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Ask Todd: How often should a trust be reviewed? · 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 from now joined by the one and only
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  Speaker 2: Todd Lotsky from the law firm of Cushing and Dolan,
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  Speaker 2: we got the phone lines open for you to ask
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  Speaker 2: Todd your estate planning questions. Eight eight eight to zero
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  Speaker 2: five two two sixty three is the number. A reminder,
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  Speaker 2: we typically can get through about two or three questions,
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  Speaker 2: so get calling to make sure that we can get
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  Speaker 2: to your question again. That number is eight eight eight
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  Speaker 2: to zero five two two sixty three. To ask Todd
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  Speaker 2: Lotsky your questions about your estate plan that number again
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  Speaker 2: is eight eight eight two zero five two two sixty three.
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  Speaker 2: In reminder, we have limited time to ask Todd your questions.
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  Speaker 2: Mister Glutsky. How are you doing today?
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  Speaker 3: I am doing wonderful. How are you? I'm okay, yeah,
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  Speaker 3: just okay. Well, there's nothing to do with Oklahoma does.
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  Speaker 2: I went to a glass blowing class yesterday?
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  Speaker 3: Glass blowing? Yeah? Yeah, what were you doing there?
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  Speaker 4: Well?
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  Speaker 2: I accidentally inhaled. Oh I got stomach pain?
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  Speaker 3: Now yeah, i'd imagine.
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  Speaker 2: Yeah, so it's not great. Uh, Todd, I want to
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  Speaker 2: talk to you about irrevocable trusts. Okay, it's kind of
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  Speaker 2: like magnets. How do they actually work?
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  Speaker 1: Like?
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  Speaker 2: What what's the mechanism by which an irrevocable trust protects
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  Speaker 2: assets from long term care costs?
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  Speaker 3: Yeah? So a little from a more of a specific standpoint, right,
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  Speaker 3: because there's so many things that you can do, so
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  Speaker 3: few things that you can't. So when I say how
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  Speaker 3: does it work? Or when you say how does it work?
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  Speaker 3: It's a very broad question. But let's narrow it down
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  Speaker 3: to what you were saying is, is you know what
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  Speaker 3: is the the one mechanism that that truly you know,
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  Speaker 3: provides the protection. I guess is what you're saying from
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  Speaker 3: from the nursing home. And there's language right when you
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  Speaker 3: when you when you draft these trusts the drafting is
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  Speaker 3: the key. The language in there, right, So there's a
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  Speaker 3: regulation that says if there are any circumstances within the
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  Speaker 3: four corners of the document that allow the principle to
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  Speaker 3: be paid out two or for the benefit of the
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  Speaker 3: don or, then the nursing home can get them. So
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  Speaker 3: it seems simple enough, sure to draft around that, and
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  Speaker 3: and to draft around that, you need to have a
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  Speaker 3: specific language that says there is no the trustee shall
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  Speaker 3: have no power to distribute directly to the donor in
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  Speaker 3: any way. And you could go on and further make it,
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  Speaker 3: you know, irrevocable, unchangeable, whatever you want to put to
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  Speaker 3: make it clear that the trustee cannot distribute directly to
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  Speaker 3: the donor.
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  Speaker 5: Toud.
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  Speaker 2: When we look at the current legislative landscape, big tax
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  Speaker 2: builds making its way through Congress right now, any signs
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  Speaker 2: that anything related to estate planning might be included in
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  Speaker 2: there that could affect how folks plan. I know there
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  Speaker 2: still are you know, a lot of evolutions that can happen, but.
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  Speaker 3: Oh yeah, yeah, I think there's a couple of things.
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  Speaker 3: I mean, I think the estate tax side of things
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  Speaker 3: is probably going to stay the same. If I had
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  Speaker 3: to guess, meaning that the exemptions won't fall. But from
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  Speaker 3: a Medicaid perspective, yes, you've heard already that they're trying
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  Speaker 3: to cut Medicaid and Medicare and different things around those
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  Speaker 3: entitlement statutes, and that may be true. I don't know
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  Speaker 3: what the scale is on that, But at the end
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  Speaker 3: of the day, I do not see a change coming
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  Speaker 3: with regard to the use of these irrevocable Medicaid trusts
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  Speaker 3: on how they work. In other words, I don't see
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  Speaker 3: anything saying that's going to be a longer than five
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  Speaker 3: year waiting period. I don't see anything that says, all
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  Speaker 3: of a sudden they don't work. So I think that
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  Speaker 3: the planning side for Medicaid is steady as you go,
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  Speaker 3: but you know, jump in, get it done.
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  Speaker 2: Talk with Todd Lotski from the law firm of Cushing
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  Speaker 2: and Dolan. We call the segment Ask Todd because you
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  Speaker 2: get to ask Todd your estate planning questions. We still
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  Speaker 2: have room on the phone lines at eight eight eight
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  Speaker 2: to zero five two two sixty three. That is the
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  Speaker 2: number to call to ask Todd your questions right now,
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  Speaker 2: live on air again eight eight eight to zero five
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  Speaker 2: two two six three a reminder, we do have limited
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  Speaker 2: so make sure that you get calling so that we
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  Speaker 2: can get to your question. That number again is eight
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  Speaker 2: eight eight to zero five two two sixty three. We're
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  Speaker 2: gonna take a quick break here, but when we come back,
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  Speaker 2: it's right to your questions with Todd. That phone 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 Lutsky 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: All right, Todd, we got some calls for you. Let's
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  Speaker 2: go first to Loretta on the Cape. Loretta, you are
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  Speaker 2: on with Todd Watsky.
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  Speaker 4: Oh, thank you, Todd. I'm a client with Pushing and
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  Speaker 4: Jolan and I have been so many years long before
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  Speaker 4: you even with the firm. And my question is how
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  Speaker 4: often should this trust be reviewed?
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  Speaker 3: Well, if if, if you've been a client longer than
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  Speaker 3: I've been with the firm, that's more than thirty years.
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  Speaker 3: So that's that's amazing. So first of all, great, but
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  Speaker 3: I would say, yeah, not more than once every thirty years.
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  Speaker 3: So is the kind of trust you have revocable or
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  Speaker 3: irrevocable irrevocable. So if it's irrevocable and you've done it
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  Speaker 3: that long ago, I suspect that in your case, the
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  Speaker 3: size of the estate is what sort of dictates the
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  Speaker 3: amount of time that you need to review it. So
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  Speaker 3: you know, I don't know really anything about the size
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  Speaker 3: of your estate now, but I'm guessing it's probably less
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  Speaker 3: than two million dollars in assets.
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  Speaker 4: I think it's gone up maybe I would say undiscremaddon,
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  Speaker 4: but a little okay.
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  Speaker 3: So either way, that's still fine. I would say then,
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  Speaker 3: based on the size of your estate and the fact
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  Speaker 3: that it's irrevocable, it's likely designed to protect assets from
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  Speaker 3: the cost of long term care and probate. And because
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  Speaker 3: the estate tax exemption in mass has gone up to
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  Speaker 3: two million dollars and you've got the irrevocable trust in
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  Speaker 3: place more than five years ago, you're probably still okay.
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  Speaker 3: So this was a great review and a great lesson
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  Speaker 3: for everybody else when you're thinking about calling and finding
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  Speaker 3: out whether you should review your document. In this case,
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  Speaker 3: this is all it took was a few minutes to
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  Speaker 3: sort of realize where you are, what the size of
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  Speaker 3: your estate is and if there's been any family changes.
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  Speaker 3: So if there's not been any other family changes on
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  Speaker 3: your front, then I think you're probably good to go
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  Speaker 3: with the trust plan that you have based on the
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  Speaker 3: current legislation and estate tax situation. So hopefully that was helpful.
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  Speaker 3: Thanks for the call, folks. That's a great question though,
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  Speaker 3: when people want to call and think about reviewing their
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  Speaker 3: estate plan. But interestingly enough, this caller had an irrevocable
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  Speaker 3: medicaid trust in place, which is exactly what our guide
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  Speaker 3: is this month, folks. It's one of my favorite because
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  Speaker 3: it does, over thirty years, give all my most frequently
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  Speaker 3: asked questions about these trusts. What can I put in?
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  Speaker 3: What can I take out? Can I put my house in?
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  Speaker 3: Can I sell? Can I move? How do I have
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  Speaker 3: to file income taxes? Are there any you know? What
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  Speaker 3: are the negatives? I mean, it goes on and on
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  Speaker 3: and answers all in a question answer format for you.
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  Speaker 3: So if you've ever wondered whether an irrevocable trust is
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  Speaker 3: right for you, after you read this guide, you're gonna
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  Speaker 3: know whether it's right for you, So call and get
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  Speaker 3: it eight six six eight four eight five six nine
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  Speaker 3: nine or Legal Exchange Show dot Com again eight six
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  Speaker 3: six eight four eight five six nine nine Legal Exchange
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  Speaker 3: Show dot Com.
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  Speaker 2: Todd, we get another one here for you. Let's good
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  Speaker 2: to John in Plymouth. John, what's your question for Todd Alutsky?
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  Speaker 4: Yeah, good morning.
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  Speaker 5: My question, Todd is there's got to be a downside
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  Speaker 5: to irravocableist priest right. I've been listening to the show
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  Speaker 5: for a long time and it seems like there's a constant.
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  Speaker 3: Bush or you know, irrevocable versus revocable.
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  Speaker 5: What's the downside?
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  Speaker 4: And the second question is what is there a percentage
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  Speaker 4: of people.
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  Speaker 2: That actually end up in long term healthcare?
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  Speaker 4: I don't suspect it's too high.
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  Speaker 3: Well, I think to to, and so I'll start with
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  Speaker 3: the last one because percentages I never pay attention to
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  Speaker 3: because they're always you know, you can make a percentage
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  Speaker 3: anything you want it to be, and you can make
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  Speaker 3: it sort of work for you any way you want.
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  Speaker 3: I don't really know how many people end up. I
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  Speaker 3: can tell you that nursing homes are pretty full. That
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  Speaker 3: that's really all I can tell you. I don't I
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  Speaker 3: can't give you a percentage, but but I do know
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  Speaker 3: they're pretty full. So so yes, I think I think
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  Speaker 3: people do go in there and you know, it's it's
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  Speaker 3: it's a great question. The downside it's hard to say.
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  Speaker 3: If you've been listening a long time and you haven't
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  Speaker 3: heard a downside, it's because there really are very very
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  Speaker 3: few of them right to speak about. In fact, when
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  Speaker 3: I try to explain, and it's hard on the radio,
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  Speaker 3: I get it. But when I try to explain an
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  Speaker 3: irrevocable trust, and by the way, not all irrevocable trusts.
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  Speaker 3: So I assume you're talking John specifically about these Medicaid
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  Speaker 3: irrevocable trusts, because irrevocable gifting trusts right that are designed
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  Speaker 3: to get assets out of your estate or other reasons
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  Speaker 3: that you might do an irrevocable trust. There are irrevocable
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  Speaker 3: trusts that are more rigid and more inflexible than this one.
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  Speaker 3: So I don't want you to think that they're all
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  Speaker 3: as flexible as this one. So these Medicaid irrevocable trusts
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  Speaker 3: really do not have an income tax downside. They allow
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  Speaker 3: you to manage and invest your assets. They allow you
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  Speaker 3: to live in your home. They allow you to rent
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  Speaker 3: and collect the rent and sell and buy another house,
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  Speaker 3: and so there are very very few downsides with them.
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  Speaker 3: And when I explain to the client that, you know,
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  Speaker 3: when we start the conversation, I'm going to say you're
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  Speaker 3: about ninety eight percent in control. You know, about two
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  Speaker 3: percent would be you know, your ability to get assets
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  Speaker 3: out directly. Oh, and make sure that when you when
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  Speaker 3: you transfer property in that if it's encumbered. So one
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  Speaker 3: of the downsides that you can't borrow, I guess that's it.
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  Speaker 3: You can't borrow again after it's in the trust. But
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  Speaker 3: most of my clients at this point in their life
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  Speaker 3: either have a mortgage that don't plan on refinancing, which
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  Speaker 3: you can keep, or they are are not gonna get
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  Speaker 3: a new mortgage anytime soon. So hopefully that helps John.
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  Speaker 3: I think it's worth exploring though in a longer meeting.
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  Speaker 3: Then I can give you on on the phone. So
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  Speaker 3: that's helpful.
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  Speaker 2: Todd, I've got another John for you. Let's go to
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  Speaker 2: John in Weymouth who has been waiting patiently. John, you
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  Speaker 2: are on with Todd Lutsky.
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  Speaker 5: Yes, Hi, Hi guys. A quick question I have. I
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  Speaker 5: don't have anything. I've given everything away, it's gone to
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  Speaker 5: stall or whatever. All I have now is my ca
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  Speaker 5: in a in a lot of money in an ira
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  Speaker 5: and if you protect that money from a nursing home
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  Speaker 5: if that happens.
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  Speaker 3: Yeah, So pretty easy question on this one. And so
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  Speaker 3: while I one don't think it's a great idea that
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  Speaker 3: you gave everything away, but you've done it so that
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  Speaker 3: that's over. But iras, unfortunately, are one asset that you
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  Speaker 3: cannot protect overnight, and you cannot protect really in advance
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  Speaker 3: of going to the nursing home.
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  Speaker 2: Now, are you married John?
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  Speaker 5: No? Single? And it's a roth.
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  Speaker 3: Oh, if it's a wrath, that's different. So if it's
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  Speaker 3: a wrath and you don't mind it not being a
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  Speaker 3: wroth anymore, then you can take the money out of
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  Speaker 3: the wroth because there's no income tax on the withdrawal,
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  Speaker 3: and then you can set up a trust put the
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  Speaker 3: assets in these irrevocable medicaid trusts. Probably I wouldn't put
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  Speaker 3: it all in, but you could put some in and
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  Speaker 3: get a five year clock started and still be very
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  Speaker 3: much in control of those assets and enjoy those assets
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  Speaker 3: while they're in that trust, but at least get it
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  Speaker 3: protected again. Taking it out is non income taxable. But
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  Speaker 3: when you put it in the trust, you can invest
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  Speaker 3: in any way you want, but not in a wrath.
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  Speaker 3: So the downside would be that it is going to
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  Speaker 3: grow income taxa bull but at your rate. So there
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  Speaker 3: you have it. That's that's probably the best answer for
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  Speaker 3: you on that.
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  Speaker 2: Todd, when we're talking about these irrevocable trusts, any other
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  Speaker 2: things that you want to add as far as you know,
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  Speaker 2: just big items that you think people should know that
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  Speaker 2: are relevant with how they operate.
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  Speaker 3: Uh, yeah, you know, I think I think operationally, I
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  Speaker 3: think the good the first question you mentioned is like
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  Speaker 3: he was, John was mentioning iras right, they cannot go
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  Speaker 3: into the trust. So that's one item that you can't
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  Speaker 3: just put in there anyway. But I think operationally, one
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  Speaker 3: thing I would like to just explain is a rental
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  Speaker 3: property in the time we are, because that's one that
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  Speaker 3: that a lot of people have and a lot of
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  Speaker 3: people want to protect because it's like your house, it's
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  Speaker 3: like your vacation home. It tends to be your one
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  Speaker 3: of your bigger assets. And they always wonder if I
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  Speaker 3: can I put it in there, and if I do,
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  Speaker 3: what's going to happen? Well, if you put it in there,
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  Speaker 3: you still want the income, Well, the trust says that
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  Speaker 3: all the income belongs to you, So you can put
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  Speaker 3: your house in there and you can still live off
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  Speaker 3: the rental income, which is great because that's what you're doing. Meanwhile,
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  Speaker 3: you've started a five year waiting period on that house,
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  Speaker 3: on that rental property, and soon it will be protected
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  Speaker 3: from the cost of long term care, avoiding probate, and
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  Speaker 3: available for your children when you pass. And so then
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  Speaker 3: people would always come back and say, Okay, I kind
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  Speaker 3: of get that, and you have to deposit the rent
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  Speaker 3: in the trust, and then the trust pays out the
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  Speaker 3: rent to your personal account and you're living on it.
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  Speaker 3: It's exactly right. And then at the end of the
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  Speaker 3: day they always say, well, what about my income tax?
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  Speaker 3: Am I gonna have a big income tax on this? No,
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  Speaker 3: another non negative to this trust. So for the first
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  Speaker 3: John Caller, I make it a grant or trust for
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  Speaker 3: income tax purposes. So at the end of the year
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  Speaker 3: you file a the income tax return for the trust,
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  Speaker 3: but all the income gets picked up on your personal
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  Speaker 3: return just like it used to before you had the trust.
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  Speaker 3: So these trusts are income tax neutral.
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  Speaker 2: Mister Lutsky, appreciate you joining us today. Thanks so much
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  Speaker 2: for all the information, always a pleasure.
• 15:18
  Speaker 1: This has been asked Todd on the Financial Exchange Radio
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  Speaker 1: Cushing and Dolan, serving Massachusetts and New England for more
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  Speaker 1: Medicaid planning, and probate law. Call eight hundred three nine
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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 Advisory does not provide any legal
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  Speaker 1: or tax advice. Please consult with your legal or tax
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• 15:47
  Speaker 2: Still bunch to get to. As we continue through the show,
• 15:50
  Speaker 2: We're gonna be talking about where markets currently stand at
• 15:54
  Speaker 2: the moment and what's next for them. We'll also talk
• 15:56
  Speaker 2: a little bit about artificial intelligence. Couple good stories on
• 16:00
  Speaker 2: that front there, and some other nuggets that we pulled
• 16:04
  Speaker 2: from yesterday's retail sales data. Is what are retail sales
• 16:08
  Speaker 2: telling us about the current state of US households and
• 16:12
  Speaker 2: what they are prioritizing their spending on. We got some
• 16:17
  Speaker 2: thoughts on that quick break here. Hour two just a
• 16:20
  Speaker 2: bit