There is Fraud and Then There is More Fraud
How much money do you think seniors aged 60 and older lost to financial fraud last year? According to the FBI Elder Fraud Report for 2023, seniors filed 880,000 complaints for $3.4 billion. We suspect the number of seniors defrauded is much higher because they were too embarrassed to report the crime.
About one-third of these fraudulent incidents involved investment scams making wild claims of never losing out on real estate or cryptocurrency opportunities. Beyond investment scams, seniors lost a significant amount of money to romantic schemes or fraudsters calling to say that a friend or relative needs money fast to avoid going to jail. Sometimes it is hard to believe someone can fall for these tricks, but the criminals are very convincing and believable. If it sounds too good to be true, it probably is. Never hesitate to reach out to us for help.
10 Shares for the Price of One?
Nvidia secured a podium spot in the S&P 500 as the chipmaker and has been at the forefront of the artificial intelligence race. The demand for its advanced AI chips is very strong, and its share price has grown dramatically this year by over 130%, making it the third company to ever reach a market value of $3 trillion.
This substantial growth prompted the board of directors to perform a 10-for-1 stock split in June because the share price had become too high, and they wanted to make the stock more affordable for investors and employees. This will not change the shareholders’ voting rights, but they announced an increase in dividends. Existing shareholders of Nvidia received nine additional shares for every share they owned. Think of a stock split cutting slices on a pizza, but at the end of the day, you’ll still have a whole pizza to yourself.
In the last 10 years, it has been uncommon for a company worth over $1 billion to perform such a significant stock split. Typically, companies issue smaller 2-for-1 or 3-for-1 stock splits. Looking into the last 10 years, past performance shows that large companies’ share prices, on average, tend to fall between the period of the announcement date and the actual stock split and tend to start seeing more gains one year after the split. However, past performance is not always an indicator of future performance. Nvidia’s shares were up over 27% between the announcement and the actual stock split and have only grown 2% since the actual stock split. (Source: Y-Charts)
What are the Facts About the National Debt?
Depending on your political position, you might say the federal government is spending too much, or the rich are not paying their fair share. The Congressional Budget Office, long viewed as one of the most non-partisan organizations in Washington, D.C., has worked tirelessly to maintain that reputation. The Wall Street Journal recently published an op-ed putting it all on the line (Soaring U.S. Debt Is a Spending Problem – WSJ).
Here is a summary of the article. Although the report covers the next ten years, let’s first look at this year, which is now projected to have almost a $2 trillion deficit, up another $400 billion just since its February report. Over the next decade, the projection calls for a total of $21.9 trillion to be added to the national debt. It will grow from a national debt of 97.3% of GDP in 2023 to 122.4% in 2034. According to the op-ed, the revenue collected by the government will be 17.2% of GDP, which is about the 50-year pre-pandemic average.
Unfortunately, the government’s spending is expected to be 24.2% of GDP this year and average 24% for the next ten years, far above the average of 21%. Yes, there are all kinds of “reasons” that the past few years have been different, including spending on Obamacare, Medicare, the Pandemic, the Inflation Reduction Act, immigration, eliminating student debt, EV credits, interest expense, money to foreign governments, and the list goes on. So, the argument goes that if pre-pandemic numbers were still being used on the spending side, the deficit this year would be $890 billion, not $2 trillion. Neither Trump nor Biden is talking about deficits or debts because they are both somewhat responsible for the problem in the first place, and if they did talk about it and were elected, they might have to do something about it. So, is it a spending problem, a revenue problem, or some of both? Whatever it is, the current situation is not sustainable. It may take a crisis for the White House and Congress to sit up and do something.
Suprise Supreme Court Decision
Last week the Supreme Court stunned many tax advocates with its decision in Moore v. United States regarding a married couple who invested overseas in India. In 2017, the IRS determined that the couple owed taxes of $14,729 from a company in which they had a small interest. They objected to this assessment, arguing that they had never received any income from the company, but the IRS essentially said it was implied. The couple took the issue to court, claiming that taxing them on an investment that provided no income was unconstitutional. The trial’s outcome has two possible implications: 1) that hundreds of U.S. companies doing business overseas face additional taxation; and 2) that an opportunity to create a “wealth tax” where wealthy taxpayers would pay taxes on capital gains that are not yet recognized. The ruling was written very narrowly.
The Marital Home and Divorce
For many divorcing couples, the marital home represents the largest and most significant asset to be divided. This property holds substantial financial value and carries significant emotional weight. When children are involved, this asset’s emotional and financial significance intensifies. Should one spouse retain the home to maintain stability for the children? Can the divorcing couple afford this option? These questions highlight the complexity and potential contentiousness of dividing this asset.
Below are a few choices that divorcing couples may consider when deciding the fate of the marital home:
- Buy-Out Option: One spouse buys out the equity portion of the other spouse. The spouse being bought out transfers the deed, granting sole ownership to the purchasing spouse. This transaction is a non-taxable event, offering a clean and straightforward resolution.
- Sell the Home and Split the Proceeds: The couple can sell the home and split the proceeds. This approach, especially when executed promptly, ensures that all expenses related to the preparation and sale are shared. If certain requirements are met, the couple may benefit from the Section 121 capital gains exclusion.
- Co-Owning Post-Divorce: Another option is to continue co-owning the house and sell it in the future. This option requires effective communication and willingness to share the financial responsibilities of homeownership post-divorce. Both ex-spouses must agree on expenses, repairs, and upkeep. This arrangement can become complicated, particularly regarding how to divide equity if one ex-spouse remains in the home and pays the mortgage. Additionally, the Section 121 capital gains exclusion may be affected depending on the duration of co-ownership.
Divorcing couples should seek professional guidance to navigate these complex decisions regardless of the chosen path. By engaging professionals, divorcing couples can ensure they make informed decisions that reflect their financial interests and emotional well-being.
Provise Webinar – Laying the Foundation: Understanding the Landscape of Education Costs
For those who missed our webinar series on navigating the complexities of funding your child’s or grandchild’s education, please visit our website to watch recordings of the first of three sessions. Or, click on this LINK for session #1 or this LINK for session #2. Oscar Skjaerpe, CFP®, shares practical ways to save, invest, and maximize financial aid for higher education.
Best Places for Seniors to Live in Retirement
Don’t ask us why a personal injury law firm would commission a study to learn the answer, but it is just what Burger Law from St. Louis, MO did. They based their analysis on the usual retirement considerations such as – access to good health care, ratings on long-term care facilities, weather, safety, transportation, taxes, and cost of living. Once again, Florida made the top ten list. Are you surprised by any of the other states making the top ten list:
10) Georgia
7) California, New Jersey and Illinois (tie)
6) Vermont
5) Iowa
4) Minnesota
3) Massachusetts
2) Florida
1) Hawaii
Aloha, here they come!
Recent Comments