Markets During Elections & Gifting Strategies

Zach and Will, good morning.

Hey, morning. Morning.

Happy Friday to you both, and welcome back to everyone for episode two of the McCabe & Associates podcast series, name still to be determined. But I think hopefully by the time this comes out, this will be a timely conversation for people to view. Busier year this year, a lot of things going on. Election coming up in a couple of months, a lot of back and forth from the Fed on whether or not they're going to be cutting interest rates, and it seems likely that they will before the end of the year.

Which I think brings about a lot of questions, particularly around the election, from clients and just people in general about how do you invest during an election year. Is it different from how you should be normally investing? What can we expect before the election? You know, we've had a very good year so far, but is that going to change after the election? Does it depend on who's going to land in office? So I think there's a lot of really questions out there, probably, you know, as usual, with no definitive answers to them.

But I think hopefully we'll look at some interesting data today and conversation points around how we're viewing the election and kind of our investment approach as we head into the home stretch of the election. And so, Will, I think you were going to start off today just with maybe a chart or two from American Funds and how they're perceiving not only this election but historical elections as well.

Yep, I'll get right into those charts. So this shows the growth of $1,000 in the S&P 500 starting in 1933 through the end of 2023. If you started off with $1,000, the value of that investment would be, you know, $24,800,000 at the end of 2023. The blue shaded area on the graph is Democratic control of the White House, and the red area is Republican. Since 1933, we've had eight Democratic presidents and seven Republican presidents.

And I think the main takeaway here is that regardless of who's in the White House, the market has gone up. And, you know, this election, it feels very important, and I think they all do. Like, if you think about how controversial and divisive the last two were, and the market has gone up either way. So at the end of the day, it's just, we feel that it's not wise to make investment decisions based on your political beliefs or who's going to be in control or who's going to win the election.

Yeah, I think anecdotally, to your point, Will, the winners of the past two elections, it's probably been more divisive than it's ever been in terms of how people feel about how the market's going to perform if one or other individual lands in office. But I remember hearing from clients in both instances. When Trump was elected, that things were really going to take a turn for the worst, just because he had really no political experience, and the market performed phenomenally well for a period of time after he got elected.

And the same thing happened with Joe Biden. I remember hearing from probably a few more clients than I did the previous election, but I think it was one of the best 100 days that we had ever seen post-election for a sitting president. So I think this chart really captures it. And like you said, I don't know if you said it was eight Democratic presidents and seven Republican presidents. So that's a pretty even split, and to have pretty much strong performance over a 4 to 8-year period in 95% of those instances, I think, can be comforting when you take a step back and look at, you know, how's the market going to perform over the next four years, as opposed to, hey, what's going to happen three months after, you know, the election in a few months.

Yeah, I think absolutely. I think that this chart just makes you kind of think about, like, more long term. Like, all our clients' time horizons are longer than, you know, a four-year, you know, presidency, or, you know, eight years potentially is, like, the max. So, you know, really stepping back and looking out over long term how the S&P 500 has done. Granted, I don't think many people are going to be investing for 90 years like this chart, but, you know, for any significant piece of it, over a 10 or 20-year period, it looks like things are going pretty well. So it kind of makes you step back a little bit.

Yeah, I think one other thing that I was thinking about: I think maybe the one presidency where the value of a dollar invested was less than when his term started was George Bush. But what happened during his terms was, you know, the tech wreck as well as kind of the beginning of the financial crisis, which, again, you know, you could make arguments as to whether or not that was affiliated with his presidency. But I think, again, it goes back to, you know, what's going on in the world around us isn't always directly related to what's going on politically. And so, you know, I think that's an interesting case where, hey, you know, the market, you know, didn't perform well over the term of a presidency, but, you know, was it directly tied to who is in office? You know, I would say probably not.

All right, so this next one shows the average annual return under different scenarios with the White House and Congress, going back to 1933. So we've got 90 years of data here. This first one is the average annual return of the S&P under a unified government, so a blue or red wave, all houses of Congress and the White House being in one party. That is actually the best scenario historically for markets. The worst scenario would be a unified Congress with an opposite party president, so maybe House and Senate are Republican, Democrat president. The S&P 500 historically hasn't done as well. And then the last scenario would be a split Congress, so, you know, Democratic House, Republican Senate, with either in the White House.

And I say, you know, this is the worst one, but each of these scenarios are double-digit average returns, which is fantastic, and well above the long-term inflation rate, which is the goal for most people of investing: grow your money beyond the rate of inflation, so, you know, your dollars are worth more over longer periods of time. So I found this one, you know, pretty interesting as well. The S&P has, you know, of course done fantastic over the long term, and no matter the makeup of the White House and Congress, it does good over long periods of time.

Yeah, I think one thing that comes to mind too is that, you know, this looks at the S&P, which is all US-based companies, but it's part of why we have a diversified portfolio. For people that may have concerns, even look at this data and they just think, yeah, well, that's all well and good, you know, double-digit returns, but it always seems the comment seems to be, but this time's different, is the feeling sometimes when people are negative on the outlook.

But that's part of why, you know, we think it's prudent for people to have their money invested overseas in other countries that may not be as affected, you know, by what's going on over in the US, even during a US election. And so even for people that look at this and they say that return data is great, but I just still have a negative outlook, you know, that's part of why, you know, people look outside of just the S&P 500 to invest their money, because they don't want to put all their eggs in one basket and let, you know, a single government dictate, you know, how their portfolio is going to perform over, you know, the next three to six months.

Right. Yeah, and we could probably, you know, have another call on diversification outside of the S&P 500, especially in the current market, when it seems to be a little bit more concentrated than... but that'll be a conversation for another day. Next slide.

So this looks at two different average market scenarios. And the darker green line is when the incumbent party won, so in this situation it would be, you know, Biden's presidency ends and Kamala Harris wins. On average, if it's Democrat to Democrat or Republican to Republican, dark green line. With the lighter green line, or teal, this would be if the incumbent party lost, so if it changed from a Republican to a Democrat or vice versa. And what we're really focused on here is the three months leading up to the election. So election this year is November 5th. It's usually, you know, right in the beginning of November, or when elections happen.

And the anecdote here is that the market has accurately predicted who's going to win the election 20 out of 24 times, going back to 1936. And the way it does that is, if the S&P is up three months leading up to the election, the incumbent party has won 20 out of 24 times. If the S&P is down 3 months leading up to the election, the other party has won. Looking at this year, since August 5th, which would be 3 months prior to November 5th when the election is, the S&P is up 8%.

If you look at both of those scenarios, it has, you know, generally gone up in August, and then this kind of divergence where the market's going to make a prediction happens later in September, and October is when you can kind of start to see the change. So, you know, interesting, the market is forward-looking and it does price things in. I think a lot of that has to do with the uncertainty of a different, you know, president and what the impact could be on the market. But just kind of an interesting way to look at it.

Yeah, it's really cool seeing the divergence kind of that starts in September between that, where the market, it's probably pricing in after certain debates or, you know, candidates releasing their economic policies and things like that. That's interesting.

Yeah, yeah. This chart reminds me of another one. I think it's Capital Group has one that talks about, you know, how does the market typically perform in an election year. And I think this has actually been outside of what we typically see, because one thing I think that normally happens is you typically see a little more volatility in an election year, particularly leading up to the election. And we've had a very low level of volatility this year, outside of that stretch during July where we just saw, you know, a 10% drop in the market, which is not abnormal, as we all know.

But I think, you know, something like that speaks to, you know, we show these numbers and it can be comforting to see, you know, hey, taking a step back always and looking at the long term, you know, no matter who's in office, we typically see good market returns over a 3 to 4-year period. But I'm sure people look at that and ask, does that just mean you don't do anything? And I don't think that's the case.

And I think something like, you know, taking a look at historically how election years typically have been more volatile, and how we could maybe see that during the latter half of this year, how, you know, we've looked at things internally and maybe started to tilt a little more towards value stocks, you know, stocks that typically hold up a little better during volatile periods in the market, you know, tilting a little more away from growth. We're taking a look at, you know, some things in reference to the fixed income and what the Fed might be doing later this year. And so, you know, even though we always start with that big picture, there are, you know, small granular moves that you can make within an election year, you know, looking at some of the more specific historical data.

Correct. Yep. All right, I've got one more. So this one looks at equity fund flows versus money market fund flows, so how many dollars are going into stock market funds versus how many dollars are going into money markets, which, you know, very similar to cash, a stable investment that pays market interest rates. And this one goes back to 1992, so we've got, you know, up to 2023, we got 30 years of data here.

The left side, the dark blue and light blue, is a presidential election year. So going back to '92, the year of the election, you've seen $37 billion going to equity funds and $195 billion going to money market funds. So although, you know, I think the last few slides have shown that, you know, who's going to win the election, or, you know, the outcome of the election, doesn't impact stock market performance, it does impact investor behavior. People are generally more conservative in election years.

Now, to the right, we're looking at the year after the election, dark blue being equity fund flows, light blue being money market flows. You see $200 billion going into equity funds, $85 billion going into money markets. So it basically flips. People, after the uncertainty, they're more comfortable going into the stock market. You know, we would encourage people not to make investment decisions based on elections, and I think this data summarizes that pretty well.

And another kind of interesting thing on money markets: you know, this year it's around $6 trillion total in money markets if you look at all the US investors, and that number has grown from $4.6 trillion to $6.1 trillion from October 2022 to June of this year. Over that period, the S&P 500 has gained 55%. So it's very difficult to time the market, and it's easy to be comforted by the stability of money market funds, but when you try and time the market based on, you know, anything, especially election, you can see it's easy to miss out on some serious returns.

Yeah, and I think that coupled with the fact, and I think this year is particularly interesting, because we've seen a lot of people holding a significant amount of cash due to the interest rate raise in 2022. And I'm curious if that tide is starting to turn now in terms of people putting money back into the market, you know, because we've got this election going on, and then we've got the Fed indicating that they might be cutting interest rates later this year.

And as you said, Will, you know, sometimes waiting till after the election, if you're so nervous about the election, it may be a little bit too late to start trickling money out of money market funds back into maybe some, you know, intermediate term or longer term duration bond funds. Because I think we've looked at data that shows, you know, six to nine months before the Fed starts cutting, typically you can start to see some valuation raises in bond fund performance.

And so I think it's a good time to be looking at money market funds now, and people that have money in them, you're looking at that interest rate risk, you know, like parking your money there and waiting until after the election, asking yourself, what's the risk of doing that if we solely focus on the election and we don't take a look at, you know, what the Fed's talking about doing? So I think this year in particular is an interesting year, and this is a very pertinent slide that kind of speaks to that issue. But it'll be interesting to see how that data plays out after the election, you know, when we sit here a year from now, to see if that holds true, this chart.

Correct. And, you know, I find this extremely bullish for the stock market if, next, you know, this year to next year is anything like the last 30 years with election years and the year following. Say a lot of money market fund does flow in equity funds, you know, that is a good sign for stocks. You know, they are functions of supply and demand, and when there's more buying activity than selling activity, prices go up. So evaluate, you know, your money market balances, how much do you have in cash, and, you know, this could be as good of a time as any to get into the market. But that was all I had.

Yeah, and that $6.1 trillion, you know, as rates do fall, as they're expected starting next month, as the Fed lowers rates, I think people are going to be surprised with how quickly that, you know, juicy 5% yield you're getting in your money market fund kind of goes away. And that's when a lot of people, I feel like, are going to be looking into adding to equities or adding to bonds, which, just as you said, Will, is, you know, a positive sign.

But yeah, so I've got some different stuff on the election too, just a couple slides. But, you know, I think with kind of the different stuff, like the first slide that you spoke about, Will, of just the up and to the right of the markets regardless of who's in power, like, I think some people might think, like, we're saying that, you know, whoever wins the election doesn't matter. Like, I think it definitely matters, but I think it's one of, like, many things that matter to the market. You know, interest rates, or, you know, geopolitical things going on in the world, or, you know, a pandemic or stuff like that, is going to always affect the market. But I think it's one of many different things that affect the market.

And at the end of the day, we're, you know, the fund managers we work with are investing in companies that have great management teams that are, you know, going to do what they think is best to increase their shareholder value. And yesterday I was at a kind of investment conference, and they were talking about the election as well, and made a point of, in 2020, during the whole trade war stuff like that, we were increasing tariffs on, you know, pretty much anything coming into the US, and one thing was French wine, where every bottled French wine that came to the US had a tariff of, we'll say, like, 25% or something.

So the French wineries, being that it was only on bottled wine, shipped the barrels to the US and bottled it in the US, and, like, that was a way to get around it. And I just think there's, like, many different levers that management teams are going to be able to pull regardless of, you know, what's going on in the world. But I thought that was really interesting.

Yeah, no, that's a great point. You're investing in companies that are led by CEOs, which are some of the smartest people in the world, and regardless of what the policy decisions are, like, they will find ways to grow their company's earnings.

All right, here, I will share my screen here and kind of cover a couple slides I thought were interesting and relevant. So this is something from JP Morgan. They put out what's called a Guide to the Markets every month and cover certain things, and I thought this one was really timely given the election. George, as you kind of mentioned, typically elections have a little more volatility, and, you know, if there's one thing the markets hate, it's uncertainty, which kind of leads to volatility.

And this chart on the left hand side of the page just shows the S&P 500 for the 100 days before the election and the 100 days after. And this, you know, line here shows the election day, and you could see here, typically after the election, markets increase, or the S&P 500 increases, as that uncertainty of the election gets out of the way. So you can see there's a couple years where that's not the case. 2000 is this blue one, so that's the tech bubble. 2008, great financial crisis, goes down. But generally things, you know, trend up and to the right after the election, after that uncertainty is out of the way.

And I think that the right side of this chart is an interesting one as well. It just shows, you know, quarterly returns in election years. So this goes back to 1936, so was that almost 80 years of data, 90 years of data. You know, on average, the first quarter, second quarter are, you know, average returns, but you could see the third quarter, as the market, or the election, gets underway, and the fourth quarter is generally your best returning quarter, once that uncertainty is out of the way. You guys?

Yeah, no, one thing is just, yeah, I just go back to, I think, is interesting, is this year is a little bit of an outlier in a good way. It's been kind of a low vol, high performing first eight months of the year. So I will be interested to see. And because it's an outlier, there's probably not as much data on what happens in years where it doesn't do what's typical, which is a little higher vol, lower performance during the first eight, nine months of the year, and then, you know, here's what happens after the election. So, yeah, I think, yeah, it's just, I'll be interested to see what happens. I guess that's just more of a comment than anything.

Yeah, no, I mean, being that the S&P 500 is up 17, or 17.7%, so far this year, I wonder how that'll impact things, but we will find out. And then the last slide I wanted to show was, you know, and I kind of mentioned it earlier, that, you know, the election matters, but one thing we want to kind of talk with our clients about is, you know, have the more long-term mindset, and that we're going to be investing for longer than, you know, the next presidential cycle. And we want to take a longer term time horizon when we invest, and I think this chart kind of does a good job of illustrating why we want to do that.

So this shows just diversification over time. So all of these different green bars are going to be, you know, your equities, so this is your S&P 500. The blue bars are going to be your bonds, which I believe is the US Aggregate Bond Index. And then the gray shows your 60/40 portfolio, so a mix of equities and bonds. And over, you know, a one-year time horizon, the, you know, high versus low of, you know, what we've done historically. So in any one-year period, potentially you had a 52% return at one point, or minus 37% return at one point. So in one year, volatility, or your range of returns, could be very, very broad. You know, a little bit less in bonds, and then in your diversified portfolio, you know, kind of somewhere in the middle.

But as you kind of go out over longer term time periods, your five years, your 10 years, generally you have positive returns as you increase. So, you know, looking out 10 years, the worst situation of a rolling 10-year return in the equity markets was minus 1%. If you look at bonds, you've never had a negative 10-year rolling return historically. You know, that's not saying it can't happen, but history is kind of our guide going forward. And for a diversified portfolio, you also have never had a negative 10-year rolling return.

And you could see here, just, you know, average returns over that whole time period. You know, stocks have averaged 11.4% going back to 1950, bonds are about 5%, and then the diversified portfolio is a little bit over 9%. So taking a diversified portfolio approach, and over a long-term time horizon, you know, I think that is the best way to invest money.

Well, that's a great slide. And the expected volatility of the stock market doesn't change in any single year. There's, you know, that variance on the, all the way to the left, that can always happen. But just by simply holding a portfolio for a long term, you're, you know, not, you can't guarantee anything, but you're significantly raising your chances of success by holding for longer periods. That nails it. This is a great slide.

Yeah, and I think that's what the diversified investor wants, is, you know, capturing as much upside as you can, knowing that it's probably not going to, you know, get what a 100% stock portfolio could, while minimizing the amount of volatility that you're going to get along the way. And, you know, one thing that stands out to me about this slide is the bond performance, which is, it's just a reminder as to why you keep bonds as a part of the portfolio. You could see in that one year return, significantly less than the worst year of the S&P 500.

And even on the upside, the positive returns that you see there, we haven't seen great returns in the bond market over the last 5 years or so, and when that starts to happen, even longer term, I was, over a 10-year period, but when that starts to happen, people start to question, why do I have these at all? And this slide's a great reminder of, well, this is part of why. It's a good buffer when the stock market really takes a turn for the worst, and you could see that there's, you know, there is upside here historically, even though we haven't seen it in the last five years or so. So, yeah, I think this captures it well.

Yeah, but I think, and as you think about a diversified portfolio, for so long that bond piece of the portfolio wasn't really returning anything, and in 2022 really got beat up as rates rose as fast as they did. But, you know, now that the Fed has been on pause for a year, and it's likely that they're going to be cutting, you know, it's a really good outlook for that bond component in your portfolio. So in addition to being a volatility hedge, we actually produce some returns, which is very helpful.

Perfect, thanks, Zach. Yeah, and then I thought I'd wrap it up just with a financial planning topic, and this is just really something that I've been getting asked more and more over the past year, and it really pertains to gifting, specifically parents that are gifting to their children. And one thing that's always just interesting to me is why these certain things come up more often in certain years than others.

And this is just a guess, but I really think it probably has a lot to do with, you know, the people that are typically gifting their kids are retirees, typically anywhere from 75 to 85 is when they might start. And I think it's probably why you're starting to see more of it, particularly in 2023 and 2024, is a lot of those individuals have been the beneficiary of a really strong market over the past 15 years, 2022 notwithstanding. And so you've got these individuals that were living off of this portfolio that they had saved, but they've not only been able to meet their expenses, but they've maybe outgrown what they were anticipating they would have at this point in their lives.

I think that's combined with the fact that you've got a lot of, you know, maybe kids that are between 25 to 35 that are starting families and maybe buying their first home, and it's not an ideal environment to be doing that. Home prices are higher, it seems, than they've ever been. Supply seems to be relatively low. Filing for a 30-year mortgage right now is very unattractive. So I think a lot of kids are turning to their parents, or even parents are being proactive and reaching out to their kids, saying, hey, I want to help you out, because this is not an ideal situation for you, and, you know, we've got more of a nest egg now than we thought we would have.

And so, you know, that's more of a commentary and a guess as to why I'm being asked it. But I think it's important to talk about gifting, because I think it can be a little bit of a confusing topic. And I think a lot of times people just end up giving money, or giving a car, or giving, you know, buying a home for their children, and not thinking twice about it. And I think that they should, you know, depending on the type of person that you are.

But the gist of it is, number one, there are limits to what you can gift an individual every single year. Basically, this year you can gift up to around $18,000 per person. So, you know, if I was a father with three children, I could gift each of them $18,000 if I wanted to. Correspondingly, if I was married, my wife could also gift $18,000 to each of those children.

Where it starts to get confusing is you'll get asked the question, you know, what happens if I go above that? Is it a problem? And typically what you have to do is you have to file what's called a gift tax return anytime you go above the limits of what you gift. And that's where clients really, they don't start to get worried, but they hear that and they think, well, if I go over the gifting limits, am I going to have to pay some sort of tax when I go to file my tax return next year? And typically the answer is no.

Basically, how it works is every individual gets what they call an estate lifetime exemption. You know, federally it's, like, I think right now it's around $13.6 million. So if you die and have assets less than that dollar amount under your name, you're not going to have to pay the federal government any of what they call estate tax. If you're somebody that has over that amount, you would have to pay some sort of estate tax to the federal government.

So bringing it back to the gifting, what happens is, if people gift over that limit for a calendar year, basically whatever amount they went over, you take that and you subtract it from that lifetime exemption. So, you know, if I gave half a million dollars to somebody, you know, I was allowed to give 18, you know, I went $532,000 above that, basically I would subtract that $532,000 from that estate lifetime exemption. So for the average Joe, you know, gifting, or even gifting above the limit in the calendar year, is not necessarily a problem, because it's not going to cost you any tax. And a lot of people will say, well, there's no way I'm going to have that much money when I die.

One of the important things is, you know, you are supposed to file a gift tax return. It's not unlike any other return that you file. So it is important to be talking with your accountant each year if you are gifting and saying, hey, just so you know, I gave X amount to one of my kids, you know, can you file a gift tax return for me? You just always want to have your ducks in a row.

Even though, you know, there's these limits, there's a couple strategies you can use for people that maybe do have really high net worths that they can use, where they can keep that estate tax exemption intact while they're gifting. You know, one of the strategies I mentioned is both of the spouses can gift up to $18,000 to one of their children. I've even seen clients where they'll both gift $18,000 apiece, and if their child's married, they'll also gift to their spouse. So as a starting point, that's $72,000 a year you can gift to your child and their spouse without, you know, dipping into that estate tax exemption. So that's a good starting place.

Another strategy might be, you know, I've seen a lot of couples, they'll do gifting to their children maybe for Christmas, and instead of, if you're thinking about giving $100,000, you know, maybe you want to spread that over multiple tax years. Maybe you tell your kid at Christmas, hey, we're going to be gifting you some money. Maybe you and your spouse, you give half now, and then you write two more checks come January. That's another way to just kind of stretch out what you're giving, you know, into two tax years, while still gifting within a few month period.

Where I really see this can come up as a potential issue, where people, you know, are gifting a lot more than just the estate tax limit, is if they're helping their child buy a home for the first time, where they're saying, hey, you know, we've got the funds here, you know, our child's buying a home and they need a down payment of $300,000, we're just going to gift this to them.

One strategy that's a little bit off the beaten path, that not a lot of people are aware of, is what's called an intra-family loan. And basically it's a good way for, you know, a married couple to say, hey, we want to help our kids out to buy their first home. We don't want them to go to the bank and have to file for a mortgage where they're paying, you know, whatever it is, 6% interest each year. Basically what we can do is we can structure a loan within our family where we can loan them that money. We can give them a more favorable mortgage rate. You know, typically you have to use whatever the federal applicable rate is, but usually it's more attractive than what you can get at a bank, so it costs your child less in interest.

And, you know, one of the benefits is you keep all that wealth within the family, and long term it can be a good thing for the parents and for the child. You can structure the loan typically how you want in terms of, you know, the term of the loan. You can stretch it out, which gives the child a little longer time to pay it back. And also, as the parent, you get a little bit of extra interest on the money that you gave your child. And so that's another strategy you can use, where you can go above and beyond the, quote unquote, gifting limit by structuring it as a loan.

And so one final comment about that estate tax exemption of $13 million. Sometimes people say, hey, I want to gift to my kids, but I don't want to gift to them right now, or I don't want them to use the funds right now. And so what they'll do is they'll set up what's called an irrevocable trust, where they'll gift into a trust that's set aside, maybe for their kids, you know, for their benefit when you pass away. Typically when you gift into one of those trusts, it automatically, you know, goes over the gift tax limit and it comes off your estate tax.

But the reason why I'm bringing that up is, in 2026 they're talking about maybe cutting that $13.6 million number in half. And so people that maybe had, you know, $8 million in their name, and they were saying, hey, this is an estate tax issue, it's not a problem for me. Well, if they cut that estate tax exemption number in half, all of a sudden it is a problem for you or your spouse.

And so one thing, you know, ultra high net worth families have the opportunity to do now is, they're calling it, hey, use it or lose it, this estate tax exemption limit, where people are setting up irrevocable trusts and they're superfunding them and using up the entirety of that $13 million number, you know, and being able to gift as much as they can now without having to pay any tax on it, and using up the whole limit before they cut it in half.

And so that's a bit more of a niche strategy, where actually you're, you know, you're obviously not staying under the limits, and you're actually using up that estate tax exemption. But it's something for anybody that's got a tremendous amount of wealth that want to talk with their attorney, their accountant, to say, hey, you know, what's the likelihood that these sunset provisions are going to kick in, they're going to cut the estate tax exemption in half, and, you know, I should superfund an irrevocable trust now.

So, a lot there, you know, on gifting. You know, but, you know, as I started, it sounds like a simple topic that people just don't really think about, and they just go ahead and write checks. You know, for most people it's not going to be a problem, but it's always important, you know, as I mentioned, to be making sure that you're filing returns, you're being proactive and contacting your accountant, or even, you know, letting us know as the advisers, and we can talk to your accountant on your behalf and make sure that they document that for you. So that's really it. That's it in a nutshell.

George, so if, just say you were under that annual amount, say you gift $15,000 to your kid, do you still, is there anything that you have to do with that? Or, like, is there no gift tax that you have to file?

Yeah, as much as my understanding of it, it's only when you go over that limit, which, again, can, you know, save you a little bit of time and hassle. And I don't know if there's an additional fee that your accountant charges you for preparing that form, but, you know, if you gift $18,100, you might as well gift $18,000 and do the extra hundred next year to just avoid that.

Great.

Well, as always, thank you both for your time. I hope this was informative for our clients. As always, to our clients, if you have any suggestions of topics that you'd like us to cover, questions that are top of mind for you that you think would be great for our team to cover in one of these podcasts, we look forward to addressing those and talking about them in future podcasts. So, yeah, thank you both for being here.

All right, thanks, guys.

Thank you. Have a good one.

This transcript was generated from the episode audio and may contain errors.