Latest / The Financial Exchange Show / Ask Todd: Estate planning beyond the grave

Transcript

Ask Todd: Estate planning beyond the grave · The Financial Exchange Show

• 0:01
  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
• 0:05
  Speaker 1: If you have an existing estate plan or in the
• 0:07
  Speaker 1: market for one, Todd Lutsky is here to answer your
• 0:09
  Speaker 1: questions and help you plan for a later life. Ask
• 0:12
  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
• 0:15
  Speaker 1: New England for more than thirty five years, helping families
• 0:19
  Speaker 1: with estate and tax planning, medicaid planning, and probate law.
• 0:22
  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
• 0:28
  Speaker 2: As promised, We're now joined by Todd Lutsky from the
• 0:30
  Speaker 2: law firm of Cushing and Dolan. The segment is Asked Todd,
• 0:33
  Speaker 2: and we've got the phone lines open so you can
• 0:36
  Speaker 2: ask Todd your estate planning questions.
• 0:38
  Speaker 3: Eight eight eight to zero five two two sixty three.
• 0:42
  Speaker 2: That is the number to call to ask Todd your
• 0:44
  Speaker 2: state planning questions.
• 0:45
  Speaker 3: Live on air.
• 0:47
  Speaker 2: Usually we can only get through about two to three
• 0:49
  Speaker 2: of these, so get calling early to make sure you
• 0:52
  Speaker 2: get a chance to ask Todd your estate planning questions.
• 0:55
  Speaker 2: That number again is eight eight eight to zero five three.
• 1:00
  Speaker 2: We got plenty of room on the phone lines right now,
• 1:02
  Speaker 2: but they do fill up, so again eight eight eight
• 1:05
  Speaker 2: two zero five two two sixty three is the number
• 1:08
  Speaker 2: to call to ask Todd your estate planning questions. Mister Lutsky,
• 1:12
  Speaker 2: how are you doing today?
• 1:14
  Speaker 4: I am doing great in yourself.
• 1:17
  Speaker 3: Uh, I'm okay.
• 1:17
  Speaker 2: My my wife asked me the other night why I
• 1:20
  Speaker 2: didn't buy her flowers for Valentine's Day.
• 1:23
  Speaker 3: Well, yeah, that's a fair question.
• 1:24
  Speaker 4: I mean in Valentine's Day and.
• 1:25
  Speaker 2: All I didn't know she was selling flowers. Oh see,
• 1:29
  Speaker 2: that's really kind of a problem for me. Anyways, Todd,
• 1:33
  Speaker 2: I want to talk a little bit about the idea
• 1:36
  Speaker 2: of estate planning beyond the grave, and you know, what
• 1:41
  Speaker 2: types of tools are available to someone who might have
• 1:45
  Speaker 2: concerns about a child's spending habits or a child, uh,
• 1:52
  Speaker 2: maybe they're concerned about one of their child's marriages and
• 1:55
  Speaker 2: want to make sure assets are protected for you know,
• 1:57
  Speaker 2: their grandkids, specifically, what kinds of tools are available if
• 2:02
  Speaker 2: someone has these kinds of concerns.
• 2:04
  Speaker 4: Yeah, and this is funny because I tell clients this
• 2:07
  Speaker 4: a lot when we're doing estate planning. I mentioned to them,
• 2:10
  Speaker 4: you know that, you know, here's what the trust is
• 2:12
  Speaker 4: going to do while you're alive. But oftentimes I think
• 2:15
  Speaker 4: as you're pointing out, Chuck, that that they can do
• 2:18
  Speaker 4: a lot more for you even after you're gone, in fact,
• 2:22
  Speaker 4: sometimes more than they.
• 2:23
  Speaker 3: Do while you're living.
• 2:24
  Speaker 4: So if you think about it, you know, a revocable trust,
• 2:27
  Speaker 4: you pretty much set it and forget it, put your
• 2:28
  Speaker 4: assets in, go about your life, and it really doesn't
• 2:31
  Speaker 4: disrupt your life at all. Yet it provides all these
• 2:34
  Speaker 4: planning opportunities and tax savings and probate savings. When you
• 2:38
  Speaker 4: die just happens. Well, when you're gone, the trust doesn't
• 2:42
  Speaker 4: have to end. And this is your point, Chuck. They
• 2:45
  Speaker 4: can go on for these family members, and oftentimes they'll
• 2:48
  Speaker 4: say just that, you know, these kids aren't too good
• 2:50
  Speaker 4: with money. They're you know they I don't want them
• 2:52
  Speaker 4: to blow through everything I get give them right away.
• 2:55
  Speaker 4: I want them to work hard. I want them to become,
• 2:58
  Speaker 4: you know, productive members of society, but use the money
• 3:01
  Speaker 4: to better their lives. Things like that, Absolutely all that
• 3:05
  Speaker 4: can be drafted into the document. And sometimes it's not
• 3:08
  Speaker 4: even just you know, just that it's not just about
• 3:13
  Speaker 4: being bad spenders. It's about future creditors, whether it's a
• 3:18
  Speaker 4: spouse's creditor that you had nothing to do with your
• 3:20
  Speaker 4: family but that's a problem if you're married. What if
• 3:22
  Speaker 4: it's a divorce that could befall them. Well, they don't
• 3:27
  Speaker 4: want to have to lose half of what you gave them.
• 3:30
  Speaker 4: So these documents are designed to make sure that they're
• 3:34
  Speaker 4: available for the children, perhaps even controlled and invested in
• 3:41
  Speaker 4: managed by the children, but not owned by the children. Therefore,
• 3:47
  Speaker 4: if they don't own them, they're not available to the
• 3:51
  Speaker 4: creditor the divorce. It's not a marital asset when they
• 3:55
  Speaker 4: get into that situation. Why because they don't own it.
• 3:58
  Speaker 3: It's really all about ownership.
• 3:59
  Speaker 4: Yeah, there's language and the trust about discretionary distributions, but
• 4:02
  Speaker 4: it's really all about ownership. And Folks, even if you're
• 4:06
  Speaker 4: not worried about the divorce, right, everything's going to be fine,
• 4:10
  Speaker 4: but you love your grandkids. I think, as you mentioned, Chuck,
• 4:14
  Speaker 4: well if this trust goes on and the children just
• 4:18
  Speaker 4: take it as they need it, well, then it could
• 4:21
  Speaker 4: grow over their lifetime and when they die because the
• 4:26
  Speaker 4: parent had already died long ago and an allocation of
• 4:30
  Speaker 4: generation skipping tax exemption had been made to the trust,
• 4:34
  Speaker 4: the growth and all these assets. When the child dies,
• 4:38
  Speaker 4: if they haven't taken it, they don't own it, and
• 4:43
  Speaker 4: therefore the government is not taxing it, and so we're
• 4:47
  Speaker 4: able to skip a whole generation of taxation and get
• 4:51
  Speaker 4: it to the grandkids tax free. So, folks, that piece
• 4:54
  Speaker 4: of it is staggering when you think about what the
• 4:57
  Speaker 4: savings might be. In fact, you can't even really calculate it.
• 5:00
  Speaker 2: Talking with Todd Lutsky from the law firm of cushingon Dolan,
• 5:03
  Speaker 2: still some room on the phone lines here at eight
• 5:05
  Speaker 2: eight eight to zero five two two six three, So
• 5:09
  Speaker 2: get your calls in so that you can speak with
• 5:11
  Speaker 2: Todd about your estate planning questions. That number is eight
• 5:15
  Speaker 2: eight eight to zero five two two six three. We're
• 5:20
  Speaker 2: gonna take a quick break here, but when we return,
• 5:23
  Speaker 2: it's going to be right to your calls with Todd.
• 5:26
  Speaker 2: That number is eight eight eight to zero five two
• 5:29
  Speaker 2: two six three. One more time, eight eight eight to
• 5:33
  Speaker 2: zero five two two sixty three your calls with Todd
• 5:36
  Speaker 2: when we return.
• 5:38
  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
• 5:41
  Speaker 1: only here on the Financial Exchange Radio Network. You're listening
• 5:47
  Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
• 5:51
  Speaker 1: Radio Network.
• 6:02
  Speaker 2: Got a little bit more room for calls so called
• 6:04
  Speaker 2: eight eight eight two zero five two two sixty three.
• 6:06
  Speaker 2: If you got a question for Todd Lutsky again, that
• 6:10
  Speaker 2: number is eight eight eight two zero five two two
• 6:14
  Speaker 2: six three. To ask your question to Todd Lotsky about
• 6:17
  Speaker 2: your estate plan, Let's go to Chris in Maine, who
• 6:20
  Speaker 2: has a question for Todd.
• 6:21
  Speaker 3: Chris, you are on with Todd Lotsky.
• 6:24
  Speaker 5: Hi dog, Hey Chris. So, my mother's about eighty four.
• 6:29
  Speaker 5: She owns two properties outright. They're both worth about half
• 6:33
  Speaker 5: a million. She also has somewhere around six hundred thousand
• 6:37
  Speaker 5: and savings. She has two surviving sons, which we inherit
• 6:42
  Speaker 5: everything right now. She has everything basically a simple fifty
• 6:47
  Speaker 5: to fifty and we sort it out with the two
• 6:51
  Speaker 5: properties being of equal value. Is there any point to
• 6:56
  Speaker 5: her leaving one property to myself and one property to
• 7:00
  Speaker 5: my other brother or do we just leave it as
• 7:03
  Speaker 5: fifty fifty. The other question is she would like to
• 7:06
  Speaker 5: give some money to the grandkids, not a large amount,
• 7:11
  Speaker 5: I guess, let's stay five to ten thousand each. Should
• 7:15
  Speaker 5: she do that now or should that be in the will?
• 7:18
  Speaker 4: Well, so there's a lot of questions, and so let's
• 7:22
  Speaker 4: just start with the very last one. I'll come back
• 7:23
  Speaker 4: to the real estate in a minute. Because the smaller
• 7:27
  Speaker 4: item is the grandkid's item only because it's dollar amount smaller.
• 7:31
  Speaker 4: I think she needs to first of all, all these
• 7:34
  Speaker 4: questions make it sound like, you know, I don't want
• 7:37
  Speaker 4: it to be your wish. It needs to be what
• 7:39
  Speaker 4: she wants to do. So if she wants to leave
• 7:42
  Speaker 4: money to grandkids, then the question is how old are
• 7:45
  Speaker 4: the grandkids, how responsible are they and do we want
• 7:48
  Speaker 4: them when we pass, to get it right away or
• 7:52
  Speaker 4: do we want to hold it in trust for them
• 7:54
  Speaker 4: so that you kids, perhaps as trustee, can you know,
• 7:58
  Speaker 4: make distributions out of the trust for them on a
• 8:01
  Speaker 4: need based situation, like you know, for health, education, welfare
• 8:06
  Speaker 4: and support right so and again, if it's only ten
• 8:09
  Speaker 4: grand and that's probably not going to change their life,
• 8:12
  Speaker 4: not worried about them blowing it, and they're old enough,
• 8:14
  Speaker 4: well then the trust can just say, you know, upon death,
• 8:17
  Speaker 4: allocate ten thousand dollars to each of them paid out. Again,
• 8:21
  Speaker 4: I think a trust is needed way more than a
• 8:23
  Speaker 4: will here, based on these things that you're talking about now.
• 8:27
  Speaker 4: Sticking with the grandkids, it might be that she says
• 8:30
  Speaker 4: you know what, for that kind of money, I want
• 8:32
  Speaker 4: to be able to see them enjoy the money. Give
• 8:36
  Speaker 4: it to them now. That way she can actually see
• 8:38
  Speaker 4: them enjoy the money. And so this is really a
• 8:42
  Speaker 4: question for her more so than for anyone else. And
• 8:47
  Speaker 4: for that amount of money, there would also not be
• 8:50
  Speaker 4: any gift tax concerns if she were to say, yes,
• 8:54
  Speaker 4: I want them to see it now and enjoy it now.
• 8:57
  Speaker 4: So again, under nineteen thousand dollars per person per year,
• 9:03
  Speaker 4: she doesn't even need to file a seven h nine
• 9:07
  Speaker 4: gift tax return. It's simply ignored. So I hope that
• 9:11
  Speaker 4: answers that part.
• 9:12
  Speaker 3: Now.
• 9:13
  Speaker 4: The bigger part is the real estate. Couple of things
• 9:17
  Speaker 4: one certainly very happy to hear she hasn't given them
• 9:21
  Speaker 4: away yet, whether it's one to you or one to
• 9:24
  Speaker 4: your sibling, giving it away during life is not a
• 9:29
  Speaker 4: good idea. Unlike the small cash gifts, I'm okay with those,
• 9:34
  Speaker 4: but giving real estate that I'm guessing she bought a
• 9:38
  Speaker 4: long time ago and could have a large built in gain.
• 9:42
  Speaker 4: Right if you give away that property to either of
• 9:45
  Speaker 4: the kids while they're living, then you're sticking them with
• 9:49
  Speaker 4: this built in gain because they're going to get something
• 9:51
  Speaker 4: called a carryover cost basis. So when they go to
• 9:56
  Speaker 4: sell it you, for that matter, Chris would go to
• 9:58
  Speaker 4: sell it, you would be stuck with that capital gain.
• 10:01
  Speaker 4: Whereas if she dies owning it, we throw it into
• 10:04
  Speaker 4: one of these trusts. Now for her, I'd put it
• 10:05
  Speaker 4: into an irrevocable trust. Sounds like there's not a real
• 10:09
  Speaker 4: big estate tax concern here. She's under two million dollars
• 10:12
  Speaker 4: based on the numbers you gave me, and I'm assuming
• 10:14
  Speaker 4: she's a mass resident. We want to just make sure
• 10:18
  Speaker 4: that they're protected from the cost of long term care
• 10:20
  Speaker 4: in the event she would you get sick prior to passing.
• 10:24
  Speaker 4: So so one, don't give them away. Two set up
• 10:26
  Speaker 4: an irrevocable trust. Throw them in there.
• 10:29
  Speaker 3: Now.
• 10:30
  Speaker 4: Once they're in this irrevocable medicaid trust, up to her
• 10:34
  Speaker 4: again in terms of what that trust says, when she dies,
• 10:37
  Speaker 4: do we want it to have a payout? Oh, divide
• 10:41
  Speaker 4: equally to the kids, pay it out. Well, if we
• 10:44
  Speaker 4: did that, there would be if when we do it
• 10:46
  Speaker 4: at Cushing it all and there's language in the trust
• 10:48
  Speaker 4: that says, listen, we're going to sell these properties unless
• 10:52
  Speaker 4: you both want them. See now, it's up to you kids,
• 10:55
  Speaker 4: right whose head is where? Who wants what? When you
• 10:58
  Speaker 4: never know geographically where it's child's going to be, and
• 11:01
  Speaker 4: so then what, Well, then you guys can decide no,
• 11:04
  Speaker 4: we don't want it, to sell it' split the money,
• 11:06
  Speaker 4: or oh wait I want this one and I don't
• 11:10
  Speaker 4: when the other sibling doesn't, Well, then the one who
• 11:12
  Speaker 4: wants it can buy out the one who doesn't at
• 11:14
  Speaker 4: fair market value. So again everybody's getting the building that
• 11:17
  Speaker 4: they want anyway, or as you guys said, you can
• 11:20
  Speaker 4: always just work it out and say, you know, I'll
• 11:23
  Speaker 4: give you this building, you take this building and go
• 11:25
  Speaker 4: on your way. I like to leave language in there
• 11:27
  Speaker 4: to allow the kids to not be stuck with real
• 11:30
  Speaker 4: estate if they don't want it, So put that language
• 11:33
  Speaker 4: in there. All that said, that's the way I would
• 11:35
  Speaker 4: probably pitch it to the client, but I would still
• 11:38
  Speaker 4: want to do what the client wants. If the client
• 11:40
  Speaker 4: comes back and says, nope, I want property X to
• 11:42
  Speaker 4: go to you and property why to go to your sibling,
• 11:45
  Speaker 4: so be it. We'll put that language in there. So
• 11:47
  Speaker 4: hopefully that helps a little sorry, long winded answer, I know,
• 11:50
  Speaker 4: but a lot actually going on in that question. And folks,
• 11:54
  Speaker 4: there's a lot going on in your estate plan as well,
• 11:58
  Speaker 4: and that's why you need to get the guide back
• 12:00
  Speaker 4: to the basics. If you've never done your planning. This
• 12:03
  Speaker 4: is basically an engagement letter that I drafted explaining a
• 12:08
  Speaker 4: recommendation to a made up client with kids and assets.
• 12:13
  Speaker 4: Everything is laid out. It goes on to explain all
• 12:17
  Speaker 4: the basic documents from powers of attorneys to healthcare proxies
• 12:20
  Speaker 4: to your will and in detail, and then it goes
• 12:23
  Speaker 4: on and explains the plan itself, which is in this case,
• 12:26
  Speaker 4: the client wanted an irrevocable trust, so it explains how
• 12:30
  Speaker 4: the irrevocable trust works, from state gift taxes, nursing, home protection, accessibility,
• 12:37
  Speaker 4: bloodline planning. It really gives you who knows. It might
• 12:40
  Speaker 4: be if you put your family dynamics into this situation.
• 12:43
  Speaker 4: You might say this is a plan for me. Who knows.
• 12:46
  Speaker 4: Either way, it's gonna give you the information you need
• 12:50
  Speaker 4: to begin your estate plan, what to think about prior
• 12:53
  Speaker 4: to going to your attorney to start the planning. So
• 12:58
  Speaker 4: get the guide back to the basics eight six six,
• 13:01
  Speaker 4: eight four, eight five six nine nine or Legal Exchange
• 13:05
  Speaker 4: Show dot Com again eight six six, eight, four, eight, five, six,
• 13:10
  Speaker 4: nine to nine or Legal Exchange show dot com TUD.
• 13:15
  Speaker 3: One other thing that I just want to.
• 13:17
  Speaker 2: Touch on we talked earlier about, you know, kind of
• 13:20
  Speaker 2: planning beyond the grave. What if someone is in a
• 13:23
  Speaker 2: second or third marriage and they have children from prior marriages,
• 13:27
  Speaker 2: how can trusts help to navigate who gets what after
• 13:31
  Speaker 2: both spouses pass?
• 13:32
  Speaker 4: Yeah, great question, because again think about Chris's call right
• 13:35
  Speaker 4: when when he was asking, you know, who should get
• 13:37
  Speaker 4: what what assets? Right, and that's just for a first marriage.
• 13:40
  Speaker 4: And look that we went through, right, So but remember
• 13:43
  Speaker 4: the trust can be designed to accommodate that. So at
• 13:48
  Speaker 4: the end of the day, if you can accommodate a
• 13:51
  Speaker 4: first marriage, you can certainly accommodate a second marriage. And again,
• 13:55
  Speaker 4: there you're really gonna need to talk to the client say, hey,
• 13:58
  Speaker 4: do you have kids from a prior marriage? And do
• 14:00
  Speaker 4: you have kids from a prior marriage, and you know,
• 14:03
  Speaker 4: are you close to all of them? Are you both
• 14:05
  Speaker 4: close to all of them? Or are you only close
• 14:07
  Speaker 4: to your own? You know, these are the kind of
• 14:09
  Speaker 4: questions that need to be sort of you know, ferreted
• 14:11
  Speaker 4: out when you're when you're drafting it and and if
• 14:15
  Speaker 4: the case is yeah, we are close to all of
• 14:17
  Speaker 4: them and we'd like to, you know, treat them equally, well,
• 14:19
  Speaker 4: then it's easy. And then you say, okay, equally to
• 14:21
  Speaker 4: all the kids. But you need to define in the
• 14:24
  Speaker 4: document that the children the word child children and issue
• 14:30
  Speaker 4: shall mean children of a you know, regardless of parentage.
• 14:36
  Speaker 4: In there, it's going to be considered their child. So
• 14:38
  Speaker 4: the child of one is the child of the other.
• 14:40
  Speaker 4: So you got to make sure you define that, and
• 14:42
  Speaker 4: then you can do it that way. Some people say,
• 14:45
  Speaker 4: you know what, I came into this marriage with extremely
• 14:49
  Speaker 4: different amounts of assets, and so maybe I brought seventy
• 14:51
  Speaker 4: percent in and the spouse brought thirty percent in. Well
• 14:55
  Speaker 4: that might be a way of splitting it, right, go,
• 14:57
  Speaker 4: I'm going to allocate seventy percent of the assets equally
• 15:00
  Speaker 4: to my kids and thirty percent equally to the children
• 15:04
  Speaker 4: from the other marriage. So there's many ways to think
• 15:07
  Speaker 4: about it. I think the message here is simply get
• 15:10
  Speaker 4: your planning done and learn how to do it.
• 15:13
  Speaker 3: Mister Lotski, thank you for joining us today. Always a pleasure.
• 15:17
  Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
• 15:21
  Speaker 1: Ask Todd with Todd Lutsky has been presented by Cushing
• 15:23
  Speaker 1: and Dolan, serving Massachusetts and New England for more than
• 15:26
  Speaker 1: thirty years, helping families with the state and tax planning,
• 15:29
  Speaker 1: Medicaid planning, and probate law. Call eight hundred and three
• 15:32
  Speaker 1: nine three four thousand and one or visit Cushingdolan dot com.
• 15:36
  Speaker 1: The views expressed in this segment are solely those of
• 15:37
  Speaker 1: Cushing and Dolan Armstrong advisor. He does not provide any
• 15:40
  Speaker 1: legal or tax advice. Please consult with your legal or
• 15:42
  Speaker 1: tax advisor on such matters. Cushing and Armstrong do not
• 15:44
  Speaker 1: endorse each other and are not affiliated.