provided to Santiva Chronicle
The Sanibel Captiva Trust Company recently held a virtual presentation entitled, “Elections Years and Your Wealth Strategy,” in which more than 150 clients and guests participated. Presenters included Ian Breusch, CFA, Chief Investment Officer, Timothy Vick, Director of Research and Hood Craddock, CPA, Director of Family Office Services.
Some of the key questions the presentation addressed included, “How does the stock market react to the elections – whether Democrats or Republicans,” – “Is it wise to sit in cash and wait out the elections,” and “What should concern us most – the election or COVID?” and finally “What is the likelihood my income or estate taxes will rise?”
One of the most important findings through history is that no matter which party is in office at the time, there is little to no correlation between the success or decline of the stock market. Polls from numerous institutions have worked to identify such statistics Vick concludes, “Taking money out of the market around an election has not produced good results.” The cost of staying out of the market has been dear according to a Standard & Poor’s 500 Stock Index across 30 years ending 12/31/2019. “Our constitution, with its ingenious combinations of checks and balances was not designed to ensure that only the best and brightest can attain federal office,” said Vick. “The Constitution ensures that even the most controversial leaders cannot do much harm to the economy and our political process.”
“Our markets are resourceful,” says Breusch. “Who would have predicted they would have rebounded from the low in April to having surpassed an all time high last February?” He states that the strong companies we invest in work hard to find a way to stay healthy and work around the current state of affairs to keep business humming. So, when Congress takes aim at a sector or asset class, The Trust Company’s portfolio management team finds alternative investment ideas to pursue. “Legislation from Washington is like a cloud that can be avoided,” said Breusch.
So, what are the dominant forces actually responsible for moving the stock market? Those would be the economy, Federal Reserve policy and COVID. He said, “The stock market has shown little reaction to date to the candidates’ proposals and if Congress stays divided, nothing controversial will get passed no matter who wins the Oval Office.”
Hood Craddock finished the program by highlighting key issues on both income tax planning and estate tax planning. Depending upon which party is in office, investors will need to consider potential higher rates on capital gains and qualified dividends, the raising of top tax rates for ordinary income, a potential cap on itemized deductions and an increase in the Social Security earnings cap.
Concerning estate tax planning, he addressed the possible lowering of the lifetime exemption, the repeal of the “Step up in Basis” rules on death and removing minority interest discounting rules.
“The best thing you can do for your wealth plan at this time,” said Craddock, “is to consult with both your CPA and estate attorney now, so you are prepared to make necessary changes if/when legislation changes.” He went on to say that year-end planning is critical for 2020 and 2021, since sometimes tax legislation passed later in the year is retroactive to the beginning of the year. Revisit your current estate plan and consider preparing documents now for trusts that would receive gifts.
The Trust Company team is available to assist you with questions concerning your wealth planning strategy. Anyone who would like to receive the replay of “Election Years and Your Wealth Strategy,” visit www.sancaptrustco.com.
The Sanibel Captiva Trust Company is an independent trust company with $2.5 billion in assets under management that provides family office and wealth management services, including investment management, trust administration and financial counsel to high net worth individuals, families, businesses, foundations and endowments. Founded in 2001 as a state-chartered independent trust company, the firm is focused on wealth management services that are absolute-return oriented and performance driven. Each portfolio is separately managed and customized specifically to the client’s yield and cash-flow requirements. The Naples Trust Company and The Tampa Bay Trust Company are divisions of The Sanibel Captiva Trust Company. Offices in Sanibel-Captiva, Naples, Tampa, Belleair Bluffs-Clearwater and Tarpon Springs. http://www.sancaptrustco.com