The Federal Estate Tax Has Been Repealed For 2010, But It Is Scheduled To Return In 2011 With An Exemption Of $1,000,000.
As of January 1, 2010, the Federal Estate Tax has been repealed! That's the good news. The bad news is that if Congress does not change the law, the exemption will be one million dollars beginning January 1, 2011.
The highest estate tax rate is also scheduled to increase to 55%. There have been attempts to pass legislation to prevent this, but all have failed. This means if your net estate were $2,000,000, the estate tax owed would approach $500,000.
This is not a time to panic, but it is a time for a close Trust review in 2010. Remember, your estate includes all of your assets and the proceeds from any life insurance policy you control.
On Friday April 16, 2010, it was widely reported that the SEC filed a civil lawsuit against Goldman Sachs Group Inc ("Goldman Sachs") alleging fraud in the construction and sale of a mortgage-backed securities product. The GFWM Investment Strategies team reached out to Goldman Sachs to better understand the scope of the inquiry and Goldman Sachs's position on the issue. In order to provide you with as much clarity around this situation as possible, we would like to share some insights based upon conversations with Goldman Sachs.
First, the product in question in the SEC suit was created and sold by the securities division of Goldman Sachs. This group is a separate division of Goldman Sachs and functionally unrelated to the investment management division which is responsible for the GFWM asset allocation models, Goldman Sachs mutual funds and sub-advisory services provided to the AssetMark Core Plus Fixed Income Fund.
Second, the transaction in question involved a privately-structured product that was traded by sophisticated institutional investors. In contrast, the Goldman Sachs Asset Management Asset Allocation Strategies on the GFWM platform are delivered through highly-regulated retail mutual funds, and the Goldman Sachs sub-advisory services to the AssetMark Core Plus Fixed Income Fund trade primarily in liquid fixed-income securities.
The GFWM Investment Strategies team will be meeting with Goldman Sachs at their headquarters in the coming weeks as GFWM accelerates their ongoing due diligence efforts in light of this news. Their due diligence process includes a deep examination of organizational and personnel structures both directly and indirectly related to the strategies provided through GFWM.
While we expect and believe this issue to have little direct relevance to asset management services provided to GFWM, please be assured that ChappelWood will continue to monitor the situation.
At the end of the first quarter of 2010 the Dow Jones Industrial Average closed up 4.82%. The S&P 500 index finished with a gain of 5.39%. Within U.S. equity markets, generally speaking small-cap stocks fared better than large-cap stocks for the quarter and value outperformed growth. In the international arena, the MSCI EAFE Index (a proxy for developed international markets) posted a return of 0.94%. The MSCI EAFE Emerging Markets Index posted a gain of 2.45% during the quarter. The FTSE MAREIT Index returned 10.02%. In the bond markets the Barclays Capital Aggregate Bond Index returned 1.78%.
The U.S. Dollar appreciated 6.90% against the Euro and 1.13% versus the Japanese Yen for the quarter.
Sourses: Bloomberg, Ibid, Bureau of Labor Statistics
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