Economic Review and Outlook
Second Quarter 2016 e-Newsletter
Doug Williams
Economic Review and Outlook- UPDATE FOR Q2
 
The UK's surprise vote to leave the European Union dramatically raises doubt about the sustainability of the global economic expansion, undermines confidence in European political stability, and challenges 70 years or more of established economic policy orthodoxy.  The ensuing global equity markets swoon reflects these uncertainties and suggests a more defensive posture by investors, business managers, and consumers in the months ahead.
The European economy, burdened by excessive regulation and structural rigidity, has expanded at a tepid pace since the recession with the support of an extraordinarily accommodative monetary policy from the European Central Bank.  The uncertain effect of the UK's removal from the EU's trade and labor agreements poses risk of an economic contraction in Europe, the UK, and beyond.
The UK vote to leave provides fresh oxygen to secession movements in Scotland, Catalonia, and other regions within current national borders. Furthermore, nationalistic sentiment in France and Germany as well as other countries may spark anew.  After more than 70 years of stability in Western Europe and a quarter century since the collapse of the Soviet Bloc, the European map may be redrawn again with new risk to global security and economic welfare.
European recovery from the cataclysmic destruction of WWII was built upon the notion of a unified economic community in which goods, services, labor, and capital would flow freely across borders.  These policies in Europe, and the proliferation of free trade and market-based economies around the world, have resulted in unprecedented improvement in living standards.  The implicit rejection of time-proven policies by UK voters could jeopardize these gains.
Since my last commentary the economic outlook has shifted dramatically.  A short month ago I anticipated that, in recognition of a resilient US economic expansion with GDP growth likely to exceed 2%, the Federal Reserve would raise short term interest rates two times this year.  Now that looks highly improbable. With the UK's vote to leave, I expect the Federal Reserve, investors, business managers, and consumers will proceed cautiously.
Let's hope UK and European leaders hear the cries of voters for a more productive and just economic order and return to market-based economic policies unfettered by excessive regulation and bureaucratic interference from Brussels.  Officials in Washington would be wise to heed those cries as well.
 
SERVICES SPOTLIGHT
 
Special Needs Trust

What is a Special Needs Trust?

A special needs trust ensures that a disabled beneficiary remains eligible for government benefits even when their assets exceed the maximum allowed by law to qualify for benefits. A trust company can serve as trustee to make sure the guidelines for administering the trust are followed.
 
Special needs trusts are created during the estate planning process to benefit the disabled person or the trust can be created through a court order due to a personal injury lawsuit settlement. These trusts are designed for the "sole benefit" of the beneficiary to supplement their needs beyond basic food and shelter. 
 
Why use a Special Needs Trust?

The needs of a disabled beneficiary are quite different from the needs of a typical trust beneficiary.   Families are often financially strained by the cost of caring for their disabled relative. Using a trustee to help manage the process eases the burden of learning and complying with every rule. The trustee helps ensure the beneficiary can still qualify to receive much-needed assistance through government-sponsored health care and community outreach programs. 
 
The trustee reports the income and expenses of the trust to the state Medicaid office for review and approval as required by law.  This review process is an important part in the disabled beneficiary maintaining their government benefits.
 
About Us

Southeastern Trust brings over 120 years of combined trust experience, the highest level of personal service, and compassion to each unique situation. It is our privilege to serve families across the country in this way.  Southeastern Trust Company is a full service trust and wealth management company and a division of Atlantic Capital Bank.  


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