and that same unprepared heir issue is now worldwide."

Profligate spending by heirs -- the type chronicled on sites like Rich Kids of Instagram -- is often a reason for a loss of wealth, as is a simple lack of ambition.

"The people who created the wealth were often obsessive," said Russ Prince, president of the wealth research and consulting firm Prince and Associates. "But their kids were not hungry."

Related: The richest Americans in history

Perhaps the most famous example is the Vanderbilt family. Cornelius, the patriarch, built a fortune on railroads and shipping during the mid-1800s. Adjusted for the size of the economy, he was the second richest American ever, worth over $200 billion -- well above Bill Gates.

Yet his children -- and especially, his grandchildren -- lived lavishly, building huge mansions in New York City, Newport, R.I., and elsewhere, and did little to preserve the fortune. By the 1970s, the family held a reunion with 120 members attending, and there wasn't a millionaire among them, wrote Michael Klepper and Robert Gunther in their book The Wealthy 100.

Yet the biggest reason family fortunes are squandered, experts say, is because the people who built the wealth do not pass along clear instructions on how to handle the money after they're gone. That often leads to bitter infighting among surviving family members, and an eventual loss of fortune.

"The intent is good, but there's a communications gap," said Michael Liersch, director of behavioral finance at Merrill Lynch Wealth Management. "People can have a different take on what the wealth creator wanted, and that creates dispute."

Avoiding that might seem simple enough -- just divide up the money equally. But in practice, preserving a fortune requires communication and collaboration that's hard to achieve in any organization, let alone a family.

Large bequests should come with detailed instructions like whether the money will be used to pay for the education of all family members, how much will go to charity, whether money be available for entrepreneurial endeavors, and more.

"Families need to take their time to shape their attitudes toward wealth," said Nathan Dungan, who runs the family wealth consultancy Share Save Spend. "It needs to go beyond maximizing returns and reducing taxes."

Related: America's love/hate relationship with the rich

One of the best ways to do this is to set up a philanthropic organization, experts say. That helps the family develop effective tools for communication and decision making, yet no one has a personal interest in the cash at stake. Those tools can then be used to better administer the family's personal wealth.

"They create family banks, seed capitol, and go into businesses together," said Tom Livergood, head of the Family Wealth Alliance. "If you pool your resources, you get scalability."

A good example of this, said Livergood, is the Rockefeller family. They have a prominent foundation, and are still living quite comfortably seven generations after the fortune was made.

"It's not that [John D.] Rockefeller was one of the richest guys in the world," said Livergood. "It's what the family did after."

First Published: June 25, 2014: 7:54 AM ET

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Home prices jump nearly 11% in April

NEW YORK (CNNMoney)

Prices are up 22.6% since bottoming out just over three years ago, but are still 18% below the peak set in July, 2006. And year-over-year gains are slowing.

Related: Dream beach houses for sale

"Although home prices rose in April, the annual gains weakened," says David Blitzer, Chairman of the Index Committee at S&P Dow Jones Indices. "Last year some Sunbelt cities were seeing year-over-year numbers close to 30%, now all are below 20%."

Five cities posted strong month-over-month gains: Atlanta, Boston, Chicago, San Francisco and Seattle, all of which jumped at least 2%.

Low mortgage rates, which the Federal Reserve is expected to keep reined in through mid-2015, and gains in the job market should continue to help the housing market, according to Blitzer.

Related: Which natural disaster will likely destroy your home?

But don't get too comfortable.

"Housing is not back to normal." said Blitzer, "Prices are being supported by cash sales, low inventories and declining foreclosure sales. First time home buyers are not back in force, and qualifying for a mortgage remains challenging. The question is whether housing will bounce back before the Fed begins to tighten sometime next year."

First Published: June 24, 2014: 9:09 AM ET

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Stocks lost in summer doldrums

NEW YORK (CNNMoney)

The Dow Jones industrial average and the S&P 500 were down slightly in early trading. The Nasdaq was slightly higher and the "big mover" of the day at a mere 0.15%.

"Following the excitement of the European Central Bank and the Fed meetings earlier this month, we've quickly returned to a familiar pattern of low volatility and even lower volumes," wrote Deutsche Bank analyst Jim Reid, in a market report.

Stocks soared to all-time highs last week as investors remain confident that global monetary policy will continue to support the market. But the tone has been cautious so far this week as investors look for the next catalyst to move the market one way or another.

Related: Will the Dow crack 17,000 this week?

Dubai enters bear market. U.S. stocks might not be moving much, but they sure are elsewhere.

While oil prices have backed off nine-month highs, the turmoil in Iraq has wreaked havoc on the Dubai stock exchange.

The Dubai DFM General index plunged more than 6% overnight. The index is down more than 22% so far this month, putting the Persian Gulf Emirate in a bear market. It was the worst one-day drop since Oct. 2008, according to a note from analysts at ETX Capital.

"There is a possibility that traders are liquidating positions as a result of the current situation in Iraq which has eaten at sentiment in the Emirate region," the analysts wrote.

Stocks to watch -- Walgreens, Avago, Buffalo Wild Wings: Walgreens (WAG) said earnings rose nearly 16% in the first quarter, but the results missed analysts' expectations. Shares fell more than 1%.

Shares in Avago Technologies (AVGO) were up 2.5% after the Singapore-based chipmaker announced a $309 million cash acquisition of PLX Technology.

Related: CNNMoney's Tech30

And one company that is really loving the World Cup action is Buffalo Wild Wings (BWLD). The company's stock popped 6% Monday after an analyst at Wunderlich Securities increased his price target for shares after seeing all the demand for the flagship wings for soccer games.

Home prices up: Investors will have some economic data to digest Tuesday morning. Home prices nationwide continued to rise in April. The S&P/Case-Shiller index measuring the value of residential real estate in 20 U.S. cities increased 1.1%.

Still to come, the U.S. government will post May data on new home sales at 10 a.m. and the Conference Board will release its monthly consumer confidence index, also at 10 a.m.

Abe lets another arrow fly in Japan: Japan's government has released details on the third and final phase of Prime Minister Shinzo Abe's ambitious plan to jolt the country's economy out of stagnation. Companies may pay less tax as a result, but the response in the stock market was muted. The Nikkei ended flat.

Related: Fear & Greed Index still extremely greedy

European markets were mixed in afternoon trading.

The ruble and Moscow stock index were stronger, continuing their recovery from sharp losses earlier this year as fears about an escalation of the crisis in Ukraine fade. A ceasefire between government forces and pro-Russian separatists declared last Friday appears to be holding. Sentiment was also improving after Abbott Laboratories (ABT) said Monday it would buy Russian pharmaceutical company Veropharm for as much as $495 million, underlining the waning threat of sanctions.

First Published: June 24, 2014: 9:53 AM ET

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Meet the Marxist behind Seattle's wage hike

Seattle City Council member Kshama Sawant wants more cities to adopt her hometown's new $15 minimum wage.

SEATTLE (CNNMoney)

Now, fresh off Seattle's historic passage of a $15 minimum wage, the self-described Marxist is ready to make it a national fight.

Sawant -- whose full name is pronounced "Shah-mah Sah-want" -- emigrated to the U.S. from India and earned a PhD in economics from North Carolina State University before taking a teaching position at Seattle Central Community College. She says she was radicalized politically by the gaping inequality she observed upon arriving in the world's richest country.

The veteran activist, who supported the Occupy movement that cropped up in the wake of the Great Recession and bank bailout, ran for city council last year under the banner of Socialist Alternative, an organization that calls for "international struggle" against global capitalism.

The "Socialist" label is practically an epithet in many parts of the U.S., but Sawant says it "wasn't really any kind of barrier" in her meetings with voters.

"Everybody said, 'Don't call yourself a Socialist,' but every speech I gave, I started with saying that I'm a member of Socialist Alternative," she said in a recent interview at her City Hall office. "People are hungry for an alternative, but that alternative isn't there."

The cornerstone of Sawant's campaign was her call for a $15 minimum wage, an issue the local press credited her with placing on the city's agenda.

Seattle's city council unanimously passed the wage increase earlier this month, and it will be phased in over several years based on a scale that considers the size of and benefits offered by an employer. It will apply first to many large businesses in 2017 and then to all businesses by 2021.

Related: Some Seattle small business owners say new minimum wage is unfair

Washington already has the nation's highest state-level minimum wage, at $9.32, a rate that also applied to Seattle. The current federal minimum stands at $7.25. Some Democrats in Congress have been pushing for a gradual increase to $10.10, but so far without success.

While Seattle's $15 minimum is a first for a major U.S. city, it's not as if workers will be living lavishly. Working full-time, year-round for $15 an hour with two weeks off yields an annual pre-tax income of around $30,000.

"The cost of everything is going to go up," said Selena Bevers, a convenience store clerk in downtown Seattle. "You're still going to be where you are now."

Annette Kousin, who works at a nearby coffee shop, worries about how the bill will impact food stamps and other federal benefits.

"I have a ton of student loans I need to pay off," she said. "I'm having trouble just surviving."

Local businesses, meanwhile, have complained that the legislation will hurt their bottom lines and harm the local economy.

Supporters counter that the economy could actually see a boost as workers gain more disposable income to spend.

"It has the potential to really help the economy," said Olivia Anderson, a clerk at a Seattle ice cream shop. "I know it will affect small businesses, but big corporations have the money to do this right now."

Related: Massachusetts approves $11 minimum wage

Sawant concedes that she has a number of concerns about the bill that ended up passing. She says it was "watered down" by business interests and the Democratic party establishment. She'd like to shorten the phase-in period, get rid of an allowance for sub-minimum "training wages" and leave tips out of businesses' wage calculations for workers.

But despite those caveats, she called the legislation a major victory, estimating that it will benefit 100,000 low-wage workers and transfer $3 billion from businesses to low-wage workers over the next decade.

Seattle's minimum wage push gained momentum following protests by fast food workers and a vote in the nearby city of SeaTac last fall to raise its minimum wage to $15. Now, Sawant hopes Seattle's example will help the cause of activists fighting for a $15 minimum elsewhere.

Related: Wages are falling in Manhattan and L.A.

Agitation for a higher minimum wage is on the rise, with low-wage workers staging demonstrations across the country in recent months.

She and Socialist Alternative launched an organization in January called 15 Now that has gained chapters in New York, Chicago, Philadelphia and Los Angeles.

Sawant said there is "a deep disconnect " between young people today and older generations that grew up with the "American Dream" ideal of hard work leading to a more prosperous life.

"That is not going to happen for most people now, statistically speaking," she said.

First Published: June 24, 2014: 10:09 AM ET

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Seattle $15 wage plan is unfair to me

Kathy Lyons owns a franchise in Seattle and says that her business might not survive the transition to a $15 minimum wage.

NEW YORK (CNNMoney)

He worries that the city's newly passed $15 minimum wage will hurt his ability to be competitive. That's because his competitors -- other small employers -- will have extra time to transition into the higher minimum wage. But because Subway is a national fast food chain, his restaurant doesn't count.

"In three years, my wages will be up by 60%, but the sandwich shop next door won't have to do it yet. I'll have to charge more, and he can charge less than me," said Hollek, who has been a franchise owner since 1997.

Seattle's city council approved a timetable earlier this month for how the $15 minimum wage would be phased in from its current wage floor of $9.32. Businesses with fewer than 500 workers get until 2021 to phase it in.

Companies with 500 or more employees must begin paying $15 in 2017. Chains like Subway, McDonald's (MCD) or Burger King (BKW) are in the latter category, even if many of their restaurants are run by small business owners.

Franchisees are up in arms over this. The International Franchise Association has sued the city of Seattle, charging that the ordinance unfairly penalizes franchisees.

The average franchisee at the association employs 11 people.

Related: Subway leads fast food industry in underpaying workers

Hollek said that as a franchise owner, he has the advantage of purchasing ingredients through Subway. But he points out that he is already paying a percentage of his earnings to Subway for royalties and advertising.

Kathy Lyons, a plaintiff in the suit against Seattle, said the new plan could put her out of business. She and her husband employ 22 workers at their franchise of BrightStar Care, which supplies nurses and personal attendants for in-home patient care.

Lyon said the cost of her franchise not only eats up her margins, but that non-franchise competitors will inch her out of the market when she's paying $15 an hour and they're not.

"We are at risk of not making it if we can't compete on fair ground," she said.

It hurts a large number of businesses, the association said. Seattle has roughly 600 franchise operators, with 1,700 locations, employing around 19,000 workers.

Chuck Stempler, who owns AlphaGraphics franchises in Seattle, said the transition to a $15 minimum wage could cost jobs.

Seattle city council member Nick Licata said he's more concerned about the quality rather than the number of jobs. He also believes that three years is enough time to adjust.

Related: 10 big overtime pay violators

Chuck Stempler, another plaintiff in the suit against Seattle, said his business is being "miscategorized."

"They are carving out a particular segment of small businesses and treating them like they're a different size," he said.

Stempler employs 69 workers in two AlphaGraphics franchises in Seattle and worries that "every printing company that's not a franchise" will have a meaningful advantage over him.

Stempler said he might end up raising prices, and also cutting jobs.

First Published: June 24, 2014: 6:54 AM ET

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Can this bank lift 80,000 out of poverty?

Muhammad Yunus, founder of Grameen Bank, cuts the ribbon at the U.S. Training Institute's opening.

NEW YORK (CNNMoney)

The Grameen Bank made its name by offering loans of $1,500 to impoverished female entrepreneurs in the developing world. In 2008, it expanded its program to the United States.

In the last six years, more than 28,000 women have received micro loans from Grameen America totaling over $150 million. Last week, the organization officially opened the doors of its first U.S. training institute in Queens, N.Y., which it will use to reach even more women across the country.

In partnership with Capital One (COF), the Robin Hood Foundation and Citibank (C), the new center will act as a training school for loan officers, who are crucial to Grameen's strategy of empowering female entrepreneurs.

Related: Women take on manufacturing

The organization takes a peer-group lending approach: Groups of five women band together and work with a loan officer or "center manager" at one of Grameen America's 18 branches. Center managers, who are full-time salaried employees, give women financial training to open bank accounts (for many, it's their first), establish credit and launch businesses.

Loan officers are the gateway to capital and play a "critical, pivotal role," according to Grameen America CEO Andrea Jung.

"Part of scaling nationally is embedding best practices to our loan officers," she said.

There are already over 110 Grameen loan officers in the U.S., and Jung expects the new training center to add 200 men and women to the roster in the next year. Center managers will be trained at the new center and then will return to their local branches around the country. Each manager can help an estimated 400 women get their small businesses off the ground per year.

In sum, the institute could help as many as 80,000 women a year, many of whom are single moms working dead-end or unsustainable jobs.

The center had a soft launch earlier this year, and 70 people already went through the training, including Mercedes Martinez.

Originally from Puerto Rico but now living in the Bronx, Martinez received $1,500 in loan from Grameen America in January 2014. A new mom, she wasn't working when a neighbor told her about the program and suggested she start a business selling jewelery. Martinez, who had previously worked as a cashier in the jewelry business, opted to buy jewelry on Canal St. with her initial loan.

"I wasn't good at money management," explained Martinez. "Through Grameen, I learned you have to save and make your money grow."

Martinez paid off her loan in March. Changed by the foundation and its mission, she completed the one-month training -- which combines classroom-style learning with shadowing Grameen America loan officers -- and is now a loan officer at the Manhattan branch of Grameen.

Related: The best countries for female entrepreneurs

The fact that the training center is located in Queens, where the first of Grameen America's 18 branches opened, is no coincidence, according to Jung.

Franklin Mora, deputy director of Queens Economic Development Corporation, said his organization refers women to the Queens branch.

"The model works really well with local communities," Mora said. "As a whole, the borough could really benefit from more organizations like Grameen America to help support small businesses."

First Published: June 24, 2014: 6:57 AM ET

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A $6.9 million bet on a clean shave

NEW YORK (CNNMoney)

As a first year student at Stanford Business School, Walker emailed Foursquare founders Dennis Crowley and Naveen Selvadurai. He parlayed the email into a job heading up business development for the startup. Walker later left Foursquare to become an entrepreneur in residence at investment firm Andreessen Horowitz.

Now Walker is ready for the next step in his career: heading up his own company.

His new venture, Walker & Company, just raised $6.9 million in a round of financing led by Andreessen Horowitz. It will provide products made specifically for people of color. The idea stemmed from his own experience.

Walker, who is African American, found men's razors difficult to use due to his hair and skin type. As a solution, the first brand under the Walker & Company umbrella is called Bevel -- a six-piece razor kit selling for $59.95 that is designed specifically for people with course, curly hair.

"I know when I started a company, there's one thing that was very important to me, and that was developing something with real authenticity," Walker told CNNMoney.

Walker says that with a single blade, the Bevel razor cuts the hair level with the skin rather than beneath like multi-blade razors. The kit also includes creams aimed at reducing irritation and bumps. The idea is to tap into the health and beauty market for people with curly and coarse hair.

According to Walker, a large number of black males are interested in a product that helps combat razor burn. In addition to African Americans, Walker & Company products will address specific needs faced by Latinos and Asians.

"When I think of other issues that exist in the community, I think about things like Vitamin D deficiency, I think about hyperpigmentation, I think about natural hair transitioning," Walker says. "We're going to develop brands to solve each of those problems."

While the Bevel is currently available only online, Walker says his goal is to have it sold in major retailers.

First Published: June 24, 2014: 8:00 AM ET

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Iraq, oil price fears spook market

NEW YORK (CNNMoney)

The Dow Jones Industrial Average is slightly lower in early trading. Many hope this could be the week the Dow cross the 17,000 mark for the first time, but it's not looking promising today. It's largely a psychological barrier, but it illustrates that the index has continued unabated the bull run that saw it close above 16,000 for the first time just six months ago.

The S&P 500 and the Nasdaq are flat.

Related: What does Dow 17,000 mean, anyway?

Here are the top things to watch in today's trading:

1. Oil prices: As fighting in Iraq intensifies and Israel continues launching rockets into Syria in retaliation for the killing of an Israel teen, keep an eye on oil prices. WTI crude oil is creeping closer and closer to the $107 barrier. It's been near that mark for a few days, but any increase in oil that could affect gas prices won't be welcome news amid America's peak driving season.

2. Turmoil in the fashion industry -- Lululemon & American Apparel: Lululemon shares are bouncing this morning after the Wall Street Journal reported that the company's founder Chip Wilson hired Goldman Sachs to help him strengthen his role at the company, where he is the largest shareholder. Lululemon (LULU) shares are up 3.8%

American Apparel (APP) shares have opened 3.6% higher. Former CEO Dov Charney wrote a letter to the board challenging his dismissal, which the board contends was legal. The company continues to struggle to turn around its brand. The stock is trading for less than $1.

3. Big deal for Micros: The computer giant has reportedly purchased MICROS Systems (MCRS), one of its largest customers, for more than $5 billion. Micros specializes in providing software applications to the hospitality and retail sectors, and has worked with Oracle for more than 15 years. Oracle shares are flat, and Micros stock is up 3%.

4. Ou la la -- GE finally snags French prize: General Electric (GE) has finally closed the deal on French company Alstrom (ALSMY) to the tune of $17 billion. The French government had opposed the deal because it was concerned the merger would lead to job losses. GE stock is down slightly, as are Alstom's French shares.

5. BNP Paribas on verge of settlement with U.S.: The bank is on the cusp of a $9 billion settlement with the U.S. Justice Department on allegations that it did business with off-limits countries. The French bank's shares are flat at the moment.

Related: The fine could hurt BNP's credit rating

6. Data Dump: Data comes out at 10 a.m. showing the pace of May existing home sales, and the market is expecting an annual rate of 4.73 million. Keep an eye of homebuilder stocks like Toll Brothers (TOL), PulteGroup (PHM) and Lennar (LEN).

Earlier in the day, the Federal Reserve Bank of Chicago put out an index of economic activity showing that May was a good month for growth.

7. International Markets: European stocks are largely down, with the FTSE 100 down slightly in afternoon trading. Asian markets are also a mixed bag, as are Chinese stocks are doing well after the country's manufacturing showed its first expansion in six months. The Hang Seng fell 1.7%, but shares traded in Shenzen were up nearly 1.1%.

First Published: June 23, 2014: 10:08 AM ET

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