The upcoming presidential election brings with it much speculation about the tax policy and market implications of the outcome. We don’t recommend changing your plans based on educated guesses about how tax policy may change once the election is behind us. However, it does make sense to consider how changes may affect your planning so that you can prepare. Of course, it is not just the presidential election that will dictate these changes, but House and Senate majorities.
The following changes have been floated as possibilities:
Being informed of these potential changes can help with the timing of decisions, especially if there are legacy transfers or the transition of your family business under consideration. Using your lifetime exclusion is often a good idea, if you can afford to do so, but there may become some more urgency to this to use it before you lose it.
There are other policy-related items that may also have a direct effect on our financial lives, including how the next administration and Congress will address the post-coronavirus economy, US- China trade policies, and policy changes in the tech and healthcare sectors.
As for the election and the movement of financial markets, evidence from the past indicates that the markets generally ignore elections. In fact, market volatility is historically lower in the 100 days leading up to and right after a presidential election. And, history shows no statistical difference in market performance in election vs non-election years.
While 2020 has given us plenty to concern ourselves with and there will certainly be changes on the horizon based on the results of the election, they are nothing we can’t prepare for and manage well.