Legal Developments

In the recent Ringling case, the scope in which heirs or donees can become liable for unpaid estate and gift taxes was highlighted. Generally, the time period on federal estate tax collections from a transferee is 10 years from the date the assessment of tax is made against an estate. In this case, the IRS filed suit in the 9th year of that 10-year period, or 19 years after the date of death. Transferee liability was found to include many who felt they would escape that liability, including recipients of life insurance, donees of gifts made prior to death, survivors of joint tenancies, and any others.

Economic Observations

The Fed voiced a dovish stance on interest rates, which up until now was viewed favorably by the markets for not raising them too fast or too much. Now the markets may be questioning whether investors should be worried about the outlook for growth.  Bonds in a complimentary manner rose, with Treasury yields falling. World financial markets are keeping our rates low and values high, with the yield on Germany’s 10-year bund (The German equivalent to the U.S. Bond) moving back towards zero.  The 3 month – 10 year Treasury spread recently inverted causing some to raise  recession concerns and the prospect that the Fed may actually lower rates if inflation doesn’t rise.