It’s 2024, and this political season promises to be one to remember. While no one knows how this year’s presidential election will turn out, we all have our own beliefs and motivating factors when it comes to voting. Our objective is to plan, not predict either outcome, and we’re certainly not going to try to persuade you one way or another! Instead, we wanted to take something that is on everyone’s mind and offer some insight into how the result of the election can impact your life – your wealth, your portfolio, taxes, the economy, and your family dynamics.
The election affects you in three main ways: how you approach your wealth planning, what might happen to the markets, and your personal relationships.
So, no matter whether you’re red, blue, or purple, here’s how we’re thinking about the 2024 election:
Part of any planning discussions we have with clients is the consideration of how much they’ll be on the hook for in taxes and how much they get to keep. Taxes are very much on the ballot this year, with razor-thin control over both Houses of Congress in recent years, and neither party is projected to reach a key 60 votes in the Senate. The fate of Trump’s 2017 tax cuts is up to who controls the House, Senate, and White House. Here are a few of the highlights between major U.S. political parties:
The differences are stark, with each party speaking to its values through tax policy. A Republican administration would seek to make the 2017 tax rules permanent, while a Democratic administration would favor raising the corporate tax rate and taxes on the wealthy.
The Federal Estate Tax Exemption sunsets at the end of 2025. This temporary exemption allows assets up to $13.6 million for individuals and $27.22 million for married couples to be transferred untaxed. If Republicans are not able to renew and make it permanent, the policy will revert to transferring $5.6 million of untaxed assets, with a 40% tax on anything above this amount in 2026.
The bottom line is that there are significant differences between parties regarding how successful families plan. Here’s a summarized overview of some of the most salient points:
Families with generational wealth may consider making a gift of this bonus exemption amount before the exemption expires in 2026. Higher interest rates make certain estate tax strategies more attractive, such as Charitable Remainder Trusts (CRTs), Qualified Personal Residence Trusts (QPRTs), and intra-family loans.
Anxiety about the economy has become a national pastime over the past few years, and three-quarters of voters think it’s a key issue in this year’s election. It can feel like whoever wins the Oval Office will have a significant impact on everything. Still, history tells us that while some volatility throughout the election is to be expected, the best strategy is to stay calm, stick to your plan, and keep investing.
A new President could impact the economy by changing the corporate tax rate and structure or influencing inflation rates. We also expect federal interest rates to be cut this fall and in 2025, although the administration doesn’t control this metric.
Long story short, elections sort of matter for the economy, but they have less impact than you might assume. Our advice continues to be to stay the course and plan for, but don’t predict various outcomes.
After the election dust settles, there are policies that the new President can adopt that promote growth and entrepreneurism, which is categorically good for the economy. The view that less regulation, lower taxes, higher tariffs, and less immigration could benefit certain sectors and industries has been called the “Trump Trade.”
Over the past 74 years, we’ve had 18 presidential elections, and the White House has changed parties ten times. During that time, U.S. GDP growth averaged 3.2%, and the S&P 500 has grown at 9.4% annually. That said, elections can introduce short-term volatility, but we believe investors should do well by planning for, not predicting outcomes either way.
While we certainly can’t predict what will happen in November – or next week – we can plan for any outcome. As you evaluate your personal investments, consider the following:
We don’t have to tell you that election season brings strongly held opinions and even conflict to the forefront – more so every year, it seems. So, elections really can have a big impact on your family. Election years present opportunities for conversations and an exploration of what’s important to your loved ones – but we all know that the topic can be filled with landmines. So here are a few thoughts as you engage:
Discussing your values and what matters most to your family with younger generations can bridge the gap and help you to better understand one another. Viewing this election year as an opportunity to engage is not for the fainthearted. However, if done well and with humility, it can be an extraordinary launchpad for transferring family values and ideals from one generation to the next.
Endeavor can assemble a team for you to create a plan that considers potential legislative and taxation changes in the future and ensures you can thrive no matter who is in the White House.
Keep in mind: The later you wait in the year, the fewer options you have to make adjustments. We invite you to reach out to discuss your questions today.
