Latest / The Financial Exchange Show / White-collar workers are getting spooked by AI and layoffs

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White-collar workers are getting spooked by AI and layoffs · The Financial Exchange Show

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Speaker 2: Chuck Mark Tucker with the here and the Day after
1:15
Speaker 2: the jobs report. We open our show today with a
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Speaker 2: piece in the Wall Street Journal. Spooked by AI and layoffs,
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Speaker 2: white collar workers see their security slip away. The subheader
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Speaker 2: office workers are hanging on to their jobs for dear life.
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Speaker 2: Let's discuss mark your thoughts.
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Speaker 3: Well, the.
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Speaker 4: Main fact cited by the author is at the unemployment
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Speaker 4: rate among the meat of the labor force, people in
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Speaker 4: their mid twenties to their mid fifties, has gone up.
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Speaker 2: But that's about.
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Speaker 4: The amount by which it's gone up is not much
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Speaker 4: different than the amount by which the overall unemployment rate
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Speaker 4: is increased. No, so I wasn't as startled by that
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Speaker 4: little statistic. Maybe I had it in the back of
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Speaker 4: my mind somewhere, as the author of this piece is, Look,
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Speaker 4: we should all be I guess a little bit concerned.
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Speaker 4: I mean, you've you've pointed out many times at the
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Speaker 4: unemployment rate change. The unemployment rate can be persistent, so
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Speaker 4: once it starts to go up, tends to continue to.
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Speaker 2: So I have two divergent thoughts here. The first is
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Speaker 2: that I am a little concerned about where the labor
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Speaker 2: market seems to be right now, because the data from
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Speaker 2: yesterday was not great. Just there's no way to sugarcoat
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Speaker 2: it was not a good jobs report. The counter to
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Speaker 2: that is twofold number one. The Bureau of Labor Statistics
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Speaker 2: came out with a published statement the day before that
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Speaker 2: basically said, hey, you might see some bigger swings in
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Speaker 2: the jobs report than normal, and and here's why. It
3:00
Speaker 2: has to do with the way that they do their
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Speaker 2: sampling and how different cohorts are grouped, and basically which
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Speaker 2: months samples get included in November, given that there was
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Speaker 2: no October sample collected from households. And so that's one
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Speaker 2: piece that you know, you look at this and you say, okay,
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Speaker 2: I need to take this with a grain of salt.
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Speaker 2: The other is that the sample collection period for this
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Speaker 2: pretty much began like right after the shutdown, And so
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Speaker 2: there's a decent chance that at least some respondents may
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Speaker 2: have been responding to their employment status during the shutdown
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Speaker 2: rather than after, because they may have been you know,
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Speaker 2: temporarily furloughed or laid off by a government contractor or
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Speaker 2: anything and any one of these you know, number of things,
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Speaker 2: and so like, just as an example, when I see
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Speaker 2: the underemployment rate the U six jump from eight percent
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Speaker 2: to eight point seven percent in a span of two months,
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Speaker 2: not one, because now we're gonna have this gap in
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Speaker 2: October that we have to fill in every chart from
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Speaker 2: now on, which doesn't make me feel great about it,
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Speaker 2: but that's it, is what it is. When I see
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Speaker 2: the underemployment rate go from eight to eight point seven
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Speaker 2: in a span of two months, it means one of
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Speaker 2: two things. Either a something a little wild happened with
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Speaker 2: the data sampling, which is an acknowledged possibility, or the
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Speaker 2: labor market worsens significantly in a span of two months,
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Speaker 2: which is not reassuring. It's one of those two things.
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Speaker 2: Those are the only two explanation.
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Speaker 4: This is the frustrating thing about economic data. It's all sampled,
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Speaker 4: which means you have a so called confidence interval, the
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Speaker 4: same plus or minus you get when you look at
4:38
Speaker 4: a political poll. The candidates could be tied or one
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Speaker 4: could be up by five. We don't really know. We
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Speaker 4: can't ask the whole population are you working?
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Speaker 2: We could, they just wouldn't answer.
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Speaker 4: Yeah, I guess right, But when's.
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Speaker 2: The last time you responded to it? A text message
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Speaker 2: from Hey, I'd like to ask you some questions about this. Yeah, no,
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Speaker 2: I'd rather not. Almost look at.
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Speaker 4: A lot a census takes to clean. They do it,
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Speaker 4: and it takes years to get the data into the
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Speaker 4: shape where it could be consumed by people who use
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Speaker 4: data for professional reasons. I guess my point is we
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Speaker 4: never really know what the rate of unemployment is, so
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Speaker 4: we have to look at the change and the magnitude
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Speaker 4: of the change, the direction of the change, and on
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Speaker 4: top of all that, chuck if you're the Federal Reserve,
5:21
Speaker 4: which is probably why most people care. In addition to
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Speaker 4: caring about the the playing your own.
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Speaker 2: Job prospects, how thank you?
5:29
Speaker 4: Yeah, we're wondering what's the Fed going to do? Should
5:32
Speaker 4: it be lowering standing pat or raising interest rates? What
5:35
Speaker 4: is phrased differently? Because the unemployment rate is a pretty
5:38
Speaker 4: good indicator of whether or not the economy's running too hot.
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Speaker 4: Empirically it's lined up pretty well over time, we come
5:44
Speaker 4: up with this concept of a non accelerating inflationary rate
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Speaker 4: of unemployment, which historically was thought to be somewhere between
5:50
Speaker 4: five and six. It went down when the baby boomers
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Speaker 4: came into the workforce, and other demographic changes pushed it
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Speaker 4: down in the nineteen nineties. Maybe my point is maybe
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Speaker 4: it's going up again. Maybe the accelerating rate is now
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Speaker 4: five again. Maybe it's five and a half, which it
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Speaker 4: was throughout the nineteen eighties. We don't really know, Chuck.
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Speaker 2: And so I think ultimately, again we always say, like, look,
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Speaker 2: don't pay attention to anyone report because because of the
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Speaker 2: issues that we've talked about with sampling and estimation, one
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Speaker 2: report doesn't mean anything. Here's what we do know. When
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Speaker 2: you look at the job openings in the Labor Turnover Survey,
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Speaker 2: the Jolts report shows a consistent weakening in the labor
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Speaker 2: market for the last three and a half years. When
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Speaker 2: you look at the job support that we are talking
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Speaker 2: about now prepared by the BLS, a consistently weakening labor
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Speaker 2: market for the last three and a half years. When
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Speaker 2: you look at private reports from indeed, an ADP and Paychecks,
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Speaker 2: a consistently weakening labor market for the last three and
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Speaker 2: a half years. There has been no acceleration or deceleration
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Speaker 2: in that it's been pretty linear, which is kind of
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Speaker 2: interesting because generally when you have a labor market that
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Speaker 2: decelerates in linear fashion. It usually does so for maybe
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Speaker 2: a year to year and a half, and then something
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Speaker 2: breaks and it either gets markedly worse or something doesn't
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Speaker 2: break and things start to improve. Like you, we don't
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Speaker 2: really have straight lines down into the right in labor
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Speaker 2: market data historically.
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Speaker 4: Is it weakening? And I would have used the same
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Speaker 4: word as you did, And this question is rhetorical. I
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Speaker 4: don't have the answer. Or is it normalization following an
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Speaker 4: abnormally type labor market in the aftermath of COVID. That's
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Speaker 4: the question in the back of my mind.
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Speaker 2: You have a thought I do from my perspective, which
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Speaker 2: is worth.
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Speaker 4: I don't know much as anybody else's.
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Speaker 2: If it was a penny for the average person's thoughts,
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Speaker 2: mine would be half a penny, but due to inflation,
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Speaker 2: it's still a penny. That's how I look at it.
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Speaker 4: I think, I follow you.
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Speaker 2: My mind is overvalued in dollar terms. I think whatever.
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Speaker 2: In any case, my thought is that twenty two and
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Speaker 2: twenty three represented the normalization from twenty one. Okay, twenty
8:09
Speaker 2: twenty two and twenty three were the normalization of an
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Speaker 2: abnormally hot labor market. And the the way that I
8:16
Speaker 2: get there is completely unscientific. The way that I get
8:20
Speaker 2: there is basically, hey, when you got into you know,
8:24
Speaker 2: twenty twenty four, the start of twenty four unemployment okay,
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Speaker 2: it was you know, back at four percent basically, which
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Speaker 2: historically is kind of where we viewed as like the
8:34
Speaker 2: old Like that's like the low that we've gotten to.
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Speaker 4: Historical in the modern area.
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Speaker 2: And so I kind of looked at it. I'm like, okay,
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Speaker 2: we've normalized to you know, the lowest normal reading.
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Speaker 4: I gotta say, though, relative to the broader sweep of history,
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Speaker 4: four percent, it was only realized a couple of times
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Speaker 4: at any in any other era, four percent would have
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Speaker 4: been a five alarm fire for the FED.
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Speaker 2: Totally get that. But like I look at the end
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Speaker 2: of the two thousands, just end of the nineties.
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Speaker 4: I know, I just that's why I qualify then.
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Speaker 2: We were there. And so I basically say, okay, if
9:03
Speaker 2: we've reached the lowest reading before here, yes we've we've
9:07
Speaker 2: at least reached, you know, a normal threshold. I look
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Speaker 2: just at another example, the ratio of openings to unemployed people,
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Speaker 2: which was around one point one seven in Q one
9:22
Speaker 2: of twenty four heading into twenty twenty just before the
9:25
Speaker 2: pandemic it was one point one six. So again it
9:28
Speaker 2: was at pre pandemic levels. There is what I look at,
9:32
Speaker 2: and so I I kind of view like, hey, the
9:35
Speaker 2: economy had normalized by the end of twenty three as
9:37
Speaker 2: far as the labor market is concerned.
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Speaker 4: But even then normalization and I know you know this,
9:42
Speaker 4: it is a moving target. COVID changed the way peeped totally. Yeah, y,
9:47
Speaker 4: So what if And again question in the back of
9:50
Speaker 4: my mind, don't know the answer. What if the natural rate,
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Speaker 4: which is synonymous with the non inflationary rate, what if
9:56
Speaker 4: it's been pushed up by the changing composition of the workforce,
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Speaker 4: Millennials coming in, different ethic, different view of work and
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Speaker 4: life and balance, Boomers going out, and other forces, constricting immigration.
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Speaker 4: All of these things put upward pressure on They increase
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Speaker 4: people's wage expectations potentially and change the structure of the
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Speaker 4: economy and ways we can't know in real time.
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Speaker 2: So the reason that I push back on those and
10:21
Speaker 2: again this is this is why we have these conversations,
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Speaker 2: just because, by the way, anyone listening like, neither Mark
10:25
Speaker 2: nor I are right, you know, we don't know, right,
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Speaker 2: there's no right on this if we look at a
10:33
Speaker 2: whole bunch of supplemental measures of wage growth, it's continued
10:36
Speaker 2: cooling over the last year or two. Like you look
10:40
Speaker 2: get the Atlanta Fed wage tracker, you look at paychecks
10:42
Speaker 2: and their small business wage tracker, you look at aggregate
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Speaker 2: payroll growth. We've seen a continued cooling in wage growth
10:51
Speaker 2: over the last couple of years. It is not inflected up,
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Speaker 2: which is what you would expect to see if it's
10:57
Speaker 2: something where yeah, there are those pressures on the labor
11:01
Speaker 2: market that you're describing.
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Speaker 4: For me, the game set and match, and this is
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Speaker 4: like an empirical question. Labor economists will wrangle with this
11:09
Speaker 4: for years. So, like you said, we're not going to
11:11
Speaker 4: settle anything. These are like what we're doing is fleshing
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Speaker 4: out some of the high level potential causes and then
11:17
Speaker 4: someone with some a specialist would dig in and.
11:21
Speaker 2: The real nerds dig in on this.
11:23
Speaker 4: PhD academic will dig in on They're doing this right
11:27
Speaker 4: now and they have been doing it for decades because
11:29
Speaker 4: these are all moving targets.
11:31
Speaker 2: Let's take a quick break here. When we return, let's
11:36
Speaker 2: talk a little bit about what we are seeing in
11:38
Speaker 2: energy markets.
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Speaker 2: All right, let's talk a little bit about energy, just
13:10
Speaker 2: because everyone loves to be an energy expert when no
13:13
Speaker 2: one actually is. And look, energy markets have been kind
13:17
Speaker 2: of wild recently.
13:20
Speaker 7: You know.
13:20
Speaker 2: October November sawnt gas, as an example, rise from two
13:24
Speaker 2: dollars and ninety two cents per million BTUs to five
13:27
Speaker 2: dollars and forty nine cents, so almost doubling in a
13:30
Speaker 2: span of two months, and now was falling back to
13:32
Speaker 2: three eighty nine. So you've just been seeing like wild
13:36
Speaker 2: swings in that gas to the tune of again almost
13:40
Speaker 2: doubling in two months and then falling you know, thirty
13:43
Speaker 2: percent in a week, which is just not you know,
13:46
Speaker 2: stuff you normally see when you take a look at oil.
13:50
Speaker 2: Uh So, I gotta be honest here. You've got this
13:55
Speaker 2: piece here that's titled oil Rallies's geopolitical risksmount from Russia
13:59
Speaker 2: to Venice, and it's true oils up like one and
14:02
Speaker 2: a half percent today. The counter is that on West
14:08
Speaker 2: Text Intermediate it's still down almost ten percent in the
14:13
Speaker 2: last week and a half. So I'm not really buying
14:17
Speaker 2: the cover story here. Oil rallies is geopolitical risks amount.
14:22
Speaker 2: I'm not saying that, you know, oil wouldn't see any
14:24
Speaker 2: shift there, but it's it's just not matching up with
14:29
Speaker 2: what we've seen over the last you know, month or
14:30
Speaker 2: two in general. The other thing that I will tell you, though,
14:34
Speaker 2: is complacency around energy markets is probably at an all
14:38
Speaker 2: time high. And the reason why I say that is,
14:43
Speaker 2: look twenty twenty two, you had Russia invade Ukraine and
14:47
Speaker 2: oil prices obviously spike then, but subsequently have come down
14:51
Speaker 2: significantly in the three and a half years since. Earlier
14:55
Speaker 2: this year. I think we all remember, you know, back
14:59
Speaker 2: in June, Israel and Iran got into a rather heated tussle.
15:04
Speaker 2: You know, you had explosions all throughout Iran. You had
15:07
Speaker 2: Iran you know, lobbing missiles back at Israel. You know,
15:11
Speaker 2: explosions throughout Israel, like it was, it was pretty gnarly.
15:14
Speaker 2: We also basically saw oil prices spike for about a
15:18
Speaker 2: week and then come right back to where they were
15:22
Speaker 2: before that. And so I do think that. And and look,
15:27
Speaker 2: this gets talked about even in equity markets, but in
15:30
Speaker 2: commodity markets in particular, there's like this idea that well,
15:34
Speaker 2: nothing ever happens, Like there's there's no you know, if
15:37
Speaker 2: you've tried to bet on geopolitics influencing commodity availability broadly
15:44
Speaker 2: over the last fifteen years, really hasn't worked out for you,
15:49
Speaker 2: like just has not been a winning trade. And so
15:53
Speaker 2: there's there's a whole generation of traders out there who
15:57
Speaker 2: you know, they said, oh, like I think this is
15:59
Speaker 2: gonna happen. And by the way, like they could have
16:01
Speaker 2: been betting this year on you know, oh, I think
16:03
Speaker 2: oil is going to go up because of conflict between
16:05
Speaker 2: Israel and Iran. And then it went up for a
16:08
Speaker 2: week and came right back down. And I think there's
16:12
Speaker 2: some complacency because occasionally these things can go on longer
16:16
Speaker 2: and become more disruptive to energy markets. Just because they
16:20
Speaker 2: haven't in recent history could lead to some complacency that is,
16:25
Speaker 2: you know, problematic in these markets in my opinion.
16:28
Speaker 4: Yeah, I don't know. And a researcher who specializes in
16:31
Speaker 4: this probably has the answer how the advent of shale
16:36
Speaker 4: has impacted those dynamics. But my suspicion is it puts
16:41
Speaker 4: a natural kind of ceiling on it, because when you
16:43
Speaker 4: get above seventy eighty. This is probably very ignorant. But
16:49
Speaker 4: I'll just say more of those shale production increases because
16:53
Speaker 4: it becomes marginally more profitable, thus fixing the price problem.
16:58
Speaker 4: So more supply comes online from shale. I don't know
17:01
Speaker 4: if oil is less volatile or if it's traded in
17:03
Speaker 4: more of a band since the prominence of shale, but
17:08
Speaker 4: I wouldn't be surprised. I need to finish the second
17:11
Speaker 4: season a Landman, and then maybe I'll have an answer.
17:14
Speaker 2: Just wait until you get to the third. Wait a minute,
17:16
Speaker 2: it's only on the second.
17:17
Speaker 4: That okay, that was the bit that was okay.
17:22
Speaker 2: The counter to this is that even like when you
17:25
Speaker 2: have these short term spikes based on what the shale
17:29
Speaker 2: patch saw back in the twenty tens where they did
17:34
Speaker 2: say like okay, like let's open it up and just drill,
17:36
Speaker 2: and then they basically got, you know, put out of
17:38
Speaker 2: business by Russia deciding okay, you're gonna drill. Fine, We're
17:42
Speaker 2: gonna drill more because we don't care about the price.
17:44
Speaker 2: And you know, a whole bunch of oil companies in
17:46
Speaker 2: the US went out of business. You just don't see
17:51
Speaker 2: a similar approach with recent spikes in price, and so
17:58
Speaker 2: I think it's something where, look, you've had a declining
18:02
Speaker 2: rig count in the US since twenty twenty three, and ultimately,
18:07
Speaker 2: I'm just not sure how price sensitive they are in
18:10
Speaker 2: the short term because the projections that they're making are Okay,
18:14
Speaker 2: we're going to explore this for you know, a couple
18:17
Speaker 2: of years. Then we've got to get you know, the
18:18
Speaker 2: well on the ground, and we got to be able
18:20
Speaker 2: to make money from you know, twenty twenty eight through
18:23
Speaker 2: twenty thirty three on this, because the other side effect
18:26
Speaker 2: of shale wells are not side effect, but the other
18:29
Speaker 2: wrigle with shale wells is the production degrades at a
18:33
Speaker 2: much more rapid rate than conventional production does. You lose
18:37
Speaker 2: a lot more production year over year than you do
18:40
Speaker 2: with traditional methods, and so you basically have to be
18:44
Speaker 2: able to say, Okay, can I really make my money
18:46
Speaker 2: in that first four to six years as opposed to
18:48
Speaker 2: a ten to fifteen year lifespan that you would expect there.
18:53
Speaker 2: So ultimately, I look at you know, the headline oil
18:58
Speaker 2: rallies is Geopolitical risks mount from Usia to Venezuela. I
19:02
Speaker 2: honestly don't know which geopolitical risks will or will not
19:06
Speaker 2: matter to the oil market because I don't know which
19:08
Speaker 2: ones are going to represent a real, long term potential disruption.
19:14
Speaker 2: I'm also just not convinced that, I mean again, like
19:20
Speaker 2: the again, even with the continued sanctioning of Russia and
19:26
Speaker 2: you know, crackdowns on that side of things, from an
19:29
Speaker 2: oil export perspective, You've still continue to see oil prices falling,
19:33
Speaker 2: largely by the way, just because the Saudi's and the
19:35
Speaker 2: rest of OPEK have continued to increase production to offset that.
19:39
Speaker 2: At a certain point you run out of you know,
19:40
Speaker 2: additional excess capacity in OPEC. But you're not quite there yet.
19:46
Speaker 2: So I guess where I get to on this is
19:48
Speaker 2: I'm not sure that this matters, but I know for
19:51
Speaker 2: sure you won't figure out if it matters by reading
19:53
Speaker 2: Bloomberg or the Wall Street Journal. Let's take a quick break.
19:58
Speaker 2: When we return, Todd Wetski joins us for ask Todd.
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Speaker 6: keeping a close eye on the price of oil after
20:40
Speaker 6: President Trump ordered a blockade of sanctioned tankers entering and
20:44
Speaker 6: exiting Venezuela. Right now, the Dow is up merely three
20:48
Speaker 6: tenths of one percent or one hundred and thirty seven points.
20:52
Speaker 6: SMP five hundred is down over tenth of a percent
20:54
Speaker 6: or eight points lower. NASDAK down a third of a
20:57
Speaker 6: percent or seventy five points lower. Russell two two thousand
21:00
Speaker 6: is up seven tenths of one percent. Tenuere Treasure Reiled
21:03
Speaker 6: is flat currently a four point one five to one
21:06
Speaker 6: percent Crewede Oil up nearly two percent. Hire Trading and
21:09
Speaker 6: fifty six dollars and twenty three cents a barrel What
21:13
Speaker 6: Warner Brothers Discoveries Board unanimously recommended shareholders reject Paramount's hostile
21:18
Speaker 6: takeover bid. Saying it believes the offer from Netflix for
21:22
Speaker 6: its studios n Hbomax streaming service is still superior. Netflix
21:27
Speaker 6: shares are climbing nearly three percent. Warner stock is dipping
21:31
Speaker 6: in paramount chairs of falling four percent. Meanwhile, according to
21:35
Speaker 6: several media outlets, Open Ai is in discussions with Amazon
21:39
Speaker 6: about a potential ten billion dollar investment and agreement to
21:43
Speaker 6: use its AI chips. Amazon stock is up one percent. Elsewhere,
21:48
Speaker 6: home builder Leonar reported lower than expected earnings as the
21:52
Speaker 6: housing market remains stagnant. Lenar stock is down four percent.
21:56
Speaker 6: According to Bloomberg, Bankrupt Spirit Airlines is in re discussions
22:01
Speaker 6: to merge with the Frontier. Shares in general Mills up
22:05
Speaker 6: two percent after the cheerios maker reported better than expected
22:09
Speaker 6: results In After Today's Clothes, We'll see more tech earnings
22:13
Speaker 6: from Micron. I'm Tucker Silvan.
22:15
Speaker 1: That is Wallstree Watch. This is Ask Todd on the
22:19
Speaker 1: Financial Exchange Radio Network. If you have an existing estate
22:23
Speaker 1: plan or in the market for one, Todd Lutsky is
22:25
Speaker 1: here to answer your questions and help you plan for
22:28
Speaker 1: later life. Ask Todd is presented by Cushing and Dolan,
22:31
Speaker 1: serving Massachusetts and New England for more than thirty five
22:34
Speaker 1: years helping families with a state and tax planning, Medicaid planning,
22:38
Speaker 1: and probate law. Visit Cushingdolan dot com. Now here's Todd Lutsky.
22:44
Speaker 2: As promised, We've got Todd Lutsky with us here in
22:48
Speaker 2: studio for ask Todd to answer your estate planning questions.
22:54
Speaker 2: This is your chance to ask those questions live on
22:57
Speaker 2: air right now, and we do have the phone lines
23:01
Speaker 2: open at eight eight eight to zero five two two
23:05
Speaker 2: six three. Again that number is eight eight eight two
23:09
Speaker 2: zero five two two six three. So this is your chance.
23:13
Speaker 2: If you've been thinking about getting you know as sibling
23:15
Speaker 2: and irrevocable trust for Christmas, here's your chance to talk
23:19
Speaker 2: to uh Todd and find out good idea, bad idea,
23:23
Speaker 2: ugly idea. But again eight eight eight to zero five
23:26
Speaker 2: two two sixty three is the number to call. Make
23:29
Speaker 2: sure you call early to get in line, since we
23:31
Speaker 2: can usually only get through a couple of these. Mister Lutsky,
23:34
Speaker 2: how are you doing today?
23:35
Speaker 8: I'm great. Never really thought this was a Christmas present,
23:38
Speaker 8: but I like, I liked the idea.
23:40
Speaker 2: How are you doing? Uh? Tough day for me? I'm
23:43
Speaker 2: sure has had to fire my fruit delivery driver this morning.
23:48
Speaker 8: Fruit delivery.
23:49
Speaker 2: Yeah. I had to let the man go. Yeah, yeah, yeah,
23:52
Speaker 2: you know how it is, Todd. Want to talk to
23:54
Speaker 2: you about UH asset protection the way I see it,
23:59
Speaker 2: And maybe I'm wrong because you do this every day
24:01
Speaker 2: and I don't. There seem to be three different ways
24:04
Speaker 2: to deal with the cost of long term care irrevocable trusts,
24:09
Speaker 2: long term care insurance, and self insuring. Is that accurate?
24:13
Speaker 8: I would say yes, in general, like you know those
24:15
Speaker 8: are I don't think so. Yeah, those are really only
24:17
Speaker 8: three things you can do.
24:18
Speaker 2: What's the How does someone go about figuring out which
24:21
Speaker 2: is the right instrument for their situation?
24:24
Speaker 8: So if you're thinking about irrevocable versus insurance versus self insurance, yeah,
24:34
Speaker 8: it's and it's not just limited to this question, Chuck.
24:37
Speaker 8: I think it's great. I think when you talk about
24:39
Speaker 8: estate planning in general, where do you begin value? Value?
24:45
Speaker 7: Value?
24:45
Speaker 8: What's the size of your estate? How much are you worth?
24:51
Speaker 8: I mean, I think that's one of the first fundamental
24:54
Speaker 8: things you need to think about when you're doing a
24:57
Speaker 8: state planning. So you sit down and let's let's apply
24:59
Speaker 8: it to all the all of these you sit down
25:02
Speaker 8: and you say, I need to do a state planning. Okay,
25:05
Speaker 8: do I need an irrevocable trust or a revocable trust?
25:08
Speaker 8: First question, well, how much are you worth?
25:11
Speaker 7: Oh?
25:11
Speaker 8: I'm worth ten million dollars? Okay, pretty sure. You probably
25:15
Speaker 8: don't need nursing home planning. Why because I'm self insured.
25:21
Speaker 8: I've got ten million dollars I'm generating you know, seven percent,
25:25
Speaker 8: that's seven hundred thousand dollars a year in income. I'm good,
25:29
Speaker 8: I can pay for the nursing home. I'm self in short,
25:32
Speaker 8: which also means I don't need an irrevocable Medicaid trust.
25:36
Speaker 2: But there might be other planning needs, just not specifically
25:39
Speaker 2: on that end.
25:40
Speaker 8: Right. So then you shift and you say, okay, well
25:42
Speaker 8: then I'm going to go with the revocable trust. Correct,
25:45
Speaker 8: And then we can talk about planning from a revocable perspective.
25:48
Speaker 8: So very helpful there. Next let's come back with the
25:52
Speaker 8: answer being, well, jeez, Todd, I'm worth about four million,
25:56
Speaker 8: and you know one and a half million of that
25:57
Speaker 8: is my home, and I got to be five hundred
26:00
Speaker 8: you know, in an IRA, I want to protect my
26:03
Speaker 8: assets from the nursing home. Sure, Oh, you're right, So
26:06
Speaker 8: now I don't need the revocable trust. I need an
26:09
Speaker 8: irrevocable trust, and we can go down and explore that
26:12
Speaker 8: at the meeting. But it also makes me think that's
26:16
Speaker 8: long term care. I'm not self insured. Cross that off,
26:21
Speaker 8: and I know that I would that I you know,
26:23
Speaker 8: I don't want to just I think irrevocable trust planning
26:27
Speaker 8: would be the other way. Let's say I'm too old,
26:30
Speaker 8: I'm seventy, I can't get long term care insurance, so
26:34
Speaker 8: that's out. I guess I'm stuck with irrevocable trust planning.
26:38
Speaker 8: I don't want to say stuck with That's a good
26:40
Speaker 8: that's a good approach, sure, right, So I think looking
26:43
Speaker 8: at value, a value of your estate is really what's
26:48
Speaker 8: going to drive not only the type of trust you need,
26:51
Speaker 8: but also how you might protect your assets from the
26:56
Speaker 8: nursing home if you get there. If you can insure
26:58
Speaker 8: yourself great, I'd start, you know, in my fifties looking
27:03
Speaker 8: for those policies because they're great, they do work, and
27:06
Speaker 8: you know, I just got to make sure you can
27:07
Speaker 8: afford them.
27:08
Speaker 2: Talking with Todd Lotsky from Cushing and Dolan Studio, Line
27:11
Speaker 2: still has room on it at eight eight eight to
27:13
Speaker 2: zero five two two six three. That is the number
27:17
Speaker 2: to call for you to ask Todd your estate planning
27:20
Speaker 2: questions live on air right now again eight eight eight
27:25
Speaker 2: to zero five two two six three. We're gonna take
27:29
Speaker 2: a quick break, but when we come back, we're gonna
27:31
Speaker 2: get right to your questions with Todd. That phone number
27:35
Speaker 2: is eight eight eight to zero five two two six three. Again,
27:39
Speaker 2: it is eight eight eight to zero five two two
27:43
Speaker 2: sixty three.
27:45
Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
27:48
Speaker 1: only here on the Financial Exchange Radio Network. You're listening
27:53
Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
27:57
Speaker 1: Radio Network.
28:21
Speaker 2: All right, we got a couple of calls for you,
28:22
Speaker 2: mister Latsky. First in the queue is Dan in Wellesley. Dan,
28:27
Speaker 2: you're on with Todd.
28:29
Speaker 3: Hey Todd, good morning, good morning. Ah question for you.
28:33
Speaker 3: My brother and I had our estates done by you
28:35
Speaker 3: and your firm and twenty ten. Great job. We're very comfortable.
28:39
Speaker 3: We need to do some sort of an update to
28:43
Speaker 3: take a look at what we have. Things really haven't
28:45
Speaker 3: changed too much. A little real estate appreciation, a little
28:48
Speaker 3: debt reduction, but pretty much overall, we got everything, the
28:52
Speaker 3: whole package from you, and I didn't know where we
28:54
Speaker 3: stood fifteen years later.
28:55
Speaker 8: Wow fifteen years huh?
28:57
Speaker 7: Who?
28:57
Speaker 3: Yeah?
28:58
Speaker 2: Good?
28:58
Speaker 7: Good?
28:59
Speaker 8: Well, still that's good. A couple of things, obviously, I
29:03
Speaker 8: would need to ask you just a couple of questions.
29:05
Speaker 8: But I think in general this is great for everybody
29:07
Speaker 8: listening because he's doing exactly what Dan's doing, exactly what
29:11
Speaker 8: I would think. You know, you as other people who
29:14
Speaker 8: have done your estate plan, you know, you might want
29:16
Speaker 8: to check in once in a while and see if
29:18
Speaker 8: anything needs to be changed. Might not, but a check
29:20
Speaker 8: in couldn't hurt. So in this case, you know, for you, Dan,
29:24
Speaker 8: I can at least speak to that. You know, I
29:27
Speaker 8: forget are you married?
29:28
Speaker 3: Ah married my brother and I he's married. You did
29:31
Speaker 3: both of our estates together because a lot of the
29:33
Speaker 3: real estate is combined, and we did the insurance trust
29:36
Speaker 3: and the gifting and all that stuff.
29:37
Speaker 8: Okay, so you've got revocable trusts for you and your
29:41
Speaker 8: brother and for your families, and you've got irrevocable gifting
29:45
Speaker 8: trusts done correct.
29:48
Speaker 3: Everything you set up for us in twenty ten, right
29:50
Speaker 3: to the tee. So I'm not positive one hundred percent.
29:52
Speaker 8: But yes, So in this regard, how much are you
29:55
Speaker 8: and your wife worth today?
29:58
Speaker 3: Round number probably right about now around ten million, eleven million,
30:01
Speaker 3: with all the real estate and our share and that
30:03
Speaker 3: type of thing.
30:04
Speaker 8: So the good news is, if we've done a revocable
30:06
Speaker 8: trust plan for you, with the exemption federally being now
30:10
Speaker 8: fifteen million dollars each, right, you and your wife, that's
30:14
Speaker 8: thirty million, your plan can shelter thirty million. So I'm
30:18
Speaker 8: going to say, and if your brother's in a similar situation,
30:22
Speaker 8: I'm going to say that the revocable trust plan is
30:25
Speaker 8: working great from a estate tax standpoint. Federally, it also
30:31
Speaker 8: is drafted with a formula so it automatically adjusted for
30:36
Speaker 8: the new Massachusetts estate tax exemption, which is now two million.
30:41
Speaker 8: So you and your spouse can shelter four million with
30:45
Speaker 8: your estate from the state state tax. So whether you
30:49
Speaker 8: want to consider doing some I don't know, residency changes,
30:53
Speaker 8: that's up to you, because you know, from Massachusetts, to
30:56
Speaker 8: the extent you're over four million, you are going to
30:59
Speaker 8: have Massachusetts a state tax bite. There Now, mass cannot
31:04
Speaker 8: tax out of state property, So if some of that
31:07
Speaker 8: ten million is out of state, it would not be
31:09
Speaker 8: taxable here in mass So keep that in mind. And
31:13
Speaker 8: to the extent we've taken assets and put them in
31:16
Speaker 8: an irrevocable trust, they should not be included in this
31:19
Speaker 8: ten million dollar number. Did you do that when you
31:22
Speaker 8: gave me that number?
31:25
Speaker 3: I did everything you said in twenty ten, and be honest,
31:27
Speaker 3: whether you haven't looked at it too much since. One
31:30
Speaker 3: of my last quick questions was, if I did move
31:32
Speaker 3: to a Hampshire, would that make any difference? Because all
31:35
Speaker 3: these properties are in Massachusetts and in their own trusts.
31:38
Speaker 8: I think if you could spend six months in a
31:40
Speaker 8: day outside of the state, yes, you can make New
31:43
Speaker 8: Hampshire your residency. You don't have to be there six
31:46
Speaker 8: months in a day unless they require that for their residency,
31:50
Speaker 8: which I don't think they do. So as long as
31:52
Speaker 8: you're not six months in a day in this state,
31:55
Speaker 8: you could be anywhere else. You don't have to be there,
31:58
Speaker 8: But change your residency be a great idea if in fact,
32:02
Speaker 8: you're still worth ten million, and that doesn't include what
32:05
Speaker 8: we gave away, right, that's the way I want it.
32:09
Speaker 8: Whatever's not in your state, I shouldn't be in that
32:11
Speaker 8: ten million dollar number. But assuming that's the case, and
32:14
Speaker 8: that's what you're worth. Yeah, you have, you know, ten
32:18
Speaker 8: minus four six figure, six hundred thousand reasons to move.
32:24
Speaker 8: So that's a lot of reasons to become a resident.
32:28
Speaker 8: And if you want to do that of New Hampshire,
32:30
Speaker 8: please come in, sit down. I can explain to you
32:33
Speaker 8: all the things you have to do to accomplish that,
32:36
Speaker 8: including setting up LLCs if you don't for Massachusetts real
32:41
Speaker 8: estate so it's not taxed in mass even though you're
32:46
Speaker 8: a non resident. I actually did a seminar once called
32:49
Speaker 8: So you think you changed your residency, get it. It's
32:52
Speaker 8: not so easy, but I can explain to you exactly
32:55
Speaker 8: how to do it. So sounds like you're probably in
32:57
Speaker 8: pretty good shape. So is your brother going forward, except
33:01
Speaker 8: for maybe moving, that's an option. If you want to
33:04
Speaker 8: explore some more state estate tax reductions, we could sit
33:08
Speaker 8: down and talk. Or if you want to leave your
33:10
Speaker 8: assets differently to your children, we can sit down and
33:13
Speaker 8: talk about that. Otherwise, I think it's in good shape.
33:16
Speaker 8: Thanks for to call. I hope that was helpful, and
33:18
Speaker 8: folks like Dan call get this guide Balancing asset protection
33:24
Speaker 8: and avoiding the state taxes right. It explains what this
33:29
Speaker 8: trust that Dan has works, talks about portability, talks about
33:34
Speaker 8: marital shares and remainder shares, folks better than we can
33:37
Speaker 8: ever talk about it on the radio. Right, It's it's
33:39
Speaker 8: a little more complex than that. The guide gives you,
33:42
Speaker 8: the answers, gives you the charts, tells you how to
33:45
Speaker 8: calculate your own estate tax liability and does it also
33:48
Speaker 8: for irrevocable trusts. Little something for everyone in this guide.
33:53
Speaker 8: See which trust is right for you? Call and get
33:55
Speaker 8: it eight six six eight four eight five six or
34:00
Speaker 8: Legal Exchange show dot Com again eight six six eight
34:04
Speaker 8: four eight five six ninety nine.
34:08
Speaker 2: Todd got another one for you here. Let's go to
34:10
Speaker 2: Rita in Shrewsbury, Rita. What's your question for Todd?
34:15
Speaker 7: Oh, good morning. My question is does the recent increase
34:19
Speaker 7: in support and access to home healthcare have any impact
34:23
Speaker 7: on the need for nursing home care?
34:26
Speaker 8: Hmm, that's an interesting question. So when you say the
34:29
Speaker 8: increase in home healthcare, are you talking about insurance premiums
34:33
Speaker 8: or something.
34:34
Speaker 7: No, I'm talking about services that you can you know, get,
34:38
Speaker 7: or staying in your home when you're when you're sick.
34:42
Speaker 8: Okay, So these are what they call, uh, you know,
34:45
Speaker 8: community based medicaid. I will try to answer it. I'm
34:51
Speaker 8: not an expert when it comes to community based medicaid.
34:55
Speaker 8: There are certain programs a lot offered by individual communities, right,
35:00
Speaker 8: You've got to find out if it's available, like elder
35:03
Speaker 8: frail elder care is one. There's different programs that are
35:09
Speaker 8: available for your community. You got to find out how
35:12
Speaker 8: much money is available. Generally is not a ton, but
35:15
Speaker 8: there could be some, and so certainly look into that
35:20
Speaker 8: and see if you can get community based, you know,
35:23
Speaker 8: medicaid services for staying at the home. I agree with
35:26
Speaker 8: you that the programs themselves have expanded, which I think
35:32
Speaker 8: is wonderful. The idea of keeping people at home is
35:36
Speaker 8: exactly what we all want to do, and even the
35:40
Speaker 8: planning that we do for people is not designed to
35:43
Speaker 8: say go to a nursing home, do everything you can
35:46
Speaker 8: to stay at home. Now that said, does that change
35:51
Speaker 8: I think your question is does that change the need
35:54
Speaker 8: to protect assets from the cost of long term care
35:58
Speaker 8: if you cannot stay at home, I would say no.
36:03
Speaker 8: It really has no difference as to whether I would
36:07
Speaker 8: do that planning or not. If if your goal is
36:10
Speaker 8: to say I want to make sure this particular house
36:14
Speaker 8: gets to my family, or this vacation home gets to
36:17
Speaker 8: my family. If that's your goal, or I just want
36:20
Speaker 8: more of my assets available to my family, well you
36:25
Speaker 8: can't really rely on community based in home care for
36:30
Speaker 8: that doesn't mean you can't apply for it, try to
36:33
Speaker 8: get it, and by the way, getting it if you
36:36
Speaker 8: have assets in these irrevocable trusts that you need to
36:39
Speaker 8: do to ensure those goals are met, might also help
36:43
Speaker 8: you become eligible for in home services. I don't know
36:47
Speaker 8: what their asset limits are, but clearly if it's in
36:51
Speaker 8: the trust, it's not your asset, and so it should
36:54
Speaker 8: help you, you know, get those assets those community based services.
36:59
Speaker 8: So winded answer, but I think at the end of
37:01
Speaker 8: the day, the idea is I'm doing my planning because
37:05
Speaker 8: I want to protect assets from my family. This will
37:08
Speaker 8: do it. But also you might need to do it
37:10
Speaker 8: to reduce a state taxes if you're married and you
37:13
Speaker 8: want to double your exemption. These irrevocable trusts will do it.
37:16
Speaker 8: The guide explains that. And lastly, I'm doing it not
37:20
Speaker 8: just to protect and avoid probate and reduce taxes, but
37:24
Speaker 8: also I want a nice, easy streamline of my assets
37:28
Speaker 8: to my family so they can get it the way
37:31
Speaker 8: and when and how they should get it, so hopefully
37:34
Speaker 8: that helps.
37:35
Speaker 2: Mister Lutski, thank you so much for joining us today.
37:38
Speaker 8: Always a pleasure. Thank you.
37:40
Speaker 1: This has been Asked Odd on the Financial Exchange Radio network.
37:43
Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
37:46
Speaker 1: and Dolan, serving Massachusetts and New England for more than
37:49
Speaker 1: thirty years, helping families with the state and tax planning,
37:51
Speaker 1: Medicaid planning and probate law. Call eight hundred and three
37:54
Speaker 1: ninety three, four thousand and one or visit Cushingdolan dot com.
37:58
Speaker 1: The views expressed in this segment are so those of
38:00
Speaker 1: Cushing and Dolan Armstrong advisor. He does not provide any
38:02
Speaker 1: legal or tax advice. Please consult with your illegal or
38:05
Speaker 1: tax advisor on such matters. Cushing and Armstrong do not
38:07
Speaker 1: endorse each other and are not affiliated.
38:09
Speaker 2: Still more to come. In hour two, we're going to
38:11
Speaker 2: be previewing Micron Technologies earnings and what it may say
38:16
Speaker 2: about what's going on in the tech space, specifically AI
38:20
Speaker 2: related tech space. Also latest updates on the Warner Brothers Paramount,
38:26
Speaker 2: Netflix Triangle what's going what's going on there. And then
38:30
Speaker 2: we are also going to be joined by Mike Simonson.
38:33
Speaker 2: He's the chief economist at Compass. He's going to be
38:37
Speaker 2: giving his twenty twenty six housing market outlook and forecast.
38:41
Speaker 2: Mike always has some really interesting information for us, and
38:44
Speaker 2: we will talk to him next