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Election economic outlook: It’s a bummer, man

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Anyone looking for the proverbial silver lining in the presidential election would have come away disappointed after attending Wilmington Trust's annual fall wealth briefing.

Pessimism and uncertainty colored the remarks by Wilmington Trust executives when commenting on the upcoming election.

The wealth management firm, owned by M&T Bank, is "very pessimistic over the long term" after looking at both Hillary Clinton and Donald Trump's proposals for the economy, said Luke Tilley, chief economist for Wilmington Trust Investment Advisers.

Regardless whether the Democratic or Republican candidate is elected, the nation's debt and deficit would likely keep increasing, Tilley said, adding that the economic outlook is "not very encouraging."

Tilley said he was also disappointed that both parties have embraced anti-trade rhetoric. In fact, if after the election "we enter a period of retreat (on free trade), it would be detrimental to long-term economic growth," he noted.

Both Trump and Clinton have spoken in favor of new infrastructure spending, which is encouraging, Tilley said. Yet the big question of where the money will come from to cover the spending remains unanswered.

After reviewing the tax proposals of both candidates, Carol Kroch, Wilmington Trust's managing director of wealth and philanthropic planning, said many wealth families might initially applaud Donald Trump's proposal to eliminate the estate tax.

But, she noted, Trump has not specified what the basis of inherited assets would be if the estate tax was eliminated. Under current law, the basis is stepped up to fair market value at death.

If the basis of inherited assets is not stepped up, heirs might not be so happy, she said.

"There's a major hole that is not thought through," she said. "How will the new system determine the basis of gifted or inherited assets?"

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