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I want to help a friend who is going through some challenges with her husband. My friend and her husband are both from India and work in the Pacific Northwest. They have twin daughters who are 2 years old. My friend’s husband appears to be a friendly and agreeable person, and has an exceedingly large circle of friends.
My friend, however, complains that he has a temper and is extremely controlling. My friends and I have witnessed the controlling behavior, where she has to manage the kids completely on her own and her husband doesn’t seem to bother at all about helping. Also, he controls what she does and who she visits.
She has complained that her husband has forced her out of the house on several occasions. Several friends and I visit the couple on social occasions, and we veer between ignoring him completely and imploring him to be more helpful around the house. He simply ignores our advice. We have not witnessed our friend being thrown out of the house, but I trust her word.
A ‘lost’ passport
My friend’s husband stopped her from continuing her job, and now she is now forced to be a homemaker, something she doesn’t like. It may sound unbelievable and is obviously unjust, but it’s fairly common in some cultures for women to be treated like this. We friends have often discussed the issue and debated how we can help her.
These discussions often end with “We should not interfere in their life” or “It’s her fight and she should push back and know what to do.” Though at some level, we may be unsure or unwilling to ruin our friendship with her husband. My friend recently told friends that her husband “lost” her passport and is not lodging a police complaint or getting a new one.
She told me today that she is so fed up that she just wants to go to her parents in India, but she doesn’t have her passport. I sometimes suspect that her husband is just hiding her passport. I have often thought that maybe I should just call the authorities and tell them the issue and let them help her.
However, I am also not sure if this is the right step. What should we do?
Confused Friend
Related: My ex-husband has a life-insurance policy on me — and jokes he’ll be ‘Suspect No. 1’ if I die. Other than haunting him, what can I do?
“Coercive control and financial abuse are often tied together.”
MarketWatch illustration
Dear Friend,
Nobody knows what goes on inside a relationship except for the people involved.
However, there are signs of coercive control and financial and domestic abuse that should not be ignored, whether you are a friend or family member or a hairdresser, manicurist or neighbor. We should all remain vigilant. You can’t live somebody’s life for them, but you can give them information to help them become aware of what is happening.
Coercive control and financial abuse are often tied together. The vast majority of domestic-abuse cases also involve economic abuse, and finances are one of the main reasons a person stays with or returns to an abusive partner, as noted in a research brief by the University of Wisconsin-Madison Center for Financial Security. The fact that your friend’s husband pushed her to give up her job is a bad sign.
Unfortunately, all the signs are there. Your friend’s husband removed her source of income and ability to travel, and she is completely reliant on him for money. Financial control and a gradual dismantling of her self-confidence go hand in hand. Other signs include economic exploitation where the abusive partner forces their partner to take out a line of debt, or does so in their name.
How to escape financial exploitation
I’m extremely reluctant to conflate your friend’s husband’s cultural background and his behavior. Men who engage in coercive control over their wives cross all geographical boundaries, and domestic abuse is something of an epidemic in the U.S.
“Intimate partner violence is a persistent public health problem that affects millions of Americans every year and disproportionately affects women and some racial/ethnic minority groups,” according to the Centers for Disease Control and Prevention.
Your friend’s marriage and life may now be her new normal, so if you believe she is in danger of being controlled and manipulated, tell her the signs and say you are concerned about her long-term well-being. A year can turn into 10 years in the blink of an eye, and if she can’t do it for herself, she may be willing to do it for her twin daughters.
Domestic-abuse survivors must be financially prepared to leave, as escaping is only half the battle, says the Kansas City, Mo.-based law firm Hale Robinson & Robinson. They must support themselves once they flee the relationship, or their chances of success will fall. “Transportation, shelter, food, and funds for the ensuing legal battle must be obtained,” the firm adds.
There are women’s shelters that have a detailed plan of action on how to leave an abusive relationship, including the documents she should bring with her. These include bank-account numbers, credit-union and 401(k) information, copies of car titles and past three years’ income-tax returns, and the partner’s Social Security and bank details.
Godspeed in your efforts to protect your friend — and good luck to her.
Read next: I lost $240,000 after a ‘friend’ I met on Instagram encouraged me to invest in crypto. Can I write off my loss?
Are you experiencing domestic violence or coercive control? Call the National Domestic Violence Hotline at 1-800-799-SAFE (7233) or visit thehotline.org. FreeFrom works to establish financial security for domestic-violence survivors, and the National Coalition Against Domestic Violence supports efforts to change conditions that lead to domestic violence and coercive control.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter.
The Moneyist regrets he cannot reply to questions individually.
Previous columns by Quentin Fottrell:
‘I don’t want my wife to lose everything’: I’ve been diagnosed with dementia — I suddenly could not spell or write legibly
‘Things have not been easy’: My sister is a hoarder and procrastinator. She is delaying probate of our parents’ estate. What can I do?
‘I gave up a job that I loved passionately’: My husband secretly set up a trust that includes our home and his investments. What should I do?
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, or weigh in on the latest Moneyist columns.
By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.
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It hasn’t been a great start to the year for cannabis producer Canopy Growth (CGC 6.41%), as its shares are already down 29% this year. The stock has struggled to win over investors in recent years. A highly competitive Canadian cannabis market has made it difficult for the company to grow without burning through cash and incurring hefty losses along the way.
Earlier this month, the company released its latest quarterly results, which showed a significant improvement in the bottom line. Does this indicate something positive, that perhaps the stock can finally turn things around this year?
A closer look at how Canopy Growth performed in Q3
For the last three months of 2023, Canopy Growth reported net revenue of 78.5 million Canadian dollars, which was down 7% on a year-over-year basis. A big part of the reason for the decline in the top line was that the company has gotten smaller by divesting its sports nutrition business BioSteel, which Canopy Growth previously said was a significant drain on cash.
The company has been focusing on becoming leaner in an effort to slow its cash burn and improve profitability. Last quarter, Canopy Growth’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of just under CA$9 million was much smaller than the CA$49.7 million adjusted EBITDA loss it incurred a year earlier. Its free cash flow for the quarter was a negative CA$33.9 million, which was also an improvement from the prior-year period when Canopy Growth’s free cash was a negative CA$78.9 million.
Overall, it was an improved quarter for Canopy Growth, but investors seem uninspired by the company’s latest update.
Canopy USA remains the focal point of its strategy
For years, the big draw for investing in Canopy Growth has been that it would be ready to move into the U.S. pot market once it’s legal to do so. It has reached tentative deals with Acreage Holdings, Wana Brands, and other U.S.-based cannabis companies that it hasn’t been able to close on due to the federal ban on pot in the U.S.
Marijuana legalization isn’t on the horizon in the U.S., so Canopy Growth is doing the next best thing: Creating a special purpose vehicle for all the pending deals it has with U.S.-based companies, called Canopy USA. There is a shareholder vote scheduled for April 12, which, if successful, will move things forward and pave the way for the creation of a new class of non-voting, non-participating exchangeable shares.
Canopy Growth says it expects “to be the first and only U.S. listed company offering shareholders a unique opportunity to gain exposure to the fastest growing cannabis market in the world.” It will have a non-controlling interest in the entity, and it will be an “unconsolidated investment.” The Nasdaq exchange had previously objected to Canopy Growth consolidating the results of U.S.-based cannabis companies, which is why investors shouldn’t expect to see those results pad up Canopy Growth’s own numbers anytime soon.
My concern as an investor would be that Canopy Growth continues paying too much attention to a market that is unavailable and is likely to continue to be unavailable to the Canadian pot producer for the foreseeable future. Spending time and money on this elaborate setup for Canopy USA in the hopes of someday being able to capitalize on those opportunities doesn’t seem like a great use of resources, especially since Canopy Growth’s financials still need lots of work to get to breakeven and for this to be a viable investment.
Not enough has changed (improved) for Canopy Growth stock to be a buy
Canopy Growth investors only need to look to rival Aurora Cannabis as proof that even achieving positive adjusted EBITDA may not be enough to turn things around for the troubled pot stock. Aurora has posted an adjusted EBITDA profit for five straight quarters, and that hasn’t resulted in a significant rally.
Investors have simply lost trust in these companies, and rightly so. Even if Canopy Growth gets to breakeven, its strategy for long-term growth is questionable, given that the U.S. doesn’t look like it’s legalizing marijuana in the near future. And that would need to happen for investors to become bullish on the company’s long-term growth opportunities.
Although Canopy Growth’s financials are improving, there’s still not a compelling enough reason to invest in the stock, as it could still be a tough road ahead for investors.
You’re probably well aware that if you don’t make an effort to save for retirement, you may be forced to live on Social Security alone when you’re older. And that could mean living frugally to an extreme.
The average Social Security recipient today collects just $1,907 a month, or a little less than $23,000 per year. Granted, if you’re far from retirement, the average monthly benefit (and yearly benefit) is likely to be much higher by the time your career wraps up due to inflation and cost-of-living adjustments.
The point, however, is that it’s important to bring savings with you into retirement. And in that regard, many people have work to do.
Image source: Getty Images.
Recent Motley Fool research found that the median retirement savings across U.S. households was $87,000, as of 2022. For a 20-something or 30-something household, that’s not terrible. But for older households, that figure is worrisome.
If you’re looking to boost your retirement savings, you don’t necessarily have to go to the extreme of working a 20-hour-a-week side gig or denying yourself all non-essential expenses to grow your 401(k) or IRA. Rather, these simple moves could be your ticket to more savings — and more options in retirement.
1. Save your raise every year
Many companies have a policy of giving out cost-of-living raises year to year, the same way Social Security benefits are eligible for an annual cost-of-living adjustment. One thing it pays to do is save your entire raise from the very start of the year — before you get used to having extra money in your paycheck. That way, the additional money you’re saving is money you won’t even miss.
2. Claim your full 401(k) match
Many employers offer a match of some sort in their 401(k). You may not be in love with your company’s retirement plan because it lacks investment choices or charges high fees. And if that’s the case, you can make an IRA your main retirement savings vehicle. But at the very least, put enough money into your 401(k) to claim your employer match in full so you’re not giving up so much as $1 for your retirement.
3. Time your departure from your employer strategically
Some employers with a 401(k) match impose a vesting schedule. Yours could mean that you’re not entitled to your full 401(k) match until you’ve been with the company for a specified period of time.
If you’re thinking of leaving your job, read up on your vesting schedule and time your resignation accordingly. It may be that waiting two or three months to leave could enable you to walk away with thousands more in your 401(k).
4. Bank any windfalls that come your way
During the year, you may come into extra money, whether in the form of a tax refund, bonus, commission, or even a gift. That’s money that can all go into your long-term savings. And if you think random contributions won’t make a huge difference, consider this: If you put an extra $200 you get as a holiday gift into your IRA at age 25 and invest it at an average annual 8% return, which is a bit below the stock market’s average, it’ll be worth over $4,300 by the time you turn 65.
To be clear, the money that goes into your IRA needs to be earned income. But this advice assumes that you work and earn money, and a $200 gift allows you to allocate $200 more from your paycheck toward retirement savings.
Boosting your nest egg is something you might feel the need to do. Before you make yourself miserable in the course of increasing your IRA or 401(k) contributions, see if these relatively painless steps do the trick of helping your savings get to a better place.
My long-term boyfriend and I, both 45, finally had our first child last year after years of trying.
Due to our age and some other factors, he is likely to be our only child. He is the light of my life, and I’m realizing that as I only get one chance to experience these magical early years with him, I hate that I’m doing it while also working full-time, robbing me of the precious little time I have with him as a toddler.
I am the primary earner in our household, making about $150,000 a year in an intense job. My boyfriend has been out of work for over a year after a failed attempt at switching industries, and probably won’t have a new job for a little while longer as he recalibrates what’s next.
Though I’m very successful in my career, the birth of my son has cemented for me that I hate the 9-to-5 grind, and it’s not what I want to do for the next 20 years. I would love to work for myself, with a flexible schedule that allows me to spend more time with my son each day.
Passive-income streams
Since he’s been born, I’ve been researching ways to both do that as well as building some other passive-income streams. In an ideal world, I’d love to start those up and get them moving so that I can leave my job in the next 7 to 8 months.
My main concern is that I’m terrified that, no matter what I cobble together, I won’t match my current income with the new plan. While I’m hopeful my boyfriend will also get a new job in that time period, I’m thinking conservatively and only accounting for one income (mine) in this plan.
Before we had our son we were in a great financial spot — all housing costs were coming in at under 30% of my pay and I was maxing out my 401(k). However, with childcare costs and his lack of income we’re now basically living paycheck to paycheck. If I am able to take on this new self-employed dream some costs (childcare) would go down, but others would increase.
Six-figure trust fund
There’s one catch, though. I have a trust fund that is worth a very high six figures. I rarely ever touch it: I mainly look at it as an enormous emergency savings fund should the bottom fall out of the economy like it did in 2008.
But the other day, as I struggled to crank out numbers for this new life plan, it hit me that I could just take from the trust to supplement any shortfall. In four to five years when my son is in school, if my self employment isn’t working out I could always reenter the traditional labor force.
But this plan scares me, simply because I’ve always viewed my trust fund as my safety net, and I’d be depleting it. Is this a good idea? A bonkers idea? What else should I be thinking about?
For context, it’s not my only source of investments: I currently have about $395,000 in my 401(k) and Roth IRA, a $10,000 “slush fund” investment account, and about $80,000 in company stock, with more stock due to vest over the course of my (potential) remaining time at the company.
I have an emergency cash fund in a high-yield savings account, but I’ve had to pull from it lately so it doesn’t even cover three months of expenses right now. So should I go for it? Money I can always earn, but this time with my son I will never get back.
Time is Fleeting
“Wait until your boyfriend finds a job before making any move.”
MarketWatch illustration
Dear Time is Fleeting,
First, a warning: There’s no magic bullet.
Of course, we should all — in an ideal world — feel fulfilled by our jobs and partners and life, but our wantonness will keep us looking for more ways to find that magic elixir. Happiness is an inside job. When you change one thing in your life, you may realize that there is something else that you need to fix, and then something else, like a house that always needs repairs, and never quite suits your needs. One of my favorite pieces of advice: “Listen to your body because your mind lies through its teeth.” Don’t act from a place of fear, anger or ego. Listen to how you feel.
If your trust fund can buy anything, however, it’s peace of mind for the future. I agree that it should be used to help you maintain a semblance of contentment for the here-and-now. There’s no point having a six-figure trust fund with high six figures if — like a treasured china tea set — you are not going to tap it at the most critical and important times of your life. If you want to spend the next couple of years with your son, instead of paying for childcare, you could do it. One major caveat: Wait until your boyfriend finds a job before making any move.
Millions of parents are in your boat. Weekly daycare costs for children in the U.S. are now running at $284 per week, up 54% over the previous decade, according to Care.com. If you can save that money, and withdraw from your trust fund over, say, the next two years, it is essentially fulfilling part of its purpose. You don’t say what profession you are in, but women who take time out of their careers to raise their children obviously lose promotional opportunities and, when they return to the workforce, their pay tends to fall behind that of their peers.
MarketWatch recently built a tool that uses Department of Labor data to show the average cost of childcare by county and how that compares to your income. As MarketWatch reported when the tool was launched: The average cost of center-based group care infant childcare in Queens County, N.Y. was $23,635 in 2022. A family would need to make at least $337,647 per year for that to be 7% of their income. The median annual income for families in Queens in 2020 was $81,193, so they would need to spend roughly 26% of their income on childcare.
In the meantime, ask your employer if you can work remotely two days a week and/or see if you can move to a part-time schedule. It may be that you can keep your job and spend more time with your son, too. It may not be an all-or-nothing scenario. If you do decide to give up your job for now, and you are in a career that you could easily return to in the event that your business idea does not work out, and your boyfriend finds work, you will be in a more secure position to take a career break. So many “ifs.” But you’re right. You won’t get this time again.
Talk to a financial adviser and a therapist because it’s almost always a bad idea to make a financial decision based on emotion. Of course, we should have agency over our own lives, but bringing in third-party help will bring a fresh, independent perspective. Sometimes, we often think, ‘If I could just change this one thing, I’d be happy.’ But that’s often our mind and emotions playing tricks on us. What you don’t want to happen is one year down the line, feeling overwhelmed with full-time childcare, and wondering why you gave up a $150,000 job.
Give yourself some time to get used to having this new person in your life, and see how the next six months play out.
More from Quentin Fottrell:
My father has dementia and ‘forgave’ my brother’s $200,000 house loan. The nursing-home notary said he was of sound mind. What can we do?
My husband bought our house with an inheritance. I signed a quitclaim. He said I could live there after he dies, but changed his mind. What now?
Low-paying jobs are the economy’s way of saying you should get a better job’: I’ve decided to stop tipping, except at restaurants. Am I wrong?
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com, and follow Quentin Fottrell on X, the platform formerly known as Twitter. The Moneyist regrets he cannot reply to questions individually.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write to me with all sorts of dilemmas. Post your questions, or weigh in on the latest Moneyist columns.
By emailing your questions to the Moneyist or posting your dilemmas on the Moneyist Facebook group, you agree to have them published anonymously on MarketWatch.
By submitting your story to Dow Jones & Co., the publisher of MarketWatch, you understand and agree that we may use your story, or versions of it, in all media and platforms, including via third parties.
Sixty years after their invention, Pop-Tarts remain beloved by consumers who bought about three billion of them in 2022.
“We didn’t realize that this thing was going to go as well as it did,” said 96-year-old Bill Post, who helped develop Pop-Tarts in the early 1960s. “It went beyond any expectations we had.”
Post remembers when Kellogg’s came to Keebler, the cookie and cracker company where he worked at the time, to ask that Keebler make a breakfast snack for the cereal giant. Post said the two companies collaborated on the product, with Keebler as the manufacturer and Kellogg’s as the marketer.
“It was an unusual, cooperative thing,” said Post. “We got along famously.”
Pop-Tarts were initially released in Cleveland, a test market, in 1963.
“They wanted 10,000 cases of each flavor. But it was such a success that we made 45,000 cases of each flavor,” he said. “The production was not enough. They ran out.”
Now Pop-Tarts, owned by Kellanova, the business made up of Kellogg’s snacking brands, is on the cusp of becoming the company’s next billion-dollar product. In 2022, the toaster pastry brought in about $978 million in U.S. sales, according to Circana, a Chicago-based research firm. By October 2023, U.S. sales for the year were already at $985 million.
“The reality is we’re looking for that next billion and how we start to continue that wonderful journey,” said Oli Morton, the general manager of the portable wholesome snacks division at Kellanova. “We’re actually even more excited about how we go and close the next opportunity down and how we continue to be relevant.”
One way the brand is trying to keep itself top of mind is the first annual Pop-Tarts Bowl on Dec. 28 in Orlando, Florida.
In October, the Kellogg Company split into two independent, publicly traded companies. Kellanova, which kept the “K” ticker symbol, is focused on snacks. W.K. Kellogg Co., which trades under the symbol “KLG,” runs Kellogg’s cereal brands.
In 2022, snacking brought in $7.5 billion, or 60%, of Kellogg’s sales. The company’s five snack brands in order of profitability are Pringles, Cheez-It, Pop-Tarts, Eggo and Rice Krispies Treats.
Robert Moskow, a food and agribusiness analyst for TD Cowen, said Pop-Tarts’ biggest competitors are “real” pastries, rather than similar products.
“There really haven’t been any other copycats that have had any success in the toaster pastry,” he said.
“I think that’s a testament to very consistent branding for the product,” he said.
Watch this video to learn more.
As the crypto market gears up for 2024, the chief legal officer of blockchain payment company Ripple, Stu Alderoty, has released three projections on crypto regulations that could impact investors’ confidence ahead of a year expected to start the new bull cycle by many analysts.
Ripple And SEC To End Legal Tussle In 2024, Alderoty Says
In an X post on Friday, December 15, Ripple shared the predictions of Alderoty on policy and US regulations in 2024. The post included three bold forecasts by the company’s chief legal officer, which generally present a dual outlook on the crypto space. Firstly, Alderoty expects the ongoing court case between Ripple and the US Securities and Exchange Commission (SEC) to come to its conclusion in the new year.
#2024Predictions — It’s that time of year again and we’ve asked leaders at Ripple to weigh in on what they think 2024 holds. 🔮
Our Chief Legal Officer @s_alderoty kicks us off with three bold outlooks on policy and U.S. crypto regulation for 2024. pic.twitter.com/7pcLmk2qPR
— Ripple (@Ripple) December 15, 2023
The blockchain payment firm already scored a “massive” partial victory over the US regulators when Judge Analisa Torress ruled that programmatic sales of XRP do not qualify as a security offering. While many still expect the SEC to still challenge this decision in the Court of Appeals following a final judgment, Alderoty projects the 3-year legal tussle, which he described as a “misguided lawsuit” by the SEC, will finally come to an end.
However, he predicts the commission will continue with its current enforcement action on key players in the crypto space. In addition to Ripple, the SEC has also launched against multiple crypto establishments, including Binance, Coinbase, Gemini, etc.
In his second prediction on US crypto regulations, Alderoty anticipates that the judiciary will continue to curtail the SEC’s excesses in terms of regulation of the crypto space. As a result, the Ripple executive believes the commission will continue to record more losses in court, as seen in similar cases against Ripple and Grayscale.
However, while this may be interpreted as a positive forecast for crypto enthusiasts, it would eventually lead to an intervention by the US Supreme Court which could result in a plethora of possibilities.
Ripple CLO Foresees No Regulatory Framework Yet
Alderoty’s final prediction on US crypto regulations centered on legislative action by the US Congress.
While the Ripple Executive expects the US lawmakers will eventually unanimously agree on the need to create a crypto regulatory framework, He believes there will be difficulty in taking action stemming from disagreements on the specific measures and regulations to be implemented.
In other news, the crypto market is now valued at $1.6 trillion, having experienced 0.5% devaluation in the last 24 hours. XRP, which currently ranks as the fifth-largest cryptocurrency, is trading at $0.6203 with a 0.12% decline over the last hour.
XRP trading at $0.6197 on the daily chart | Source: XRPUSDT chart on Tradingview.com
Featured image from The Student Room, chart from Tradingview
Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.
Imagine you have $50,000 to give to your daughter and her husband for a down payment on their new home. The question is, will you owe gift taxes because of your generous gesture?
Despite popular framing, the federal gift and estate taxes only apply to very wealthy households. Unless you have approximately $13 million to give away over your lifetime, these taxes likely won’t apply to you.
A financial advisor can help you navigate and plan for gift and estate taxes. Find an advisor today.
To be very clear, these are the rules for federal taxation. Every state also has its own tax laws and every tax profile is different, so make sure to speak with a financial or tax professional before making any plans for your own assets. However, there are two main issues to consider within this scenario: the mortgage process and potential gift tax implications.
Down Payments and Gifts
With the mortgage and lender process, you want to ensure that you fill out all forms and requirements correctly. It is extremely unlikely that you can complicate the title to this property, but you can certainly complicate or invalidate the loan by making a mistake.
When your daughter applies for her mortgage, the lender will go through her finances in detail. They want to know what assets she has, where they came from, what income she has and any other information related to how she will repay this debt. The down payment is intended as an indicator of this financial stability, so receiving it from a third party can raise concerns.
Many lenders have rules around who can provide the money for a down payment. It’s common for them to reject a mortgage with a gifted down payment unless that money comes from someone with a longstanding relationship to the borrower. Among other issues, this is intended to prevent fraud and money laundering. Since the borrower is your daughter, that shouldn’t be a problem.
If you are giving the money directly to your daughter you will typically either need to “season” the money or provide a gift letter. Seasoning the money means transferring it more than 60 days in advance, again as an indicator of legitimacy against fraudulent transfers. A gift letter is a document signed by both the giver and the recipient confirming that this is a unilateral transfer with no right to repayment.
The specific format of the gift letter will vary based on lender and jurisdiction, so consult an attorney about this document. A financial advisor can also potentially help you through this process.
You may also make this transfer through the loan process, making the down payment on your daughter’s behalf rather than transferring the money to her. The lender will require you and your daughter to disclose this during the loan application process. In and of itself, your gift will typically not be a problem, but failing to specify the difference between borrower and payer will almost always complicate (if not invalidate) the loan.
Gift Tax Exclusions and Exemption Limits
Beyond the rules that surround making a gift of this sort, your main consideration here is the gift tax.
This is a tax that the IRS places on unilateral transfers. If you give someone money or assets without expecting fair-value compensation in return, you have given them a gift. If you give them enough money, eventually you (the gift giver) must pay taxes on the transfer. Gift tax rates range from 18% to 40% based on the size of the gift.
However, the gift tax only applies to very few households due to a pair of important tax provisions: an annual exclusion and a lifetime exemption limit. And if you have additional questions about either, consider speaking with a financial advisor.
Annual Exclusion
The first is the gift tax’s annual exclusion. This is the amount of money you can give to someone each year regardless of gifts in past or future years. In 2023, the annual exclusion is set at $17,000 for individuals and $34,000 for married couples who file their taxes jointly. In 2024, those limits will increase to $18,000 for individuals and $36,000 for married couples.
The annual exclusion applies on a per-recipient basis. So, for example, say that you had four children. You could give each of them $17,000 in 2023 without triggering any gift taxes.
Lifetime Exemption
The lifetime gift and estate tax exemption is the amount of money you can give away over the course of your life – or at your death – without triggering either gift or estate taxes. For gifts that exceed the annual exclusion, the difference is applied to your lifetime exemption. If you give someone a gift over that year’s annual exclusion and have exhausted your lifetime exemption, you’ll owe gift taxes on the amount of money that exceeds that year’s exclusion.
In 2023, the lifetime gift and estate tax exemption is $12.92 million for individuals, which means married couples have a combined exemption limit of $25.84 million. In 2024, the exemption will increase to $13.61 million for individuals and $27.22 million for married couples. If an individual has already gifted $12.92 million over the exclusion limits by 2023, they will be able to gift another $690,000 in 2024 (not including the annual exclusion amount).
Unlike the annual exclusion, the lifetime exemption does not reset. While you can gift up to the annual exclusion each year, any remainder permanently reduces your lifetime cap. The lifetime exemption is on a per-donor basis, meaning that it applies collectively to all gifts you have given. For example, say that in 2023 you give $20,000 to each of your four children. Each gift exceeds the exclusion by $3,000. Collectively, they would lower your lifetime gift and estate tax exemption by $12,000.
Gift Taxes And Down Payments
When it comes to your daughter’s down payment, the tax issues are this: Are you married? And how much have you given away throughout your life? Let’s assume you’re single for simplicity’s sake.
First, if you give her the down payment money in 2023, the first $17,000 of the gift will automatically be free of any potential tax liability. However, since the gift exceeds the annual exclusion by $33,000, that remainder will lower your lifetime exemption.
So, for example, if you have never given anyone a taxable gift, you will pay no gift tax and your annual exclusion will be reduced to $12.887 million ($12.92 million minus $33,000). If you have already exhausted your lifetime exemption, you would have to pay taxes on the $33,000.
However, there would still be ways to manage this potential tax liability. If you could wait until 2024 to give your daughter the money, your lifetime exemption would go up to $13.61 million. You can apply the remainder to the newly raised cap and will owe no taxes on the excess gift. But if you need additional help managing your tax liability, consider working with a financial advisor.
Bottom Line
Unless you have gifted more than $12.92 million over your lifetime, you can almost certainly give a $50,000 down payment to your daughter or other family member and not owe gift taxes in 2023. Just be careful to do the paperwork right, otherwise, it could complicate the loan.
Gift Tax Tips
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Will the fact that this is your daughter complicate things? While the IRS does not treat gifts from parents differently, large gifts within a wealthy family can potentially complicate future planning around trusts and estates.
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A financial advisor can help you strategically give away assets to lower your potential estate tax liability. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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The post I Want to Give My Daughter and Her Husband $50,000 For a Down Payment. Do I Have to Worry About the Gift Tax? appeared first on SmartReads by SmartAsset.
Renowned investor and business magnate Warren Buffett has long been a vocal participant in discussions surrounding economic and fiscal matters. In a 2001 interview with Becky Quick on CNBC, Buffett introduced a bold strategy aimed at addressing the enduring challenge of America’s deficit.
Buffett’s proposal revolves around making Congress accountable for deficit decisions. He suggests passing a law stipulating that if the deficit exceeds 3% of gross domestic product (GDP), all incumbent members of Congress become ineligible for reelection.
Buffett made the visionary proposal in 2011. It recently resurfaced on social media, particularly on X (formerly Twitter), and appears more pertinent than ever in the current economic climate dominated by inflation and debt.
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Buffett frequently comments on global and domestic monetary policy and the likely movement or state of various countries’ economies or currencies. In a 2011 statement at the annual Berkshire Hathaway Inc. shareholders’ meeting, he said, “We’ve got a huge national debt, which is a problem. But it’s not necessarily a problem that’s going to cause the country to collapse. We’ve had periods of higher debt in the past and we’ve come through them.”
Buffett feels his proposal is the only way to encourage legislators to keep the deficit below the specified threshold to secure their chance at reelection. He is highlighting lawmakers’ responsibility for fiscal policies, making their political futures contingent on their management of the nation’s debt. Ideally, such an inducement should encourage the adoption of strategies that align with long-term sustainability rather than politicians succumbing to actions that relate only to short-term political gains.
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On the positive side, Buffett’s plan could incentivize lawmakers to act more responsibly with the nation’s finances. However, skeptics might argue that this could lead to too much emphasis on deficit reduction and less attention on critical areas such as social programs, infrastructure and education.
Buffett is not the only high-profile investor and financial commentator talking about the national debt. Author and investor Robert Kiyosaki recently said on a taping of “The Rich Dad Radio Show” that “America is now bankrupt. And the question I want to answer today is how [come] America, at one time reportedly the richest country in the world, is now bankrupt?”
While America is not currently bankrupt, the high national debt and resulting interest remain extraordinarily high. The U.S. Treasury notes the current public debt outstanding is more than $33.8 trillion as of Dec. 8.
While it’s unlikely members of Congress will approve a law that ties their reelection eligibility to deficit choices, Buffett’s thoughts present them with a reminder of the need for accountability and fiscal responsibility.
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This article Just Give Me 5 Minutes! Inside Warren Buffett’s Claim That He Can Fix the National Debt In 300 Seconds originally appeared on Benzinga.com
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