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Estate planning for unmarried partners · 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: need assistance in any of these areas, or have a
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  Speaker 1: question about another issue that may affect your future, call
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  Speaker 1: eight six six eight four eight five six ninety nine
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  Speaker 1: to make an appointment. That's eight sixty six eight four
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  Speaker 1: Here are your hosts, Todd Lutsky and Susan Powers.
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  Speaker 2: Welcome into the Legal Exchange with Todd Lutsky. 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'm never better in you.
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  Speaker 2: I'm great.
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  Speaker 4: Thank you.
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  Speaker 2: What you have for us this week?
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  Speaker 3: Well, I've got a couple of things.
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  Speaker 5: I've got a Montana Supreme Court case which is kind
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  Speaker 5: of interesting. Basically, it's going to help us understand when
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  Speaker 5: are you married? Well, it seems like an obvious question,
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  Speaker 5: but when are you common law marriage? How have you
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  Speaker 5: been holding yourself out? What have you been doing? And
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  Speaker 5: then what happens when you die if you are common
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  Speaker 5: law married but leave everything to your kids. Sure, so
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  Speaker 5: you weren't married or were you? So lots to think
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  Speaker 5: about in this and I'm going to explain the tips
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  Speaker 5: and things to think about, obviously from a planning perspective.
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  Speaker 5: Then we head over to Illinois where we have an
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  Speaker 5: appellate court case, and basically we're going to learn about
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  Speaker 5: how do you handle debt when it's on real estate
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  Speaker 5: in estate planning. I mean, real estate is tough enough
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  Speaker 5: to deal with in a state planning. We've talked about
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  Speaker 5: it many times, how to plan for it in a trust,
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  Speaker 5: how to hold it for people, how to pay bills.
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  Speaker 5: But remember when you die, that mortgage is due in
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  Speaker 5: full and you've got to be ready to handle it.
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  Speaker 5: So we're going to talk about how to handle real
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  Speaker 5: estate in your estate plan. And most importantly, folks, it
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  Speaker 5: is the end of the month and I want to
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  Speaker 5: make sure that we when we talk about how to
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  Speaker 5: handle real estate or money or any assets in your
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  Speaker 5: estate that may be Gifting them away is not the
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  Speaker 5: right thing to do. The guide is making the most
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  Speaker 5: of gifting assets. I'm not saying not to gift, but
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  Speaker 5: I'm saying to learn. It's not always the first you
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  Speaker 5: know reaction, because there's income tax issues, there's gift tax
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  Speaker 5: issues right step up in basis issues, loss of control issues.
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  Speaker 5: Do we gift to our children outright or into an
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  Speaker 5: irrevocable gifting trust, which is way better? You know what,
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  Speaker 5: if we're making big gifts, we don't want to give
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  Speaker 5: it away and then make ourselves bankrupt. So we want
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  Speaker 5: to give it away and figure out how we can
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  Speaker 5: continue to control it as the giver and enjoy it
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  Speaker 5: as the giver. Well spousal lifetime access trust would be
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  Speaker 5: the way to go there. All of these things are
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  Speaker 5: in the guide. If you're going to gift, learn how
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  Speaker 5: to gift or not to gift. End of the Month
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  Speaker 5: Folks eight six six eight four eight five nine nine
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  Speaker 5: or Legal Exchange Show dot Com. Making the most of
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  Speaker 5: gifting assets it's going away after this eight six six
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  Speaker 5: eight four eight five six nine nine or Legal Exchange
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  Speaker 5: Show dot com.
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  Speaker 2: All right, susan common law marriage Montana. I don't think
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  Speaker 2: we've gone to Montana. I don't recall going to Montana.
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  Speaker 2: And he's in this show before.
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  Speaker 5: When we go to Montana, we go to this top
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  Speaker 5: supreme court. We don't just mess around.
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  Speaker 6: Go home.
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  Speaker 5: So Carol and Doug began a relationship in seven when
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  Speaker 5: they were living in California, while in two thousand and
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  Speaker 5: eight they moved to Montana and they began living together
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  Speaker 5: full time. They never married. Twenty eighteen, Carol died unexpectedly
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  Speaker 5: left almost the entire estate to her son sons Alan Jeff,
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  Speaker 5: let's call him aj Alan Jeff. Doug wasn't happy about that, Yeah, Doug,
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  Speaker 5: Doug said, wait a minute, he claimed the elective share
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  Speaker 5: because hey, we were common law married. He said, so
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  Speaker 5: you can't disinherit your spouse. Remember we talked about forced share. Yeah, yeah,
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  Speaker 5: well I don't know that it's exactly if the time
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  Speaker 5: makes the difference.
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  Speaker 3: But let's keep looking.
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  Speaker 2: So he's everything sorted in my mind over here for
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  Speaker 2: the soap opera.
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  Speaker 5: Yeah, he's unhappy about that, so he claims this forced share. Well,
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  Speaker 5: in twenty twenty four, Wow, they have a bench trial
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  Speaker 5: finally to determine declaratory relief under this was he married
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  Speaker 5: or not? Wow?
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  Speaker 2: That was six years later after she died.
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  Speaker 3: No I know.
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  Speaker 5: Testimony was given. Doug said that they agreed to be spouses,
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  Speaker 5: but not Mary because they both have been through bad divorces.
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  Speaker 5: Doug also gave Carol jewelry and recognition of the commitment.
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  Speaker 5: Carol's friends, including an attorney, testified that they all viewed
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  Speaker 5: them as married. Well, AJ the kid said Carol didn't
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  Speaker 5: really share that view at all. In fact, she filed
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  Speaker 5: on her tax return as single, and she told her
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  Speaker 5: medical records all indicated she was single. Well do you well, Aj,
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  Speaker 5: they really are single. You can't. There's not a box
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  Speaker 5: for common law marriage to check. So I'm not sure
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  Speaker 5: that's a super strong argument. And the district court agreed
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  Speaker 5: that wasn't a super strong argument. They ruled that they
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  Speaker 5: were common law married and Doug gets elective share relief. Well,
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  Speaker 5: as you might imagine, that appeal came and they went
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  Speaker 5: all the way up to the Supreme Court. Both the
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  Speaker 5: appellate Court and the Supreme Court affirmed, stating there's a
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  Speaker 5: three part test. One parties have to be competent to marry.
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  Speaker 5: There was no issue here of competency. Two parties mutually
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  Speaker 5: consented to the relationship. Yeah, no issue of noncompetency, confirming
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  Speaker 5: the marriage by cohabitation and public Rebut is number three? Well,
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  Speaker 5: they acted like they were married. They referred to each
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  Speaker 5: other as husband and wife, they were viewed in the
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  Speaker 5: community by their friends as being married, and they lived again.
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  Speaker 5: Pretty sure they're common law marriage. So Doug gets his
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  Speaker 5: elective share. Well, you know, I don't really care who
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  Speaker 5: wins or loses in this, but I think that's the
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  Speaker 5: right result.
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  Speaker 3: But folks, it's okay to plan.
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  Speaker 2: It's my lesson, right, especially if you have any kind
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  Speaker 2: I mean, think about how long this took six years
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  Speaker 2: after she died.
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  Speaker 3: But even that, Susan.
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  Speaker 5: My point is it's okay to plan if you're not
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  Speaker 5: married but have a significant other.
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  Speaker 2: I think it's more important.
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  Speaker 5: More point, it's almost like a second marriage.
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  Speaker 6: Yeah.
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  Speaker 5: So you know, we say how important it is to
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  Speaker 5: marry as a second marriage, Well, it's equally as important
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  Speaker 5: to marry if you're not actually I'm sorry to plan, yes,
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  Speaker 5: if you're not actually married, right, right, If you're not
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  Speaker 5: actually married, you need to plan right.
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  Speaker 2: Because not every state is a common law state, so true,
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  Speaker 2: they could be out.
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  Speaker 5: So if you really loved each other here you would
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  Speaker 5: think that you know what, I'm going to provide and
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  Speaker 5: take care of each other, you know, after death. Will
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  Speaker 5: put this so we have this ability, and I say
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  Speaker 5: it's just okay to plan for your significant other and
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  Speaker 5: then the kids can take what's like later. Now what
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  Speaker 5: about from a tax perspective, Well, yeah, you're not married,
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  Speaker 5: so you know, but you can get all of the
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  Speaker 5: same benefits by doing two single person trusts if you
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  Speaker 5: really wanted to write, let's put this way. If the
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  Speaker 5: amount in each trust, and when I'm talking about Massachusetts
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  Speaker 5: for a moment, is under two million. And by the way,
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  Speaker 5: in Montana, if you live in a state with no
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  Speaker 5: estate tax, it's even better. But I'll just bring it
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  Speaker 5: back to Massachusetts for a minute. Even if you both
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  Speaker 5: did two single trusts and you each had two million
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  Speaker 5: or less in each of your trusts, then on the
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  Speaker 5: first death you die, you're under two million. There's no
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  Speaker 5: estate tax, duo, and the assets can be held for
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  Speaker 5: the benefit of your significant other good and later when
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  Speaker 5: the significant other dies, it won't be included in that
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  Speaker 5: person's estate. Again, you don't get a marital deduction. So
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  Speaker 5: if the amount in the first spouse to die's trust
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  Speaker 5: is more than two million, even though it's held for
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  Speaker 5: the significant other, if you're effectively not married, yeah, you're
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  Speaker 5: not going to get a marrit of de duct and
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  Speaker 5: there'll be some tax due on the first death.
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  Speaker 2: So what Yeah, a lot of people when they're doing
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  Speaker 2: that kind of planning, though they're not as concerned about taxes,
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  Speaker 2: their primary concern that drove them to meet and plan
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  Speaker 2: is taking care of their partner because they know they
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  Speaker 2: have no standing.
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  Speaker 5: Typically in this case, maybe these are his kids, not hers, right,
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  Speaker 5: And so now you've got to say, I'm coming to you,
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  Speaker 5: as you said, Susan, not just to take care of
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  Speaker 5: each other, but what do I do? And I want
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  Speaker 5: to make sure that that my significant other doesn't deplete
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  Speaker 5: my assets after I'm gone, and provide for my children,
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  Speaker 5: which can also be done. And remember when I say
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  Speaker 5: do you care for each other? Remember in this case,
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  Speaker 5: and I'll just assume it's a second marriage for now,
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  Speaker 5: what's going to happen is.
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  Speaker 3: A forced share. Well forced if you don't get.
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  Speaker 5: That much under the fourth share statue, you could actually
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  Speaker 5: get more if she might have been more.
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  Speaker 3: Lucky if she died without a will.
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  Speaker 5: If she died without a will and they went to
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  Speaker 5: the intestate succession statue because they said, you're common law married,
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  Speaker 5: well then at least even if it's a second marriage,
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  Speaker 5: you're going to get half and the kids are going
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  Speaker 5: to get half, you know. And if it was first marriage,
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  Speaker 5: then you'd get it all. I mean, depending on your state,
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  Speaker 5: each state intestate succession statue could be a little different.
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  Speaker 5: I'm speaking more about Massachusetts, but similar idea.
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  Speaker 2: But if for share, what is that typically percentage wise
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  Speaker 2: like a third.
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  Speaker 5: Or a quarter, could be every bit of that or less.
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  Speaker 5: Sometimes you only get a life of state interest in
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  Speaker 5: the real estate. You don't even get the right. You
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  Speaker 5: just get a right to live there. You don't get it.
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  Speaker 2: Not how you'd want things to be, probably definitely not.
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  Speaker 3: Folks, you do the planning, you put together a trust.
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  Speaker 5: You could simply put in the language of the trust
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  Speaker 5: something like hold the house in trust for the significant other.
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  Speaker 5: You know, have that person pay the bills, the maintenance,
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  Speaker 5: the upkeep. If they move out or don't pay a bill, well,
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  Speaker 5: then you could have the house. You know, transferred to
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  Speaker 5: the kids, or maybe they died, or they decided they
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  Speaker 5: don't want to live there. Folks, planning so much better
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  Speaker 5: than this than this little disaster. But again, planning doesn't
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  Speaker 5: always include gifting. I'm not going to tell you to
• 10:09
  Speaker 5: make a gift, but learn whether or not gifting is
• 10:12
  Speaker 5: right for you and how to do it. Get the
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  Speaker 5: guide eight sixty six eight four eight five six nine
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  Speaker 5: to nine or Legal Exchange show dot com. It is
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  Speaker 5: the end of the month.
• 10:23
  Speaker 2: You've been listening to Todd Lutski, a partner with the
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  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 10:29
  Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
• 10:33
  Speaker 2: more to come when we return to the Legal Exchange
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  Speaker 2: with Todd Lutsky.
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  Speaker 2: Welcome back. Into the legal exchange with Todd Letsky. I'm
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  Speaker 2: Susan Powers, a financial advisor with the Armstrong Ofsory Group,
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  Speaker 2: and I'm joined by Todd Leutsky, a partner with a
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  Speaker 2: law firm of Cushing and Dolan with a master's in taxation.
• 14:07
  Speaker 2: Were where are we headed now?
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  Speaker 6: Todd?
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  Speaker 5: How about Illinois?
• 14:11
  Speaker 2: Illinois?
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  Speaker 5: Exciting? Montana was way more exciting, But this one is
• 14:15
  Speaker 5: exciting too, because you know, we need to figure out
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  Speaker 5: how to deal with real estate, especially.
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  Speaker 3: Not only from it.
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  Speaker 5: Yeah, not only just from an estate planning standpoint. You're right, Susan,
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  Speaker 5: but what about you know, if it's encumbered, is there
• 14:28
  Speaker 5: dead on it?
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  Speaker 3: You know?
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  Speaker 5: Well, here's what happened. The facts are Ed created a trust,
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  Speaker 5: his wife, Deborah, and two sons, Kevin and Brent, were beneficiaries.
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  Speaker 5: Now I pause there because I'm not sure if this
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  Speaker 5: is a second marriage or not, because it says, you know,
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  Speaker 5: his two sons, So I'm anyways, let's just assume married
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  Speaker 5: two sons. The trust owned real estate in Saint Clair County.
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  Speaker 5: Well Ed and Deborah also owned this property called Renchalier
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  Speaker 5: Station Road in Saint Clair County, but they own that
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  Speaker 5: property jointly the trust owned the other property in Saint
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  Speaker 5: Clair County. Well Ed took out a mortgage and a
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  Speaker 5: promissory note for eight hundred and sixty two thousand dollars
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  Speaker 5: secured by Renchealier Station property and the trust property. Okay,
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  Speaker 5: life goes On September twenty twenty three, Ed dies, and
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  Speaker 5: of course the bank notifies Debora that she's in default
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  Speaker 5: pay and we're going to foreclose. Well Deborah as successor
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  Speaker 5: trustee on the trust. It's not uncommon. It seems normal
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  Speaker 5: petitions the court to determine if she can use any
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  Speaker 5: of the trust assets to pay off the note. By
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  Speaker 5: the way, the note was on the Renchealier Station Road property. Well,
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  Speaker 5: they petitioned the court so well, Kevin and Brent. The
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  Speaker 5: kids object. So this is why I'm thinking it's a
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  Speaker 5: second marriage. I'm thinking if this is Mom, they're probably not.
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  Speaker 3: So Deborah.
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  Speaker 5: They say, wait a minute, we're going to object to that.
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  Speaker 5: We don't want you taken the trust property to pay
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  Speaker 5: off this debt. Deborah is the sole owner of the
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  Speaker 5: property and therefore responsible for the debt. Remember that was
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  Speaker 5: jointly owned. The court agreed, said, Deborah, you're the sole
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  Speaker 5: owner of the property as that property passed to you
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  Speaker 5: by joint tendancy with the right of survivorship outside of probate,
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  Speaker 5: and did so subject to the debt. And Ed never
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  Speaker 5: intended the trust assets to assume the responsibility of paying
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  Speaker 5: for the debt, even though it was secured by the bank.
• 16:50
  Speaker 5: Probably just threw that on for security. Well, they didn't
• 16:55
  Speaker 5: like that, so they appealed. The appellate court affirmed dating
• 17:00
  Speaker 5: that if Ed intended the trust assets to be used
• 17:06
  Speaker 5: to pay the debt, he could have authorized the use
• 17:10
  Speaker 5: of the trust assets to pay off the debt, write
• 17:12
  Speaker 5: it right inside the trust use the money to pay
• 17:16
  Speaker 5: the debt.
• 17:17
  Speaker 3: He didn't.
• 17:18
  Speaker 5: Therefore, the jointly owned property passed to Deborah with the debt,
• 17:25
  Speaker 5: which is normal.
• 17:26
  Speaker 3: Right.
• 17:26
  Speaker 5: So deb you want to stay living in Renchalle or
• 17:30
  Speaker 5: Station Road in Saint Clair, you get to pay the debt,
• 17:36
  Speaker 5: go refinance or whatever you need to do in your name.
• 17:40
  Speaker 5: I assume they'll let you do that. There's probably plenty
• 17:42
  Speaker 5: of equity. Well, I don't know if that's the right
• 17:46
  Speaker 5: result or not the right result. I think it probably
• 17:48
  Speaker 5: is the right result. And again, it all comes down
• 17:51
  Speaker 5: to drafting. It all comes down to planning. It all
• 17:53
  Speaker 5: comes down to thinking about what you do when you're
• 17:55
  Speaker 5: planning for your assets. Some of that brings me back
• 17:59
  Speaker 5: to the guide, folks, which is giving away this real
• 18:02
  Speaker 5: estate would not have been the best option. Now, when
• 18:04
  Speaker 5: you're thinking about gifting, think about what kind of assets
• 18:08
  Speaker 5: to gift high basis, low basis assets. There's control issues
• 18:12
  Speaker 5: when you gift. There's estate tax issues to consider, federal
• 18:16
  Speaker 5: and state. You know, do I want to give things
• 18:18
  Speaker 5: away to my kids outright or put it in a trust?
• 18:21
  Speaker 5: Probably a trust if I want to make bigger gifts
• 18:24
  Speaker 5: and I want to keep control of what I give
• 18:26
  Speaker 5: away because I'm not going to give it away without
• 18:28
  Speaker 5: controlling it. How do I do that? Spousal lifetime access trusts, Folks.
• 18:33
  Speaker 5: So many ways to think about gifting or maybe not gifting,
• 18:37
  Speaker 5: depending on your situation. It's the end of the month, folks,
• 18:41
  Speaker 5: get this guide Making the most of Gifting Assets eight
• 18:45
  Speaker 5: six six eight four eight five six nine nine or
• 18:49
  Speaker 5: Legal Exchange Show dot com again end of the month
• 18:53
  Speaker 5: eight six six eight four eight five six nine nine
• 18:57
  Speaker 5: or Legal Exchange Show dot com. What can we learn
• 19:01
  Speaker 5: from this?
• 19:01
  Speaker 2: Yeah, a lot of people have mortgages, but they want
• 19:04
  Speaker 2: to do estate planning.
• 19:05
  Speaker 5: Absolutely right, and you should and that is not a deterrent. Please,
• 19:10
  Speaker 5: that's less than number one. Well, folks, there's always a
• 19:14
  Speaker 5: need to remember when you're leaving encumbered property to a
• 19:18
  Speaker 5: family member that the note will be due on death.
• 19:21
  Speaker 5: So drafting again, how many times have we spoken about drafting?
• 19:26
  Speaker 5: Drafting language is important. So in your trust, perhaps you
• 19:29
  Speaker 5: should always important to provide a way to pay it
• 19:32
  Speaker 5: off if that's what you want it, you know, if
• 19:34
  Speaker 5: you want that property kept. So example, you could say,
• 19:38
  Speaker 5: what I want to leave this one particular property to
• 19:41
  Speaker 5: my one child so that I know that child has
• 19:43
  Speaker 5: a place to live. That's not uncommon. Maybe the other
• 19:46
  Speaker 5: kids are fine, they all have houses. You could say
• 19:49
  Speaker 5: that the debt on the property will be paid off
• 19:52
  Speaker 5: out of trust assets.
• 19:54
  Speaker 3: Very simple that way.
• 19:55
  Speaker 5: I know, let's say it's my daughter, she will she
• 19:57
  Speaker 5: will have a place to live.
• 19:59
  Speaker 3: Yep.
• 20:00
  Speaker 5: But you could also then say, well, the amount of
• 20:02
  Speaker 5: the debt could be treated as an advancement. So what
• 20:05
  Speaker 5: I want to do then is, you know, give the
• 20:07
  Speaker 5: house there, but allocate that amount of the debt to
• 20:11
  Speaker 5: the other kids to try and equalize it. And if
• 20:14
  Speaker 5: that's not enough, maybe You could try to equalize by
• 20:16
  Speaker 5: giving the kids other money equal to the fair market
• 20:19
  Speaker 5: value of the house that was given, or give them
• 20:22
  Speaker 5: other property something.
• 20:24
  Speaker 3: But you know what, it's okay if you can't.
• 20:25
  Speaker 5: Equalize, if you want that person to have that house,
• 20:29
  Speaker 5: draft for it and so that it can be done
• 20:32
  Speaker 5: and your wish will be accomplished. Because here this mortgage
• 20:35
  Speaker 5: caused all kinds of problems. You could also state that
• 20:39
  Speaker 5: a child could just you know, have to go out
• 20:40
  Speaker 5: and refinance it. You're going to get the house, but
• 20:43
  Speaker 5: you got to go refinance it, and you know that's
• 20:47
  Speaker 5: that's what you do.
• 20:47
  Speaker 3: If you want the house. Now.
• 20:49
  Speaker 5: Folks here, remember it was a second marriage, or I
• 20:52
  Speaker 5: think it was a second marriage. All the more reason
• 20:56
  Speaker 5: to be doing plan. Never mind the fact that we've
• 20:59
  Speaker 5: got a plan for real estate anyway, but this really
• 21:02
  Speaker 5: makes you want to plan. So here you could have
• 21:05
  Speaker 5: simply given the house to the not to the well.
• 21:07
  Speaker 5: You could have given the house, you know, to the wife,
• 21:11
  Speaker 5: and then money to cover the mortgage and allow the
• 21:14
  Speaker 5: kids to get the other property right away. You could say,
• 21:17
  Speaker 5: here's the house, or here's here's the house and some money,
• 21:21
  Speaker 5: and then I give the kids everything else they don't
• 21:23
  Speaker 5: have to wait. Or you can hold the property and
• 21:25
  Speaker 5: trust and say, you know what, I'm going to allow
• 21:28
  Speaker 5: my wife to live in the house, but I wanted
• 21:32
  Speaker 5: to pay all the bills, maintenance upkeep, which is not
• 21:35
  Speaker 5: sure you've got a place to live and you just
• 21:36
  Speaker 5: got to maintain it. That's a pretty nice deal.
• 21:39
  Speaker 3: I take it. I take it.
• 21:41
  Speaker 5: You know.
• 21:42
  Speaker 3: Uh, you know.
• 21:43
  Speaker 5: The point is drafting the trust when you're dealing with
• 21:47
  Speaker 5: real estate is super important to make sure that it
• 21:50
  Speaker 5: goes the way you want and the debt is handled
• 21:52
  Speaker 5: the way you want and the people get it that
• 21:54
  Speaker 5: you want to get it. Because then after the wife
• 21:57
  Speaker 5: either moves or or pays all the bill, or decides
• 21:59
  Speaker 5: not to live there, moves out, or fails to pay
• 22:02
  Speaker 5: a bill, well, then you can have the property revert
• 22:05
  Speaker 5: back to the children, which they're the ones that we're
• 22:09
  Speaker 5: doing the objecting here anyway, right, So that's always always important.
• 22:13
  Speaker 5: Now there's other things you can do, folks. There's so
• 22:15
  Speaker 5: many options with real estate. But you know one of
• 22:18
  Speaker 5: them is you might say, you know, if I don't
• 22:20
  Speaker 5: have a significant other, how do I treat real estate
• 22:23
  Speaker 5: encumbered or not? I can always put the rite of
• 22:26
  Speaker 5: first refusal for a child, or I could say the
• 22:28
  Speaker 5: property is sold unless all the kids want it, and
• 22:31
  Speaker 5: then the ones who don't want it can buy out
• 22:34
  Speaker 5: the interest of the ones who do want it. Very important.
• 22:38
  Speaker 5: And now a last comment about a mortgage and transferring property,
• 22:44
  Speaker 5: because we said in the beginning of the segment that
• 22:46
  Speaker 5: we don't want people to think that having a mortgage
• 22:50
  Speaker 5: is a turren. Yep, it's not. If you take your
• 22:55
  Speaker 5: house and you put it into a revocable trust, it
• 22:57
  Speaker 5: is not a triggering event for the du oneslase period.
• 23:01
  Speaker 5: Don't have to tell the bank put it into an
• 23:03
  Speaker 5: irrevocable medicaid trust. We're going to reserve a life estate
• 23:06
  Speaker 5: to prevent them from triggering the duon sale clause.
• 23:09
  Speaker 3: As long as you reserve that life estate, it also.
• 23:12
  Speaker 5: Won't trigger the du on sale clause with irrevocable trust.
• 23:15
  Speaker 5: So planning with encumbered property not a deterrent. Still do it. However,
• 23:21
  Speaker 5: gifting may or may not be right for you, so
• 23:24
  Speaker 5: please get this guide. It's the end of the month.
• 23:26
  Speaker 5: Don't make gifts without learning the tax and control implications
• 23:30
  Speaker 5: eight six six eight four eight five six nine nine
• 23:34
  Speaker 5: or Legal Exchange show dot Com.
• 23:36
  Speaker 2: You've been listening to Todd Letski, a partner with the
• 23:38
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 23:42
  Speaker 2: financial advisor with the Armstrong Advisory Group. Todd will be
• 23:45
  Speaker 2: answering your listener questions when we return to the legal
• 23:48
  Speaker 2: exchange with Todd Letsky.
• 23:50
  Speaker 1: Cushing and Dolan want to help you avoid costly mistakes
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  Speaker 1: when it comes to gifting assets to your children. They're
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• 24:40
  Speaker 1: The proceeding was paid for in The views expressed are
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  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
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  Speaker 1: or Armstrong Advisory may contact you offering legal investment services.
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  Speaker 8: This is chucks outa from the Armstrong Advisory Group. Required
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  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
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  Speaker 1: You're listening to the Legal Exchange and it's time for
• 27:26
  Speaker 1: Ask Todd, the segment where Tod will answer your questions
• 27:29
  Speaker 1: about anything and everything that's included in the estate planning process.
• 27:33
  Speaker 1: Once again, here's Todd Lutsky and Susan Powers.
• 27:39
  Speaker 2: Welcome back, tob We have a few questions from listeners.
• 27:42
  Speaker 2: First question comes from Robert in Danver's Mass and Robert writes,
• 27:47
  Speaker 2: my father has been married to his second wife for
• 27:49
  Speaker 2: over twenty years. She recently went into the nursing home,
• 27:53
  Speaker 2: and the home they live in was hers originally, but
• 27:55
  Speaker 2: it is in both of their names now. Her adult
• 27:58
  Speaker 2: children are trying to get my dad to agree to
• 28:00
  Speaker 2: move out so they can sell the house, because they
• 28:03
  Speaker 2: claim the house has been willed to them even though
• 28:06
  Speaker 2: she is still alive. Does he have to vacate the
• 28:09
  Speaker 2: house or is he entitled to stay there? Could they
• 28:12
  Speaker 2: legally force him to leave? How about after she dies
• 28:15
  Speaker 2: she's still alive.
• 28:16
  Speaker 5: Susan, I'm going to need a summary here. This is
• 28:19
  Speaker 5: not easy to.
• 28:19
  Speaker 2: Fall trying to kick out stepdad.
• 28:21
  Speaker 5: So we've got a married couple. Yeah, period, they're married.
• 28:24
  Speaker 5: That's first and foremost. They've been married for twenty years.
• 28:27
  Speaker 5: The house is owned now jointly.
• 28:31
  Speaker 2: So it doesn't matter that she used to own it alone.
• 28:34
  Speaker 5: I don't think any of that makes any difference anymore.
• 28:37
  Speaker 5: So I'm just trying to cut through those sure, you know,
• 28:39
  Speaker 5: sort of the cut to the chase here. So this
• 28:42
  Speaker 5: is owned jointly. They're married, and one is going into
• 28:46
  Speaker 5: the nursing he's in the nursing home. Now, that keeps
• 28:48
  Speaker 5: it nice and simple for me. She's in the nursing home.
• 28:51
  Speaker 5: And I would imagine they're going to try to apply
• 28:54
  Speaker 5: for medicaid. I know that's not the question here, but
• 28:56
  Speaker 5: who's paying for the nursing home. But let's assume the
• 28:59
  Speaker 5: house is going to be protect So first and foremost.
• 29:01
  Speaker 2: It'll be because they're married and he's living there right.
• 29:04
  Speaker 5: Exactly, and that's why all that matters. And these other
• 29:07
  Speaker 5: kids need to know that that if this was not
• 29:11
  Speaker 5: this way, or they weren't married and that was in
• 29:15
  Speaker 5: her name alone, that house might be taken. There might
• 29:17
  Speaker 5: be no house to fight over. Yeah, So I think
• 29:20
  Speaker 5: you sometimes have to bring the family down to earth
• 29:24
  Speaker 5: and say, let's work with the facts that we have,
• 29:28
  Speaker 5: because here's where it would be if you didn't get married,
• 29:33
  Speaker 5: if they weren't married and it was only to her name,
• 29:35
  Speaker 5: it'd be a lot harder to save this house. Maybe
• 29:38
  Speaker 5: not impossible, but not a good a good place, because
• 29:42
  Speaker 5: even if it was in her name alone and they
• 29:44
  Speaker 5: weren't married. Best they could hope for is the state
• 29:47
  Speaker 5: would put a lien on it. They'd let her get
• 29:49
  Speaker 5: on Medicaid, but there'd be a leen and now the
• 29:51
  Speaker 5: kids are going to have to pay off Allen. So
• 29:54
  Speaker 5: that's not helpful. Now since they're married, don't transfer the house. Well,
• 30:00
  Speaker 5: you could transfer the house all to the step dad,
• 30:03
  Speaker 5: but again, if you want to do that, that will
• 30:05
  Speaker 5: guarantee protection from the nursing home and no lean no lean,
• 30:10
  Speaker 5: and then maybe work with your stepdad to put together
• 30:13
  Speaker 5: an estate plan as to you know, now I might
• 30:16
  Speaker 5: want to put this house into an irrevocable trust. Since
• 30:19
  Speaker 5: we have a red flag, we've learned that somebody could
• 30:22
  Speaker 5: go to a nursing home and take the house. Maybe
• 30:25
  Speaker 5: now we put together an irrevocable trust estate plan. This
• 30:30
  Speaker 5: property goes into this trust, we get a five year
• 30:33
  Speaker 5: clock running, We protect it for the family, and the
• 30:36
  Speaker 5: family can include all the kids or step kids or
• 30:41
  Speaker 5: whatever they want. But I would think, you know, rather
• 30:44
  Speaker 5: than stirring the pot, maybe a family meeting might go
• 30:50
  Speaker 5: a long way.
• 30:51
  Speaker 2: And if they owned it, you know, let's say they
• 30:53
  Speaker 2: owned it as tenants in common. If they wanted to
• 30:57
  Speaker 2: sell it, if somehow they had the ability to sell,
• 31:00
  Speaker 2: or if the stepdad was willing to sell. Now half
• 31:04
  Speaker 2: of a house worth of dollars is going to be
• 31:07
  Speaker 2: in the hands of Mom who's in the nursing home.
• 31:10
  Speaker 5: That's right now, you have to try to figure out
• 31:12
  Speaker 5: how to protect the money. Money's a lot harder to
• 31:14
  Speaker 5: protect sometimes than a house because a house is a
• 31:17
  Speaker 5: special asset in the medicaid world.
• 31:19
  Speaker 2: And if they keep poking stepdad, if they own it jointly,
• 31:24
  Speaker 2: it's going to go to him alone when she passes.
• 31:26
  Speaker 5: That's why I think a family meeting, sit down, lay
• 31:30
  Speaker 5: out the groundwork, lay out the rules here.
• 31:33
  Speaker 3: But can they force him to sell?
• 31:35
  Speaker 5: No? No, I mean he's a joint owner with Mom.
• 31:39
  Speaker 5: You can't force him to sell. But again, anytime you
• 31:42
  Speaker 5: use the word force with a state planning when people
• 31:44
  Speaker 5: are alive doesn't end well.
• 31:46
  Speaker 2: For the people.
• 31:49
  Speaker 5: So keep that in mind, folks. And when you're thinking
• 31:51
  Speaker 5: about gifting, instead of poking, think about getting this guide.
• 31:55
  Speaker 5: It's the end of the month. I just don't want
• 31:57
  Speaker 5: you to make mistakes for gifting. There's tax considerations on
• 32:02
  Speaker 5: the estate side, on the income side, you know, with
• 32:05
  Speaker 5: step up in basis? Do we want to give away
• 32:07
  Speaker 5: high basis assets, low basis assets? Do we want to
• 32:10
  Speaker 5: give it outright to kids? No trust? Do we want
• 32:13
  Speaker 5: to make big gifts? And if we do, we want
• 32:15
  Speaker 5: to make sure we keep control over what we give
• 32:17
  Speaker 5: away and enjoy it. Maybe spousal lifetime access trust pop up, folks,
• 32:22
  Speaker 5: so many things to think about before you gift. Call
• 32:26
  Speaker 5: and get the guide. It's the end of the month
• 32:29
  Speaker 5: eight six six eight four eight five six nine nine
• 32:33
  Speaker 5: or Legal Exchange show dot com Making the most of
• 32:36
  Speaker 5: gifting assets eight six six eight four eight five six
• 32:40
  Speaker 5: nine nine or Legal Exchange Show dot com todd.
• 32:44
  Speaker 2: Our last question comes from Joe and Wooster Mass and
• 32:47
  Speaker 2: Joe Wrights. Can a state pension be protected from medicaid planning?
• 32:52
  Speaker 3: Also?
• 32:52
  Speaker 2: Can IRA funds be protected without having to withdraw all
• 32:56
  Speaker 2: the money from the accounts and pay the taxes. I'd
• 32:59
  Speaker 2: like to protect my pension and four hundred thousand dollars
• 33:02
  Speaker 2: IRA for my wife if I go into a nursing home. Wow,
• 33:07
  Speaker 2: I don't know what other assets are involved here, These
• 33:10
  Speaker 2: two IRA and income.
• 33:12
  Speaker 5: These two are certainly important assets.
• 33:15
  Speaker 3: Well.
• 33:15
  Speaker 5: First of all, I think we should help people understand
• 33:18
  Speaker 5: that a pension is not an asset, it's income. The
• 33:22
  Speaker 5: house is an asset. An ira is an asset. Although
• 33:28
  Speaker 5: the IRA does generate income, it's also an asset. Okay,
• 33:33
  Speaker 5: let's take the pension first and foremost. Is there an
• 33:37
  Speaker 5: actual way to protect a pension. No, But does that
• 33:42
  Speaker 5: mean we're going to lose the pension? Not always. This
• 33:47
  Speaker 5: is simply a function of the facts of every case. Again,
• 33:50
  Speaker 5: nothing you can do to actually protect that. It's just
• 33:53
  Speaker 5: going to be based on the facts and circumstances of
• 33:56
  Speaker 5: the case. For example, yeah, explain that. Let's assume that
• 34:01
  Speaker 5: this is who's the wife's Joe has the pension. Joe
• 34:05
  Speaker 5: has the pension. Let's say wife is at home, and
• 34:07
  Speaker 5: let's say she gets one thousand dollars a month in
• 34:11
  Speaker 5: social security. Okay, Well, when you get sick and go
• 34:14
  Speaker 5: in the nursing home and it keeps changing every month,
• 34:17
  Speaker 5: I think it's somewhere around twenty five hundred dollars a
• 34:20
  Speaker 5: month that the spouse who's at home the community spouse
• 34:26
  Speaker 5: at home is allowed to keep. I'm just going to
• 34:29
  Speaker 5: use that as a rough number. Now, folks, it might
• 34:31
  Speaker 5: be a little higher than that. It does change every November.
• 34:36
  Speaker 5: So if she now, just for easy numbers, she is
• 34:40
  Speaker 5: fifteen hundred dollars a month short of something called a
• 34:45
  Speaker 5: minimum monthly maintenance needs allowance. Okay, heck is that right?
• 34:49
  Speaker 5: When you get sick and go in a nursing home
• 34:51
  Speaker 5: as a married couple, they allow the healthy spouse to
• 34:54
  Speaker 5: keep approximately one hundred and fifty seven thousand dollars of
• 34:59
  Speaker 5: money and make sure the healthy spouse has at least
• 35:04
  Speaker 5: twenty five hundred dollars a month of income coming in.
• 35:08
  Speaker 2: Okay, So if she has one thousand dollars and let's
• 35:11
  Speaker 2: say his pension is, you know, three thousand dollars a month,
• 35:16
  Speaker 2: so she would get to reach into his pension and
• 35:19
  Speaker 2: take fifteen hundred to make her a hole.
• 35:21
  Speaker 5: Exactly right, Susan. You explain that spot on, and that's
• 35:24
  Speaker 5: what matters here. So when I say facts some circumstances, No,
• 35:28
  Speaker 5: I can't just protect income, but I can, if the
• 35:33
  Speaker 5: income is needed to increase the person's minimum monthly maintenance
• 35:39
  Speaker 5: needs allow them.
• 35:40
  Speaker 2: And the flip side of that coin Todd is, if
• 35:43
  Speaker 2: the wife were in the nursing home, Joe wouldn't have
• 35:46
  Speaker 2: to give up any of his pension. His pension would
• 35:49
  Speaker 2: be completely safe. Right, it doesn't matter how much he has.
• 35:52
  Speaker 5: Community spouse could keep all their income, so he could
• 35:54
  Speaker 5: make five thousand a month income, pension, social Security whatever. Yeah,
• 35:58
  Speaker 5: he's fine.
• 35:58
  Speaker 2: And what about the IRA?
• 36:00
  Speaker 5: So the IRA is a little harder, right, So the IRA,
• 36:04
  Speaker 5: you know, if it's his IRA and we want her
• 36:07
  Speaker 5: to say to keep it, the only way to do
• 36:10
  Speaker 5: that is, unfortunately, move it, and it would be subject
• 36:13
  Speaker 5: to estate tax when you go to move it, I
• 36:17
  Speaker 5: mean out of state tax, income tax. Excuse me, it
• 36:19
  Speaker 5: would be subject to income tax. So you have to
• 36:21
  Speaker 5: just play out the string and say how much am
• 36:23
  Speaker 5: I going to lose in taxes versus you know, I'm
• 36:27
  Speaker 5: assuming this is last minute planning. Yeah, you know, I'm
• 36:30
  Speaker 5: going to save in taxes and versus how much does
• 36:33
  Speaker 5: it cost in the nursing home if I keep paying? So,
• 36:36
  Speaker 5: I mean the deal there is if I'm going to
• 36:37
  Speaker 5: lose five hundred thousand dollars in tax and he dies quickly,
• 36:40
  Speaker 5: I might not want to do that. Otherwise, for advance planning,
• 36:45
  Speaker 5: you could do a testamentary trust and name the estate
• 36:48
  Speaker 5: the beneficiary. But that's this I thought was last minute planning.
• 36:51
  Speaker 5: So folks, lots to think about, but before you make
• 36:55
  Speaker 5: any any decisions about gifting, call and get the guide.
• 36:59
  Speaker 5: It's the end of the month eight six six eight four,
• 37:02
  Speaker 5: eight five six nine nine and learn the most of
• 37:06
  Speaker 5: making gifts.
• 37:08
  Speaker 2: If you have a question you would like to ask Todd,
• 37:10
  Speaker 2: visit his website Legal Exchange Show dot com and click
• 37:14
  Speaker 2: on the ask Tod tab. Maybe I'll be able to
• 37:17
  Speaker 2: read your question on the air, and hopefully his answer
• 37:19
  Speaker 2: will stop you from becoming one of his next real
• 37:22
  Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
• 37:25
  Speaker 2: with the law firm of Cushing and Dolan. I'm Susan Powers,
• 37:29
  Speaker 2: a financial advisor with the Armstrong Advisory Group. We'll be
• 37:32
  Speaker 2: back with more after this quick break on the Legal
• 37:35
  Speaker 2: Exchange with Todd Lutsky.
• 37:37
  Speaker 1: Cushing and Dolan want to help you avoid costly mistakes
• 37:40
  Speaker 1: when it comes to gifting assets to your children. Their
• 37:42
  Speaker 1: brand new guide, Making the Most of Gifting Assets shares
• 37:45
  Speaker 1: crucial strategies to help you protect your legacy and your family.
• 37:49
  Speaker 1: Many people think gifting is always a good thing, but
• 37:52
  Speaker 1: if it's done the wrong way, they can create real headaches.
• 37:55
  Speaker 1: Even well intentioned gifts can cause complications if your children
• 37:58
  Speaker 1: are dealing with financial pressure or legally shoes like a divorce.
• 38:01
  Speaker 1: The guide also explains how a major gift like a
• 38:03
  Speaker 1: home or vacation property could come with hidden tax consequences
• 38:07
  Speaker 1: that may impact your entire estate plan. Before you make
• 38:10
  Speaker 1: any big moves, arm yourself with the facts and this
• 38:12
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• 38:17
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• 38:20
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• 38:23
  Speaker 1: Exchainshow dot com. That's Legal exchange show dot com. The
• 38:27
  Speaker 1: proceeding was paid for in The views expressed are solely
• 38:29
  Speaker 1: those of Cushing and Dolan. Cushing and Dolan and or
• 38:31
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• 39:48
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• 39:50
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• 40:17
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• 40:20
  Speaker 7: eight hundred three nine three four zero zero one or
• 40:23
  Speaker 7: Armstrong Advisory dot com.
• 40:25
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 40:27
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 40:29
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 40:32
  Speaker 1: your own financial tax into state planning advisors before making
• 40:34
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 40:37
  Speaker 1: advisory services. Your tune to the legal exchange with Todd Lutsky.
• 40:41
  Speaker 1: If you are a loved one needs a nursing homestay,
• 40:43
  Speaker 1: call Todd right now at eight sixty six eight four
• 40:46
  Speaker 1: eight five six ninet nine and let him make sure
• 40:48
  Speaker 1: your assets are protected. That's eight six six eight four
• 40:51
  Speaker 1: eight five six nine nine, or visit him online at
• 40:54
  Speaker 1: Legal Exchange show dot com.
• 40:59
  Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
• 41:02
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 41:06
  Speaker 2: and I'm joined, of course by Todd Lutsky, a partner
• 41:09
  Speaker 2: with the law firm of Cushing and Dolan with a
• 41:11
  Speaker 2: master's in taxation. So, Todd, when we talk about giving
• 41:16
  Speaker 2: assets away, can you explain the difference between giving assets
• 41:21
  Speaker 2: away from an IRS perspective versus giving them away from
• 41:25
  Speaker 2: a medicaid perspective? Because how we are here from the government.
• 41:30
  Speaker 2: We're here to help, but we don't talk.
• 41:32
  Speaker 5: To each other.
• 41:32
  Speaker 2: We have very different rules, right right.
• 41:34
  Speaker 5: They do not talk to each other all the time,
• 41:37
  Speaker 5: so they are and the rules are mutually exclusive. And
• 41:40
  Speaker 5: I think it's important because, like I say, the guide
• 41:43
  Speaker 5: deals with the making the most of gift tax or
• 41:45
  Speaker 5: making the most of gifting. But and I've mentioned a
• 41:47
  Speaker 5: lot of times that there's income and estate tax issues
• 41:51
  Speaker 5: to deal with, but I haven't really mentioned there's a
• 41:54
  Speaker 5: medicaid perspective. Yes to deal with, and there is. You
• 41:56
  Speaker 5: wouldn't think about that, but there actually is. So many
• 42:00
  Speaker 5: people think, oh, well, if I make a gift of
• 42:05
  Speaker 5: nineteen thousand dollars a ube, Yeah, that's the freebie. What
• 42:09
  Speaker 5: so from the estate tax side of the government, right,
• 42:13
  Speaker 5: we're going to talk about both sides, or the gift
• 42:16
  Speaker 5: tax side of the government. If you make a gift
• 42:21
  Speaker 5: of nineteen thousand dollars per year per person, there is
• 42:28
  Speaker 5: no need to file a gift tax return by the giver,
• 42:33
  Speaker 5: and there is no reporting whatsoever.
• 42:35
  Speaker 2: Okay, it's as you say.
• 42:38
  Speaker 5: It's a freebie.
• 42:39
  Speaker 3: It really is.
• 42:40
  Speaker 5: And you can do that for anybody that's a year, family,
• 42:45
  Speaker 5: no family, anybody you want write check check check check,
• 42:47
  Speaker 5: nineteen nineteen nineteen.
• 42:50
  Speaker 3: Okay.
• 42:51
  Speaker 5: However, when people are faced with nursing home care, maybe
• 42:56
  Speaker 5: more like the Joe question we had above, where you
• 42:58
  Speaker 5: could be last minute dealing with with going into a
• 43:01
  Speaker 5: nursing home, people might say, well, why don't I just
• 43:04
  Speaker 5: make a bunch of gifts. I've got kids and grandkids
• 43:08
  Speaker 5: and we can go nineteen times, you know, bang, bang bang,
• 43:11
  Speaker 5: however many you want to give away. Plus we're married,
• 43:13
  Speaker 5: I can do it with my spouse so I can
• 43:15
  Speaker 5: take nineteen times two times. However many kids and grandkids
• 43:19
  Speaker 5: we have, and I'll make a ton of gifts. Well,
• 43:23
  Speaker 5: from the irs side of the equation, they'll say that's
• 43:25
  Speaker 5: perfectly fine. But from the Medicaid side of the equation,
• 43:29
  Speaker 5: that's a five year waiting period. So they don't care
• 43:32
  Speaker 5: about the tax side on what's going on there. They're
• 43:37
  Speaker 5: simply telling you the ramification of that gift is not
• 43:40
  Speaker 5: a tax issue for them Medicaid. It's a waiting period
• 43:44
  Speaker 5: issue for them. That is a disqualifying transfer, just the
• 43:49
  Speaker 5: same as when you take it and put it into
• 43:52
  Speaker 5: a trust, it's a disqualifying transfer that triggers a five
• 43:57
  Speaker 5: year look back.
• 43:58
  Speaker 2: Okay, so you have to be careful when you do that.
• 44:01
  Speaker 2: So when I think about the people that listen to
• 44:04
  Speaker 2: your advice and actually do advance planning, and maybe they've
• 44:08
  Speaker 2: transferred a chunk of money and assets into their irrevocable trust,
• 44:13
  Speaker 2: does that mean if they are planning for nursing home protection,
• 44:16
  Speaker 2: which obviously that's one of their objectives, because they've done
• 44:19
  Speaker 2: the irvocable trust, does that mean they can't gift anymore?
• 44:24
  Speaker 5: When you say they can't gift any more, for the
• 44:27
  Speaker 5: year or at all.
• 44:28
  Speaker 2: Like if you're because they would be they would have
• 44:31
  Speaker 2: a problem with the nursing home.
• 44:33
  Speaker 5: No, no, it doesn't mean they can't gift anymore. It
• 44:36
  Speaker 5: just means that let's say they put money in in
• 44:39
  Speaker 5: five years has gone by, well, they still have their exemption.
• 44:43
  Speaker 5: It depends because remember, any gifts to the Medicaid Trust
• 44:46
  Speaker 5: are first of all, incomplete gifts, so they are not
• 44:49
  Speaker 5: considered taxable gifts to begin. Okay, So you could take
• 44:52
  Speaker 5: a million dollar home and put it into a Medicaid
• 44:54
  Speaker 5: irrevocable trust, you don't need to file a gift tax return. Okay,
• 44:57
  Speaker 5: why because we did not make a completed gift all.
• 45:01
  Speaker 5: So now I've still got my whole thirteen point nine
• 45:03
  Speaker 5: million dollar gift tax exemption available to me. So if
• 45:06
  Speaker 5: you're saying, after I've done that, Todd, and I want
• 45:08
  Speaker 5: to now give things to my children, can I still
• 45:11
  Speaker 5: do that? Well, sure you can, and you still can
• 45:14
  Speaker 5: follow the gift tax rules, but if you do, it's
• 45:17
  Speaker 5: a five year waiting period for Medicaid.
• 45:19
  Speaker 3: So you can't really get around that five year waiting.
• 45:22
  Speaker 5: Period too too easily. But folks, that's just one aspect
• 45:26
  Speaker 5: of gifting. When you think about making the most of
• 45:28
  Speaker 5: gifting assets, which is the guide that we're giving away.
• 45:31
  Speaker 5: Think about what to give cash high basis assets versus
• 45:36
  Speaker 5: low basis assets. Think about the income tax issues this
• 45:40
  Speaker 5: step up in basis issues, the estate tax issues. Am
• 45:44
  Speaker 5: I saving federal versus only state estate tax? Do I
• 45:48
  Speaker 5: give it outright to kids? Or set up gifting trusts?
• 45:51
  Speaker 5: Do I use spousal lifetime access trust so I can
• 45:53
  Speaker 5: give something away and keep control over it for myself.
• 45:57
  Speaker 5: So many things to think about in addition to the
• 46:01
  Speaker 5: simple idea of.
• 46:02
  Speaker 3: Whether I should even gift at all. Please get the guide.
• 46:06
  Speaker 5: It's the end of the month eight six six eight
• 46:08
  Speaker 5: four eight five six nine nine or Legal Exchange Show
• 46:12
  Speaker 5: dot com again eight six six eight four eight five
• 46:17
  Speaker 5: six nine nine or Legal Exchange Show dot com.
• 46:20
  Speaker 2: So when you do your ireevocable trust planning, and let's
• 46:23
  Speaker 2: say you've done it, you've funded it, and it's been
• 46:26
  Speaker 2: over five years, so in the eyes of the nursing
• 46:30
  Speaker 2: home it's no longer yours, but in the eyes of
• 46:33
  Speaker 2: the irs, it is yours. Because you said it's an
• 46:37
  Speaker 2: incomplete gift, right, that's.
• 46:38
  Speaker 5: Very true, right, very true.
• 46:40
  Speaker 2: So if you wanted to make gifts, and you have
• 46:45
  Speaker 2: money in your irrevocable trust. If you want to make
• 46:47
  Speaker 2: gift to your kids, yeah, is that where you would
• 46:50
  Speaker 2: make them from is from the trust.
• 46:52
  Speaker 3: Yeah.
• 46:52
  Speaker 5: So again this is a great strategy. Now we're thinking
• 46:55
  Speaker 5: again how medicaid and tax world's irs versus medicaid world
• 47:01
  Speaker 5: to make them work together. So to go slow, We've
• 47:05
  Speaker 5: put a bunch of money and maybe a house and
• 47:08
  Speaker 5: a million dollar portfolio into the trust, and later on
• 47:14
  Speaker 5: we still have some money outside the estate. We know
• 47:16
  Speaker 5: we have made no gifts yet, and we have done
• 47:19
  Speaker 5: nothing to reduce our estate tax. So just because it's
• 47:23
  Speaker 5: in that trust, Remember I said it's an incomplete gift.
• 47:25
  Speaker 5: So if our estate is three million and I end
• 47:29
  Speaker 5: up putting a million dollar home and a million dollar
• 47:31
  Speaker 5: investment into the trust, I'm still worth as a single
• 47:36
  Speaker 5: person three million. So I haven't given anything away. So
• 47:40
  Speaker 5: from a gift tax standpoint, no effect. From an estate
• 47:44
  Speaker 5: tax standpoint, no effect. But from a nursing home standpoint,
• 47:49
  Speaker 5: in five years I will have protected what I put
• 47:53
  Speaker 5: in that trust. Yeah, from the cost of nursing home care. Wow,
• 47:57
  Speaker 5: this is really working out great, Except Todd, it looks
• 48:00
  Speaker 5: like in Massachusetts, I can only shelter two million, and
• 48:03
  Speaker 5: in this example, I'm still worth three. Right, Well, I
• 48:07
  Speaker 5: do want to give some stuff away now because I can,
• 48:10
  Speaker 5: and I happen to have a bunch of cash. Maybe
• 48:12
  Speaker 5: I've got a bunch of CDs that a lot of
• 48:13
  Speaker 5: people do that with my investment trust, and I'd like
• 48:19
  Speaker 5: to lower my estate tax from Massachusetts. Can I do that? Yes,
• 48:25
  Speaker 5: give it from the trust. From an estate tax standpoint,
• 48:30
  Speaker 5: it will get it out of my estate.
• 48:33
  Speaker 2: So would you still be limited to giving the nineteen
• 48:35
  Speaker 2: thousand only?
• 48:36
  Speaker 5: Absolutely not. I have a thirteen point nine million dollar
• 48:40
  Speaker 5: exemption fifteen million come January one, twenty twenty six, and
• 48:45
  Speaker 5: so I can absolutely I am not limited. I can
• 48:48
  Speaker 5: give you know, say I wanted to give a million
• 48:50
  Speaker 5: dollars five hundred thousand of cash, sure right to my kids.
• 48:54
  Speaker 5: Can do it right from the trust.
• 48:56
  Speaker 2: But that's way over the nineteen grand.
• 48:58
  Speaker 5: Right, So I'll file a gift tax return. I won't
• 49:02
  Speaker 5: pay any gift tax because I'll eat into my one
• 49:05
  Speaker 5: thirteen point nine million dollar gift tax exemption.
• 49:09
  Speaker 3: And now I've reduced my.
• 49:10
  Speaker 5: Estate tax without creating a five year waiting period for
• 49:16
  Speaker 5: the nursing.
• 49:16
  Speaker 2: Home because you've done it through your trust.
• 49:19
  Speaker 1: Right.
• 49:20
  Speaker 5: Compare and contrast if instead you say, well, Todd, I
• 49:22
  Speaker 5: got this five hundred thousand dollars CD sitting in my name.
• 49:27
  Speaker 5: I'll give that away. That's a five year waiting period.
• 49:31
  Speaker 5: You will get it out of your estate. You will
• 49:33
  Speaker 5: have the same estate tax benefit that I just described
• 49:37
  Speaker 5: with the gift from the trust, but you'll have a
• 49:41
  Speaker 5: five year waiting period for nursing home care. Not helpful, okay.
• 49:45
  Speaker 5: And finally, the type of asset we picked, Susan was cash.
• 49:49
  Speaker 5: Why Why Because it allows us to give away high
• 49:56
  Speaker 5: basis assets with no built in gain. Fucking that in,
• 50:00
  Speaker 5: We're not trapping any capital gains tax liability.
• 50:04
  Speaker 2: If you gave away your house, Yeah, I.
• 50:06
  Speaker 5: Would think twice about that. Yeah, that's a very big asset.
• 50:09
  Speaker 5: And it's also, you know, one that probably carries with
• 50:13
  Speaker 5: it a lot of built in gain, and so I
• 50:16
  Speaker 5: would think twice about even making that gift.
• 50:19
  Speaker 2: I'd probably a lot to consider when you're when you're
• 50:22
  Speaker 2: wanting to gift, the right way, the right fashion, the
• 50:24
  Speaker 2: right type of.
• 50:26
  Speaker 5: So many things to think about, And I think this
• 50:29
  Speaker 5: question that you asked, Susan really explored all of those.
• 50:33
  Speaker 5: Call and get the guide eight six six eight four
• 50:36
  Speaker 5: eight five six nine nine or Legal Exchange show dot com.
• 50:40
  Speaker 5: It's the end of the month. The guide's going away.
• 50:42
  Speaker 5: Learn whether gifting is right for you.
• 50:44
  Speaker 2: Todd Lutsky from the law firm of Cushing in Dolan,
• 50:47
  Speaker 2: thank you so much.
• 50:48
  Speaker 5: Thank you, Susan. Always a pleasure.
• 50:49
  Speaker 2: I'm Susan Powers, a financial advisor 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: Crushing and Dolan want to help you avoid costly mistakes
• 51:02
  Speaker 1: when it comes to gifting assets to your children. Their
• 51:04
  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
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