‘When I married my husband, he sold his house, which was valued at about $100,000 more than mine, but he had no equity in it.’
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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.
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.
My husband and I married 10 years ago. It was a second marriage for both of us. I recently found out that after five years of marriage, he put all of our assets into trusts controlled by him alone. At that time, at his request, I also gave up a job that I loved passionately so we could establish a stable home for his youngest daughter. He also has three other children who had already launched.
Instead of having a high-level job with bonuses and accolades, I ran one of his companies with no pay. I also drove his daughter’s carpool, allowed his adult son and his son’s children to move in with us, and ran our home in a smooth and efficient manner. I acted as a good steward of his assets so he could maximize his retirement and investments. I also added substantial assets to our portfolio with my “hobby” of real-estate investing.
I’m a team player and thought that upon retirement we would live the life we dreamed about during the early days of our marriage — I expected he would retire at 65 and we would travel the world. Our portfolio is worth 10 times what it was when we married. His retirement account and several IRAs were opened after we were married.
Irrevocable trust for his children
He put everything, even our home and my investment properties, into a trust, with his friend as trustee. I had been the beneficiary of his retirement account, but now the trust is. I believe this change of beneficiary was forged. He invested in a company that stands to make a lot of money, and that investment was put into an irrevocable trust for his children only. His children have quit their jobs to create startups with funding from their dad. At 69, he feels he can’t retire because he’s helping his kids.
I told him that if I outlived him, I would give everything I inherited from him to his children, and my assets would go to my family. When confronted about the trusts, he said he assumed I’d be OK with that because of my promise to give his assets to his kids. I’m not even a 50% beneficiary. I’m terrified his kids will boot me out of my home or declare me incompetent when I’m a little old lady just trying to sit on the beach. I don’t even have kids of my own to look out for me.
He can’t understand why I’m upset. Now I’m nearing retirement age with no extra investments in my retirement account, no credit for the work I’ve done and no say in my assets. I don’t even have a work history for the past 10 years and can’t get a job. Is this even legal? If I bring an attorney in, it will ruin the marriage. I can’t even contest the will because it states if anyone contests the will, they will have nothing.
With most things, I’m smart. But gosh, I’ve been so stupid. What are my options?
Second-Class Wife
“Transparency is key to marital estate planning.”
MarketWatch illustration
Dear Ex-Wife,
Secret trusts and a possible forgery do not constitute a healthy marriage.
There’s nothing stopping a spouse from setting up a trust during a marriage, but they should do so with separate assets. To set up a trust with separate assets without telling your spouse is bad manners, but to create a trust with both separate and marital assets, in secret, is a recipe for a legal battle and divorce court. Marital assets are those that are accumulated during the marriage.
Sometimes in life, you have to make a choice: You can stand back and allow your husband to squirrel away marital property and thereby “save” your marriage on paper — even though he has broken your faith in him and in the marriage. Or you can call a lawyer and perhaps a forensic accountant to examine the contents of the trust and trace their origins, and thereby risk your marriage.
“While there are legitimate reasons for a spouse to set up a trust during marriage, sometimes it is done in order to improperly shield assets from equitable distribution,” according to Jewell Law PLLC in New York. “Often, the non-beneficiary spouse is not aware of the trust or thinks the money came from another source such as a family member.”
Transparency is key to marital estate planning. “A trust set up in one spouse’s name can be considered separate property regardless of whether it is set up before or after marriage,” the law firm adds. “However, when it is created during a marriage, the non-beneficiary spouse must raise the question of whether any marital assets have been put into the trust.”
“This is a situation in which a prenuptial agreement could have been helpful to confirm — and protect — the rights of each spouse in the event of divorce or death,” says Neil V. Carbone, a partner at Farrell Fritz, P.C. ”State law governs a spouse’s inheritance rights. Most states provide a surviving spouse with a minimum ‘elective’ share, that is, the right to take a share of a deceased spouse’s property regardless of what a will or revocable lifetime trust agreement provides.”
“The idea of the elective share is to avoid the complete disinheritance of a surviving spouse, so ‘no contest’ clauses are ineffective to defeat the demand for an elective share,” he adds. “What goes into the elective share ‘pot’ will vary from state to state. For example, in New York, life insurance is not included in determining the elective share. Some people may seek to defeat a spouse’s elective share rights by transferring property to an irrevocable trust, but they generally must survive a look-back period in order for the transferred property to be excluded.”
Potential forgery
Some retirement plans require a spouse to be the primary beneficiary. If your husband changed the beneficiary on a qualified retirement plan without your consent this should be challenged. Other retirement plans, such as IRAs, do not carry the same spousal-consent requirements. You can read more about what plans are covered under the Retirement Equity Act here.
Many people are surprised to learn that 401(k)s and IRAs are treated differently,” Carbone says. The former are governed by the Employee Retirement Income Security Act of 1974 and, typically, a spouse must consent in writing to have someone else named as beneficiary, he adds. “IRAs are not governed by ERISA and the spouse’s consent is not required to designate a non-spouse as a beneficiary.” If your husband did forge your consent on a 401(k) beneficiary designation form, you should act ASAP.
While you process that information, I have other questions for you to mull over: What are you hanging onto? The illusion of a happy marriage? The promise of financial security, even though that seems increasingly unlikely? The damage to your marriage has already been done by your husband. By hiring a lawyer after so many years of acquiescing to his requests, you would be merely cleaning up the fallout from his actions.
One final piece of advice: If you are considering divorce, you would be better off waiting until your 10th wedding anniversary. After that date, you will be able to receive spousal Social Security benefits. If he earned more than you during your marriage, you are entitled to a maximum of 50% of your husband’s full retirement benefit.
You’ve given up a lot for your husband. Yes, you did it willingly, but you contributed your time and financial expertise to your husband’s businesses, and any right-thinking divorce court would not be likely to look kindly on your husband’s actions. Not all stepmothers abide by their promise to distribute assets to their late spouse’s children, but this is not an excuse for his actions.
In addition to forgery and financial skullduggery, you can add gaslighting to the list of his misdeeds.
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 have $1.5 million in stocks and bonds. I asked my broker to convert my bonds to cash. He didn’t and my portfolio fell by $100,000. Can I sue?
‘She was very special to me’: My late 98-year-old cousin was targeted by grifters. They stole $800,000. Do I have any recourse?
‘It was a mistake’: My father set up a revocable trust, leaving everything to my stepmother. She’s cutting me out completely. What can 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.
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.
This man and his wife have fallen on hard times, but in reality they have been in this predicament for decades. He hasn’t had a job for many years, because he says that his wages will be garnished so it isn’t worth working. They owe a lot in property taxes. So he does odd jobs for cash.
They have hit up neighbors for money over the years, but everyone else has stopped giving them money. Even the local church no longer helps them out. The wife receives Social Security Disability and the husband just turned 62 and started receiving Social Security this month.
Their house is literally falling apart, and they have no running water. They come to our house to fill up water jugs when needed. Just this month, my husband loaned the man $400. I wouldn’t mind this, except this guy constantly calls my husband to borrow $20 or $40 at a time.
‘Are we being selfish?’
Sometimes my husband will have him work off some of the money he owes by weeding or trimming shrubs — things we can do ourselves. My husband claims that the guy will pay us back when he has the money, but I doubt it. We are now constantly fighting about this.
I am starting to feel that we are being used, but my husband feels bad for them. We are a retired couple in our late 60s and this is blowing our budget for retirement. My husband says that we have the money and are in good financial shape.
I told my husband that instead of giving cash, let’s buy our neighbor oil for his car — he has a history of running vehicles into the ground from not taking care of them — or gas cards, or store gift cards, but he says the guy wants cash. I don’t know how long this will go on.
Am I being selfish? Is there another way to handle this situation?
Good (or Bad) Neighbors
Related: My in-laws asked me to relinquish any claim to $100,000 they gave us as a down payment for our house — on the day we closed. Is that legal?
“As shocking as it might seem, there are more than 2.2 million people in the U.S. without running water.”
MarketWatch illustration
Dear Neighbor,
Being a good neighbor does not necessarily mean giving money to others when they ask for it. In fact, you could be enabling these neighbors rather than helping them. But there are other issues here that need addressing: You can be a good neighbor by helping them find assistance to make their home habitable — including making sure they have access to running water. This is not just a lifestyle or financial problem: Unhygienic conditions pose a threat to their health, too.
They might be able to apply for single-family-housing loans through the Department of Agriculture. Other organizations that could help them bring their home up to basic standards include AARP; the nonprofit Community Action Partnership, which was created as part of President Lyndon B. Johnson’s War on Poverty and with the advocacy of Dr. Martin Luther King Jr.; and Habitat for Humanity, a nonprofit that partners with people in the local community.
Your neighbors may be stuck in a cycle of poverty, and giving them cash will not help address their basic needs. Contaminated water and poor sanitation are linked to many diseases such as diarrhea, dysentery, hepatitis A and typhoid, the World Health Organization says, adding that “absent, inadequate, or inappropriately managed water and sanitation services expose individuals to preventable health risks.”
As shocking as it might seem, there are more than 2.2 million people in the U.S. without running water, according to the nonprofit DigDeep, which aims to bring safe, clean water to all U.S. households. Another 44 million people in the U.S. don’t have water that’s safe to drink. “Black and Latinx households are twice as likely as white households to lack indoor plumbing, while Native American households are 19 [times] as likely,” the organization says.
Selfish versus realistic
As to your original question, there’s nothing like a balance sheet and a timeline to provide context and wake people up to the realities of their own retirement prospects. You could use this as an opportunity to have a discussion with your husband about your financial goals, income, savings and expenditures. You’re correct that $400 here and $40 there can add up, and your husband is effectively addressing the symptoms of your neighbors’ financial troubles rather than the source of the problem.
You’re not being selfish; you’re being realistic. We are here to help people — that is our job as human beings — but no one can be expected to pour money into a neighbor’s coffers at the expense of their own financial well-being. Perhaps it makes your husband feel good about himself, but there are other ways for him to help out in his community, in addition to the organizations listed above. Decisions about giving money to these neighbors should be made jointly by you and him. A codependent relationship with a neighbor is not advisable.
There’s very little chance that you will see any of this money again, so if your husband has given a total of $1,000 — to pick a round number — to these neighbors, he needs to write it off and then consider what else you could have done with that money: fix your own plumbing, improve insulation, replaster walls, paint your home, upgrade your car, top up your emergency fund — which should be enough to cover at least six months’ worth of expenses — or even take a vacation.
This is not Monopoly money. Your husband is putting your neighbors’ needs above your own, and as long as he is a “soft touch” — that is, someone who finds it difficult to say no even when many others reached that point a long time ago — the longer he will continue to act as a “savior.” The term has biblical connotations, but it’s not always a smart or sustainable choice in real life. He can still be a good husband and a good neighbor, though, by being a helper.
He just needs to know the difference between the two.
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.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
Previous columns by Quentin Fottrell:
I asked my elderly father to quitclaim his home so I can refinance it — and take out a $200,000 annuity for my sister and me. Is this a good idea?
My partner is against us getting married. I’m not on the deed to his home, but he has a revocable trust. What could go wrong?
I want my son to inherit my $1.2 million house. Should I leave it to my second husband in my will? He promised to pass it on.
My husband and I signed a prenuptial agreement before we married. This is my second marriage, his first. He has no children. I have one child who was an adult when we married so there was no need for my current husband to adopt him. My husband and I live in a home that I purchased and maintain with my separate property.
I have been careful to pay for all mortgage and maintenance costs myself to make sure there is no question that this is my separate property. After I die, my trust directs that my husband gets the house — currently worth a net $1.2 million after deducting the outstanding mortgage from its market value — and my child gets the rest of my assets, which are around $1.2 million.
My husband will also get monthly payments from my pension as a survivor and beneficiary, which will more than cover the monthly mortgage payments. So my husband would, in effect, be paying the mortgage from funds that I provide even after my death. I would like the house to be given back to my son after my husband passes.
Not a blood relative
He is, after all, my son’s stepfather, but he is not a blood relative. Would the house be considered an inheritance? If my son were to sell the house, would it have a step-up in cost basis just as it would if I had left the house to him directly? Or would my husband leaving the house to my son be akin to a stranger bequeathing the house to him?
I know I can rewrite my trust to give my husband use of the house while he is alive and then have it pass to my son upon his death, but that forces my husband to live in the house until his death. He may wish to move elsewhere after he retires. What I wish to avoid is his leaving the house to a spouse he marries after my passing.
If I rewrite my trust to allow my husband to live in the home until his death at which time it passes to my son, what are his options and what happens to the house if he chooses to go live in another state? Can he rent out the house to provide him with an income to pay for housing wherever he goes? I suppose I could stipulate this in my trust.
I would appreciate any advice you have on this matter.
Also see: My brother lives in our parents’ home, which we’ll inherit 50/50. I want to keep it in the family for my children. How do I protect my interests?
“Trusts and wills cannot be all things to all people.”
MarketWatch illustration
Dear Wife & Mother,
Alas, you are trying to be too many things to too many people. Set out your goals with your estate planning in order of priority. You will have to make some kind of compromise along the way and, from what you say in your letter, your son is your No. 1 priority from an inheritance viewpoint, even though you wish to make sure your husband has a roof over his head.
You are going to great pains to ensure that your $1.2 million home is not commingled with your marital assets — in the event that you divorced — and yet still plan to leave it to your second husband in your will. Ultimately, you want your son to inherit your entire estate, while ensuring that your second husband lives a financially independent life after you’re gone.
In order to do that, you have to cut yourself some slack. Situations change, relationships crumble, people marry and those spouses often come with their own power and influence. Your husband and son could fall out. He or a new spouse could fall on hard times and need money for long-term care or medical expenses. That house could become a lucrative source of income.
Trusts and wills cannot be all things to all people. Allow your husband to live in your home for the remainder of his life as a tenant for life, making sure to specify that he must take care of the property taxes and upkeep of the property. But you are asking for trouble by allowing your husband to have his cake and eat it — by allowing him to live in the house and sell it.
So what if you did leave your house to your husband — with the hope/promise that he would keep his word and leave it to your son after he dies? Stepchildren are not ordinarily regarded as legal heirs under the law, unless they are formally adopted, or included in beneficiary designations, trusts, gifts or a last will and testament. Check with a tax lawyer in your state.
Step-up in basis
But who qualifies for a step-up in basis complicated. “An heir does not have to be a biological descendant to receive a step-up in basis,” says S. Michelle Jann, director of wealth planning at Goelzer Wealth Management. “The property in question must be included as a part of the decedent’s estate. Qualifying for the step-up in basis doesn’t have anything to do with the relationship of the individual.”
You would need to be named either in the will, or in a revocable trust, or via a transfer-on-death deed to inherit the property, Jann adds. If you inherited the property via one of these methods, you would receive the step-up in basis.
“If no one has been named as the legal heir and the home is going through probate, then the stepson may not be determined to be the legal heir during the probate process,” she added. “If the probate courts have to decide, they will follow the laws of intestate succession which would follow blood lines and probably not include the stepson. The individual or individuals chosen by the probate court would receive a step-up in basis.”
As an aside, there are wrinkles to the step-up rule for married couples, depending on where they live. For example, if you owned the house jointly with your second husband, he would receive a step-up in basis, but likely only on half of the value of the house, Jann says. However, if you lived in a community-property state, he would receive a full step-up in basis.
This all assumes that you predecease your husband. It’s actually more likely that your husband will die before you. Between 25% and 50% of men outlive women, according to this global study spanning 200 years published in BMJ Open, a peer-reviewed open-access medical journal. Indeed, women tend to outlive men by five to six years, Scientific American reports.
Create an estate plan that is rock solid, one that needs no room for maneuver.
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.
Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
The Moneyist regrets he cannot reply to questions individually.
Previous columns by Quentin Fottrell:
My parents want to pay off my $200,000 mortgage, and move into my rental. They say I’ll owe my sister $100,000. Is this fair?
‘I hate the 9-to-5 grind’: I want more time with my newborn son. Should I give up my job and dip into my six-figure trust fund?
My best friends tell the story about when they met. He was her teaching assistant at university and he noticed her right from the start. He asked her out several times, but she turned him down. My friend is a die-hard feminist. When she finally agreed, she said she would go out on a date with him but that she would pay her own way. His response? “Great! Then we can do twice as many things.”
They only got married because he got a job at a teen summer camp that would not hire someone who was “living in sin.” So they had a small ceremony at their home with a few close friends and their sheepdogs. Throughout the marriage, they have shared all of the expenses of running the home, buying groceries and furniture, and paying for holidays. They each have their own investment accounts. I have never known two more happy people than these two.
I personally pay my share at the beginning of every relationship, simply because there is still the male societal expectation that women are like pop dispensers: You put in some money, and you get what you want as a result. At least, that’s how I see it. When you start out paying for yourself, you are telling the person you’re going out with that that value judgment is off the table, and that there is no expectation when the date is over.
Who do you think should pay?
Admiring Friend and Occasional Dater
Related: ‘This guy grifted me hard’: My date chose an exclusive L.A. restaurant. After dinner, he accepted my credit card — and we split a $600 bill. Shouldn’t he have paid?
“Choosing a partner is potentially the biggest financial decision you will ever make in your life, especially if you eventually divorce. So make that decision wisely.”
MarketWatch illustration
Dear Admiring,
If a man asks a woman out on a date and he chooses the restaurant, he should at least offer to pay. If a man asks another man out on a date and he chooses the restaurant, he should at least offer to pay. If a woman asks another woman out on a date and she chooses the restaurant, she should at least offer to pay. And if a woman asks a man out on a date and she chooses the restaurant, she should at least offer to pay.
If their date says, “No, let’s go Dutch,” fine.
If their date says, “Thank you, that’s very nice of you,” and lets the person who asked pay, that’s OK too. I feel particularly strongly about this if the person asking chooses a very expensive restaurant. You can’t expect everyone to fork out $100 or $200 or more for a meal. If you do, you’re living in a bubble and you’re not taking the other person’s feelings into consideration, and that’s a red flag.
Of course, some people — like this woman — expect their partner to pay for everything. And some men don’t even want their wives to work. Other people say they want to go to an office to get away from their partner. What does this tell us? Not a lot, really, except to say that if everyone felt the same about working and paying for dinner, the world would be a very dull place.
I heard another “meet cute” story recently about two people who met on a night out. She gave him her phone number, but he never called. So she thought, “We had a great night. I’ll find him and ask him why he never called.” He lived in another city, and she tracked him down through his work and sent him a letter. Turns out, he had lost her number. They’re now married with three kids.
Everybody has a different level of expectation and confidence, and a person who has strong principles about paying their way, like your friend, should find a romantic match who appreciates and supports that. Choosing a partner is potentially the biggest financial decision you will make in your life, especially if you eventually divorce. So make that decision wisely.
Who pays on the first date, and the consideration and respect that they show for their partner’s decision, is a good guide for how the relationship will progress. Here’s an experiment: Bring your date to a restaurant with slow service, and then sit back and see how they react. You may learn a lot about how that person operates under pressure if things don’t go their way.
More columns by Quentin Fottrell:
‘I want to meet someone rich. Is that so wrong?’ I’m 46, earn $210,000, and own a $700,000 home. I’m tired of dating ‘losers.’
My dinner date ‘forgot’ his wallet and took the receipt for his taxes. Should I have called him out for being cheapskate?
‘I spend $600 a month taking women out for dinner and drinks’: Does the man always have to pick up the check on a first date?
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.
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.
My husband and I live in California, and this is the second marriage for us both. He is 68 and I am 63, and we have been married 13 years. Here’s my problem: My husband used his inheritance to purchase the house we have been renting.
At that time, he had an attorney draft a trust stating that if he were to die before me, I could live in the house until I died, with nothing said about what happens to it after that. He said he would file the trust document if I signed a quitclaim.
Believing him, I signed, but he never followed through on filing the documents. He did deposit those funds into a separate account, but we used it to buy a car, do some traveling, do upgrades on the house, etc. I also used funds from my 401(k) to build a fence.
If he dies before me, where does that leave the house? Is the trust valid if he never filed the papers? He has two grown sons who would probably fight me for ownership of the house, and I wouldn’t care to spend my retirement funds fighting.
The Wife
“There is another possibility — your husband did not, as he said, buy the house you are living in with an inheritance.”
MarketWatch illustration
Dear Wife,
Never sign anything without seeking legal counsel first.
It does not make sense to me that he would ask you to sign a quitclaim on a home that he bought with his inheritance. Inheritance is deemed separate property under California law, so the home he purchased with that money would also be regarded as separate rather than marital property — unless, of course, he put your name on the deed.
You did not have to sign the quitclaim deed, but he obviously used his promise that you could live in the house for your lifetime and the story that he bought this house with an inheritance as leverage for you to sign it. My guess is he would use the quitclaim as evidence that this house is, indeed, separate property, if you ever decided to challenge that in divorce court.
Given those circumstances, however, there’s no reason he would not follow through on his word and give you “right of occupancy.” It may be that he had second thoughts, and wants his sons to inherit the property upon his passing. Or he may be dragging his feet — perhaps indefinitely.
Did your husband even have an inheritance?
There is another possibility: Your husband did not, as he said, buy the house you are living in with an inheritance, but told you that to make you believe you did not have any claim to the property. If he bought that house with marital funds — that is, money earned during your marriage — it would be community property and split 50/50.
“The money mentioned does not appear to have been used to buy the house,” says David Cowan, LegalShield partner attorney at provider firm Parker Stanbury. “It seems that it was placed in a 401(k) and used for other items. This raises a concern that the house was not purchased with the husband’s separate property. This also makes the impact of the quitclaim need more significant and not in the wife’s favor.”
There are other areas of confusion in your letter. “Trusts are not filed,” Cowan adds. “They are created and signed/executed, but there is no filing of the trust while both parties are alive. It is always prudent to ask for a copy of a trust to make certain it says what you think it does. Of course, there is no obligation to give a copy.”
Another sliver of hope: Daniel McKenzie, an attorney with The McKenzie Law Firm in Centennial, Colo., wonders whether you received any benefit in exchange for signing your husband’s quit-claim deed. “If you signed the deed based on a promise that was not fulfilled, and did not receive any benefit in exchange, you may have several contractual bases for having it rescinded,” he says.
There could still be claims for reimbursement
Although the home would belong to your husband if he acquired it solely with his separate property, there could be claims for reimbursement or an interest in the home if your funds or community funds were used to purchase or improve the home, says Marc M. Stern, a partner at Greenberg Glusker in Los Angeles.
He recommends you ask your husband to confirm that he set up a trust and that you will have the right to live in the home for the rest of your life. But you are still in a tricky position: Your husband can change his mind at any time during your marriage unless he is contractually obligated, through a written agreement you both sign, to make the gift to you, Stern says.
Another possible outcome that could be favorable to you: If your husband deposited his separate inherited funds into an account holding community property, “and the funds to purchase or improve the home were then taken from that account, the home might not be characterized as 100% husband’s separate property,” Stern adds.
Otherwise, your future in this home depends on your husband.
More from Quentin Fottrell:
Is it OK for my new boyfriend to ask me to split the bill? ‘I don’t want him to get used to me paying for my own meals.’
My stepdaughter is executor to her late father’s will, and believes she’s now on the deed to my home. Is that possible?
I inherited $246,000 from my late mother and used $142,000 to pay off our mortgage. If we divorce, can I claim this money?
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.
Dear MarketWatch,
My husband is 68 and I’m 74. He makes $250,000 a year. We’re renting a townhouse in a very upscale suburb in the Houston area, but our last rent increase was $300 a month!
My husband wants to find a house for not more than $300,000 because he doesn’t want to be a slave to rent increases. We’d have to take out at least a $100,000 mortgage, which he says he can pay off in a year because he currently banks every other paycheck.
I would rather move into a 55-plus community where we could rent a nice apartment and have amenities, with no property tax or upkeep. He says we will be homeless because our rent keeps going up, and we won’t last long on our combined Social Security.
What is the best path to take?
See: I’m 53 and hate my job. My husband, 59, and I have two homes, plus $1 million in savings. Can we afford to retire?
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com
Dear Reader,
What is best for you both will depend heavily on your finances — that is, your day-to-day spending and your nest egg for retirement.
There’s no one-size-fits-all approach to retirement housing. In some instances, renting can be the best choice, as there’s no maintenance, renovation or repair fees or taxes to worry about. On the other hand, as you have seen, with an owned home, the value (and any growth in that value) is entirely yours, and you’re not relegated to whatever rent hikes come.
A 55-plus community isn’t a bad idea, but many of them offer homes for purchase with a maintenance fee, similar to a condo or coop. It sounds like your husband is trying to avoid cost-of-living increases that are out of your control, in which case, this may not be the best option for you two, since a homeowners association can easily increase your maintenance fee or dues from year to year. These locations would likely provide the maintenance for the exterior of your home, including landscaping.
If you do explore this option, ask the homeowners association who is on the board, how often they’ve increased fees, how much funding is in the reverse and if you can participate in community meetings, suggested Rocket Mortgage.
Buying a home, on the other hand, can be a lot of work, and can take a lot of money. You have to worry about the upkeep — a new roof or boiler, or perhaps amenities to help you age in place, like widened door frames and extra railings, when the time comes. There are also property taxes, as you mentioned, and utility costs.
Also see: Will our Social Security checks be reduced? My wife has a school pension and I’m a veteran.
The median listing home price in Houston is $340,000, while the median sale price is $311,300, according to Redfin, which means it isn’t impossible to find a house in the price range your husband is considering. Before you jump into the housing market, though, get serious about your current and anticipated future budgets.
Look at your predicted income and expenditure with a new home. Try to get as granular as possible, and include expenses like your mortgage with a realistic interest rate, property taxes, utilities, and other necessities, including groceries, transportation, healthcare, and so on.
Paying off the mortgage quickly is a fantastic goal, but only if you have extra money saved for emergencies and a retirement nest egg. These two goals should be split — you don’t want to tap into retirement funds for an emergency, so that your retirement assets can grow over the long-term and your emergency assets are liquid in the event you need money immediately.
If you’re relying heavily on Social Security, as it sounds like you might have to do eventually, it is imperative no matter your choice in housing that you have money to fall back on outside of Social Security. Having Social Security benefits is helpful, but it shouldn’t be your main source of retirement income — especially if you’re considering buying a home. Expenses arise for renters and homeowners alike, and if you’re not financially prepared, you’ll be in trouble no matter what type of housing you choose.
Readers: Do you have suggestions for this reader? Add them in the comments below.
Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com
Dear Quentin,
I live in Florida. I think my husband wants a divorce. I purchased my house a short while before we got married about six years ago. The deed and the mortgage are in my name only (actually, I haven’t even changed it to my new last name).
I have about $80,000 to $100,000 worth of equity. Everyone keeps telling me he could force me to sell the house and give him half of the proceeds. He says he wants me to sign a contract where he would get 20%. I don’t want to sell, and I don’t want to…
Master your money.
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