(MONEY Magazine) – Q. My wife and I are divorcing. Originally, I planned to buy my wife's share of the house for $300,000 and continue living there with our daughter. (We purchased the house for $200,000 but it's now worth $600,000.) However, my lawyer says that this arrangement will cost me a major tax break because, when I eventually sell the house, the $300,000 I pay my wife won't be added to the cost basis. As a result, the maximum capital-gains exclusion of $250,000 for singles won't be nearly enough to shelter my profits. If we sell the house now, our joint exclusion of $500,000 will keep the entire gain tax-free. Is Uncle Sam really so cruel as to force parents to choose between the comfort of a child and their finances? J. SMITH Norwalk, Conn.

A. Whether it's a house or a mutual fund, asset transfers between spouses--even divorcing ones--are deemed tax-free exchanges, not purchases. As a result, the cost basis of the asset stays the same. But there is something you can do. Instead of buying your wife's share, lend her the $300,000 and continue to own the house jointly. The loan would be payable with interest when the house is finally sold. As long as one of you is living in the house under the divorce agreement at the time of the sale, you each can take half of the maximum exclusion--up to $250,000 per person.

Q. I receive a $30,000-a-year lifetime pension that is adjusted for inflation. I want to make sure that my portfolio is properly diversified, but I don't know what asset class my pension belongs in. JOHN HENKELMAN Somis, Calif.

A. You should regard your pension as income, not as an asset. But you're right to consider your pension when allocating your portfolio. If you can live on your pension and Social Security, you can afford to take more risks with your portfolio. In that case you may want to invest heavily in stocks (80%)--diversified among large and small companies and foreign markets--and put the remainder in bonds (15%) and cash (5%). But if you need extra income, you must balance growth with safety. A more prudent portfolio: 50% stocks, 40% bonds and 10% cash.

Q. I've noticed that stock markets in Belgium, Finland and Greece have performed extremely well, but I can't find any mutual funds mainly invested in those three markets. Are there any? SHIRLEY CYR Santa Ana, Calif.

A. A search of mutual fund databases did not find any funds that focus primarily on Finland or Greece. The Belgium Index Series is not a mutual fund but an investment company whose shares are traded like a stock (ticker symbol: EWK). Before you pick up the phone, though, remember what investors who flocked to Japan's unstoppable economy a decade ago have learned: It's risky to bet on a single country.

Q. Four years ago, I set up a Twentieth Century Giftrust for my sister. The trust is structured so that no withdrawals can be made for at least 10 years after the account is opened. But my sister badly needs the money now. Is there some way to tap the account? NAME WITHHELD Oklahoma City

A. No. The contract you signed created an irrevocable trust. No one has succeeded in breaking the agreement in the 20-year history of the trust, now known as American Century Giftrust. If it makes you feel any better, your sister's creditors can't get their hands on her money either.

REPORTER ASSOCIATES: Jan Alexander and Cindy Hsiao