DEAR BRUCE: My elderly mother is now living with me. Her house, which has no mortgage, is currently being rented. Her philosophy is that her money will go to take care of her needs and, if she uses it all, so be it. She's not worrying about leaving anything to her kids. Her assets at this time are: her house, a CD, her regular checking account and a money-market account. I hear the talk about "protecting" monies so that if a person goes into a nursing home (which for me will be an absolute last resort) the government cannot take it all. If her money is going to take care of her needs, does this come into play or not? — N.P., via e-mail

DEAR N.P.: I'm with your mom. It's her house, her money and, if she uses it all, so be it, and no estate for you. The people who protect monies are those who don't want their funds to be used for them. They want the kids to inherit the money. Oftentimes, it is the elderly person who would rather go on Medicaid (welfare) than use his/her own money. I believe your mother has the proper attitude. Of course, during the time she is living with you, you should receive some of her money for living expenses.

DEAR BRUCE: I have been told that if you have credit cards open with a zero balance, it hurts your credit rating based on the theory that open credit is a concern for lenders. I have also heard just the opposite, that open lines of credit not used are strong for credit scoring. Can you help me to understand what is best — to close open credit cards or to let them stay at a zero balance? Currently, I use just one card that is paid off monthly, and I have one other card used for my auto loan at zero interest, paid automatically every month until the balance is satisfied. — S.M., via e-mail

DEAR S.M.: There is so much concern about FICO scores and how they are determined. I, too, have heard both arguments. The strongest argument against too much open credit is, a lender may be concerned you have the ability to suddenly go out and run up enormous credit obligations that you will be unable to meet. On the other hand, the fact that other creditors are willing to grant you these large sums doesn't hurt your situation. It would seem to me you're doing just fine. If you're paying bills on time and not abusing the credit, I wouldn't change a thing. If you were applying for a large amount of credit, you could clearly indicate to the company that you'd be willing to cancel one or two of these other cards, if they felt it was in their best interest.

DEAR BRUCE: I've been a working stiff all of my life, making between $40,000 and $65,000 a year. I did purchase a couple of homes, including the one I lived in and then sold, realizing a very substantial profit. Now my accountant tells me, never mind the 15 percent capital gain, I will have to pay a lot more tax due to something called the alternative minimum tax. I was totally unaware of this. You may have discussed it in your column before, but I'm sure there are many who'll get hit and will be shocked. Can you give me an explanation? — K.E., via e-mail

DEAR K.E.: The alternate minimum tax is another question of law gone wrong. The notion behind it: When it was passed, the woodwork was crawling with multimillionaires who paid no tax at all. They passed this AMT so that everyone would pay something. As it turns out, that was not a good observation. The troublesome part is, it was not indexed for inflation and now lots of people are getting hit. Congress is dealing with it, and, hopefully, it will get put aside permanently but probably only temporarily. This is one of those instances (Homeland Security might be another example) of good intentions but lousy law.

Send your questions to: Smart Money, P.O. Box 503, Elfers, FL 34680. E-mail 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.