Bond markets fighting the Fed

The Federal Reserve has indicated numerous times throughout the year that they feel the economy is stable enough to support an increase in interest rates. In anticipation of this increase, with some speculation it could happen as early as September, short-term Treasury yields have started moving higher. However, yields on longer-term debt, such as the 10-year and 30-year Treasury, have continued to fall. Some argue this is a sign that investors, both domestic and foreign, are more skeptical than the Federal Reserve is regarding the health of the U.S. economy.   This skepticism has led to the smallest spread between two- and 10-year notes at their slimmest level since April. Therefore, who is right – The Federal Reserve or the bond market? As we move closer to September, and the highly anticipated rate increase, we will continue to monitor where yields are in relation to each other as we wait to whether the bond markets know something the Federal Reserve doesn’t.

New Tax Policy – Transfer of Assets

Time Sensitive Information

August 4, 2015

The U.S Department of Treasury Office of Tax Policy recently commented  that they are about to release new regulations regarding IRC 2704 which could contain provisions severely limiting the ability to take valuation discounts on transfers of assets  between family members or family entities.

A very common estate planning tool is using asset or business transfers to trusts or family limited partnerships so as to utilize minority or lack of marketability discounts to lower the valuation and related transfer costs including utilizing a smaller exemption or incurring a smaller gift tax. President Obama initially included limiting intra-family discounts in his budget proposal and thus it seems that Treasury intends to now limit  the ability to use this planning tool  for transfers occurring after the regulations are issued which could be as early as this this September.

While we do not know what these proposed regulations will say, time is of the essence if one has a goal of mitigating estate or gift taxes  via intra-family transfers.