Gift Tax, Explained: 2021 Exemption and Rates

Gift Tax, Explained: 2021 Exemption and Rates

Patrick Villanova   Fri, October 29, 2021

The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.

The gift tax is a federal levy on the transfer of money or property to another person when equal value is not received in return. While it may sound cumbersome, most Americans will never pay a cent in gift taxes to Uncle Sam due to several key Internal Revenue Service rules. However, a financial advisor or tax professional can help you determine what your tax liability may be if you plan to give money or property to another person.

What Is the Gift Tax?

When a person gives money or property to someone other than their spouse or dependent, they may be required to pay gift tax. This federal excise starts at 18% and can reach up to 40% on certain gift amounts. The responsibility for paying the tax typically lies with the donor, not the individual receiving the gift. While recipients don’t face any immediate tax consequences, they may have to pay capital gains tax if they sell gifted property in the future.

Not all gifts are subject to this tax, though. Certain gifts are entirely free of tax, including:

School tuition and education payments

Charitable donations

Medical expenses

Political contributions

Gifts to spouses and dependents

The gift tax does not play a significant role in the finances of most Americans because of two key IRS provisions: the annual gift tax exclusion and lifetime exemption.

Annual Gift Tax Exclusion

The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.

The gift tax is a federal tax on the transfer of money or property to another person when equal value is not received in return.

The IRS allows individuals to give away a specific amount of assets or property each year tax-free. In 2021, the annual gift tax exemption is $15,000, meaning a person can give up $15,000 to as many people as they want without having to pay any taxes on the gifts. For example, a man could give $15,000 to each of his 10 grandchildren this year with no gift tax implications.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/gift-tax-explained-2021-exemption-172716212.html

Capital Gains on Inherited Property

Capital Gains on Inherited Property

Eric Reed   Tue, October 26, 2021

Inheritance can make your taxes tricky. If you inherit property or assets, as opposed to cash, you generally don’t owe taxes until you sell those assets. These capital gains taxes are then calculated using what’s known as a stepped-up cost basis. This means that you pay taxes only on appreciation that occurs after you inherit the property. A financial advisor could help ensure that you are filing your returns correctly. Let’s break down how capital gains are taxed on inherited property.

If You Inherit Property You Don’t Pay Taxes Automatically

There are three main types of taxes that cover inheritances:

Inheritance taxes – These are taxes that an heir pays on the value of an estate that they inherit. There are no federal inheritance taxes and only six states levy any form of inheritance tax. Given the state-specific nature of inheritance taxes, this subject is beyond the scope of this article.

Estate taxes – These are taxes paid out of the estate itself before anyone inherits from it. The estate tax has a minimum threshold. In 2021 that threshold was $11.7 million. As with all other tax brackets the government only taxes the amount which exceeds this minimum threshold, meaning that if your estate is worth $11,700,001, the government will levy taxes on $1. The remainder passes tax free.

Capital gains taxes – These are taxes paid on the appreciation of any assets that an heir inherits through an estate. They are only levied when you sell the assets for gain, not when you inherit.

Cash that you inherit is taxed through either inheritance taxes (when applicable) or through estate taxes. In the case of inheritance taxes, it is your responsibility to file and pay this tax. In the case of an estate tax, the IRS taxes the estate directly. As a result it is uncommon for an heir to owe any taxes, including income tax, on inherited cash.

The IRS does not automatically tax any other forms of property that you might inherit. This means that if you inherit property, stocks or any other form of asset, you generally will not owe taxes when you inherit. For example if you inherit your grandparents’ house, the IRS will not tax you on the value of the property when you receive it. (There are exceptions to this rule in certain specific circumstances. Most often these exceptions apply to assets that generate revenue, such as income investments, retirement accounts or ongoing businesses.)

You will, however, owe capital gains taxes if you choose to sell this property.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/capital-gains-inherited-property-164546562.html

What to Do When You’re the Executor

What to Do When You’re the Executor

Sandra Block, Senior Editor   Fri, October 29, 2021,

At some point in your life, there’s a good chance you’ll be tasked with acting as the executor of an estate. The designation is both an honor and an obligation. Depending on the size of the estate and your relationship to the deceased, performing the duties of an executor can feel like a second job, says Patrick O’Brien, cofounder of Executor.org, an online tool designed to help executors manage an estate.

O’Brien launched the tool after he served as executor of his father’s estate. Even though the estate was fairly modest, “I was shocked at how difficult and complicated it was,” he says.

The task is particularly challenging for adult children who are responsible for executing the estate of the last sur­viving parent. Those executors are often required to distribute assets among several beneficiaries, sell the family home, and comb through decades of family belongings, some of which may be valuable.

If the family is fractious, the estate is large or the parents’ estate planning was haphazard (or nonexistent), the task becomes even more time-consuming. While every situation is different, here are some basic steps most executors should follow:

Obtain copies of the death certificate and file the will. One of the first duties you must perform as executor is to obtain copies of the death certificate, usually available from the funeral home, and file the will and death certificate with the county probate court. The deadline for filing the will varies by state, but it can range from 10 to 90 days after the date of death.

If probate is required, you’ll need to obtain a letter from the court, known as a letter of testamentary, that gives you legal authority over the estate. You need this letter because “the executor doesn’t have authority until they get something from the court that says they have that authority,” says Rich Yam, an estate planning adviser with Wealthspire Advisors, in Madison, Wis.

Assemble a team. In most cases, you’re going to need professional help, including an attorney with estate-planning experience (who can help you navigate the probate court) and, depending on the size and complexity of the estate, a tax professional and certified financial planner. The attorney who helped the deceased draw up his or her will is a good option, because he or she is probably familiar with the estate.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/executor-161419524.html

7 Mistakes People Make When Choosing a Financial Advisor

7 Mistakes People Make When Choosing a Financial Advisor

Smart Asset  October 31, 2021

Choosing a financial advisor is a major life decision that can determine your financial trajectory for years to come.  A 2020 Northwestern Mutual study found that 71% of U.S. adults admit their financial planning needs improvement. However, only 29% of Americans work with a financial advisor.

The value of working with a financial advisor varies by person and advisors are legally prohibited from promising returns, but research suggests people who work with a financial advisor feel more at ease about their finances and could end up with about 15% more money to spend in retirement.

A recent Vanguard study found that, on average, a $500K investment would grow to over $3.4 million under the care of an advisor over 25 years, whereas the expected value from self-management would be $1.69 million, or 50% less. In other words, an advisor-managed portfolio would average 8% annualized growth over a 25-year period, compared to 5% from a self-managed portfolio.

1. Hiring an Advisor Who Is Not a Fiduciary

By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy.

All of the financial advisors on SmartAsset’s matching platform are registered fiduciaries. If your advisor is not a fiduciary and constantly pushes investment products on you, use this no-cost tool to find an advisor who has your best interest in mind.

2. Hiring the First Advisor You Meet

While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you.

3. Choosing an Advisor with the Wrong Specialty

Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses - before signing the dotted line.

To continue reading, please go to the original article here:

https://article.smartasset.com/financial-advisor-mistakes-18/?utm_source=smartasset&utm_campaign=sma__falc_relatedposts_financial-advisor&utm_content=famistakes_rita

7 Situations When You Need a Financial Advisor Most

7 Situations When You Need a Financial Advisor Most

Matt Wiley MAR 28, 2019

Do you know enough about financial management to take care of all of your investing on your own? Or do you need help from a seasoned expert?

That question comes up for millions of Americans each year.

If any of these describe you, you could benefit from professional financial advice:

1. You’re retiring soon – Maximizing retirement income requires smart decisions around complex topics such as Social Security, 401(k) and IRA withdrawals.

2. You manage your own investments – Individual investors should check their strategies with unbiased third parties. You may be overlooking opportunities in your portfolio.

3. You have children – Whether you’re saving for college or planning their inheritance, there are several ways to ensure your children are taken care of.

 To continue reading, please go to the original article here:

https://smartasset.com/financial-advisor/7-situations-when-you-need-a-financial-advisor-most

15 Things To Help Kids Be Good With Money

15 Things A Personal Finance Expert Suggests Parents Do To Help Their Kids Be Good With Money

Thu, October 28, 2021,

I like to imagine I was raised to be financially intelligent (thanks ma and pa) but now that I have a kid of my own, I was curious what an expert had to say about raising kids to be good with money.

I write about personal finance and money, so you'd hope I have it together — and for the most part, I think I do. I owe my love of saving money and my abhorrence of debt to my parents who set me up with a bank account at birth, had me get a job as soon as it was legal, and made me save up for the dumb plastic toys I thought I just had to have.

So I chatted with Beth Kobliner, the New York Times bestselling author of Make Your Kid a Money Genius (Even If You're Not).   Sometimes you've gotta pull out the big guns.

Here are her tips:

1. Start talking about money early on.

There's a lot of shame, stress, and worry surrounding money, so it makes sense that many parents shy away from the topic. But Kobliner says that to raise financially intelligent kids, you'll want to start talking about money early on.

"And not only should it be early, but financial education also needs to be ongoing. Here’s why: A study out of the University of Wisconsin showed that by age 3, children can grasp basic economic concepts such as value and exchange. And a University of Cambridge survey found that by age 7, many of the habits that help kids manage their money are already set."

There's a lot of shame, stress, and worry surrounding money, so it makes sense that many parents shy away from the topic. But Kobliner says that to raise financially intelligent kids, you'll want to start talking about money early on.

"And not only should it be early, but financial education also needs to be ongoing. Here’s why: A study out of the University of Wisconsin showed that by age 3, children can grasp basic economic concepts such as value and exchange. And a University of Cambridge survey found that by age 7, many of the habits that help kids manage their money are already set."

2.  Show them how money works and teach them the difference between wants and needs.

The act of trading money for goods and services will be completely foreign to them. They may literally think money, and the things it buys, grows on trees.

To continue reading, please go to the original article here:

https://www.yahoo.com/lifestyle/15-ways-parents-help-kids-194602014.html

Treasury Bills vs. Bonds: What’s the Difference?

Treasury Bills vs. Bonds: What’s the Difference?

Patrick Villanova   Fri, October 29, 2021,

Fixed-income securities play an important role within individual investment portfolios and the economy at large. But like other securities, fixed-income instruments come in a myriad of variations, from short-term Treasury bills that only pay interest when the bill matures, to long-term Treasury bonds, whose investors receive interest twice yearly. Below, we’ll specifically examine the similarities and differences between Treasury bills, Treasury bonds and other types of bonds. If you’re interested in investing in fixed-income securities, a financial advisor can help you build a balanced portfolio.

Treasury Bills vs. Treasury Bonds

Like their name suggests, Treasury bills and Treasury bonds are debt instruments issued by the U.S. Department of the Treasury to help fund the operations of the federal government. 

Since they are backed by the “full faith and credit” of the government, both are extremely low-risk investments known for their relative safety. However, that security comes at a cost for investors. The returns offered by “T-bills” and “T-bonds” often fall well short of the returns of stocks and mutual funds.

The key difference between the two is the amount of time it takes for each to mature. While Treasury bonds are considered long-term debt securities, maturing 30 years after they are sold, Treasury bills are short-term securities that mature within a year and pay less interest than T-bonds. In fact, the maturity period of T-bills can be as short as four weeks.

The other primary difference between T-bills and T-bonds is how interest is paid. A T-bill pays out interest only when it matures. When an investor purchases a T-bill, they’ll pay a discounted rate and later collect the full face value of the bill when it reaches maturity. Treasury bonds work differently, paying out interest to investors twice a year until reaching maturity.

But T-bills and T-bonds share a plethora of similarities. Both are initially purchased at auction, either on the TreasuryDirect platform or through a bank or broker. Both can also be bought and sold on secondary markets. The minimum purchase of either kind of security is $100 and both are sold in increments of $100.

Treasury Bills vs. Savings Bonds

Another common type of bond is the U.S. savings bond. Like T-bills and T-bonds, savings bonds are issued by the Treasury Department to help fund government operations, making them reliable but not lucrative investments. However, unlike T-bills and T-bonds, savings bonds cannot be bought and sold on secondary markets. A savings bond can also be purchased with as little as $25.

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/treasury-bills-vs-bonds-difference-192958846.html

Cramer: ‘Stop Freaking Out’ About Inflation”

Cramer: ‘Stop Freaking Out’ About Inflation” — here's how to profit from soaring costs

Jing Pan   Mon, October 25, 2021   MoneyWise

The threat of runaway inflation has many investors running scared — but for once, Jim Cramer isn’t getting too heated.  The Mad Money host says there are still plenty of attractive places to put your money, pointing to four sectors in particular that could profit from rising prices.

Cramer: ‘Stop freaking out’ about inflation — here's how to profit from soaring costs

“We’ve got lots of companies that benefit — and many that benefit, you might say, spectacularly — and others that are basically immune,” Cramer said last week on his show. “Plenty of winners out there if you just stop freaking out and start looking at the opportunities.”

Here are the four safe havens Cramer recommends and why you might want to funnel some cash that way, even if it’s just your spare pennies.

Energy

Inflation and commodity booms often go hand in hand, with energy typically leading the charge.

In fact, the price of crude oil has already gone up over 70% year to date, while natural gas prices have more than doubled.

Of the big multinational energy producers, “I like Chevron the most,” Cramer says.

“[The company] yields nearly 5% [and is] committed to spending $10 billion in new technologies that are less energy-intensive.”

Cramer also likes domestic producers that seem to be returning more and more capital to shareholders in the form of dividends — naming Devon Energy and Pioneer Natural Resources as just a couple.

Financials

Banks tend to do well under rising interest rates. And facing growing inflation, the Fed is expected to raise rates as soon as next year.

Cramer points out how well Bank of America, Goldman Sachs and Morgan Stanley have been doing, but he also likes Wells Fargo for being a “wildcard turnaround of this entire stock market.”

After a 70% rally year-to-date, Wells Fargo shares now trade at about the same level as they did in January 2020. The other three stocks, however, are trading well above their pre-pandemic levels.

“Wells Fargo can have a ton of upside if it finally gets its house in order,” Cramer says. “And I’m telling you, it is getting its house in order.”

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/cramer-stop-freaking-inflation-heres-221000510.html

How To Rebound From a Bad Financial Year

How To Rebound From a Bad Financial Year in 2020

By Andrew Lisa May 17, 2021

Follow these steps to improve your financial health.

Many Americans toasted the end of 2020 and woke up in 2021 realizing that while the end is in sight, we still have a long way to go to conquer the pandemic and right the economy. You may be one of the millions of Americans who lost their jobs, closed a business, faced unexpected expenses or experienced some other major loss due to COVID-19. The first thing to know is this: You are not alone.

Even more comforting, you still have the power to achieve financial freedom despite the setbacks of last year. With a little effort, you can shore up your budget, reduce your expenses and manage your financial recovery. The following short list of actions you can take right now will help you improve your financial health this year.

Listen To the Experts

One of the easiest steps to take costs nothing but time and could save you a lot of money in the long run: Take advice from people who know what they’re talking about. Personal finance podcasts like “Afford Anything,” “Women & Money,” “Brown Ambition” and “Future Rich” put some of the world’s foremost experts on the subject within your reach — and it costs nothing to listen. Likewise for YouTube channels like “Wealth Hacker” and “BeatTheBush” — and those are just a few.

Do some research, ask your Facebook friends what they like and subscribe to a few shows. Make your time pay by spending it listening to experts who specialize in solving the exact kinds of problems you’re experiencing.

Confront the Reality

It’s natural for people who are behind on their finances to block it all out because it feels too overwhelming to deal with — natural, but unhelpful. Only by staring the beast in the eye can you begin to create a strategy on how to defeat it.

Consider an app like Mint, which unifies your entire financial life under one site. That includes your income, credit cards, subscriptions, bank accounts, loans, investments, retirement accounts and all the rest. You’ll get a clear picture of what’s coming in, what’s going out, which debts are most dire, which expenses are costing you the most and what changes need to be made. Conquering the crucial psychological barrier of confronting the situation is the first step to changing it.

To continue reading, please go to the original article here:

https://www.gobankingrates.com/saving-money/budgeting/how-to-rebound-from-a-bad-financial-year-in-2020/

Tips To Keep Your Finances in Order Without Sacrificing What You Want

Tips To Keep Your Finances in Order Without Sacrificing What You Want

Cameron Huddleston   Last updated: Oct. 25, 2021

If you’re trying to live on a budget, you might not feel like you can have the things you want. But you don’t have to resign yourself to living a bare-bones existence if your budget is tight — it’s possible to live on a budget and get some of the stuff you want.

Create a Budget That Prioritizes Needs

If your income is limited, make sure it covers your needs first. “Food, shelter, clothing and utilities are needs,” said Donna Freedman, author of “Your Playbook For Tough Times. “The rest is just a series of wants.”

Creating a budget can help. List the expenses you have to pay to survive. Add them up, and then subtract them from your income. If there’s not much left over, you might have to make some sacrifices. Don’t think of cutting out wants to cover needs as deprivation, though — think of it as a smart use of available funds, Freedman said.

Build an Emergency Fund

If you’re living on a budget, you might not think you can afford to set aside money each month in an emergency fund. But would you be able to afford an unexpected cost without savings?

“The thing that keeps you out of debt is to find room in your budget to grow your savings,” McClary said. You won’t be able to build your savings quickly, but if you can stash away a little each month, you can fall back on your emergency fund rather than go into debt when something unexpected happens.

Tackle Your Debt in Smart Ways

When you’re struggling with debt, you don’t want to just keep paying the minimum balance on what you owe. However, you may not be able to afford much larger payments, so you should look at other smart ways to tackle your debt. A personal loan could consolidate that debt into one set regular monthly payment.

Take Advantage of Tax Breaks

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/tips-keep-finances-order-without-220012304.html

LC From TNT: "No FDIC Insurance Necessary" 10-28-2021

TNT:

LC:  No FDIC Deposit Insurance Necessary: Wealthy Use Private Banking for Resolution

Repost  3/4/21

I am reposting this again to remind everyone FDIC is not important if your funds are in a private trust bank.

Dear All TNT Dinar & Open Mic Members;

I would like to inform everyone about my experience as a current private banking client of Wells Fargo Private Bank.

I would like to put to bed about possible banks failures after you get your blessing from exchanging your currencies. You need to ask yourself this question, why do the wealthy customers don’t worry about their investments disappearing out of their accounts.

The reason they don’t have that concern is because their investments in the “private trust bank” is considered “off  balance sheet” and therefore these investments are not owned by the bank and not reportable to Wall Street. Additionally, the wealthy customers’ investments are titled and owned by them personally or titled and owned by a trust or entity you control.

So, this is where a third party comes in to play. My private bank (Wells Fargo Private Bank) use Depository Trust Company (DTC) one of the world’s largest securities depositories that will be the clearinghouse and safekeeping for my transactions.

Now you say, what if something happens to Wells Fargo Private Bank. Well, since they don’t own your investments, you only need to contact Depository Trust Company to now instruct them to name a new private trust bank (i.e. Northern Trust, U.S. Trust).

Just remember, the private trust bank  is only a fiduciary that help manage your investment needs.

Please review the further detailed info on the Depository Trust Company that holds trillions of dollars of securities in their custody.

Furthermore, my private banker explained to me that generally his multibillion and multimillion dollar clients don’t have excess deposit insurance because the bank don’t have title to the investments to be a part of a bank failure.

Finally, this will not protect you from losing money on bad investments. Private trust banks generally carry insurance for your protection if they put you in an investment without careful due diligence and you lose your money as a result of their recommendation.

This is why everyone should relax and make sure you put your funds in a private trust bank to remove this concern. That’s what the wealthy and the 1% do. We do not need to reinvent the wheel.

Good luck to everyone and I hope that I helped ease everyone concerns I will see some of you in Las Vegas, Raleigh and some other venues that RayRen98 will be holding some Wealth Retention Workshops.

http://www.investopedia.com/terms/d/dtc.asp?view=print