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Ask Todd: Estate Planning Mistakes That Can Disinherit Your Family · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Lutsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with a state and tax planning, Medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As promised, we are joined by the one and only
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  Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan.
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  Speaker 2: We got the phone lines open because Ask Todd is
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  Speaker 2: your chance to ask Todd your estate planning questions live
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  Speaker 2: on air right now. Eight eight eight two zero five
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  Speaker 2: two two sixty three is the number again, that is
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  Speaker 2: eight eight eight two zero five two two six three.
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  Speaker 2: We can usually get through two, maybe three your calls
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  Speaker 2: if we're lucky, so get callin early to make sure
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  Speaker 2: you get in line to Ask Todd you or state
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  Speaker 2: planning questions. Eight eight eight two zero five two two
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  Speaker 2: sixty three. Again it is eight eight eight to zero
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  Speaker 2: five two two six three mister Glutsky, how you doing today?
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  Speaker 3: I am never better? How are you?
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  Speaker 4: I'm good? Do you have holes in your underwear?
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  Speaker 2: Uh?
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  Speaker 5: I don't know where to go with that, but I'm
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  Speaker 5: gonna I'm gonna say, but no, not other than in
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  Speaker 5: the right places.
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  Speaker 4: Well, how do you get your legs through?
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  Speaker 2: Then? Todd, I want to talk to you a little
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  Speaker 2: bit about uh beneficiary mishaps.
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  Speaker 4: When you're talking about estate planning.
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  Speaker 2: What are the biggest mistakes that you've seen with someone
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  Speaker 2: naming beneficiaries for assets.
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  Speaker 5: I'd say that the biggest mistake is so many people
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  Speaker 5: know that in their own mind right, one of the
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  Speaker 5: things we want to accomplish is avoiding probate, and so
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  Speaker 5: they say, well, we can do that simply by just
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  Speaker 5: naming beneficiaries. As you said, Chuck, it's very simple, right sure,
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  Speaker 5: And just yeah, what I'll do is I'll either I'll
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  Speaker 5: either I'll either do one of two things. I'll make
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  Speaker 5: it joint with my spouse or more importantly, joint with
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  Speaker 5: a child. Right, you could do that, or as you said,
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  Speaker 5: you could put a beneficiary on. Now here's the problems
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  Speaker 5: if you do it joint with a married couple. So
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  Speaker 5: husband and wife put together their assets, and they said,
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  Speaker 5: I don't need to stay planning on avoid probate.
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  Speaker 3: Make it joint. Well, they're right.
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  Speaker 5: On the first death everything would go to the spouse
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  Speaker 5: if it's all joint, and guess what, it would avoid probate.
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  Speaker 3: You're absolutely right.
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  Speaker 5: However, you've completely wasted your estate tax planning exemptions on
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  Speaker 5: the first death because everything passed under the unlimited marital
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  Speaker 5: deduction to the spouse, and so you've not helped reduce
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  Speaker 5: your estate tax and likely with no planning done or
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  Speaker 5: that kind of a of a fixed to the planning world,
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  Speaker 5: you would now be faced with potentially all probate assets
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  Speaker 5: on the second death. All right, So that that's not
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  Speaker 5: necessarily the best way. What about if I went around
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  Speaker 5: and just named you know, I put my I got
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  Speaker 5: like three children, right, and I have one child that
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  Speaker 5: lives nearby. So I throw this child on a joint account,
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  Speaker 5: on a bunch of my assets, on a bunch of
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  Speaker 5: my accounts. Well you do that, and I know why
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  Speaker 5: they do it. They do it because, yeah, I guess
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  Speaker 5: it would avoid probate. It would automatically go to that
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  Speaker 5: surviving joint owner when you die, And that's I guess
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  Speaker 5: it accomplished that, but it's not helpful. Why because you
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  Speaker 5: put it on there because you wanted that child to
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  Speaker 5: be able to have access to the account to pay
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  Speaker 5: a bill, to make it convenient for you and for
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  Speaker 5: the child to help you. But you could be accidentally
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  Speaker 5: disinheriting your other children. So if you have three other
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  Speaker 5: children or two other children and they're not listed on
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  Speaker 5: the account, then all those assets go to that spot
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  Speaker 5: that child, and that child has no obligation to leave
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  Speaker 5: you or to spread out that money to the child's siblings.
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  Speaker 5: You just you don't get to do that. Well, they
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  Speaker 5: don't have to, let's put it that way. Sure, so
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  Speaker 5: you've accidentally disinherited children. And lastly, with beneficiary designations, yes
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  Speaker 5: you could put beneficiary designations on. But again if you're
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  Speaker 5: not putting you know, every child on as the designated beneficiary,
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  Speaker 5: then you're going to have a problem with disinheriting again.
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  Speaker 5: And and you know, so I think those are are inherently,
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  Speaker 5: you know, big problems with with just trying to do
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  Speaker 5: what I like to call a quick fix to the
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  Speaker 5: estate planning or to avoiding probate.
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  Speaker 4: Talk with Todd Lutsky from Cushing and Dolan.
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  Speaker 2: This is your chance to ask Todd your estate planning
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  Speaker 2: questions live on air phone number eight eight eight two
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  Speaker 2: zero five two two six three. We do still have
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  Speaker 2: room on those phone lines, so get calling so you
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  Speaker 2: can ask Todd your estate planning questions again. Eight eight
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  Speaker 2: eight to zero five two two sixty three is the number.
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  Speaker 2: We're gonna take a quick break, but when we come back,
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  Speaker 2: your questions with Todd again. Eight eight eight to zero
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  Speaker 2: five two two sixty three is the number. Eight eight
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  Speaker 1: only here on the Financial Exchange Radio Network. You're listening
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  Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange Radio.
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  Speaker 6: Network, talking with Todd Lutsky from Kushing and Dolan cut
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  Speaker 6: room on the phone lines at eight eight eight to
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  Speaker 6: zero five two two six three.
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  Speaker 2: That's the number to call to ask Todd your estate
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  Speaker 2: planning questions live right now. Todd, would you just would
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  Speaker 2: you would you break?
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  Speaker 1: No?
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  Speaker 4: That's fine, that's the light.
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  Speaker 1: Okay, yeah, that hasn't worked for months.
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  Speaker 2: Okay, I saw, why do you start pulling wires tied like,
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  Speaker 2: what are you What are you doing talcket to the bike?
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  Speaker 3: I don't know.
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  Speaker 4: I just don't touch anything.
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  Speaker 5: Just just ask me a question so I talk intelligently
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  Speaker 5: about something.
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  Speaker 2: Eight eight eight to zero five two two six three
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  Speaker 2: is the number to call to save us from Todd
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  Speaker 2: unplugging the studio again? Eight eight eight two zero five
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  Speaker 2: two two six three.
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  Speaker 4: Uh, Todd.
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  Speaker 2: When you're talking about leaving assets to beneficiaries, what are
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  Speaker 2: the biggest advantages that trusts have in terms of the
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  Speaker 2: actual like post, like, what what does it look like
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  Speaker 2: after someone dies? How do they actually facilitate that process?
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  Speaker 4: Yeah?
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  Speaker 5: And and I think I can't tell you enough that
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  Speaker 5: that it's really not just the probate and tax part
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  Speaker 5: of the state planning that we spend so much time on,
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  Speaker 5: but it's the family behind the estate plan. That's really
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  Speaker 5: what you're driving at here, Chuck. Is you know, look,
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  Speaker 5: when someone dies, you know, now there's these assets sitting there.
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  Speaker 3: What do we do.
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  Speaker 5: Well, That's the great thing about a trust is it
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  Speaker 5: can live on after you pass away. It doesn't have
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  Speaker 5: to remember, it's no right or wrong answer here. You
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  Speaker 5: folks can can wrap it up and have everything pay
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  Speaker 5: out right away.
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  Speaker 3: To children.
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  Speaker 5: And if that's the case, it's really simple. You look
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  Speaker 5: in there, you read it, and you're the trustee and
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  Speaker 5: you just go to your financial institution if there's money
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  Speaker 5: in there and cut checks to the people that are listed.
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  Speaker 3: It could be that easy.
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  Speaker 5: Or if there's a piece of property in there, the
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  Speaker 5: trustee just prepares a deed transferring the property out to
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  Speaker 5: the people that are supposed to get it. I mean,
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  Speaker 5: so it can be very easy, and of course no probate,
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  Speaker 5: or you could have the trust live on and now
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  Speaker 5: you have a trustee who's going to manage and invest
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  Speaker 5: the money. But again it's very simple. Sit with your
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  Speaker 5: financial advisor if there's money in there and say and
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  Speaker 5: usually just go to the same advisor your parents were
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  Speaker 5: using and just walk in and say, look, I'm taking
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  Speaker 5: over the account. Let's let's just keep it going, right.
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  Speaker 5: It's that simple. You get to manage and invest the
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  Speaker 5: money that's in there, just like you would if you
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  Speaker 5: had actually received it as the beneficiary.
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  Speaker 3: So that could be easy.
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  Speaker 2: Do different types of trusts have different processes that need
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  Speaker 2: to be followed after a passing.
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  Speaker 5: So so when someone dies, these buckets. If if we're
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  Speaker 5: going to have the trust continue on. Let's let's go
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  Speaker 5: with that. The pulling it out is pretty easy. But
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  Speaker 5: if we're going to have the trust continue on, then
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  Speaker 5: the trust is going to need to get an ID number.
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  Speaker 5: So that's part of the process. You got to get
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  Speaker 5: a tax ID number. Now, if there's like three shares,
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  Speaker 5: one for each kid, well, guess what, we're going to
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  Speaker 5: have three separate tax ID numbers, one one for each
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  Speaker 5: each kid. And then yes, as life goes on, these
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  Speaker 5: dollars are in there, and yes they can be distributed
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  Speaker 5: out to the child. Generally it can be for health, education,
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  Speaker 5: maintenance and support. It could be for you know, old
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  Speaker 5: discretionary distributions by the trustee to provide divorce protection and
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  Speaker 5: other creditor protection. And as those distributions come out, they
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  Speaker 5: can be taxed on the individual's tax return, or if not,
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  Speaker 5: you're simply file an income tax return for the trust
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  Speaker 5: at the end of the year and life goes on.
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  Speaker 3: Kind kind of the same way.
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  Speaker 2: Ton I get Chris from Falmouth all queued up on
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  Speaker 2: the phone for you, Chris, what's your question for Todd Lutsky.
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  Speaker 7: That's it's nice to talk to you, appreciate it. Welcome Okay.
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  Speaker 7: My question is I used to be pretty good at
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  Speaker 7: keeping all my accounting work and my bookkeeping them for
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  Speaker 7: my small business. I was really good at it. I
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  Speaker 7: think I was real good at it. I'm thinking I
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  Speaker 7: don't know, nobody really judging me, so I'm judging myself anyway.
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  Speaker 7: I have a house. My father left me in nineteen
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  Speaker 7: eighty nine, put everything in my name. I picture of
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  Speaker 7: my mother. She has since passed away. My brother was
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  Speaker 7: up here with he had monetary problems, but he he
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  Speaker 7: has passed away. Well, it's took care of the funerals,
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  Speaker 7: and it's expensive funerals, as we know. And I would
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  Speaker 7: like to know where to start to us stop planning,
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  Speaker 7: where I can give money out if I sell the
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  Speaker 7: house or whatever.
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  Speaker 5: So the first problem I have is I don't know anything.
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  Speaker 5: I assume all these people that passed, your family members
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  Speaker 5: that have passed left you everything.
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  Speaker 7: Correct, Well, my father left everything. My mom was the
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  Speaker 7: one that had I was taking care of her.
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  Speaker 3: Did your mom leave you assets?
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  Speaker 7: She didn't do anything because my father left everything in
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  Speaker 7: my name.
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  Speaker 3: All right, so your mom didn't leave you anything.
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  Speaker 5: Your dad has assets, so they're your assets now, so
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  Speaker 5: you're allowed to do your own planning, and you should
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  Speaker 5: do your own planning. But if they're your assets, you're
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  Speaker 5: allowed to do whatever you want with them. I'm just
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  Speaker 5: trying to get to the question. I'm trying to understand
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  Speaker 5: what your question is. If they're your assets, then you're
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  Speaker 5: allowed to do whatever you want with them. They're not
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  Speaker 5: tied in any trust, they're not held up any way,
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  Speaker 5: they're not restricted, right, They're yours.
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  Speaker 7: Right, right? So something one thing I didn't mention. She
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  Speaker 7: does have money in a bank with social Security money
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  Speaker 7: from my father that.
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  Speaker 3: Built up whose name is on the account.
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  Speaker 7: Well, it is a joint a joint account, but she
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  Speaker 7: has her account by that changed while she was in
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  Speaker 7: the nursing home. I had a uh on the republic
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  Speaker 7: come in and make a joint account.
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  Speaker 5: But but my question is if she's passed away, that
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  Speaker 5: joint account should belong to you. Now, because it's a
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  Speaker 5: joint ownership situation, you can go and take the money
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  Speaker 5: and put it into your name because you're the joint owner.
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  Speaker 7: Well, it has to be Can it be transferred easily
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  Speaker 7: from her account to the joint account?
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  Speaker 5: No, you said it's already in a joint account. You
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  Speaker 5: go to the bank and take the money from the
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  Speaker 5: joint account and put it into your name. So that's
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  Speaker 5: what you need to do. I think you just need
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  Speaker 5: to get a better handle on your questions and and
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  Speaker 5: so that I can help you. But I at this point,
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  Speaker 5: I don't feel like you're able to sort of tell
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  Speaker 5: me exactly what you want to do. But I would say,
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  Speaker 5: go get the money from the joint account. And if
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  Speaker 5: you've got other assets that your dad already left you,
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  Speaker 5: those are your assets. And I think you need to
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  Speaker 5: kind of do your own planning. But I hope that
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  Speaker 5: helped a little. But folks, you know, this is a
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  Speaker 5: really good example that Chris had is that you know,
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  Speaker 5: there was no planning done, you know, in real planning done,
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  Speaker 5: so how assets got left to Chris kind of caused
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  Speaker 5: a problem. And that's exactly what we're trying to prevent.
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  Speaker 5: Here is this new guide for the month is called
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  Speaker 5: how to Leave Assets to your Beneficiaries. It talks about
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  Speaker 5: whether you've got a second marriage, how do you deal
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  Speaker 5: with that, What if you've got, you know, a special
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  Speaker 5: needs child, what if you have you know, generation skipping
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  Speaker 5: tax concerns, or you want to protect assets from future divorces,
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  Speaker 5: of your children. Folks, there's so many ways to think
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  Speaker 5: about how you want to leave your assets. Yes, as
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  Speaker 5: Chuck engined earlier, it also goes through jointly owned assets
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  Speaker 5: and beneficiary designations and tells you about the pros and
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  Speaker 5: cons of those. But folks, quite frankly, how you leave
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  Speaker 5: assets to your family can be more important than saving
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  Speaker 5: taxes and probate. So call and get the guide and
• 13:13
  Speaker 5: learn how best to leave assets to your family eight
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  Speaker 5: six six eight four eight five six nine nine or
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  Speaker 5: Legal Exchange Show dot com again eight six six eight
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  Speaker 5: four eight five six nine nine or Legal Exchange Show
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  Speaker 5: dot com And if you want more information go to
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  Speaker 5: our Instagram page. Cushing dolein PC.
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  Speaker 2: Todd is using trusts for passing assets to the next
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  Speaker 2: generation or whoever you choose to do trust have any
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  Speaker 2: impact on the step up and cost basis that in
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  Speaker 2: air would receive.
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  Speaker 5: Yeah, so they absolutely can have a step up. So
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  Speaker 5: be very careful when you're thinking about doing your planning
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  Speaker 5: what kind of trust you're putting together. You know, if
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  Speaker 5: you're putting together if you have like the largest and
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  Speaker 5: you're trying to put together a gifting trust where you
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  Speaker 5: want to get assets out of your estate so that
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  Speaker 5: you can save estate taxes. Well, that's important, but make
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  Speaker 5: sure you're saving both federal and state estate taxes. That
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  Speaker 5: combines about fifty percent, because when you give it away,
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  Speaker 5: to your point, chuck, you don't get a step up
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  Speaker 5: in basis on assets that you put in an irrevocable
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  Speaker 5: gifting trust where you completed the gift. So it's okay,
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  Speaker 5: if I'm saving fifty percent in the estate planning world,
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  Speaker 5: even though I'm trapping twenty eight percent capital gains, I
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  Speaker 5: get it. It's still better. But if not, then don't
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  Speaker 5: necessarily make the gift. But for most trusts, even medicate
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  Speaker 5: income only trust that we talk about, even though they're irrevocable,
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  Speaker 5: So some irrevocable trusts and all revocable trusts, when you
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  Speaker 5: die with those assets that are still left in your trust,
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  Speaker 5: then it's as if you died owning them because they're
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  Speaker 5: in included in your estate for estate tax purposes. Even
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  Speaker 5: the medicaid trust, it's an incomplete gift for gift tax purposes,
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  Speaker 5: so it's included. Then when you die, you get that
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  Speaker 5: all important step up in basis, eliminating all the built
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  Speaker 5: in gain on real estate and investment portfolios.
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  Speaker 2: When you die, mister Watsky, thank you so much for
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  Speaker 2: joining us today.
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  Speaker 3: Always a pleasure. Thank you.
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  Speaker 1: This has been Asked Odd on the Financial Exchange Radio network.
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  Speaker 1: Askedd with Todd. Lutsky has been presented by Cushing and Dolan,
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