Category: Insights

Timothy W.A. Horan, Chief Investment Officer—Fixed Income, recently sat down with Louisa M. Ives, Head of Manager Research to discuss current economic conditions and Chilton Trust’s outlook for fixed income markets this year.

L: As we think about the outlook and investment opportunities for 2019, what are your expectations for global growth?

T: We’re seeing a slowdown globally as we start 2019. Last year was a year of synchronized global growth right from the beginning. In the end, it did not actually come to fruition, and the seeds for the slowdown that we’re seeing this year were already sowed. We are certainly seeing additional weakness in Europe, in Asia and even here in the US. In Europe, it’s coming from an outright recession that’s happening in Italy and a marked slowdown in Germany, which has been the lead economy in Europe. Germany has been much more affected by the slowdown in China than what was originally thought. One third of Germany’s GDP is net exports. We’re also seeing some big concerns with what happens to Europe internally after Britain leaves at the end of March. So, those questions are really preoccupying what’s going on in Europe right now. Having just ended their version of quantitative easing at the end of December, the European Central bank will no longer be buying bonds.

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Thanks to the Tax Cuts and Jobs Act (the “Act”) which passed in December 2017, you have a considerably greater opportunity to minimize your tax liability when transferring wealth to future generations.

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As the end of the year approaches we here at Chilton Trust would like to highlight a handful of topics we think will help maximize efficiency in both your income and estate tax planning. We hope that we can get you thinking about your current tax situation and how to better plan for your future.

Housecleaning

Outlined below are ideas every taxpayer should be sure to address before the end of the year. Please reach out to your tax accountant or financial adviser if you have questions about any of these:

• Maximize your annual gift exclusion(s). Single taxpayers can gift up to $15,000 and married taxpayers can gift up to $30,000 per recipient without being subject to the gift tax. Ask your tax adviser for more details on what gifts may qualify for this treatment.

• Utilize the increased lifetime gift and estate tax exclusion while it is in effect. The Tax Cut and Jobs Act increased the lifetime estate and gift exclusion to $11,180,000 per taxpayer. Please note that some states have their own estate or gift tax exemption limits, which do not always match the federal amounts. Consult your tax adviser to confirm your estate plans have taken this into consideration.

• Consider a Qualified Charitable Contribution (QCD). For charitably inclined taxpayers who are required to take Required Minimum Distributions (RMD) from retirement accounts, and who do not need the money to live, up to $100,000 per taxpayer ($200,000 Married Filing Joint (MJF)) can be treated as a QCD.

• Time capital gains with capital losses. Your financial adviser is probably already practicing this with current year activity, but check with your tax adviser to see if you have any capital loss carryovers to offset other potential gains you could accelerate into 2018.

• Plan the timing of deductions. With the new increased standard deduction (discussed later), taxpayers who have historically itemized may not exceed the standard deduction. Pay attention to the timing of medical bills, taxes and charitable contributions. If it makes sense accelerate or defer the payment into another year to take advantage of the higher standard deduction.

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Equity Update: The Return of Volatility

Oh what a difference a month makes! February has ushered in the return of volatility to a market that had all but forgotten what it felt like. Since the start of the month, we have seen the Volatility Index (the “VIX”) spike from its January (and all of 2017) average of the low teens all the way to 50, now presently sitting at 29. In addition, over the last month the 10 Year Treasury Yield has moved from 2.55% to 2.83%. The S&P has declined 8.8%. All this action and we are only 7 trading days into the month! So what is going on?

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Robo-advisors, Chatbots and Artificial Intelligence Are Changing the Face of Wealth Management – However, Personal Relationships Remain Key

With the insurgence of technological advancements in the world of wealth management, such as online financial and estate planning software, you may ask: Will artificial intelligence (AI) replace your wealth manager’s role in providing financial advice including investment, retirement and estate planning? Will the digital generation migrate to machines for guidance to secure their wealth for themselves and their loved ones? The answer is: not yet.

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Dear Clients and Friends of the Firm:

As communicated in our last Tax Bulletin, the House and Senate recently passed and released proposals for tax reform titled the ‘Tax Cuts and Jobs Act.’ On December 20, 2017, the House of Representatives and Senate officially passed a unified version of this bill, written by a conference committee of the two legislative bodies. The bill was then signed into law by President Trump on the morning of December 22, fulfilling his promise of enacting tax reform prior to the Christmas holiday. In light of the new tax law, which makes significant changes to current tax policy, Chilton Trust wanted to highlight some key provisions of the new legislation that may impact your taxes. As always, we strongly recommend that you consult with your tax advisor in order to assess how the new legislation may affect your personal or entity tax situation.

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On December 2, 2017, the full Senate passed its amended version of the Tax Cuts and Jobs Act. This Bill now goes to a joint committee (conference committee) of House and Senate members who will try to reconcile the differences in the House and Senate bills and arrive at a compromised version. Republican legislators from high-tax states, however, have some concerns and may be looking for more concessions (e.g., concerns about the repeal of the state and local income tax deduction). The compromised version of the Bill, if any, will then be sent to both chambers of Congress for approval. It is difficult to predict when (or if) the Bill will be finalized, but the goal is to pass the final version of the Bill before the holiday recess. If Congress passes the Bill, it then goes to President Trump for signature.

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Dear Clients and Friends of the Firm: As communicated in our last Tax Bulletin, the House Republicans recently released a proposal for tax reform titled the ‘Tax Cuts and Jobs Act.’ On November 16, 2017, the House of Representatives officially passed its version of the bill, overcoming a significant hurdle in the tax legislative process, which now advances onto the Senate. On that same day, the Senate Republicans approved their own version of the ‘Tax Cuts and Jobs Act,’ from the Senate Finance Committee. This proposed legislation has many key differences from its House counterpart that, if passed, would need to be reconciled with the House bill in a conference committee. Consequently, the final tax bill, if any, that is presented to the President, may be different from the existing House and Senate proposals. Therefore, we continue to recommend that you maintain your current tax planning strategies at least until the full Senate votes on its bill in the beginning of December. We have highlighted below some key differences between the House and Senate proposals.

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