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How to allocate real estate in your trust · The Legal Exchange

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  Speaker 1: This is the Legal Exchange with Todd Lutsky from the
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  Speaker 1: law firm of Cushing and Dolan and Susan Powers of
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  Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
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  Speaker 1: discuss many topics, including estate planning, how to avoid probate,
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  Speaker 1: and protecting your money from a nursing home. If you
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  Speaker 1: question about another issue that may affect your future, call
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  Speaker 1: Here are your hosts, Tod Lutsky and Susan Powers.
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  Speaker 2: Welcome into the Legal Exchange with Toddltsky. I'm Susan Powers,
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  Speaker 2: a financial advisor with the Armstrong Advisory Group, and I'm
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  Speaker 2: joined by Todd Lutsky, a partner with the law firm
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  Speaker 2: of Cushing and Dolan with a master's in taxation. Welcome Todd,
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  Speaker 2: How are you today?
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  Speaker 3: I am never better in you?
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  Speaker 2: I am great. Thank you already have for us this week.
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  Speaker 3: A couple of things. I've got a Basically it's just
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  Speaker 3: a Supreme Court case but ends up being an appellate
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  Speaker 3: court case. It's strange out of Tennessee dealing with an
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  Speaker 3: irrevocable life insurance trust and divorce agreements. It doesn't seem
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  Speaker 3: like those two should go together, well, but they do.
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  Speaker 3: They do, and it's a way of equalizing in a state.
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  Speaker 3: So I'll show you that. But I'll also show you
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  Speaker 3: what went wrong with this plan and we'll try to
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  Speaker 3: figure that out. So stuff we don't talk about a lot,
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  Speaker 3: but life insurance is tricky, and I think it's important
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  Speaker 3: to know how to deal with it in your state
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  Speaker 3: because many people have it. And then we head over
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  Speaker 3: to Georgia where we have an appellate court case, and
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  Speaker 3: it's basically, you know who should be the trustees of
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  Speaker 3: your trust? Is what it comes down to here. When
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  Speaker 3: they created this trust arrangement, the trustee they picked perhaps
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  Speaker 3: wasn't the best trust, but it's nice because it deals
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  Speaker 3: with it's not so much a trustee issue. It deals
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  Speaker 3: more with how the trust allocated real estate amongst four kids,
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  Speaker 3: which is to me, the way to go. If you
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  Speaker 3: want to do it, you use a trust to do this,
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  Speaker 3: and you can accomplish it. And I think we're going
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  Speaker 3: to show you how it works here and how that
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  Speaker 3: kind of planning, especially with real estate is important. But
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  Speaker 3: before we get to all that, I want to remind
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  Speaker 3: you about our our guide this month right making the
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  Speaker 3: most of gifting assets? And by the way, should we gift?
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  Speaker 3: Get the guide? Don't know? Is it the right thing
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  Speaker 3: to do? Not sure? How do we do it? Do
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  Speaker 3: we want to give it away out right? Or do
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  Speaker 3: we want to give it to irrevocable trust for the
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  Speaker 3: benefit of kids? Do we want to use spousal lifetime
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  Speaker 3: access trusting? Give it away so we can enjoy it.
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  Speaker 3: I can tell you one of the items we probably
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  Speaker 3: don't want to give away as real estate. In fact,
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  Speaker 3: if it's got a low basis, you might have a
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  Speaker 3: capital gains tax to deal with. Folks, so much to
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  Speaker 3: think about when to gift and how to gift and
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  Speaker 3: the tax ramifications associated with it. Make sure you make
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  Speaker 3: the most of gifting. Get this guide eight six six
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  Speaker 3: eight four eight five six nine nine or Legal Exchange
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  Speaker 3: Show dot com again eight six six eight four eight
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  Speaker 3: five six nine nine or Legal Exchange Show dot com
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  Speaker 3: and you can download it right there. Where are we going, Tennessee?
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  Speaker 3: It's big, big October break for kids in fact in
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  Speaker 3: Tennessee right now. So in this case, William and Lillian
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  Speaker 3: are divorced in May of nineteen seventy five. Well, Elizabeth
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  Speaker 3: and they both William. So William and Lillilian got divorced
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  Speaker 3: in nineteen seventy five, but they established a marital dissolution
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  Speaker 3: agreement that required Bill to create an irrevocable life insurance
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  Speaker 3: trust to hold life insurance for the sun Buck to
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  Speaker 3: equalize the inheritance because of what the other four kids
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  Speaker 3: have gotten or will get, and Buck was not yet born,
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  Speaker 3: so we had to take care of Buck. Okay, well,
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  Speaker 3: a little strange, but the amount of life insurance was
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  Speaker 3: to be the average of the after tax funds received
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  Speaker 3: from the other four kids trusts.
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  Speaker 2: How would you manage that through life?
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  Speaker 3: Okay, well, let's see. Huh, this is the issue, exactly
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  Speaker 3: the issue, Susan So. September twenty twenty, long time later,
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  Speaker 3: Buck decides to sue Bill Dad. Dad not necessarily a
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  Speaker 3: good idea for breach of contract because Dad failed to
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  Speaker 3: create the islet that was in September of twenty twenty.
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  Speaker 3: Well must have killed Dad, because Bill died during that litigation.
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  Speaker 3: Now you've done so, Buck, should feel really bad. Okay, Well,
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  Speaker 3: the substitute for Bill became the co trustees of his
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  Speaker 3: revocable trust and the personal representative. They were substituted parties
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  Speaker 3: for this ongoing litigation, right, and and they ended up
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  Speaker 3: filing motion for summary judgment. Well, the estate against summary
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  Speaker 3: judgment means there's so easy yet it's so obvious on
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  Speaker 3: the facts that we don't even need to go to court. Well,
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  Speaker 3: the estate argued that the marital Dissolution Agreement, the MDA
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  Speaker 3: was too vague and valuation is too vague to enforce,
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  Speaker 3: and the amount to hold in the trust was too
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  Speaker 3: hard to calculate. Therefore it was unenforceable. So you said, Susan, Yeah, Well,
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  Speaker 3: the trial court agreed with you and granted the estate's motion.
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  Speaker 3: So Buck loses.
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  Speaker 2: I'm not an attorney. I just play one of the radios.
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  Speaker 3: Yeah, but stay tuned because the appellate court then a
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  Speaker 3: Buck appealed and the appellate court affirmed the trial court.
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  Speaker 3: So Buck still loses.
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  Speaker 2: Yeah.
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  Speaker 3: So Buck went to the Supreme Court and the Supreme
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  Speaker 3: Court decided to remand the case, which is.
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  Speaker 2: Go back and think about what you've done.
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  Speaker 3: Well, because of recent cases that had come down, and
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  Speaker 3: then on appeal or on remand excuse me, okay, the
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  Speaker 3: appellate court reversed.
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  Speaker 2: Ah, you actually have an answer for.
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  Speaker 3: This and no, and remanded the case as the amount
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  Speaker 3: of life insurance needed to be calculated could actually be
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  Speaker 3: computed and should have been allowed, and they should have
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  Speaker 3: allowed evidence in as to the amount of distributions of
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  Speaker 3: assets that Bill made to those revocable trusts for the
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  Speaker 3: other four kids, and they should have created the islet,
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  Speaker 3: and therefore he's in breach of contract. So they believe
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  Speaker 3: all that evidence should come in and you should check
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  Speaker 3: this out because he could be in breach of contract.
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  Speaker 2: It sounds like that's the right decision that it would be.
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  Speaker 3: I think it is. I think you could figure out
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  Speaker 3: how much to buy, right, But.
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  Speaker 2: Why would you draft your documents like this?
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  Speaker 3: Yeah, so I think the confusion is let's try and
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  Speaker 3: see what we can learn from this. So remember first,
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  Speaker 3: my first confusion is, and it would be this, there
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  Speaker 3: were these revocable trusts that they mentioned that were in place. Apparently, well,
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  Speaker 3: if the trust was revocable and Bill was still alive,
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  Speaker 3: since clearly he was and he was being sued, why
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  Speaker 3: didn't Buck just ask Bill to amend his trust to
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  Speaker 3: equalize the payout to all the kids.
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  Speaker 2: Right, whatever's in there, right, one fifth to everybody. I mean,
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  Speaker 2: that's how your documents typically work, right, if they're leaving
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  Speaker 2: things equally.
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  Speaker 3: People always say that about me, They go, you just
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  Speaker 3: get right to the point. I'm like, well, isn't that
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  Speaker 3: the point. Wouldn't that be the easiest thing to do?
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  Speaker 2: Well?
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  Speaker 3: Secondly, folks, I think you know that we need to
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  Speaker 3: understand that when we draft trusts, you know, like revocable
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  Speaker 3: trusts or irrevocable trust we have language in there that
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  Speaker 3: generally says equally to the kids then living right, or
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  Speaker 3: kids then deceased, leaving.
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  Speaker 2: Kids, send the grandkids basically grandkids.
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  Speaker 1: Right.
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  Speaker 3: So if that's the case, and that's how trusts are
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  Speaker 3: generally drafted, then it doesn't matter that Buck was later born,
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  Speaker 3: but Buck would have been included, right. And so folks,
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  Speaker 3: I please don't call and say, oh my gosh, Todd,
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  Speaker 3: I got to call you because I had some afterborn grandchildren.
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  Speaker 3: Since we did our trust, well, well they're.
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  Speaker 2: Included, they're covered.
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  Speaker 3: You're good, you know, unless you've decided you want to
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  Speaker 3: actually leave something directly to a grandchild instead of after
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  Speaker 3: a kid dies, well then you have to change it. Yeah,
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  Speaker 3: but they're all included in the language. You don't have
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  Speaker 3: to run around and do this. So that's less than
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  Speaker 3: number two.
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  Speaker 2: Maybe they set up trust for the kids, like funded
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  Speaker 2: revocable trusts while they were living. Well maybe I don't know.
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  Speaker 2: Maybe sounds strange, strange.
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  Speaker 3: So now having said all this, the islet can be
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  Speaker 3: used to help equalize. So if we want, if you
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  Speaker 3: are ever treating kids differently, you know, like certain parcels
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  Speaker 3: of real estate to a certain child, and you want
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  Speaker 3: to make up that difference. Sometimes it's hard to do
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  Speaker 3: that with your regular assets. So you could put together
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  Speaker 3: an islet. In the islet, the assets inside the islet
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  Speaker 3: can remember these are a state tax free and income
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  Speaker 3: tax free and grow a state tax free. So you
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  Speaker 3: could say, then allocate the amount of assets from the
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  Speaker 3: trust that equals the fair market value of the assets
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  Speaker 3: that you gave to a particular child. So if I'm
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  Speaker 3: giving parcel A to a certain child, well then I
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  Speaker 3: need to know the value of that on the date
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  Speaker 3: of death, and I'm going to allocate that amount of
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  Speaker 3: the assets to child. Be right, How fine? You can
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  Speaker 3: do that, and again I think it's also important that
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  Speaker 3: if you ever wanted to, like let's say, you know,
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  Speaker 3: one child needs a place to live and the other
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  Speaker 3: kids don't, it's a way of you know, equalizing them.
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  Speaker 3: So just remember and after you after you've equalized, you
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  Speaker 3: can then say whatever else is left just goes equally
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  Speaker 3: to the kids. So it is, it is a mechanism
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  Speaker 3: to equalize the estate, and it can be done, but
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  Speaker 3: it's got to be drafted right and so not a
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  Speaker 3: bad case overall. But folks, sometimes gifting away assets while
• 10:04
  Speaker 3: you're alive isn't always the best answer, especially with our
• 10:09
  Speaker 3: high estate tax exemptions today. So learn whether you should
• 10:13
  Speaker 3: even make a gift and how to make them by
• 10:15
  Speaker 3: getting the guide eight six six eight four eight five
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  Speaker 2: You've been listening to Todd Lutski, a partner with a
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• 10:28
  Speaker 2: a financial advisor with the Armstrong Advisory Group. We've got
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  Speaker 2: much more to come when we return to the Legal
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  Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
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  Speaker 2: Susan Powers financial advice with the Armstrong Advisory Group, and
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  Speaker 2: I'm joined by Todd Letsky, a partner with the law
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  Speaker 2: firm of Cushing and Dolan with a master's in taxation.
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  Speaker 2: Where are we headed down, Todd?
• 14:10
  Speaker 3: Good to Georgia. See what's going down there? Georgia on
• 14:13
  Speaker 3: my mind. So in this case, we've got Bob and Judy.
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  Speaker 3: They had four kids, James, Jason, Jeremy, and Christy. Bob
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  Speaker 3: died in April of twenty twenty. This is going to
• 14:27
  Speaker 3: be a very traumatic year, so stay tuned. Fairly certain
• 14:31
  Speaker 3: there was no estate planning done. Everything went to the wife. Okay, well.
• 14:35
  Speaker 3: In August of twenty twenty, not too much later, Judy
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  Speaker 3: decides to create an irrevocable trust. Oh okay, good for her,
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  Speaker 3: and she names Christy as the trustee of the trust,
• 14:46
  Speaker 3: and the trust gave six acres of real estate to
• 14:48
  Speaker 3: Jason and Jeremy, and knives and equipment and tractors and
• 14:54
  Speaker 3: things went to Jason, Jeremy and James. Okay, everything else
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  Speaker 3: goes to Christy. Okay, so be it. Judy then dies
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  Speaker 3: on November twenty twenty. It's a busy year. Yeah, okay, Well,
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  Speaker 3: of course in my head, capacity issues come to mind,
• 15:12
  Speaker 3: but let's just assume there was none. Christy then petitions
• 15:16
  Speaker 3: the court files the will, and the boys objected, and
• 15:21
  Speaker 3: the court found that Christy was unfit to serve as
• 15:24
  Speaker 3: personal representative. Okay. Now, remember the trust had all the assets,
• 15:29
  Speaker 3: so I really don't care what happens with the will.
• 15:33
  Speaker 3: Remember the will only deals with probate assets, right, Okay,
• 15:37
  Speaker 3: so all right, so be it. So Jason then decides
• 15:40
  Speaker 3: to so remember she's still trustee of the trust.
• 15:42
  Speaker 6: Right.
• 15:44
  Speaker 3: Jason then takes the equipment from the property because it
• 15:47
  Speaker 3: was left to him in the trust. Christie says it's unauthorized,
• 15:52
  Speaker 3: you can't do that, but she didn't pursue any recovery.
• 15:56
  Speaker 3: Christy then decides to transfer all of the real estate
• 15:59
  Speaker 3: in the trust, including the six acres that was left
• 16:03
  Speaker 3: to the boys all to herself, Christie. The Boys sued
• 16:09
  Speaker 3: for breach of fiduciary duty, and sure, you know, obviously
• 16:15
  Speaker 3: they should say you can't do this. Well, there was
• 16:19
  Speaker 3: a lot of jurisdictional questions. I'm not going to bore
• 16:22
  Speaker 3: you with that. You know, whether they've got subject matter
• 16:25
  Speaker 3: jurisdiction or they can actually hear the case. So a
• 16:28
  Speaker 3: lot of those jurisdictional issues arose. So the case was
• 16:31
  Speaker 3: sent back to make sure it goes to the correct
• 16:33
  Speaker 3: court to resolve the issue. So I'm not going to
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  Speaker 3: give you the answer.
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  Speaker 2: Have you not learned anything from my feedback of your
• 16:43
  Speaker 2: your hanging Chad story? You know, come on, we like answers,
• 16:47
  Speaker 2: We like nice little bows on these cases.
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  Speaker 3: I'm going to give it to you because I'm fairly
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  Speaker 3: certain that Christy's he's in trouble. Yeah, Christie's going to
• 16:55
  Speaker 3: lose here. It just was a jurisdictional issue that they
• 16:57
  Speaker 3: had to send back. But there's no way if you
• 16:59
  Speaker 3: have a tr trust that leaves six acres to those
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  Speaker 3: kids that they don't get it. So they're going to
• 17:04
  Speaker 3: get it, and I'm pretty sure they're that Christie's going
• 17:06
  Speaker 3: to you know, be in trouble here and going to
• 17:09
  Speaker 3: have to put back the assets. So there you go.
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  Speaker 3: At least I think I can give you the answer.
• 17:13
  Speaker 3: But the reason I like the case is not necessarily
• 17:15
  Speaker 3: whether that's the result or not, because I think we
• 17:17
  Speaker 3: can learn a lot about how to take care of
• 17:22
  Speaker 3: real estate, right, how do we take care of real
• 17:24
  Speaker 3: estate when we're doing our estate planning? And that's what
• 17:27
  Speaker 3: I think this is really all about. Before I get there, though,
• 17:30
  Speaker 3: I want to remind you about the guide we're giving
• 17:33
  Speaker 3: away again, the making the most of gifting assets, and
• 17:36
  Speaker 3: here real estate. I'm glad they didn't give it away, right,
• 17:40
  Speaker 3: That's one of the items if you're thinking about gifting
• 17:42
  Speaker 3: that you might not want to because it might have
• 17:44
  Speaker 3: appreciated in value significantly if it does, or stocks that
• 17:49
  Speaker 3: have appreciated. Right. When you give away those kinds of gifts,
• 17:52
  Speaker 3: you could be giving up the carryover basis, which traps
• 17:55
  Speaker 3: thirty percent capital gains, and you might only be saving
• 17:58
  Speaker 3: you know, ten twelve percent and let's say Massachusetts state tax.
• 18:02
  Speaker 3: So be careful when you think about what to gift
• 18:05
  Speaker 3: and then how to gift it, either outright or to
• 18:08
  Speaker 3: a gifting trust for kids, or if I'm giving large
• 18:11
  Speaker 3: amounts away because I'm very wealthy and I want to
• 18:13
  Speaker 3: then make sure I can enjoy what I gave away. Well,
• 18:16
  Speaker 3: that's where spousal lifetime access trusts come in. And even
• 18:19
  Speaker 3: think about how you make how gifts occur from jointly
• 18:22
  Speaker 3: owned property. From a medicaid perspective, is it a completed
• 18:25
  Speaker 3: gift or is it not? Folks, there's many taxes to
• 18:29
  Speaker 3: consider and control issues and how to gift all needs
• 18:35
  Speaker 3: to be determined. Get the guide, figure out what and
• 18:39
  Speaker 3: if you should gift anything at all. Making the most
• 18:42
  Speaker 3: of gifting assets eight sixty six eight four eight five
• 18:46
  Speaker 3: six nine nine or Legal Exchange Show dot com again
• 18:50
  Speaker 3: eight six six eight four eight five six nine nine
• 18:55
  Speaker 3: or Legal Exchange Show dot com.
• 18:57
  Speaker 2: So this case is interesting, Todd, because a lot of
• 19:01
  Speaker 2: people think who I pick is trustee. I need to
• 19:04
  Speaker 2: make sure they're fair because they're going to be distributing
• 19:07
  Speaker 2: these things. They don't get to just willing nearly decide
• 19:10
  Speaker 2: how things are going. They're there to follow your orders
• 19:13
  Speaker 2: and your wishes, and it's really more orders than wishes
• 19:17
  Speaker 2: because it's a legal document.
• 19:19
  Speaker 3: You're absolutely right, I mean to jump to the end
• 19:21
  Speaker 3: of what I was going to say here is absolutely right. Yeah,
• 19:24
  Speaker 3: I do care about who I pick. You do want
• 19:26
  Speaker 3: to pick somebody who you feel is at least good
• 19:29
  Speaker 3: with this kind of capable job. But in reality, even
• 19:34
  Speaker 3: if they're not and they become rogue trustees, perhaps like
• 19:38
  Speaker 3: Christy did here, you're going to lose because, as you said,
• 19:42
  Speaker 3: they don't get to decide. That's why I tell people
• 19:45
  Speaker 3: you don't need three kids necessarily serving as trustee, because
• 19:49
  Speaker 3: they can only do what you said to do, and
• 19:53
  Speaker 3: so it's not like you're favoring one over another. So
• 19:56
  Speaker 3: very good point there, Susan. Now that's let's analyze what
• 20:01
  Speaker 3: was done here because I kind of like it. I
• 20:04
  Speaker 3: kind of liked the idea of the irrevocable trust, right,
• 20:06
  Speaker 3: This was a great way to handle the estate plan.
• 20:10
  Speaker 3: She's alive, she's single, she lost her husband. You know, fine,
• 20:14
  Speaker 3: what do I do? Ire rev The real estate in
• 20:17
  Speaker 3: this trust would likely have avoided probate, so all the
• 20:21
  Speaker 3: wheel changes don't even matter. The assets will likely be
• 20:24
  Speaker 3: protected from the nursing home, assuming that's the kind of
• 20:27
  Speaker 3: trust that was established because it was irrevocable. I'm just
• 20:30
  Speaker 3: going to make that leap and if so, if that
• 20:33
  Speaker 3: ever became a problem, we'd at least have that covered.
• 20:36
  Speaker 3: And you know, I'm not sure about the estate taxes,
• 20:38
  Speaker 3: but you know, have have they been would have been
• 20:42
  Speaker 3: more helpful obviously if they'd done the planning before Bob died,
• 20:45
  Speaker 3: because then you would have been able to certainly reduce
• 20:48
  Speaker 3: the estate tax liability if any.
• 20:50
  Speaker 2: Right, because if you don't do any planning when both
• 20:52
  Speaker 2: spouses are living, then you give up the deceased spouses
• 20:56
  Speaker 2: exemptions federally in state.
• 20:57
  Speaker 3: Right, exactly right, And that was total to lesson learned
• 21:01
  Speaker 3: here would be folks, don't wait to plan he died, right,
• 21:04
  Speaker 3: get it done, because if that happened, then the estate
• 21:08
  Speaker 3: taxes here would have either been significantly reduced or eliminated.
• 21:13
  Speaker 3: For what you said, Susan, you would have been able
• 21:14
  Speaker 3: to shelter some assets on the first death and for
• 21:19
  Speaker 3: mass purposes at least up to two million. So if
• 21:22
  Speaker 3: the estate was four million, you could have eliminated eliminated
• 21:26
  Speaker 3: estate taxes. And I did with these every day. I
• 21:28
  Speaker 3: deal with people who come in when someone died and
• 21:30
  Speaker 3: didn't do planning, and I explained to them, was there
• 21:33
  Speaker 3: any planning done when your spouse died, I didn't know
• 21:35
  Speaker 3: you then, no, okay, so you just got everything. Yeah right,
• 21:40
  Speaker 3: that's the problem.
• 21:41
  Speaker 2: And if you had a trust, was it funded.
• 21:43
  Speaker 3: Oh it's a whole other kettle of fish, all right,
• 21:47
  Speaker 3: So then let's talk about the dispositive provisions. Now we
• 21:49
  Speaker 3: kind of understand I'd like this, right, So the trust
• 21:52
  Speaker 3: also allowed for certain parcels of real estate. Remember they
• 21:55
  Speaker 3: were give six acres or something to the boys and
• 21:58
  Speaker 3: then everything else else to Christy. So might not have
• 22:02
  Speaker 3: been unfair. But nevertheless, when you give certain kids certain assets,
• 22:07
  Speaker 3: it can be done without fighting. That's what you do
• 22:11
  Speaker 3: in the trust. So this would likely, however, result in inequality.
• 22:16
  Speaker 3: Generally it does, right, so you know, but that's okay.
• 22:20
  Speaker 3: If that's what the donor wants, you can do it
• 22:24
  Speaker 3: all right. Now, example, what what I see a lot
• 22:26
  Speaker 3: is in this case, you know the farm went to
• 22:29
  Speaker 3: the boys. Well, they maybe worked it, maybe they earned it,
• 22:32
  Speaker 3: maybe they needed but maybe the daughter needed a place
• 22:35
  Speaker 3: to live, so they gave the house, the primary residence
• 22:38
  Speaker 3: to the daughter. Ye not perfectly good, I mean that
• 22:40
  Speaker 3: could be what's happening here. And again, trusts work, right,
• 22:45
  Speaker 3: But if you do this put a no contest closet
• 22:50
  Speaker 3: that would have been something helpful.
• 22:51
  Speaker 2: Nothing.
• 22:51
  Speaker 3: They can't complain right because I said, obviously it still
• 22:54
  Speaker 3: might not equalize everything, but at least you got accomplished
• 22:58
  Speaker 3: what you wanted accomplished, and you have no fighting because
• 23:00
  Speaker 3: you put a no contest clause. So it just it
• 23:03
  Speaker 3: just really enhances things. But you know, at the end
• 23:07
  Speaker 3: of the day, this kind of planning can be helpful.
• 23:11
  Speaker 3: So folks, if you want, get the guide learn how
• 23:15
  Speaker 3: planning sometimes is better than gifting, but sometimes gifting can
• 23:20
  Speaker 3: also work eight six six eight four eight five six
• 23:25
  Speaker 3: nine to nine or Legal Exchange show dot com to
• 23:28
  Speaker 3: get making the most of gifting assets and decide whether
• 23:32
  Speaker 3: or not you should even make the gift.
• 23:37
  Speaker 2: You've been listening to Todd Lutsky, a partner with the
• 23:39
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 23:43
  Speaker 2: financial advisor with the Armstrong Advisory Group, and Todd will
• 23:46
  Speaker 2: be answering your listener questions next when we return to
• 23:50
  Speaker 2: the Legal Exchange with Todd Lutsky.
• 23:53
  Speaker 1: Cushing and Dolan want to help you avoid costly mistakes
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  Speaker 1: The proceeding was paid for. The views expressed are solely
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  Speaker 1: You're listening to the Legal Exchange, and it's time for
• 27:29
  Speaker 1: Ask Todd, the segment where Todd will answer your questions
• 27:32
  Speaker 1: about anything and everything that's included in the estate planning process.
• 27:36
  Speaker 1: Once again, here's Todd Lutsky and Susan Powers.
• 27:40
  Speaker 2: Welcome back talk. We have a few questions from listeners
• 27:43
  Speaker 2: for you. First one is from Marylyn and Hyennas mass
• 27:46
  Speaker 2: And Marylyn writes, I have three children and five grandchildren.
• 27:50
  Speaker 2: I'd like to leave a little extra to one of
• 27:52
  Speaker 2: my granddaughters when I pass because she has some health concerns.
• 27:56
  Speaker 2: Am I able to do this without my other beneficiaries?
• 28:00
  Speaker 2: Out would it be better to revise my trust with
• 28:04
  Speaker 2: you or just name her as a beneficiary on an account.
• 28:07
  Speaker 2: This is a mutual client. This is one of your trusts.
• 28:09
  Speaker 3: Okay, thank you. That's important to know. Now, a couple
• 28:13
  Speaker 3: of things. There's multiple questions here, so let's try to
• 28:16
  Speaker 3: walk through them. So, first of all, we have an
• 28:18
  Speaker 3: irrevocable medicaid trust. Correct, And we're wondering, as Marilyn is wondering,
• 28:25
  Speaker 3: how much control did I keep over who can get
• 28:30
  Speaker 3: my assets? Yeah, well, Marilynd, good news. A lot of control.
• 28:34
  Speaker 3: So you have something called a limited power of appointment
• 28:37
  Speaker 3: that allows you to change the beneficiaries in equal or
• 28:41
  Speaker 3: unequal amounts among a class consisting of your children of
• 28:46
  Speaker 3: all generations.
• 28:47
  Speaker 2: So that would include grandchildren, great grandchildren and so forth.
• 28:50
  Speaker 3: And not cousin Vinnie right in the group. So okay,
• 28:55
  Speaker 3: that's good, Todd. I don't care about cousin Vinnie. I
• 28:58
  Speaker 3: want to leave more to one of my grandchildren. Absolutely allowable. Okay,
• 29:02
  Speaker 3: So that's the first question. The next question is can
• 29:06
  Speaker 3: I do this without my other beneficiaries finding out? Again,
• 29:11
  Speaker 3: an affirmative. Absolutely, you can. Now just remember, and this
• 29:16
  Speaker 3: is something I tell all clients and then their kids think, oh,
• 29:19
  Speaker 3: that isn't what you told them, but we always put
• 29:20
  Speaker 3: it in the engagement letter. When you do this change,
• 29:24
  Speaker 3: you do it by changing your will. So the power
• 29:28
  Speaker 3: of appointment is listed in the trust, but it says
• 29:31
  Speaker 3: you can change the trust as appointed through your will.
• 29:38
  Speaker 3: So you have to through the will exercise the trust
• 29:41
  Speaker 3: power to change the language and the trust, and that
• 29:44
  Speaker 3: new language ends up in your will. So I replace
• 29:48
  Speaker 3: article five with a new article five. Yeah, in your will.
• 29:52
  Speaker 3: That makes you go to probate. All right, well everyone said, oh,
• 29:56
  Speaker 3: oh that's crazy. Well, none of the assets of the
• 29:58
  Speaker 3: trust go to probate. One of the other assets that
• 30:01
  Speaker 3: are designed to avoid probate avoid they still avoid probate.
• 30:04
  Speaker 3: So you're not going to probate with all that. You
• 30:06
  Speaker 3: just have to open up to probate, file the will
• 30:10
  Speaker 3: to effectuate the change and the trust that you wanted done.
• 30:14
  Speaker 3: So it's it's probate, but it's not.
• 30:16
  Speaker 2: Let's call it regular probate. It's less bad, less bad,
• 30:21
  Speaker 2: an extra step, but it accomplishes what you want.
• 30:24
  Speaker 3: Exactly, you know. It's it's a small price to pay
• 30:27
  Speaker 3: to accomplish what you want. But you have to do that,
• 30:29
  Speaker 3: and everybody always gets been out of shape until I
• 30:31
  Speaker 3: tell them, but look, you're better off because of this change,
• 30:34
  Speaker 3: and it's okay. So so yes, you can do it.
• 30:37
  Speaker 3: You can do it without anyone finding out. You got
• 30:40
  Speaker 3: to go to probate. Now, the last question was would
• 30:46
  Speaker 3: it be better just to change a beneficiary on an account? Well,
• 30:50
  Speaker 3: this of course assumes the fact that you've left assets
• 30:52
  Speaker 3: outside the trust, which is, I agree what happens.
• 30:56
  Speaker 2: In this case she has Yeah.
• 30:57
  Speaker 3: And we would do it generally with a irrevocable trust anyway.
• 31:02
  Speaker 3: So then the question becomes, yes, you could do that,
• 31:07
  Speaker 3: But if you really want that particular money, or that
• 31:11
  Speaker 3: amount of money that's in that account that you're designating
• 31:14
  Speaker 3: the grandchild as the beneficiary of to go to that grandchild,
• 31:21
  Speaker 3: well then I wouldn't do that. Why because you could
• 31:23
  Speaker 3: get sick and go to the nursing home and then
• 31:25
  Speaker 3: that money gets all spent on the nursing home and
• 31:26
  Speaker 3: now that account's empty, right, and then you did not
• 31:30
  Speaker 3: get what you wanted to go to your grandchild. And
• 31:33
  Speaker 3: the other issue with that is, let's say nothing bad happened,
• 31:38
  Speaker 3: then I left it to my grandchild. Well, maybe she's
• 31:40
  Speaker 3: little or he's little and I don't want him to
• 31:43
  Speaker 3: have it out right. Well, if you just named the beneficiary,
• 31:47
  Speaker 3: it's going out right. Whereas if it's in the trust,
• 31:50
  Speaker 3: you don't have to worry about it being taken because
• 31:52
  Speaker 3: of the nursing home. So it's there. You can rest
• 31:55
  Speaker 3: assured that it's there and how the child or grandchild
• 31:58
  Speaker 3: in this case gets it. It is laid out in
• 32:01
  Speaker 3: the terms of the trust controlled. So I hope that
• 32:06
  Speaker 3: answers all the questions, and certainly they're all positive and
• 32:09
  Speaker 3: favorable answers. But again, it don't do it alone. Call
• 32:13
  Speaker 3: always call your estate planning attorney once you've got your
• 32:16
  Speaker 3: plan in place and you think there might be a
• 32:18
  Speaker 3: change of some kind to it. Now that goes without
• 32:23
  Speaker 3: say with terms of planning. I also, if you are
• 32:26
  Speaker 3: thinking about making a gift, you might want to reach
• 32:28
  Speaker 3: out to your state planning attorney as well, but you
• 32:31
  Speaker 3: can always get the guide first, so you're armed with
• 32:34
  Speaker 3: what should I make a gift? How do I make
• 32:36
  Speaker 3: a gift? Do I give it outright to kids? Do
• 32:38
  Speaker 3: I put it in a gifting trust? What kind of
• 32:41
  Speaker 3: assets should I gift high basis assets, low basis assets?
• 32:45
  Speaker 3: What are the capital gains tax on gifting. What if
• 32:47
  Speaker 3: I want to give away big assets and I want
• 32:49
  Speaker 3: to still retain control over what I give away? Can
• 32:52
  Speaker 3: I even do that? Yes? Spousal Lifetime Access trust would
• 32:55
  Speaker 3: be the answer there. Folks, These are all the kinds
• 32:59
  Speaker 3: of questions that are built into this guide. Decide whether
• 33:03
  Speaker 3: or not and how you should make gifts by getting
• 33:07
  Speaker 3: the guide eight six six eight four eight five six
• 33:11
  Speaker 3: ninety nine or Legal Exchange Show dot com again eight
• 33:15
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• 33:19
  Speaker 3: Legal Exchange Show dot Com.
• 33:21
  Speaker 2: Our last question comes from Jonathan in Springfield, mass And
• 33:24
  Speaker 2: Jonathan writes what happens when a beneficiary designation differs from
• 33:29
  Speaker 2: what is in a will. My mother's intention was to
• 33:32
  Speaker 2: divide all of her assets equally between myself and my sister,
• 33:36
  Speaker 2: as was stated in her will. However, I've learned that
• 33:40
  Speaker 2: she had several accounts that listed just my sister as
• 33:44
  Speaker 2: a beneficiary. Does the will supersede these designations to honor
• 33:48
  Speaker 2: her wishes? What happens to accounts owned jointly between my
• 33:52
  Speaker 2: mother and my sister?
• 33:55
  Speaker 1: Yeah?
• 33:55
  Speaker 3: So again, this all comes back to the drafting atturn right.
• 34:01
  Speaker 3: Make sure you draft things that don't have open ended items.
• 34:08
  Speaker 3: You know, you don't want things with an open end,
• 34:10
  Speaker 3: and you also don't want a dead end. You don't
• 34:12
  Speaker 3: want something to end up going nowhere, right, So that's
• 34:15
  Speaker 3: what's important. So what do I mean by that? Well, obviously,
• 34:18
  Speaker 3: first and foremost, she's talking about a will, and I'm saying, well,
• 34:21
  Speaker 3: why do we only have a will? I can't not
• 34:24
  Speaker 3: mention that, right, you know, thirty years of doing this
• 34:26
  Speaker 3: and I don't think we really ever do will based plans.
• 34:29
  Speaker 3: You need the trust. So the will then would only
• 34:32
  Speaker 3: be dealing with hopefully a small amount of assets that
• 34:36
  Speaker 3: didn't find.
• 34:37
  Speaker 2: Their way ideally nothing, right, I deeally nothing.
• 34:40
  Speaker 3: If anything didn't find its way into the trust. Yeah, good,
• 34:45
  Speaker 3: so get that out of the way. But in this case,
• 34:47
  Speaker 3: it is a will, So what are we doing a
• 34:49
  Speaker 3: couple of things? If there is a designated beneficiary on
• 34:54
  Speaker 3: the account transfer on death or designated beneficiary, actually, yeah,
• 35:02
  Speaker 3: then it's tough for the will generally to catch it.
• 35:08
  Speaker 3: You can't stop it. It's going to go to that
• 35:12
  Speaker 3: designated beneficiary. And remember, even when you're drafting, you know
• 35:16
  Speaker 3: your will, it's tough to draft for that. You can't
• 35:20
  Speaker 3: that's where it's going to go. So even though the
• 35:26
  Speaker 3: will says equally to kids, if I left it the
• 35:28
  Speaker 3: way she said with beneficiaries to one particular child, then
• 35:32
  Speaker 3: that particular child's going to get it hard stop. Okay,
• 35:38
  Speaker 3: But a lot of times that's not how banks are
• 35:41
  Speaker 3: set up. Banks could be set up where they say, oh,
• 35:45
  Speaker 3: I just you know, Sally lives near me and all
• 35:49
  Speaker 3: my other kids live further away, so I'm going to
• 35:52
  Speaker 3: put Sally on like these three bank accounts.
• 35:54
  Speaker 2: Yeah, the checking accounts, so you can write checks and
• 35:56
  Speaker 2: just have someone else on there.
• 35:58
  Speaker 3: And so when I say put on, I mean add
• 36:01
  Speaker 3: as a joint owner, right, not a designated beneficiary, a
• 36:06
  Speaker 3: joint owner. And so how that works is if you
• 36:11
  Speaker 3: die with those assets jointly held, then you can look
• 36:17
  Speaker 3: to the will. But before we look to the will,
• 36:18
  Speaker 3: it would be normally avoiding probate, so not the will
• 36:23
  Speaker 3: and automatically going to that joint owner, you walk in,
• 36:26
  Speaker 3: take out all the money. Doesn't matter whether she's alive
• 36:29
  Speaker 3: or dead. You get the money, yep. So you walk
• 36:32
  Speaker 3: in and take it out. So that would disinherit other
• 36:35
  Speaker 3: children yep, because it all went to this one child,
• 36:38
  Speaker 3: but oftentimes when you add joint names to the account,
• 36:41
  Speaker 3: it's by accident. So we put language in our will
• 36:44
  Speaker 3: that says jointly owned accounts will be disregarded and the
• 36:48
  Speaker 3: item will go to probate, so that at least the
• 36:50
  Speaker 3: will can address it and treat the kids equally. To
• 36:53
  Speaker 3: prevent accidental disinheritance, folks don't accidentally disinherit people by making gifts.
• 37:00
  Speaker 3: Learn the right way to make gifts. Get the guide
• 37:03
  Speaker 3: eight six six eight four eight five six nine to
• 37:07
  Speaker 3: nine or Legal Exchange Show dot com.
• 37:11
  Speaker 2: If you have a question you'd like to ask Tod,
• 37:13
  Speaker 2: visit his website Legal Exchange Show dot com and click
• 37:16
  Speaker 2: on the ask Tod tab. Maybe I'll be able to
• 37:19
  Speaker 2: read your question on the air, and hopefully his answer
• 37:21
  Speaker 2: will stop you from becoming one of his next real
• 37:24
  Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
• 37:27
  Speaker 2: with the law firm of Cushing and Dolan. I'm Susan Powers,
• 37:31
  Speaker 2: a financial advisor with the Armstrong Advisory Group. We'll be
• 37:34
  Speaker 2: back with more after this quick break on the Legal
• 37:37
  Speaker 2: Exchange with Todd Lutsky.
• 37:40
  Speaker 1: Cushing and Dolan want to help you avoid costly mistakes
• 37:43
  Speaker 1: when it comes to gifting assets to your children. Their
• 37:45
  Speaker 1: brand new guide Making the Most of Gifting Assets shares
• 37:48
  Speaker 1: crucial strategies to help you protect your legacy and your family.
• 37:52
  Speaker 1: Many people think gifting is always a good thing, but
• 37:55
  Speaker 1: if it's done the wrong way, they can create real headaches.
• 37:57
  Speaker 1: Even well intentioned gifts can cause complications if your children
• 38:00
  Speaker 1: are dealing with financial pressure or legal issues like a divorce.
• 38:04
  Speaker 1: The guide also explains how a major gift like a
• 38:06
  Speaker 1: home or vacation property could come with hidden tax consequences
• 38:09
  Speaker 1: that may impact your entire estate plan. Before you make
• 38:13
  Speaker 1: any big moves, arm yourself with the facts and this
• 38:15
  Speaker 1: new guide from Cushing and Dolan. Call eight six six
• 38:18
  Speaker 1: eight four eight five six ninety nine right now to
• 38:20
  Speaker 1: get your copy. That's eight sixty six eight four eight
• 38:23
  Speaker 1: five six nine nine, or request it online at Legal
• 38:26
  Speaker 1: Exchainshow dot com. That's Legal exchange show dot com. The
• 38:30
  Speaker 1: proceeding is paid for in The views expressed are solely
• 38:32
  Speaker 1: those of Cushing and Dolan. Cushing and Dolan and or
• 38:34
  Speaker 1: Armstrong Advisory may contact you offering legal investment services. Cushing
• 38:37
  Speaker 1: and Dolan Armstrong Advisory do not endorse each other. And
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• 39:58
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• 40:00
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• 40:03
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• 40:05
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• 40:20
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• 40:24
  Speaker 6: eight hundred three nine three four zero zero one or
• 40:27
  Speaker 6: Armstrong Advisory dot com.
• 40:28
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 40:31
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 40:33
  Speaker 1: Armstrong guide is specific financial, legal or tax advice. Consult
• 40:36
  Speaker 1: your own financial tax into state planning advisors before making
• 40:38
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 40:41
  Speaker 1: advisory services. Your tune to the Legal Exchange with Todd Lutsky.
• 40:45
  Speaker 1: If you are a loved one needs a nursing homestay,
• 40:47
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• 40:50
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• 40:52
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• 40:55
  Speaker 1: eight five six nine nine, or visit him online at
• 40:58
  Speaker 1: Legal Exchange show dot com.
• 41:00
  Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
• 41:04
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 41:07
  Speaker 2: and I'm joined, of course by Todd Lutsky, a partner
• 41:10
  Speaker 2: with the law firm of Cushing and Dolan with a
• 41:13
  Speaker 2: master's in taxation. So I want to go down to
• 41:16
  Speaker 2: the lower level gifting.
• 41:18
  Speaker 3: Lower lower gifting.
• 41:18
  Speaker 2: It's in this guide, Todd. So you're allowed to give
• 41:22
  Speaker 2: money away every year to people late or not. I
• 41:28
  Speaker 2: like to call it the Mulligan gifts. Yes, where you
• 41:31
  Speaker 2: don't have to file any kind of paperwork of the irs.
• 41:33
  Speaker 3: How much is rat so this year it's nineteen thousand
• 41:39
  Speaker 3: per year per person.
• 41:42
  Speaker 2: So Mom, and dad could give thirty eight thousand to
• 41:44
  Speaker 2: a child.
• 41:45
  Speaker 3: To one child, and that's what the executions give. They
• 41:47
  Speaker 3: each head can give to that child. Yeah, be careful
• 41:51
  Speaker 3: when you do the things where you also then give
• 41:53
  Speaker 3: to that child spouse for that child. Spouse just gives
• 41:55
  Speaker 3: it back to the to the sun. I mean that's step,
• 41:58
  Speaker 3: multi step transactions. I worry about, right one, each of you,
• 42:01
  Speaker 3: just son or daughter every year, no filing, no reporting,
• 42:07
  Speaker 3: no taxes.
• 42:08
  Speaker 2: But it doesn't have to be a relative, right, Like
• 42:10
  Speaker 2: you can give to your son in law, you're you
• 42:12
  Speaker 2: could you could give the gift to me, yeah, yeah.
• 42:14
  Speaker 3: Or anybody listening, is my care to send money in
• 42:17
  Speaker 3: in college? They could send money into.
• 42:19
  Speaker 2: Us, right, So if you could gift to me now, yeah.
• 42:21
  Speaker 3: College isn't right, right, Yes, to anybody anytime, and you
• 42:26
  Speaker 3: don't have to report or file anything.
• 42:28
  Speaker 2: So nineteen thousand and it's.
• 42:31
  Speaker 3: Confusing though because people then say to me, because I
• 42:35
  Speaker 3: tell them lots of times, well what if you make
• 42:37
  Speaker 3: a big gift, and what happens then if you make
• 42:41
  Speaker 3: a big gift, if you make a big gift, then
• 42:45
  Speaker 3: you eat into your big exemption.
• 42:49
  Speaker 2: Okay, well hold on, let's back up. A second, So
• 42:53
  Speaker 2: we can give nineteen thousand away, right, Do you have
• 42:57
  Speaker 2: to file any kind of tax return for that? Do
• 42:59
  Speaker 2: you have to pay taxes when you give it to them?
• 43:01
  Speaker 3: Yeah? No filing, no taxes, no reporting at all.
• 43:04
  Speaker 2: Do they have to report it his income when you
• 43:06
  Speaker 2: give them money?
• 43:07
  Speaker 3: No, nothing gets reported.
• 43:09
  Speaker 2: So let's go down that path of doing a big
• 43:11
  Speaker 2: If let's say you want to give your child one
• 43:13
  Speaker 2: hundred and nineteen thousand.
• 43:15
  Speaker 3: Oh, I'm so glad you did that for the mass
• 43:16
  Speaker 3: easy math.
• 43:17
  Speaker 2: Yes, we're not going to strain your brain this morning.
• 43:19
  Speaker 2: So if you give them one hundred and nineteen thousand,
• 43:25
  Speaker 2: what do you have to do then in terms of taxes?
• 43:27
  Speaker 1: Yeah?
• 43:28
  Speaker 3: So that's where folks always say, well, wait a minute,
• 43:29
  Speaker 3: I could give that. How can you give more than
• 43:31
  Speaker 3: the nineteen Well you're allowed to give up to today,
• 43:35
  Speaker 3: thirteen million, nine to ninety.
• 43:38
  Speaker 2: I think my check would bounce if I check.
• 43:41
  Speaker 3: And by the way, that number is your federal estate
• 43:44
  Speaker 3: tax exemption. It also is your state. I mean it's
• 43:47
  Speaker 3: also your federal gift tax exemption. They mirror each other, so.
• 43:52
  Speaker 2: That means you can give away that much without.
• 43:54
  Speaker 3: Yeah, So come January one, twenty twenty six, it'll be
• 43:58
  Speaker 3: fifteen million.
• 44:00
  Speaker 2: Okay.
• 44:01
  Speaker 3: That's your new gift and estate tax exemption. So if
• 44:04
  Speaker 3: you gave away one million, or if you gave away
• 44:06
  Speaker 3: one hundred and nineteen thousand today, the nineteen you got
• 44:10
  Speaker 3: to report it. Now you've got a file who the
• 44:13
  Speaker 3: giver okay, has to file and the nineteen would be
• 44:18
  Speaker 3: the freebie, as you called it, the mulligan, the mulligan
• 44:21
  Speaker 3: that comes off for free. You still report the one nineteen,
• 44:24
  Speaker 3: but you get a deduction for the for the nineteen,
• 44:27
  Speaker 3: and the taxable gift is one hundred so that taxable gift.
• 44:32
  Speaker 3: Then you would file on the seven oh nine and
• 44:34
  Speaker 3: pay gift tax, but you won't because you'll just eat
• 44:37
  Speaker 3: into your soon to be fifteen million dollar exemption by
• 44:42
  Speaker 3: one hundred thousand.
• 44:43
  Speaker 2: So you're basically sending this form into the IRS. Does
• 44:47
  Speaker 2: it go with your tax return?
• 44:48
  Speaker 3: And I would assume it's a separate seven oh nine,
• 44:49
  Speaker 3: but it's due the same time.
• 44:51
  Speaker 2: Same time, okay. So you fill out this form for
• 44:52
  Speaker 2: the IRS that says basically, hey, IRS, when I die,
• 44:56
  Speaker 2: instead of giving me a fifteen million dollar exemption, give
• 44:59
  Speaker 2: me fifteen million minus one hundred thousand. Because I just
• 45:02
  Speaker 2: gave Billy a gift, that's.
• 45:03
  Speaker 3: Right, okay, And so that zero tax do will still
• 45:06
  Speaker 3: show up on the bottom of the return, right, But
• 45:08
  Speaker 3: you can make the gift, so.
• 45:09
  Speaker 2: You just have to notify the irs of those larger gifts.
• 45:12
  Speaker 3: Yes, you do, just have to file and notify, but
• 45:15
  Speaker 3: you ultimately won't.
• 45:16
  Speaker 2: Pay if you're in that one hundred and nineteen. Now
• 45:18
  Speaker 2: you're giving Billy one hundred and nineteen thousand, does he
• 45:20
  Speaker 2: have to pay income on that?
• 45:22
  Speaker 3: Great question? Regardless of the amount you give, Susan, There
• 45:29
  Speaker 3: is never an income tax ever for anybody on a
• 45:34
  Speaker 3: gift for the recipient period. It's not an income taxable
• 45:40
  Speaker 3: event unless you liquidate something to give it away, then
• 45:43
  Speaker 3: you got to pay capital gain SAX. But the gift
• 45:45
  Speaker 3: itself is not an income taxable event o period.
• 45:48
  Speaker 2: So I'm gonna raise the amount of gift that you
• 45:50
  Speaker 2: can give to me to help cover tuition this year.
• 45:55
  Speaker 3: So that's a little bit about gifting, folks. And that's
• 45:58
  Speaker 3: interesting because you know, this guide we're giving away does
• 46:01
  Speaker 3: mention that does talk about these kinds of gifts. So
• 46:04
  Speaker 3: this is more about the the gift and income taxation
• 46:08
  Speaker 3: on gifting. But there's also other income tax considerations when
• 46:13
  Speaker 3: you think about what you're going to gift high basis
• 46:15
  Speaker 3: assets versus low basis assets. Don't want to give away
• 46:19
  Speaker 3: low basis assets in trap capital gain? Maybe how do
• 46:23
  Speaker 3: I gift outright to kids? Put it in gifting trust
• 46:26
  Speaker 3: for kids? Do I want to, you know, give to myself,
• 46:30
  Speaker 3: give away a big chunk and still retain control over it.
• 46:33
  Speaker 3: I can certainly do that, you know, there's so many
• 46:36
  Speaker 3: things to think about when you're gifting to not do
• 46:40
  Speaker 3: it without getting the guide, and of course call your
• 46:43
  Speaker 3: state planning attorney too. Eight six six eight four eight
• 46:47
  Speaker 3: five six nine nine or Legal Exchange show dot com
• 46:51
  Speaker 3: again eight six six eight four eight five six nine
• 46:55
  Speaker 3: nine or Legal Exchange Show dot com.
• 46:58
  Speaker 2: So if I have a tax bull estate todd and
• 47:01
  Speaker 2: I'm looking at gifting as a strategy to try and
• 47:05
  Speaker 2: reduce how much the size of my estate is from
• 47:08
  Speaker 2: a tax perspective, what if I don't want to put
• 47:14
  Speaker 2: a big chunk of money in the hands of my
• 47:15
  Speaker 2: kids because they're too young. I don't trust them. Not
• 47:19
  Speaker 2: given a big gift to a twenty year old, So
• 47:22
  Speaker 2: how would I go about doing that? Can I still
• 47:24
  Speaker 2: even accomplish that if I don't want to have them
• 47:26
  Speaker 2: have control over those assets.
• 47:28
  Speaker 3: Yeah, and I think you can say that's good as
• 47:30
  Speaker 3: you speak to people with younger children. But let's expand
• 47:34
  Speaker 3: that and say what if I'm giving it to kids
• 47:37
  Speaker 3: who are fully grown, but I'm worried about future divorces,
• 47:40
  Speaker 3: I'm worried about creditors. So there's a whole ton of
• 47:43
  Speaker 3: reasons other than just age, although age is very important, Susan.
• 47:47
  Speaker 3: Other than just age, there's a whole ton of reasons
• 47:49
  Speaker 3: why I might not want to give large amounts of
• 47:52
  Speaker 3: assets outright to my children. Also, estate taxes. Maybe I
• 47:56
  Speaker 3: don't want it included in their estate when they die,
• 48:00
  Speaker 3: row as state tax free.
• 48:02
  Speaker 2: All great, what magic one do we waive to do that?
• 48:06
  Speaker 3: So this is what we like to call it out.
• 48:08
  Speaker 3: Just for lack of a better term, I'll come up
• 48:09
  Speaker 3: and say, these are what we call gifting trusts. You know, yes,
• 48:15
  Speaker 3: you know, you've heard of irrevocable life insurance trust. They're
• 48:18
  Speaker 3: similar to that. You put stuff in it that you
• 48:21
  Speaker 3: have made a completed gift of. It's really not yours anymore.
• 48:25
  Speaker 3: That's the one thing you need.
• 48:26
  Speaker 2: To have access or control anymore.
• 48:29
  Speaker 3: Right, you have some control. One, the kids don't own it,
• 48:31
  Speaker 3: the trust owns it. And two if I give, let's
• 48:36
  Speaker 3: say I give to the trust. And let's say you're
• 48:39
  Speaker 3: my spouse and your trustee. I can make you trustee okay,
• 48:46
  Speaker 3: and you can keep control, but you can't give. But
• 48:50
  Speaker 3: I can give, but I don't get to enjoy it.
• 48:53
  Speaker 3: Got it, okay? And that way it stays out of
• 48:55
  Speaker 3: my estate when I die. And that trust, even though
• 48:59
  Speaker 3: your trustee, you can control it. It can be set
• 49:01
  Speaker 3: up either so that discretionary distributions come to you, or
• 49:05
  Speaker 3: you could just have it set up, or you're trustee
• 49:07
  Speaker 3: to control it just for the kids, so then you
• 49:09
  Speaker 3: can sort of control how and when they did it.
• 49:11
  Speaker 3: That's it.
• 49:12
  Speaker 2: Yeah.
• 49:12
  Speaker 3: And the dough or can actually control removing and replacing
• 49:18
  Speaker 3: you as trustee, so there's some power there. There's some
• 49:22
  Speaker 3: limitations on who the replacement can be, but it should
• 49:25
  Speaker 3: not be somebody related or subordinate. Can start out that way,
• 49:29
  Speaker 3: but it can't once I start removing and replacing, it's
• 49:31
  Speaker 3: got to be someone not related and subordinate.
• 49:34
  Speaker 2: So I can I can gift? Is there a limit
• 49:36
  Speaker 2: to what I can gift into this trust? Each year.
• 49:38
  Speaker 3: So if I'm the giver, I can gift. Yeah, I
• 49:40
  Speaker 3: got the thirteen nine to ninety exemption of course after file.
• 49:44
  Speaker 3: But sometimes I might only want to gift the nineteen
• 49:48
  Speaker 3: but nineteen per kid per head, right and per benefit.
• 49:51
  Speaker 3: So if you've got three kids and three grandchildren all
• 49:53
  Speaker 3: beneficiaries of that trust, wow.
• 49:56
  Speaker 2: Right, nineteen times six twenty at a clip at a year.
• 50:00
  Speaker 6: Ye.
• 50:00
  Speaker 3: See, so that's nice and a little trick. We don't
• 50:03
  Speaker 3: have to get into it. But even and I don't
• 50:05
  Speaker 3: have to file a gift tax return. But if I
• 50:07
  Speaker 3: wanted to file a gift tax return and I wanted
• 50:09
  Speaker 3: you to sign consenting to split all gifts, then you
• 50:13
  Speaker 3: can gift and it's not treated as a gift by you.
• 50:15
  Speaker 3: You just agreed to split gifts with me. Now we
• 50:18
  Speaker 3: can double six times six.
• 50:20
  Speaker 1: Wow.
• 50:21
  Speaker 2: Nice.
• 50:22
  Speaker 3: We can move a lot of money. But folks, there's
• 50:23
  Speaker 3: so many things to think about when you're gifting. Don't
• 50:27
  Speaker 3: just write checks. Learn what to gift and how to gift.
• 50:31
  Speaker 3: Get the guide Making the Most of Gifting your Assets
• 50:35
  Speaker 3: eight six six eight four eight five six ninety nine
• 50:40
  Speaker 3: or Legal Exchange show dot com.
• 50:43
  Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan.
• 50:46
  Speaker 2: Thank you so much.
• 50:47
  Speaker 3: Thank you, Susan. It's always a pleasure.
• 50:49
  Speaker 2: I'm Susan Powers, a financial advice with the Armstrong Advisory Group.
• 50:53
  Speaker 2: We thank you for joining us today and we'll be
• 50:55
  Speaker 2: back again next week on the Legal Exchange with Todd Lutsky.
• 51:00
  Speaker 1: Cushing and Dolan want to help you avoid costly mistakes
• 51:02
  Speaker 1: when it comes to gifting assets to your children. Their
• 51:05
  Speaker 1: brand new guide Making the Most of Gifting Assets shares
• 51:08
  Speaker 1: crucial strategies to help you protect your legacy and your family.
• 51:11
  Speaker 1: Many people think gifting is always a good thing, but
• 51:14
  Speaker 1: if it's done the wrong way, they can create real headaches.
• 51:17
  Speaker 1: Even well intentioned gifts can cause complications if your children
• 51:20
  Speaker 1: are dealing with financial pressure or legal issues like a divorce.
• 51:23
  Speaker 1: The guide also explains how a major gift like a
• 51:26
  Speaker 1: home or vacation property could come with hidden tax consequences
• 51:29
  Speaker 1: that may impact your entire estate plan. Before you make
• 51:32
  Speaker 1: any big moves, arm yourself with the facts and this
• 51:35
  Speaker 1: new guide from Cushing and Dolan. Call eight sixty six
• 51:37
  Speaker 1: eight four eight five six ninety nine right now to
• 51:40
  Speaker 1: get your copy. That's eight sixty six eight four eight
• 51:43
  Speaker 1: five six nine nine or request it online at legal
• 51:45
  Speaker 1: exchainshow dot com. That's legal exchange show dot com. The
• 51:49
  Speaker 1: proceeding was paid for in The views expressed are solely
• 51:51
  Speaker 1: those of Cushing and Dolan. Cushing and Dolan and or
• 51:53
  Speaker 1: Armstrong Advisory may contact you offering legal investment services. Cushing
• 51:57
  Speaker 1: and Dolan Armstrong Advisory do not endorse each other and
• 51:59
  Speaker 1: are not affiliated HI.
• 52:00
  Speaker 5: This is Chuck Zauta from the Armstrong Advisory Group. Required
• 52:03
  Speaker 5: minimum distributions or rmds may seem simple, but there's a
• 52:07
  Speaker 5: lot more to them than just taking money out of
• 52:09
  Speaker 5: your IRA. Rmds impact how much you pay in taxes,
• 52:12
  Speaker 5: and they can push your income into higher brackets, and
• 52:15
  Speaker 5: if you miss one, the penalties can be steep. They
• 52:17
  Speaker 5: also affect how much your errors actually get to keep,
• 52:19
  Speaker 5: which makes timing and strategy crucial. If you have multiple accounts,
• 52:23
  Speaker 5: it's important to know which ones you can combine and
• 52:25
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