San Cap Trust Company hosts investment program on elections
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 Chief Investment Officer Ian Breusch, Director of Research Timothy Vick and Director of Family Office Services Hood Craddock.
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,” “What should concern us most — the election or COVID?” and “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.
“Taking money out of the market around an election has not produced good results,” Vick said.
The cost of staying out of the market has been dear, according to a Standard & Poor’s 500 Stock Index across 30 years ending Dec. 31.
“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,” Vick said. “The Constitution ensures that even the most controversial leaders cannot do much harm to the economy and our political process.”
“Our markets are resourceful,” Breusch said. “Who would have predicted they would have rebounded from the low in April to having surpassed an all time high last February?”
He stated that strong companies work hard to find a way to stay healthy and work around the current state of affairs to keep business humming.
“Legislation from Washington is like a cloud that can be avoided,” Breusch said.
So, what are the dominant forces actually responsible for moving the stock market? Those would be the economy, Federal Reserve policy and COVID.
“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,” he said.
Craddock finished the program by highlighting key issues on 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 is to consult with both your CPA and estate attorney now, so you are prepared to make necessary changes if/when legislation changes,” Craddock said.
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. Craddock advised revisiting one’s current estate plan and to consider preparing documents now for trusts that would receive gifts.
For a replay of the presentation, contact the company at www.sancaptrustco.com.