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Gene Todd, Executive Vice President/Managing Director of First Bank's Wealth Management Group

From monthly archives: October 2017

We are pleased to present below all posts archived in 'October 2017'. If you still can't find what you are looking for, try using the search box.

The New Estate Tax Rules and Your Estate Plan

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Act) included new gift, estate, and generation-skipping transfer (GST) tax provisions. The 2010 Tax Act provided that in 2011 and 2012, the gift and estate tax basic exclusion amount was $5 million (indexed for inflation in 2012), the GST tax exemption was also $5 million (indexed for inflation in 2012), and the maximum rate for both taxes was 35%. New to estate tax law was gift and estate tax applicable exclusion portability: generally, any gift and estate tax basic exclusion left unused by a deceased spouse could be transferred to the surviving spouse in 2011 and 2012. The GST tax exemption, however, is not portable. Starting in 2013, the American Taxpayer Relief Act of 2012 (the 2012 Tax Act)permanently extended the $5 million (as indexed for inflation, and thus $5,490,000 in 2017, $5,450,000 in 2016) basic exclusion amount and GST tax exemption and portability of the gift and estate tax applicable exclusion ...

Upside and Downside of Using the Applicable Exclusion Amount Now

The applicable exclusion amount is the amount that can be sheltered from federal gift and estate tax by the unified credit. The basic exclusion amount is $5,490,000 (in 2017, $5,450,000 in 2016). In 2011 and later years, the unused applicable exclusion amount of a deceased spouse is portable which may make it easier for you and your spouse to take full advantage of the estate tax applicable exclusion amount. You have some flexibility over when to use some or all of your applicable exclusion amount.   You could use your applicable exclusion amount to make a gift now. Your estate could use your applicable exclusion amount at your death. Or, if you are married, your estate could elect to not use your applicable exclusion amount, instead transferring it to your spouse for later use. There are potential advantages and disadvantages to using your applicable exclusion now rather than later. Tip: The top gift and estate tax rate is 40 percent in 2013 and later years. Technical Note:In 2011 and later ...

Quarterly Market Review: July-September 2017

The Markets (as of market close September 29, 2017) Trading during the summer months is customarily slow, and the summer of 2017 proved no different. July kicked off the third quarter with equity markets enjoying noteworthy gains over their June closing values. Both the Dow (2.54%) and S&P 500 (1.93%) posted significant gains, as did the Global Dow (3.13%). The Nasdaq posted a very favorable 3.38% monthly increase. The yield on long-term bonds changed very little from June as investors seemed to focus on surging equities. Crude oil prices reached $50 per barrel by the end of July after closing June at $46 per barrel. The national average retail regular gasoline price was $2.269 per gallon on July 31, down from the June 26 selling price of $2.288. Equities held their own in August, despite hurricanes that devastated several southern states and Puerto Rico, causing extraordinary economic loss. Conflicts both at home and abroad certainly influenced investor sentime ...

Income Tax Planning and 529 Plans

The income tax benefits offered by 529 plans make these plans attractive to parents (and others) interested in saving for college. Qualified withdrawals from a 529 plan are tax free at the federal level, and some states also offer tax breaks to their residents. It's important to evaluate the federal and state tax consequences of plan withdrawals and contributions before you invest in a 529 plan. Federal income tax treatment of qualified withdrawals There are two types of 529 plans--college savings plans and prepaid tuition plans. The federal income tax treatment of these plans is identical. Your contributions to college savings plans and prepaid tuition plans are tax deferred. This means that you don't pay income taxes on the plan's earnings each year. Then, if you take out money and use it to pay for qualified education expenses, the earnings portion of your withdrawal is free from federal income tax. This presents a significant opportunity to help you accumulate funds for college. Qu ...

Lessons for the Next Crisis

September 2017 It will soon be the 10-year anniversary of when, in early October 2007, the S&P 500 Index hit what was its highest point before losing more than half its value over the next year and a half during the global financial crisis. Over the coming weeks and months, as other anniversaries of major crisis-related events pass (for example, 10 years since the bank run on Northern Rock or 10 years since the collapse of Lehman Brothers), there will likely be a steady stream of retrospectives on what happened as well as opinions on how the environment today may be similar or different from the period leading up to the crisis. It is difficult to draw useful conclusions based on such observations; financial markets have a habit of behaving unpredictably in the short run. There are, however, important lessons that investors might be well-served to remember: Capital markets have rewarded investors over the long term, and having an investment approach you can stick with—especially during tough ti ...

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All First Bank blog information and content is strictly informational. It is not intended to be specific investment, tax, or legal advice. If you need detailed financial, investment, or tax advice, please contact a First Bank qualified professional. Please note, First Bank occasionally shares third-party content we find to be relevant and helpful to our audiences.