The most important measure of the financial strength of the United States is the Standard & Poor's 500 stock index. It’s widely watched but constantly surprising.
The stock market has been new breaking record highs for nearly a year now, and stocks are high-priced by some traditional historical measures, such as trailing 12-month earnings. With some pundits saying stock market risk is high, this is a good time to note how investors have been compensated for taking the extra risk of investing in stocks instead of parking cash in a so-called riskless asset like 90-day Treasury bills.
The Standard & Poor's 500, an index representing U.S. stocks, returned 125.4% in the five years ended June 30, 2021, making it the No. 1 performer of this diverse group of 13 types of securities investments. A distant second was the 74.9% return on a global index of stocks excluding the U.S.
From the perspective of a financial professional, the window of opportunity to act before taxes are hiked is about to close. The plan to end the step-up in basis on inheritances is perhaps the most significant change.
Tax hikes are an accident waiting to happen.
The political standoff in Washington, D.C., has complicated tax planning enormously. No one knows exactly how it will shake out but what we do know is that there are four possibilities to be prepared for.
Five years ago in financial economic history, the situation was a lot like today.
For the past decade, monetary easing measures implemented by the U.S. Federal Reserve expanded the monetary base but not the money supply. The surge in money supply, aka M2, is a major financial change currently unfolding now.
To say current financial economic conditions are unprecedented understates things: The United States, the world's largest economy, by far, is transitioning economically from a once in a hundred-year public health crisis.
Everyone's estate plan is unique, but these six documents are key in ensuring your final wishes are carried out and you end life on terms you have set out.
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Foreign Intrigue In Estate Planning
Published Monday, September 18, 2017 at: 7:00 AM EDT
Are you married to someone who isn't a U.S. citizen? If you are, special estate planning considerations may come into play.
Whether your spouse is a citizen or not, you can use the same basic estate planning documents without any reservations. You can create a will bequeathing assets to your spouse, name him or her as a beneficiary of retirement accounts, and designate your spouse as the agent under a power of attorney. No problems there.
But things get trickier when your spouse inherits assets. Normally, property transferred from one spouse to another, during your lifetimes or when one of you dies, is completely exempt from gift or estate tax thanks to an unlimited marital deduction. But that doesn't apply to non-citizen spouses.
Instead, you can make use of a $5.49 million unified gift and estate tax exemption that covers transfers to any beneficiaries, including a non-citizen spouse.
In addition, you can give a non-citizen spouse as much as $149,000 (in 2017; the amount is indexed for inflation) in gifts during your lifetimes.
Other ways to avoid being subject to the rules for non-citizen spouses may include:
1. Have your spouse become a U.S. citizen. This can be an obvious solution. It allows your spouse to qualify for the unlimited marital deduction by the time your federal estate tax return is due. That's generally nine months after death, but the IRS may grant a six-month extension.
Because it takes time to obtain citizenship—there is a waiting period before you can even apply—it's important to start sooner than later.
2. Rely on a QDOT trust. With a qualified domestic trust (QDOT), you can leave property to the trust, rather than directly to your spouse. Then your spouse can receive income from the QDOT that is exempt from estate tax.
But there are a couple of extra wrinkles. If your non-citizen spouse withdraws principal from the QDOT, it will be taxed like a distribution from your taxable estate, which can increase estate tax liability. There are also limitations on investments made by QDOTs. In some cases, it could make sense to complement a QDOT with other kinds of transfers to your spouse. Finally, a QDOT can be structured to end if your spouse becomes a U.S. citizen.
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