As 2017 drew to a close, Congress passed the Tax Cuts and Jobs Act (the “Act”), tax reform legislation that made sweeping changes to the Internal Revenue Code. When Congress last reformed the tax code in 1986, the legislative process took over two years. This time Congress accomplished the same feat in two months.
On July 21, 2017, the Wall Street Journal published an article titled “This Life Insurance Isn’t So Permanent”, which discussed instances where an insurance policy is paid out prior to the death of the insured per the terms of the contract. Specifically, they refer to the situation that a 99-year-old is currently in; his family will lose out of $3,200,000 in death benefit proceeds when he turns 100 years old in September. His Transamerica policy states that the policy’s cash surrender value will be paid out to the policy-owner upon the insured reaching maturity age (age 100 in this case). Many policy-owners are probably unaware that this could be a clause of their insurance policy and are in for an unpleasant surprise when their policy is paid out before their passing.
Congress returns to Washington in June with only seven weeks to work before leaving again for the August recess. Below we consider what Congress is likely to accomplish, and how its actions (or inactions) are likely to affect the markets over the summer and into the fall.
Following are the immediate actions on Congress’ plate: