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Ask Todd: How old is too old to plan for long term care? · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Letsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with a state and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As promised, Todd Lutsky is with us now for Ask Todd.
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  Speaker 2: This is your chance to ask Todd your estate planning questions.
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  Speaker 2: Studio line is open at eight eight eight two zero
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  Speaker 2: five two two six three, so get dialing. I know
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  Speaker 2: it's new year, so this is your chance to ask
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  Speaker 2: Todd your questions to get your estate plans squared away
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  Speaker 2: in twenty twenty five. Again eight eight eight two zero
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  Speaker 2: five two two six three. Usually have time for two
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  Speaker 2: or three questions, so get dialin to make sure that
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  Speaker 2: you are in the front of the line. Again, that
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  Speaker 2: number is eight eight eight two zero five two two
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  Speaker 2: six three. Mister Lutsky, how are you doing today?
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  Speaker 3: I am great?
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  Speaker 2: How you been, uh a little confused.
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  Speaker 3: Yeah, it happens.
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  Speaker 2: Was out yesterday doing a little bit of running. You're
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  Speaker 2: jogging on the track, uh huh. And I saw that
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  Speaker 2: there was a clam over on the side of it.
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  Speaker 2: A clam pulled a muscle. Yeah, that that happens. Real problem.
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  Speaker 2: It is a problem, real problem in this weather. Todd,
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  Speaker 2: I want to talk to you a little bit about
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  Speaker 2: the age at which it's appropriate to consider long term
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  Speaker 2: care planning and trying to protect assets from the cost
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  Speaker 2: of long term care. Specifically, is there ever an age
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  Speaker 2: that that someone gets to where you say, hey, like
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  Speaker 2: you might be too old to consider this kind of planning?
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  Speaker 2: Is that a thing?
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  Speaker 3: I think we should talk about the high end and
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  Speaker 3: the low end. Let's do that. Sure, so, so on
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  Speaker 3: the low end, right, when clients come in and they wonder,
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  Speaker 3: you know, what, what do I know? I want to
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  Speaker 3: do a state planning. But you know, then our job
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  Speaker 3: is to guide them, you know, as to what kind
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  Speaker 3: of a state plan may makes sense, and so we'll generally,
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  Speaker 3: you know, age as one factor that we look at.
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  Speaker 3: So if you come in in your and this is
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  Speaker 3: just my own number. By the way, there's no book
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  Speaker 3: telling us this, you know, sixty and up, I'm going
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  Speaker 3: to ask, you know, sixteen up. I'm probably going to say,
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  Speaker 3: you know, are we concerned about the future and potential
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  Speaker 3: long term care planning? Because we all know it takes
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  Speaker 3: five years to protect it. So if I can have
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  Speaker 3: this in my rear view mirror by sixty five or
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  Speaker 3: by seventy, I want to do that. If you come
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  Speaker 3: in and you are you know, fifty, but you tell
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  Speaker 3: me you know what I got, you know, diagnosed with
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  Speaker 3: Parkinson's or I have you know, MS, or something that
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  Speaker 3: might affect mobility, well then you might you might want
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  Speaker 3: to get the clock started sooner rather than later. But
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  Speaker 3: those are you know, the exceptions to the rule to
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  Speaker 3: your point. What about the other end, Well, you know,
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  Speaker 3: I hate to put a cap on the other end
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  Speaker 3: because you know, I'm always betting on you living, not
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  Speaker 3: on you dying.
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  Speaker 2: So nice of you.
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  Speaker 3: Yeah, that's what I do. So you know, if you
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  Speaker 3: came into me and you're eighty five and you say, geez,
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  Speaker 3: I want to start my medicaid clock running, well, you
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  Speaker 3: know what, that's okay, I'm going to say, do it.
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  Speaker 3: You know, I hope you make ninety And if you
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  Speaker 3: do then, and something happens, then it'll be You'll be protected,
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  Speaker 3: and that's important. Plus, there's never a downside to having
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  Speaker 3: the clock running. Right. If you have the clock running
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  Speaker 3: and somebody gets sick, you know, four years into the clock,
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  Speaker 3: well I might want to just private pay for one
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  Speaker 3: year if I can guarantee the protection of the you know,
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  Speaker 3: dollars or assets that I've transferred, and I only have
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  Speaker 3: to pay one one year, say one hundred and ten
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  Speaker 3: hundred and twenty thousand dollars, I might do that if
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  Speaker 3: I'm protecting half a million or a million dollar home
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  Speaker 3: or whatever it is I've I've done. Planning for sure
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  Speaker 3: makes makes sense. So getting the clock running now hurts.
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  Speaker 3: And of course I'll share with you the story that
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  Speaker 3: I did do. Uh. A ninety four ninety five year
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  Speaker 3: old came in and they needed trust planning anyway, just
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  Speaker 3: from an estate planning standpoint, so I said, well then
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  Speaker 3: why not just make them irrevocable and then you get
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  Speaker 3: the best of both worlds. Sure enough, it worked and
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  Speaker 3: they didn't get sick until they beat the five year clock.
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  Speaker 3: So never hurts to get it done. I guess there's
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  Speaker 3: not an age. I guess that's too old to do
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  Speaker 3: the planning. How's that?
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  Speaker 2: There? You go talking with Todd Loltsky from Cushing and Dolan.
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  Speaker 2: Still got a little bit of room on the phone lines,
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  Speaker 2: and know we already got a couple of people that
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  Speaker 2: called in. But uh again, eight eight eight to zero
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  Speaker 2: five two two sixty three is the number again? Eight
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  Speaker 2: eight eight to zero five two two six three. We're
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  Speaker 2: gonna take a quick break right now. But then it
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  Speaker 2: is your calls with Todd right after this. That number
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  Speaker 2: one more time is eight eight eight to zero five
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  Speaker 2: two two sixty three.
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  Speaker 1: Ask Todd with Todd Letsky every Wednesday at ten thirty
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  Speaker 1: only here on the Financial Exchange Radio Network. You're listening
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  Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
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  Speaker 1: Radio Network.
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  Speaker 2: Let's get right to your calls with Todd Lutsky.
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  Speaker 3: Here.
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  Speaker 2: First in the queue is Philip on Cape cod Philip,
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  Speaker 2: what's your question for Todd?
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  Speaker 4: Tod, you did an irrevocable trust for me about six
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  Speaker 4: years ago. I have rental property. If I sell the
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  Speaker 4: rental property, can I take some of that money out?
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  Speaker 4: Because I've not enjoyed any of the rental income to
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  Speaker 4: this state.
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  Speaker 3: Well, let me ask you why you have not enjoyed
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  Speaker 3: the rental income. First and foremost, Well, I at this
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  Speaker 3: point I thought it'd be better just to keep it
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  Speaker 3: in the trust.
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  Speaker 4: In case we needed some money for repairs on the property.
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  Speaker 3: Okay, so first and foremost, and I get it, not
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  Speaker 3: everybody remembers everything you talk about in meetings, But that
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  Speaker 3: trust is an income only trust, and all the rent
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  Speaker 3: belongs to you every single year, and you've been picking
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  Speaker 3: it up, I'm sure on your income tax return and
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  Speaker 3: it and it belongs to you and your family, so
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  Speaker 3: that rent is yours. Now. Having said that, my next
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  Speaker 3: comment would be, how long you said, six years you've
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  Speaker 3: been renting this?
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  Speaker 4: Right, Well, we've been renting it longer, but it's been
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  Speaker 4: in the trust for since we met with.
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  Speaker 3: You, and so right, right. So the good news is
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  Speaker 3: that in our trust we have language that says all
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  Speaker 3: the income shall be distributed to you. But I get it.
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  Speaker 3: Some people don't physically take the income out and put
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  Speaker 3: it into your personal bank account, although you're certainly entitled
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  Speaker 3: to it, and so we have language in the trust
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  Speaker 3: that says that doesn't go to principle. If you don't
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  Speaker 3: take it, it doesn't revert to principle. It's basically an
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  Speaker 3: account receivable. Okay. So if you are earning, if this
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  Speaker 3: thing generated, you know, sixty thousand dollars a year in rent, okay,
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  Speaker 3: then you have six years of sixty thousand dollars a year,
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  Speaker 3: so sixty times six of technically an account receivable. Now
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  Speaker 3: I get it. You might have used some of the
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  Speaker 3: money to pay for real estate taxes or or some
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  Speaker 3: upkeeper maintenance. I get it. All that money might not
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  Speaker 3: be there, but you're getting the drill, right, you're getting
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  Speaker 3: the feel. So you need to find out how much
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  Speaker 3: income and you can just look on your tax returns
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  Speaker 3: it'll be there. Find out how much income got deposited
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  Speaker 3: in that trust over six years, and that's one big
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  Speaker 3: account receivable, right, So six times six is three hundred
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  Speaker 3: and sixty thousand dollars of money. So you're allowed to
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  Speaker 3: take that because it's still income. It's not considered principle.
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  Speaker 3: So that's how I would go about taking it out.
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  Speaker 3: How much you're looking to take out.
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  Speaker 4: Believe it or not, I'm like, one hundred thousand will
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  Speaker 4: get me over the.
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  Speaker 3: Hump, all right, So there you go. Oh, I think
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  Speaker 3: even before you go to sell it. There's probably money
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  Speaker 3: sitting in that trust bank account, correct, Yeah, yes, there is. Yeah,
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  Speaker 3: so probably a lot of money because you haven't taken it.
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  Speaker 3: So I suspect that you now have the ability that
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  Speaker 3: if you did that, and I said there's three hundred
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  Speaker 3: and sixty thousand dollars of income, certainly one hundred is
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  Speaker 3: not going to be a problem to take out. And
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  Speaker 3: that's how I would go about it. It is an
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  Speaker 3: account receivable for you. Then when you sell the property again,
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  Speaker 3: it's completely a grant toward trust, so you have the
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  Speaker 3: ability to sell it. It's flexible, You're going to have
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  Speaker 3: no adverse income tax consequences, although I recommend you use
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  Speaker 3: our firm to help you with the closing so that
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  Speaker 3: you don't screw up the five year waiting period, which
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  Speaker 3: you will not. Right as long as the money gets
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  Speaker 3: put in the trust, and therefore that money you probably
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  Speaker 3: can just leave there and let continue to be protected
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  Speaker 3: and not have to worry about grabbing the principle because
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  Speaker 3: we figured out how to do it. So hopefully that
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  Speaker 3: helps a little. And you can see and everybody can
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  Speaker 3: see the flexibility built in to these irrevocable trusts. So
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  Speaker 3: Hopefully that's helpful, Philip.
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  Speaker 2: Folks.
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  Speaker 3: Sometimes people that do their planning like Philip and others
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  Speaker 3: who don't find themselves faced with nursing home care. Nevertheless,
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  Speaker 3: and so for either group, whether you've done your planning
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  Speaker 3: or not, if you find yourself faced with a nursing home,
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  Speaker 3: there's gonna be assets outside the trust if you've done
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  Speaker 3: your planning that are at risk, and there's gonna be
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  Speaker 3: folks who didn't do their planning and all their assets
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  Speaker 3: are at risk. Get this guide. It's getting close to
• 9:29
  Speaker 3: the end of the month long term care planning for procrastinators,
• 9:32
  Speaker 3: and it will teach you how to make countable assets
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  Speaker 3: non countable last minute. And each asset is differently treated
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  Speaker 3: for married versus single people, whether it's a home, a rental,
• 9:43
  Speaker 3: or money itself. So get the guide eight six six
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  Speaker 3: eight four eight five six ninety nine or Legal Exchange
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  Speaker 3: Show dot com. So don't just write to check to
• 9:55
  Speaker 3: the nursing Home eight six six eight four eight five
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  Speaker 3: six or Legal Exchange Show dot com.
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  Speaker 2: Todd, we got another caller for you here. Let's go
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  Speaker 2: to Gail in Wooster Gale. You are on with Todd Lutski.
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  Speaker 1: Hi.
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  Speaker 2: Todd I have a question. I understand that in the
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  Speaker 2: state of Massachusetts a TOD for real estate is not balanced.
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  Speaker 3: Is that true? Yeah, I don't realize. So, folks, what
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  Speaker 3: you need to understand about a TOD is it's a
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  Speaker 3: transfer on death, and you normally see that at the
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  Speaker 3: bank account level, not even so much at an investment
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  Speaker 3: account level. You see that at a bank account level,
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  Speaker 3: where you it's similar to a designated beneficiary on a
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  Speaker 3: bank account that says, when I die, I transfer this
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  Speaker 3: account on death too, and you put a name down.
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  Speaker 3: But that is for a bank account and perhaps an
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  Speaker 3: investment account, but not that I'm aware of anyway for
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  Speaker 3: real estate. So to avoid the probate on the real estate,
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  Speaker 3: whereas a TOD will avoid the probate on a bank
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  Speaker 3: account for real estate, I think you need to really
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  Speaker 3: do some trust planning and figure out how best to
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  Speaker 3: avoid the probate, protect the asset and get it to
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  Speaker 3: your family. So hopefully that was helpful.
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  Speaker 2: Todd, I got one more for you here. Let's go
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  Speaker 2: to Jim in haver Old. Jim, you are on with
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  Speaker 2: Todd Letsky. What's the question?
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  Speaker 3: Hi? How you doing? Gentlemen?
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  Speaker 1: My question is pretty simple. Can you put a house
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  Speaker 1: that he has a mortgage on it, or maybe even
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  Speaker 1: a house that has a reverse mortgage on it into
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  Speaker 1: a trust.
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  Speaker 3: Well, what kind of trust? Revocable or irrevocable?
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  Speaker 2: Either one, probably the irrevocable. It seems like you lean
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  Speaker 2: towards those more than the revocable.
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  Speaker 3: Well, and I think it's fair that you would say that.
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  Speaker 3: I don't want to say that I lean towards one
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  Speaker 3: or the other. It's strictly a function of what makes
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  Speaker 3: sense for the particular client and their situation. So we
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  Speaker 3: can try to address both if we have the time.
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  Speaker 3: But you know, revocable trusts are less problematic when you're
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  Speaker 3: transferring encumbered property because pretty much you're still the owner,
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  Speaker 3: right and so you don't have to worry about triggering
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  Speaker 3: a d on sale clause, So you could transfer it
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  Speaker 3: in and even refinancing inside a revocable trust. I mean,
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  Speaker 3: banks sometimes give you a little headache, but ultimately what
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  Speaker 3: will happen is the bank might say, Okay, take the
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  Speaker 3: house out of the revocable trust, put it in your name,
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  Speaker 3: get the refinancing done, and then put the house back
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  Speaker 3: in their revocable trust. And that's fine. They don't care.
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  Speaker 3: So from a revocable trust standpoint, with a mortgage on it,
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  Speaker 3: I don't see any issues the irrevocable trust. If it's
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  Speaker 3: encumbered property, then yes, you have to take a couple
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  Speaker 3: of steps. So if it's your primary residence, what we do,
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  Speaker 3: and we talk about life estates a lot. We've talked
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  Speaker 3: about them over the years. A life estate is something
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  Speaker 3: I use infrequently, but would use it, and I'm going
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  Speaker 3: to say to really everyone else that planners and the
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  Speaker 3: like should use it when you're transferring an encumbered primary
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  Speaker 3: residence to an irrevocable trust. Okay, so if you do that,
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  Speaker 3: If you don't do that, and you don't reserve the
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  Speaker 3: life of state and put the remainder interest into the
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  Speaker 3: irrevocable trust, you could if the bank ever checked, trigger
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  Speaker 3: the du on sale clause. Okay, unlikely the banks ever
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  Speaker 3: check on these transfers as long as you pay, but nevertheless, uh,
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  Speaker 3: it's an issue. So there's also the Guard Saint Germain
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  Speaker 3: Act that says you might not trigger it. But the
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  Speaker 3: easier thing to do is say, you know what, if
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  Speaker 3: I reserve a life estate and the deed, then I
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  Speaker 3: have the right to live there. The rest of my life,
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  Speaker 3: the right to collect the income and so, and the
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  Speaker 3: right to pay the bills. Hooray. So that's the nugget
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  Speaker 3: of ownership that I kept. Means I cannot trigger the
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  Speaker 3: due on sale clause. Okay, So I cannot trigger it,
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  Speaker 3: and I can keep my existing mortgage by transferring it
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  Speaker 3: to the trust and reserving a life estate and I
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  Speaker 3: don't have to worry about it. Now. The issue that
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  Speaker 3: becomes with that is, well, you can keep your existing mortgage,
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  Speaker 3: you're not likely going to be able to refinance it.
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  Speaker 3: Right If you try to refinance it, the bank is
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  Speaker 3: likely going to make you take the whole thing out
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  Speaker 3: of the trust and reset the five year waiting period. Now,
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  Speaker 3: I can tell you that a lot of my clients
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  Speaker 3: that have done this, of course in the past, have
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  Speaker 3: what very low rates, and today rates are really high.
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  Speaker 3: So one, we don't want to trigger the Duwan sale clause,
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  Speaker 3: so we reserve a life state. And two they're really
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  Speaker 3: not going to be refinancing so and mostly I can
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  Speaker 3: tell you folks that that people that do irrevocable trust
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  Speaker 3: planning don't have mortgages on it. But we can solve
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  Speaker 3: that problem for you. And if it happened to be
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  Speaker 3: on a rental property. You just got to keep a
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  Speaker 3: ninety nine year lease. I can explain that into TAIL
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  Speaker 3: and that will prevent a triggering. So long winded answer.
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  Speaker 3: Sorry for that, but I hope it's addressed the the question.
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  Speaker 2: Mister Lutski, Thank you so much for joining us today.
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  Speaker 3: Always a pleasure.
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  Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
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  Speaker 1: and Dolan, serving Massachusetts and New England for more than
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  Speaker 1: The views expressed in this segment are solely those of
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  Speaker 1: Cushing and Dolan Armstrong advisor. He does not provide any
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  Speaker 1: legal or tax advice. Please consult with your legal or
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