The Election Is Over-Now What?
By Paul Morrone, CFP ®, CPA, MSA
My fellow Americans, the election is over and by the fact that you are simply reading this message, you can be sure the sky is not falling, the world is not coming to its imminent demise and there are still only two certainties in life, death and taxes (more on this in a minute). This has certainly been the most polarizing presidential election of my life, and presumably the most controversial election during many of your lives as well. It’s been widely publicized that Americans feel as if they were forced to choose from the lesser of two evils, and whether or not you, your family, coworkers or friends are happy with the outcome is truly a matter of personal choice. We are all entitled to our opinions and that is one of the many things that makes America great. As a country, we’ve endured recessions, depressions, wars, political turmoil, terrorist attacks, and enormous changes in law, tax code and civil rights movements that have shaped the very definition of what it means to be an American.
Now that we’ve cleared the air, remember this, the success or failure of reaching your financial goals remains largely in your control. Yes, we may have some new rules and regulations to deal with, but that is nothing that this country has not seen before. While policies and procedures set by government officials (the President, Congress, Department of Justice, etc.) may provide us with a new framework that we must operate within, uncertainty about the future has never been an excuse for not planning ahead today. What we do know, however, is this: Donald Trump is going to be the 45th President of the United States, effective January 20th, 2017, and there is nothing we can do to change that fact. What this means to you, your family and your legacy, however, depends upon how you choose to play your cards. I’ve said many times, “control what you can control,” and I think that theory speaks volumes, especially in times of uncertainty. I stated earlier that the only two certainties in life are death and taxes, ironically, both of which may be materially impacted during the tenure of our next president.
On death – Other than the timing of your own death, one of the only other things you cannot control is whether there is an estate tax in effect at the time you pass. And while estate tax planning is often a consideration for many families (especially here in CT with a state death tax as well), it is not the only consideration. This election should have no impact on whether you have up-to-date beneficiaries, trusts in place to help maintain and preserve your legacy, assets titled correctly to minimize the impact of probate, or the appropriate amount of life insurance to protect your family from an untimely death.
On taxes – The current tax code was signed into law in 1986 by President Regan and has been modified countless times since then. There is no reason to believe that this won’t continue to happen, and it is also probably safe to assume that a major overhaul and institution of an entirely new tax code will not happen quickly. By continuing to stick to a budget, contributing to retirement plans and engaging in prudent year-end tax planning, you are allowing yourself to make informed decisions as to how taxes impact you on an annual basis. These principles will not change now that we know who our new president is going to be.
On everything else – Performance of financial markets, rising healthcare costs, changes in law, and entitlement program reform all represent inherent risks which we continue to attempt to mitigate in a myriad of ways. Whether it’s through the use of a diversified portfolio, insurance contracts, legal entities or proactive planning, it’s important to remember that a well-crafted plan has accounted for many of the uncertainties that could come to fruition from a change in power in the executive branch as well as almost anything else life can throw your way. Keeping this in perspective during short term times of uncertainty or volatility should help keep rash, emotional decisions at bay and allowing you to remain in control of your financial affairs.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual