The Growing Fascination with Community Property Trusts for Income Tax Planning Purposes

Throughout 2021, there has been much speculation surrounding an increase in income tax rates, a sizable reduction in the gift and estate tax exemption, also known as the applicable exemption amount, and the possible loss of a common tax cost basis adjustment, referred to as basis “step-up,” at death. For now, it appears that the proposed Build Back Better Act legislation is dormant; for exactly how long is anyone’s guess. Currently, the step-up basis adjustment at death remains intact, as does the applicable exemption amount, which increased to $12.06 million…

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COVID “Lockdown” Stocks: Big Winners or Cautionary Tales?

We are approaching the two-year anniversary of COVID awareness entering our lives and now have almost two years of stock market returns during that time. Of course, companies have been affected by COVID and it is interesting to see where some of the Lockdown Stocks are now trading as we’ve moved toward an environment of living with COVID. Below, we highlight the divergent paths of a sampling of stocks considered to be big “winners” from COVID. Peloton, manufacturer of exercise equipment, quickly became a shining example of a company which…

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INVESTMENT COMMENTARY – FOURTH QUARTER, 2021

Inflation and COVID dominated headlines in 2021 as the market plowed ahead to record highs. The two are related – COVID led to shutdowns which slowed both demand and production in 2020. Government reaction to the shutdowns was to stimulate the economy through easy monetary policy (low interest rates) and simply easy money (sending money directly into the pockets of consumers).

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Homeowners, Home Prices and Rising Costs

The real estate housing market has been one of the unexpected beneficiaries of the Covid-19 pandemic. While existing homeowners have seen the benefits of increased home valuations, they are also experiencing the downside of higher property taxes and higher home maintenance costs. Median home prices for an existing single-family home were up over 13% YoY in October 2021. For context, this is the highest increase in valuation of single-family homes on an inflation adjusted basis since the 2008 housing bubble. This is thanks, in-part, to increased demand from the 72…

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Structured Products: Attractive Marketing Pitch, Usually Not Good Investments

Aside from selling traditional stocks and bonds, Wall Street’s investment banks sell structured products to provide different return characteristics. These products are structured like notes with specific return terms and maturity dates. Unlike bonds with fixed coupons, the return during the period of investment is linked to an underlying asset. Depending on how these products are constructed, they can provide an infinite number of investment returns. Many structured products limit the upside return of a risky asset, such as a stock index, in exchange for protection against losses in that…

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