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The perils of not planning · 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: eight five six ninety nine. Operators are standing by. Now
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Speaker 1: Here are your hosts, Tod Lutsky and Susan Powers.
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Speaker 2: Welcome into the Legal Exchange with 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 Latsky, 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, Thank you. What do you have for us
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Speaker 2: this week?
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Speaker 3: I've got a Tennessee appellate court case and a California
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Speaker 3: appellet court case. So we're all over to Map today.
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Speaker 3: So a couple of things. The first one is changing
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Speaker 3: domicile not so easy. And you'll also see how a
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Speaker 3: factor when I, when I factor in lack of planning,
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Speaker 3: how that plays out here. In other words, these people
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Speaker 3: were married, they changed domicile, but they had a conservatorship
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Speaker 3: involved in. If you don't have the mental intent to
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Speaker 3: change domicile, can you? Is really what it comes down to.
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Speaker 3: So that's just where you live, Yes, sorry, domicile is
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Speaker 3: where you want to, Like, where's your tax home? If
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Speaker 3: you're a resident of mass then that's your tax home.
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Speaker 3: So we're going to explain that, and I'm going to
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Speaker 3: explain how planning second marriage involved in this as well,
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Speaker 3: and domicile lots to think about in that in that case.
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Speaker 3: And then we go over to California where we have
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Speaker 3: a classic undue influence case where a professor Laura was
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Speaker 3: absent from work and then they had to send someone
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Speaker 3: to find her, and then there she was found in
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Speaker 3: her home wait till I tell you, And then she decides,
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Speaker 3: without you know, doing anything, that she wants her old
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Speaker 3: student to get everything. And is that going to be allowed?
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Speaker 3: How does it play out, Folks. Again, a lack of
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Speaker 3: planning is never good and so at the end of
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Speaker 3: the day, that's what we're going to talk about. And
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Speaker 3: today we're also going to talk about when we say
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Speaker 3: lack of planning, it's not only estate planning, but also
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Speaker 3: sometimes planning, you know, for gifting, which is not necessarily
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Speaker 3: because you're passing away, which is what we talk about
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Speaker 3: with estate planning. But how you give your assets away
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Speaker 3: and does it make sense to do it in light
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Speaker 3: of certain tax law changes, And if you're going to
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Speaker 3: make gifts, think about how you want to make them,
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Speaker 3: and think about whether you giveaway high basis assets or
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Speaker 3: low basis assets. But more importantly than that, a simple
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Speaker 3: thing putting a joint name on an account. Sometimes you
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Speaker 3: don't realize is that a gift? Is it not a gift?
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Speaker 1: Well?
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Speaker 3: What if I had a joint name on AH or
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Speaker 3: a rental property? What have I done there? What kind
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Speaker 3: of tax ramifications have I caused there? And creditor ramifications?
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Speaker 3: And from a medicaid perspective, folks, there's so much to
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Speaker 3: think about when you talk about gifting, and even the
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Speaker 3: simplest thing you do could result in a taxable event.
3:17
Speaker 3: Get this guide making the most of gifting assets. Learn
3:20
Speaker 3: how to do it as we enter the Thanksgiving month. Right,
3:23
Speaker 3: so it's it's a season appropriate eight six six eight
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Speaker 3: four eight five six nine nine or Legal Exchange Show
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Speaker 3: dot com again eight six six eight four eight five
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Speaker 2: I'm gonna give a little spoiler alert. Uh oh, just
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Speaker 2: don't give your stuff away. Don't give your big stuff away.
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Speaker 3: The scariest things, Tousan. Your right is adding names to
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Speaker 3: accounts and adding names to houses. And you think it's
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Speaker 3: an easy thing to do, and it is easy, but
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Speaker 3: it might be very painful at the end of the day.
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Speaker 3: I remind creditors, taxes, etc. All Right, that said, let's
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Speaker 3: head over to Tennessee. We've got an appellate court case
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Speaker 3: there where Janis and Charles married in nineteen ninety six.
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Speaker 3: Second marriage. They lived in New York till August of
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Speaker 3: twenty twenty two, then moved to Tennessee in January of
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Speaker 3: twenty twenty three. New York, Tennessee. Jennis, the wife, filed
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Speaker 3: for conservatorship as she kind of knows her husband was
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Speaker 3: diagnosed with Alzheimer's needed help with his affairs. She noticed
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Speaker 3: that these symptoms began in twenty nineteen and diagnosed in
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Speaker 3: twenty twenty. Remember they moved in August of twenty twenty two.
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Speaker 3: Jennifer testified and the day of trial that Charles's condition
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Speaker 3: was about the same as it was when they left
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Speaker 3: for New York. So that means in twenty twenty two
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Speaker 3: he was already like this. In fact, she noticed the
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Speaker 3: condition in twenty nineteen. Well, Dawn, the stepdaughter from the
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Speaker 3: first marriage, files to intervene and says she previously filed.
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Speaker 3: So this is the daughter from the first marriage. Right,
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Speaker 3: she filed in New York as a conservator, and so
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Speaker 3: she retains jurisdiction over this person because her father was
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Speaker 3: a New York resident and they were married and so,
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Speaker 3: and the marriage also was invalid. She's arguing because Charles
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Speaker 3: was afraid of Janice and this marriage is invalid. Well,
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Speaker 3: the trial court did not find the marriage to be invalid.
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Speaker 2: Well, it was twenty something years before, right ninety six
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Speaker 2: they got married.
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Speaker 3: Yeah, it didn't find the marriage to be invalid. And
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Speaker 3: I agree with you on that, Susan, and I agree
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Speaker 3: with the court. Nothing showed that Charles didn't trust or
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Speaker 3: feel safe or comfortable with Janie and there was no
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Speaker 3: financial exploitation. So they appointed Janis as the conservator. The
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Speaker 3: trial court in Tennessee got it. They appealed. Why well,
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Speaker 3: the appellate court reversed. Not because the marriage, that's not
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Speaker 3: the issue. Reversed because the change of residency to Tennessee.
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Speaker 3: You need to do things. One physically change your location. Okay,
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Speaker 3: well they did that. They did that. Two, intend to
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Speaker 3: abandon your old domicile and intend to establish a new one.
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Speaker 3: And since he lacked the capacity when he left New
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Speaker 3: York based on her testimony, if he didn't have the
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Speaker 3: capacity because he had Alzheimer's, he couldn't form the necessary
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Speaker 3: intent to abandon his old location or the necessary intent
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Speaker 3: to desire to live in a new location. So if
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Speaker 3: you can't intend to do that, then you cannot change
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Speaker 3: your domicile.
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Speaker 2: Which is interesting because it's different from that perspective versus
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Speaker 2: like a medicaid perspective.
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Speaker 3: Right, And if you're on Medicaid and you change states,
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Speaker 3: is that's what you're saying. One day you're in they
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Speaker 3: say you're a resident of the state, and one day yeah,
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Speaker 3: right bye bye up. That's a very interesting analogy. Yeah,
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Speaker 3: and that does happen. But here again, I'm New York
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Speaker 3: and Tennessee law, so I'm not trying to advocate to
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Speaker 3: another state. But there you have it, right, that's very interesting.
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Speaker 3: So I don't think that the marriage part is at issue.
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Speaker 3: I think the issue is who's got jurisdiction to be
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Speaker 3: the conservator, the daughter from the first marriage or the
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Speaker 3: wife who filed in Tennessee. And they're saying the daughter
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Speaker 3: has the power to be the conservative. So I have
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Speaker 3: to ask the obvious question.
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Speaker 2: If they had a power of attorney and a healthcare proxy,
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Speaker 2: there'd be no conservator, right.
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Speaker 3: Oh, Susan you are That's exactly what I've been.
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Speaker 2: Doing this with you for twenty years.
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Speaker 3: The tips and lessons that I have for this case
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Speaker 3: is is, first of all, why didn't we plan? Right?
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Speaker 3: Obviously the first and foremost. So you've got a second
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Speaker 3: marriage here, Why are you not planning? Why aren't you
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Speaker 3: doing something? Even if you don't anything but basic docs, right,
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Speaker 3: A power of attorney in a healthcare proxy would have
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Speaker 3: prevented the need for this conservatorship. Guardianship, yes, none of
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Speaker 3: that nonsense, right now, Remember, the power of attorney allows
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Speaker 3: you to manage her affairs, which is what she wanted
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Speaker 3: to do. Janie wanted to manage the affairs of her husband.
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Speaker 3: So you know, you got to have a power of attorney.
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Speaker 3: You could pay bills, you can access accounts, you can
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Speaker 3: manage a person's affairs. That's all you needed. Now. Of
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Speaker 3: course that had to be done before he lost capacity.
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Speaker 3: But you know, again, do your planning. That's why you
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Speaker 3: do these plannings.
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Speaker 2: You get remarried, do your plan then, which includes put
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Speaker 2: those basic documents.
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Speaker 3: Oh, they could have had some joint accounts which would
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Speaker 3: have allowed it to work anyway, but who knows. And
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Speaker 3: the other problem is, by the way, that's a durable
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Speaker 3: power of attorney, so you need a conservatorship to deal
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Speaker 3: with money. But then if he needed nursing home care,
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Speaker 3: and I don't know that that was an issue here,
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Speaker 3: but he was getting Alzheimer's, so that could have been
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Speaker 3: an issue if he needed nursing home care and didn't
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Speaker 3: have a health care proxy, which I'm assuming they didn't
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Speaker 3: because they didn't even have a power of attorney, you'd
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Speaker 3: have to go get a guardianship, never mind a conservatorship.
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Speaker 3: You'd have to get a guardianship over the person so
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Speaker 3: that you could admit this person to a nursing home,
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Speaker 3: because without the health care proxy you can't do that
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Speaker 3: less you're discharged from the hospital.
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Speaker 2: And those two documents are the most basic documents in
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Speaker 2: the estate plan. And if you have to go and
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Speaker 2: do the guardianship and the conservatorship, that's where those attorneys
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Speaker 2: make all that money.
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Speaker 3: Costs a lot more, it's time consuming. You have to
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Speaker 3: ask the court for permission to do everything. Folks, it's
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Speaker 3: not the way to go. But at the end of
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Speaker 3: the day, just leave this with the thought of why
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Speaker 3: didn't you have a trust in place? Why didn't the
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Speaker 3: daughter from the prior marriage, or the and the father
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Speaker 3: and the even the stepmother. Why don't you just get
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Speaker 3: together and say, look, we ought to do a trust
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Speaker 3: where in case someone gets Alzheimer's, like is what happened here,
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Speaker 3: and we want to protect the assets from the nursing
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Speaker 3: home for the spouse, which you could do, and the
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Speaker 3: bloodline and then later for the bloodline, and you wouldn't
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Speaker 3: have to worry about this court nonsense and everybody's taken
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Speaker 3: care of. I think the more you open up and talk,
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Speaker 3: the more you can get your planning done, and these
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Speaker 3: trusts can do that. Folks. If you're not going to
9:54
Speaker 3: do trusts, well you should. But if you don't and
9:57
Speaker 3: you just want to make gifts, please learn learn how
10:00
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10:03
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Speaker 2: You've been listening to Todd Lutsky, a partner with the
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Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
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Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
10:26
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 Lutsky. I'm
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Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
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Speaker 2: and I'm joined by Todd Lutsky, a partner with a
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Speaker 2: law firm of Cushing and Dolan with a master's in taxation.
14:03
Speaker 2: Where are we headed now, Todd, over to California.
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Speaker 3: Let's check out what's a classic undue influenced case? Right,
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Speaker 3: So check out this pattern. Professor Laura had been missing
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Speaker 3: from school for about a week, so they had to
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Speaker 3: do a wellness wellness check at her at her apartment, right,
14:21
Speaker 3: and they found her in a very small space and
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Speaker 3: a hoarded type room. You know, a hoarding house is
14:28
Speaker 3: full of hoarding, uninhabitable home. Diagnosed with cancer, renal failure,
14:34
Speaker 3: liver issues, et cetera. Records indicate that Della, her sister,
14:39
Speaker 3: was the power of attorney Laura. Obviously, she gets better.
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Speaker 3: Laura states that she's a strange from her sister, from
14:47
Speaker 3: both her sisters. Two days later, she creates a power
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Speaker 3: of attorney, naming her friend and former student Zekiah as
14:55
Speaker 3: agent and described their relationship as intimate and personal and sacred.
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Speaker 2: Oh, pamalas smart, So.
15:04
Speaker 3: Well that's where we are. So apparently she's doing better
15:08
Speaker 3: enough now that I guess she could create this power
15:09
Speaker 3: of attorney. So Della and Laura haven't talked to her
15:13
Speaker 3: for years, but Della didn't know that she didn't want
15:16
Speaker 3: to talk to her, so she didn't realize that it
15:19
Speaker 3: didn't talk. And Helene, the other sister, denied that they
15:23
Speaker 3: were estranged. Well, she was discharged on April twelfth, and
15:28
Speaker 3: on the same day, Zekiah transfers the car to her,
15:32
Speaker 3: interesting to her to Zekiah, and Zekiah added herself as
15:37
Speaker 3: co owner on bank accounts via her newly established power
15:41
Speaker 3: of attorney. Then she contacted an attorney and they had
15:47
Speaker 3: an estate plan prepared and indicated Laura wanted to disinherit
15:53
Speaker 3: her siblings, so she's telling the attorney on behalf of
15:57
Speaker 3: Laura to disinherit her siblings. Also, she claims that she
16:01
Speaker 3: didn't know that she was the beneficiary of the trust
16:03
Speaker 3: till Laura died. So there's this estate plan created. So
16:07
Speaker 3: on June fifth, she was admitted to the hospital. She
16:12
Speaker 3: executes the trust in the hospital room and dies on
16:15
Speaker 3: June nineteenth. So they go to court. I have questions. Yeah,
16:23
Speaker 3: So they go to court and they found that Laura
16:26
Speaker 3: was vulnerable, completely dependent on food, clothing, etc. By Zakiahah.
16:33
Speaker 3: And she found that the attorney disinherited the siblings and
16:37
Speaker 3: at the end of the day ended up substantially benefiting
16:39
Speaker 3: from this estate plan that she created.
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Speaker 2: Did the attorney just not talk to her? To Laura,
16:45
Speaker 2: how do you do that?
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Speaker 3: I just this classic I get it, susan classic under influence.
16:51
Speaker 3: You went in, you found the lawyer, you took the person,
16:54
Speaker 3: you had the estate plan prepared, and you benefited. And
16:57
Speaker 3: the appellate court she appealed this. I mean, this is
17:00
Speaker 3: what are you appealing? The appellate cord affirmed for all
17:03
Speaker 3: the same reasons there was no evidence to rebut anything
17:05
Speaker 3: other than it looked like clear undue influence here in
17:09
Speaker 3: this case. So folks comment here, we're going to get
17:13
Speaker 3: back to it is. You know, when we're doing our
17:15
Speaker 3: state plan, let's look for certain things when we prepare.
17:18
Speaker 3: I'm going to go through that and give you some
17:19
Speaker 3: tips and lessons about classic undue influence and kind of
17:23
Speaker 3: what could have been done here from a planning perspective
17:25
Speaker 3: to not have this problem, folks, There's other problems that
17:31
Speaker 3: arise when you make gifts. Making the most of gifting
17:34
Speaker 3: your assets is the new estate planning guide for the month.
17:38
Speaker 3: People don't realize it, but they sometimes throw a name
17:41
Speaker 3: on a bank account. Is that a completed gift? Or
17:45
Speaker 3: they add a name to a rental property or a
17:47
Speaker 3: vacation home. What have you done there? Not only from
17:50
Speaker 3: a gifting standpoint, but a carryover basis standpoint, a income
17:55
Speaker 3: tax standpoint. What about capital gains if you want to
17:58
Speaker 3: sell it? Folks? All kinds of problems come with gifting
18:03
Speaker 3: or doing things that you don't even understand might result
18:06
Speaker 3: in a gift. And for all people that have to
18:08
Speaker 3: make big gifts. Don't just make big gifts to kids,
18:12
Speaker 3: put them in special trusts. Put them in gifting trusts.
18:16
Speaker 3: Learn how the best way to make gifts this holiday
18:20
Speaker 3: season from a tax and creditor standpoint. Get the guide
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Speaker 3: eight six six eight four eight five six nine nine
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Speaker 3: or Legal Exchange Show dot com again eight six six
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18:36
Speaker 2: So I know, Todd, you talk a lot about second marriages.
18:39
Speaker 2: You got to get your plan in place, take care
18:41
Speaker 2: of that. I think that for single people it's super
18:47
Speaker 2: important for them to do their planning if they don't
18:50
Speaker 2: have any kids, because maybe she had a legitimate relationship
18:53
Speaker 2: with this woman and wanted to take care of her.
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Speaker 2: Get it done when you're competent, not in you know,
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Speaker 2: doing this last minute Shenan.
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Speaker 3: Again, I think that's really the tip here, right. We
19:04
Speaker 3: talk about advanced planning all the time. It doesn't matter
19:07
Speaker 3: to me who your family is. If your family in
19:09
Speaker 3: this case is this significant other and you haven't gotten married,
19:13
Speaker 3: but you want to take care of this significant other,
19:15
Speaker 3: whoever it is, well then do it.
19:17
Speaker 2: And it's your prerogative right.
19:19
Speaker 3: It's no different than if you want to take care
19:21
Speaker 3: of a sibling, or of a child or a grandchild specifically,
19:25
Speaker 3: or whatever your wishes are. You've got to do it
19:27
Speaker 3: right now. When you're drafting the estate plan, just be
19:31
Speaker 3: mindful because again you want your plan to work at
19:34
Speaker 3: the same time, so be mindful of who's involved right
19:37
Speaker 3: in the planning. Like for me, when I am doing planning,
19:41
Speaker 3: sometimes the parents bring the kids and I'll be asking
19:46
Speaker 3: the parents, so how do you want to leave your assets?
19:49
Speaker 3: And they look to the kids or the or the
19:52
Speaker 3: kids just to answer, right, and they start, well, this,
19:54
Speaker 3: that and the other thing, or if the parents answer,
19:56
Speaker 3: the kids interject or you know, and at some point
19:59
Speaker 3: I have to say, look that old adage. Kids, you
20:02
Speaker 3: are welcome to be seen but not heard. So you
20:06
Speaker 3: can stay right as long as you stop talking.
20:09
Speaker 2: And I'm not your attorney, I'm your parents' attorney.
20:12
Speaker 3: And I explained to them, look, I'm not trying to
20:14
Speaker 3: be mean. By the same token. You want your estate
20:17
Speaker 3: plan for your clients to work, You don't want to
20:19
Speaker 3: run into this classic undo influenced situation, right, And I
20:23
Speaker 3: do this all the time, especially with people who come in.
20:27
Speaker 3: Let's say I've done a plan for somebody years ago
20:31
Speaker 3: and they come in, and even if it's an irrevocable trust, right,
20:34
Speaker 3: we have the power to change an irrevocable trust as
20:39
Speaker 3: to who we want to get assets among a limited
20:42
Speaker 3: group of people that we defined when we set up
20:45
Speaker 3: the irrevocable trust. Children, grandchildren, might be siblings, whatever the
20:50
Speaker 3: class is. Well, years and years later parents will come
20:54
Speaker 3: in and say, you know, I want to make a
20:55
Speaker 3: change and I want to cut out this person, or
20:57
Speaker 3: I want to change percentages to a grandchild or a child.
21:01
Speaker 3: I say, okay, we can do that because I drafted
21:06
Speaker 3: that power and the trust for you. But since we
21:08
Speaker 3: want this to work even if kids aren't involved, and
21:11
Speaker 3: they're not the parents came in. Yes, I'll tell them.
21:14
Speaker 3: Why don't we get a letter of capacity from the doctor?
21:19
Speaker 3: You look fine to me, you both look fine and healthy.
21:21
Speaker 3: I'm perfectly okay with it. Just get one, we'll stick
21:25
Speaker 3: it in the file. You know something simple, you know
21:28
Speaker 3: the primary care physician. I have no reason to believe
21:31
Speaker 3: there's any cognitive impairment with so and so.
21:33
Speaker 2: That's all, and that could just be something they do
21:35
Speaker 2: with their next doctor's visit.
21:36
Speaker 3: Exactly why, folks, Because I want this to work for you. Yes,
21:41
Speaker 3: I don't want your kids fighting. I don't want them
21:43
Speaker 3: coming in and claiming that you didn't have capacity to
21:46
Speaker 3: do this, and fighting this prevents that they they file
21:49
Speaker 3: on action. I pull out the capacity letter, and boy,
21:52
Speaker 3: that puts a damper on everything, sure does. Right not
21:55
Speaker 3: to mention that I can testify if I was the
21:57
Speaker 3: one notarizing right, so so, folks, those are just things
22:01
Speaker 3: we do to help the family. Right. Now, remember there
22:04
Speaker 3: was no will, there was no trust here, so an
22:05
Speaker 3: intestate succession statute, which is what's going to apply, right,
22:09
Speaker 3: a significant other is out. So in this case, the
22:13
Speaker 3: fact that Zakiyah was trying to do all these things,
22:17
Speaker 3: the sister or I'm sorry, the sisters, right, the two
22:21
Speaker 3: sisters are likely going to take in this case because
22:26
Speaker 3: there will be deemed to be no will and no trust.
22:29
Speaker 3: They prepared the trust, but the trust is going to
22:32
Speaker 3: fail for undue influence. Yes, and likely the will was
22:35
Speaker 3: prepared at the same time, So the will and the
22:38
Speaker 3: trust will fail for undue influence. So unless there's an
22:40
Speaker 3: old will naming the siblings, then it will go to
22:45
Speaker 3: intestate succession and a significant other doesn't even rank on
22:50
Speaker 3: the list.
22:50
Speaker 2: The state will decide.
22:52
Speaker 3: It'll go to the siblings because they'll be the next
22:54
Speaker 3: They're likely going to be the next closest next of kin.
22:57
Speaker 3: Now I don't know the rules of California, but that's
22:59
Speaker 3: how it works.
23:00
Speaker 1: Right.
23:00
Speaker 3: Whereas as you said, Susan, just do your planning and
23:03
Speaker 3: advance and you can leave it to whoever you want,
23:07
Speaker 3: however you want, whenever you want and you have to
23:10
Speaker 3: worry about this on do Inflones. It's not all about
23:13
Speaker 3: taxes and probate folks, it's about the family behind the plan.
23:17
Speaker 3: Same thing when it comes to gifting. Learn how to gift.
23:21
Speaker 3: It's no different than learning how to plan. There are
23:23
Speaker 3: right ways and wrong ways to do it. Tax and
23:25
Speaker 3: creditor issues will follow. Call and get the guide eight
23:29
Speaker 3: sixty six eight four eight five six ninety nine or
23:33
Speaker 3: Legal Exchange show dot com.
23:35
Speaker 2: You've been listening to Todd Lutsky, a partner with a
23:37
Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
23:40
Speaker 2: financial advisor with the Armstrong Advisory Group, and Todd will
23:44
Speaker 2: be answering your listener questions when we return to the
23:47
Speaker 2: Legal Exchange with Todd Lutsky.
23:51
Speaker 1: Legacy planning is incredibly important, but if it isn't done properly,
23:55
Speaker 1: you can create significant problems for your estate. Cushing and
23:58
Speaker 1: Dolan are expert to know their law and their new
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24:26
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24:28
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24:31
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24:34
Speaker 1: Call eight sixty six eight four eight five six nine
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Speaker 1: nine or request it online from their website Legal exchange
24:40
Speaker 1: show dot com. The proceeding was paid for in the
24:42
Speaker 1: music Express or sole lead those of Cushing and Dolan.
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Speaker 1: Cushing and Dolan and or Armstrong Advisory may contact you
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Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
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Speaker 1: advisory services. You're listening to the Legal Exchange and it's
26:56
Speaker 1: time for Ask Todd, the segment where Tod will answer
26:59
Speaker 1: your question about anything and everything that's included in the
27:02
Speaker 1: estate planning process. Once again, here's Todd Lutsky and Susan
27:07
Speaker 1: Powers Welcome back Talk.
27:10
Speaker 2: We have a few questions from listeners for you. Our
27:12
Speaker 2: first question comes from Derek in New Haven, Connecticut, and
27:16
Speaker 2: Derek writes, my mother is remarried and her spouse has
27:20
Speaker 2: considerably less assets than her. They have a prenup agreement
27:24
Speaker 2: and she is under the impression that her prenup will
27:27
Speaker 2: protect her assets if her husband goes into a nursing home.
27:31
Speaker 2: Is this true?
27:33
Speaker 3: Well, I mean the quick answer is no. So I
27:36
Speaker 3: know you like to get quick answers, but I need
27:38
Speaker 3: to expect it depends. Yeah, I give you the quick answer.
27:41
Speaker 3: The quick answer is no. I mean, remember, folks, prenups
27:44
Speaker 3: in general protect assets from a divorce. I they don't
27:52
Speaker 3: protect assets necessarily from creditors. Now, there may be if
27:57
Speaker 3: you look at it from a purely creditor standpoint, and
28:00
Speaker 3: you're doing a prenup and you're doing a state plan,
28:02
Speaker 3: it's very important that you want to if you have
28:05
Speaker 3: certain assets in your prenup that you want to keep separate. Yes,
28:09
Speaker 3: if you commingle assets after a prenup and you're doing
28:12
Speaker 3: a state plan, you could mess up your prenup. So
28:16
Speaker 3: and oftentimes where I might recommend a joint trust for
28:19
Speaker 3: a married couple, I won't if there's a prenup. If
28:23
Speaker 3: there's a prenup, and I'll say, look, if you've listed
28:25
Speaker 3: all these accounts over here as your separate accounts and
28:28
Speaker 3: you don't want those to be messed up in your prenup,
28:32
Speaker 3: put them in your own. They're in your name now,
28:34
Speaker 3: they've always been in your name, even though you're married.
28:37
Speaker 3: They're in your name. Make sure you put them in
28:39
Speaker 3: your trust. That way, they're not commingles. So from a
28:42
Speaker 3: creditor standpoint, a pure creditor standpoint, if the husband got
28:46
Speaker 3: sued and had a creditor chasing them, yeah, I don't
28:50
Speaker 3: think they can get what's in her trust because it's
28:53
Speaker 3: not her creditor. Accept It doesn't work that way with
28:58
Speaker 3: nursing homes. With nurse homes, it's a little different with
29:02
Speaker 3: nursing homes. If you're married, your one big giant pot
29:08
Speaker 3: of assets come together regardless of whose name is on
29:12
Speaker 3: the account. So it doesn't matter then, right Whereas if
29:16
Speaker 3: you didn't, if these people didn't get married, well that's
29:19
Speaker 3: a whole other kettle of fish for nursing homes. If
29:21
Speaker 3: you're not married. Well, then yeah, one person gets sick,
29:24
Speaker 3: the other person has no reason to use their money
29:27
Speaker 3: to pay for that person. Right, So it's the marrying
29:32
Speaker 3: that caused the problem from a medicaid perspective. Right, Keeping
29:36
Speaker 3: things separate is great from a regular creditor perspective, and
29:41
Speaker 3: to preserve your prenup in case you do get divorced.
29:44
Speaker 2: But they could, essentially, they could at this point do
29:48
Speaker 2: some irrevocable trust planning. The prenup would stay as is,
29:52
Speaker 2: but they could do their own irrevocable trust to protect
29:55
Speaker 2: their assets.
29:55
Speaker 3: I think that's exactly what they should do here, Susan.
29:59
Speaker 3: I think if these folks are thinking about wanting to
30:01
Speaker 3: take care of each other, which I'm sure they do
30:04
Speaker 3: since they're married, then they ought to put together two
30:08
Speaker 3: separate earrevs. That way, she can put her assets in
30:11
Speaker 3: her earrev so they're protected from separate lawsuits, separate creditors.
30:16
Speaker 3: It's not going to destroy the prenup if they were
30:19
Speaker 3: to get a divorce at some point, and as you said,
30:22
Speaker 3: in five years, her assets now will be protected from
30:26
Speaker 3: his divorce and vice versa. If she gets sick, all
30:30
Speaker 3: the assets are protected because they're in these irrevocable trusts.
30:34
Speaker 3: So yes, I think that would be the answer. So yeah,
30:38
Speaker 3: lots to think about here, Derek, But certainly there are
30:43
Speaker 3: answers now, Folks, it's funny because we have a guide
30:47
Speaker 3: called making the Most of Gifting Assets and seems easy.
30:50
Speaker 3: But who would have thought that all this would come
30:52
Speaker 3: from a prenup? Right? With a prenup you have to
30:54
Speaker 3: think of a lot of different things. Well, same thing
30:57
Speaker 3: with gifting. Don't just add people's names to a don't
31:00
Speaker 3: make joint accounts with kids, don't throw kids' names on property. Right,
31:05
Speaker 3: it causes gifting problems, It causes s income tax problems.
31:10
Speaker 3: You could have carryover basis issues. If you're gonna make
31:13
Speaker 3: a gift, figure out whether it should be a high
31:15
Speaker 3: basis asset or a low basis asset. Figure out if
31:18
Speaker 3: you want to gift it outright to a child, or
31:21
Speaker 3: set up a gifting trust so that it can be
31:23
Speaker 3: protected from their creditors while they enjoy it outside of
31:26
Speaker 3: your estate, yet subject to bloodline planning down the line. Folks,
31:32
Speaker 3: please get the guide before you just make gifts, and
31:35
Speaker 3: decide if you even should gift eight six six eight
31:39
Speaker 3: four eight five six nine nine or Legal Exchange Show
31:43
Speaker 3: dot com again eight six six eight four eight five
31:46
Speaker 3: six nine nine or Legal Exchange Show dot com todd.
31:50
Speaker 2: Our last question comes from John in Plymouth, mass and
31:53
Speaker 2: John Wrights. I have four siblings and one of my
31:57
Speaker 2: sisters recently relocated from California and moved in with my father.
32:01
Speaker 2: She has since transferred his house into her name, claiming
32:05
Speaker 2: that he wanted to gift it to her. He is
32:08
Speaker 2: eighty three and has had a stroke and is now
32:10
Speaker 2: in a rehab facility. He will likely not be coming home.
32:14
Speaker 2: Is there anything we can do to get the home
32:16
Speaker 2: back out of her name?
32:19
Speaker 3: Well, there's a lot to unpack here. So in this case,
32:22
Speaker 3: you know, it's John calling with four siblings and one
32:27
Speaker 3: of his sisters recently relocated. You say from California, moved
32:31
Speaker 3: in with the father. There's no spouses involved here, correct,
32:35
Speaker 3: And she transferred the house to her name. So the
32:41
Speaker 3: good news is again timing wise, I'm trying to figure
32:45
Speaker 3: out if he needs nursing home, right, he needs nursing
32:48
Speaker 3: home now and it happened just recently, right, Yes, so
32:51
Speaker 3: there was never a five year waiting period. So let's
32:53
Speaker 3: analyze this. Let's break it down. First, can he make
32:56
Speaker 3: a gift of a house to his daughter? Sure he can,
32:59
Speaker 3: he has capacity. The stroke occurred later, Let's assume he
33:03
Speaker 3: was perfectly competent when he did it. Then the stroke comes. Okay,
33:07
Speaker 3: so can he do it? Yes? Is it a completed gift. Yes.
33:12
Speaker 3: We also have a carryover basis, so there's a big
33:15
Speaker 3: capital gains tax that could be built in.
33:18
Speaker 2: So whatever his cost basis is is now hers.
33:22
Speaker 3: Correct, and so then we could have a capital gain
33:25
Speaker 3: issue for her down the road. Certainly a taxable gift
33:30
Speaker 3: by him, but probably no gift tax do because he
33:33
Speaker 3: would be under the exemption. Now, obviously there's four other
33:38
Speaker 3: siblings here, and if he has a stroke, goes into
33:40
Speaker 3: a nursing home and just passes away, one the house
33:46
Speaker 3: is hers. Did he mean to disinherit his other kids?
33:50
Speaker 3: Don't know, right, But that happens when you do these things.
33:54
Speaker 3: You accidentally disinherit people because you made gifts. You didn't
33:58
Speaker 3: think about what you were doing. In any event, if
34:02
Speaker 3: he had the stroke and the stroke put him in
34:06
Speaker 3: the rehab and turns out that he's not going to
34:08
Speaker 3: leave the rehab, I'm just sort of expanding on the
34:11
Speaker 3: facts that he ends up staying in the nursing home
34:14
Speaker 3: right says he will not be coming home later. Now
34:18
Speaker 3: we have to decide whether or not that gift can
34:20
Speaker 3: even remain, because now you have to private pay the
34:24
Speaker 3: nursing home at roughly fifteen grand a month, and you
34:29
Speaker 3: won't if you don't have the fifteen grand a month,
34:32
Speaker 3: and you'd instead rather try to apply for medicaid. You
34:35
Speaker 3: can't get on medicaid because you made a gift of
34:38
Speaker 3: a house within the last five.
34:39
Speaker 2: Years, because he gave that house away.
34:41
Speaker 3: So you're right, Susan, we have to get the house
34:43
Speaker 3: back in his name in order to even apply for medicaid.
34:47
Speaker 3: Let's say he has not a lot of money, but
34:50
Speaker 3: he has this eight hundred thousand dollars home. Well, that's
34:54
Speaker 3: his only asset. Kids might say, we'd like to save
34:57
Speaker 3: that asset. So now you need to tell the daughter
35:01
Speaker 3: sibling put it back. Well, sure it can go back.
35:06
Speaker 3: She can just make a deed prepared giving it the
35:08
Speaker 3: house back to him. Yes, it will be a taxable
35:11
Speaker 3: gift by her to him. I get it. She probably
35:14
Speaker 3: won't pay any gift tax because there's a currently a
35:17
Speaker 3: thirteen point six million dollar exemption for gifts and get
35:21
Speaker 3: the house back. Once it's back, then you can apply
35:24
Speaker 3: for medicaid assuming he has no other assets, and check
35:29
Speaker 3: a box that he intends to return home, and like magic,
35:33
Speaker 3: he can be eligible for medicaid. So that the lean
35:36
Speaker 3: against the house will be way smaller because you'll be
35:40
Speaker 3: on a Medicaid rate instead of a private pay rate.
35:44
Speaker 3: How much smaller medicaid? I mean private pay rate fifteen
35:49
Speaker 3: grand a month, easy Medicaid rate depending on your care
35:54
Speaker 3: sixty five hundred maybe a month less twenty five hundred
35:59
Speaker 3: three two thousand Social Security. The lean is pretty small
36:03
Speaker 3: right on an eight hundred thousand dollars home, A.
36:05
Speaker 2: Heck of a lot lower than fifteen grand a month.
36:08
Speaker 3: That's what we mean about learning how to do medicaid
36:11
Speaker 3: planning last minute. When you don't, when you don't do
36:14
Speaker 3: planning in advance, and you're applying for medicaid, don't.
36:16
Speaker 2: That it gifts how not to gift.
36:18
Speaker 3: More importantly, exactly, don't write the check. But before you
36:21
Speaker 3: do that, this gifting wasn't going to be a good idea.
36:24
Speaker 3: It would have been way better to put that in
36:26
Speaker 3: an irrevocable trust. Retain the step up in basis. When
36:29
Speaker 3: he passes, avoid probate, get a get the asset protected
36:33
Speaker 3: from the nursing home. So don't just make gifts, folks,
36:37
Speaker 3: call and get the guide. Eight six six eight four
36:40
Speaker 3: eight five six, nine to nine.
36:43
Speaker 2: You've been listening to Todd Leutsky, a partner with the
36:45
Speaker 2: law firm of Cushing and Dolan. Susan Powers, a financial
36:48
Speaker 2: advisor with the Armstrong Advisory Group. If you have a
36:51
Speaker 2: question for Todd, visit his website, Legal Exchange Show dot com.
36:55
Speaker 2: Click on the ass Todd tab. Maybe I'll be able
36:58
Speaker 2: to read your question on the air, and hopefully his
37:01
Speaker 2: answer will stop you from becoming his next real life story.
37:05
Speaker 2: We'll be back with more after this quick break on
37:07
Speaker 2: the Legal Exchange with Todd Lutsky.
37:10
Speaker 1: Legacy planning is incredibly important, but if it isn't done properly,
37:14
Speaker 1: you can create significant problems for your estate. Cushing and
37:17
Speaker 1: Dolan are expert to know their law, and their new
37:19
Speaker 1: guide out this month is called Making the Most of
37:21
Speaker 1: Gifting Assets. In it, you'll learn that while some gifts
37:24
Speaker 1: to your children can be beneficial, others may not be,
37:27
Speaker 1: especially if they're financial difficulties or a divorce proceeding. Learn
37:31
Speaker 1: how to protect yourself and your family by calling Cushing
37:33
Speaker 1: and Dolan right now at eight six six eight four
37:36
Speaker 1: eight five six ninet nine ask for their brand new
37:38
Speaker 1: guide called Making the Most of Gifting Assets. It contains
37:42
Speaker 1: a wealth of information about the gifting process, including important
37:45
Speaker 1: details about what tax issues may arise from a major
37:48
Speaker 1: gift like a home or a vacation property, and what
37:50
Speaker 1: happens to the asset up the child has creditor issues.
37:53
Speaker 1: Call eight sixty six eight four eight five six ninety
37:56
Speaker 1: nine or request it online from their website Legal exchange
37:59
Speaker 1: show dot com. The preceding was paid for and the
38:01
Speaker 1: music expressed just solely those of Cushing and Dolin. Cushing
38:03
Speaker 1: and Dolan and or Armstrong Advisory may contact you offering
38:05
Speaker 1: legal or investment services. Cushing and Dolan and Armstrong Advisory
38:08
Speaker 1: do not endorse each other and are not affiliated.
38:11
Speaker 4: With the year coming to a close, now's the perfect
38:13
Speaker 4: time to address some important financial considerations as you begin
38:16
Speaker 4: to think about your plans for twenty twenty five. Hi,
38:19
Speaker 4: this is Mike Armstrong from the Armstrong Advisory Group and
38:21
Speaker 4: our new guide is called the Top Year End Planning Tips.
38:24
Speaker 4: In it, we discussed the significance of several concepts that
38:27
Speaker 4: are all crucial to your overall planning topics, such as
38:30
Speaker 4: family gifting, tax loss harvesting, and properly calculating your required
38:34
Speaker 4: minimum distributions. Understanding these, among others, may help you with
38:38
Speaker 4: certain decisions you're considering as we head into twenty twenty five.
38:41
Speaker 4: Call the Armstrong Advisory Group at eight hundred three nine
38:44
Speaker 4: three four zero zero one and get your free guide today.
38:47
Speaker 4: Let us help you finish twenty twenty four without worrying
38:50
Speaker 4: about your financial strategy while setting you up for a
38:53
Speaker 4: positive start in the new year. That number again is
38:55
Speaker 4: eight hundred three nine three four zero zero one.
38:58
Speaker 1: The proceeding was paid for by Armstrong Advisory, a registered
39:00
Speaker 1: investment advisor. Nothing in the ad or in any Armstrong
39:02
Speaker 1: Guide a specific financial, legal, or tax advice. Consult your
39:05
Speaker 1: own financial tax into state planning advisors before making any
39:07
Speaker 1: investment decisions. Armstrong may contact you to offer investment advisory services.
39:11
Speaker 1: Isn't it time for you to fall naturally in rhythm
39:13
Speaker 1: with America's Caribbean paradise. The US Virgin Islands are Saint Croix,
39:17
Speaker 1: Saint Thomas, and Saint John and They're the perfect spot
39:21
Speaker 1: for your next incredible vacation. Whether it's the rich history
39:24
Speaker 1: of Saint Croix, the pristine beaches of Saint Thomas, or
39:27
Speaker 1: the peace and tranquility of Saint John, the US Virgin
39:30
Speaker 1: Islands has everything you need to enjoy a spectacular holiday.
39:34
Speaker 1: Go to visit USVII dot com and check out the
39:37
Speaker 1: American Caribbean, where you'll find all the information you'll need
39:40
Speaker 1: to book a trip that you will never forget. Travel
39:43
Speaker 1: to and from New England is simple, and your stay
39:45
Speaker 1: will be hassle free. Because this is the American Caribbean.
39:49
Speaker 1: There's no passport required and no money to exchange. Make
39:52
Speaker 1: it a romantic getaway or a week long family vacation.
39:56
Speaker 1: The friendly folks of the USVII are waiting to welcome
39:59
Speaker 1: you with open arm. So get out of the cold
40:01
Speaker 1: and head to America's Caribbean paradise. Go to visit USVI
40:05
Speaker 1: dot com and book your trip of a lifetime today.
40:08
Speaker 1: That's visit USVI dot com. Legacy planning is incredibly important.
40:13
Speaker 1: Cushing and Dolan's new guide is called making the most
40:15
Speaker 1: of Gifting Assets. In it, you'll learn that some gifts
40:17
Speaker 1: to your children can be problematic, especially if they're financial
40:20
Speaker 1: difficulties or a divorce proceeding. Get your guide today by
40:23
Speaker 1: calling eight six six eight four eight five six nine nine.
40:26
Speaker 1: That's eight six six eight four eight five six nine nine,
40:28
Speaker 1: or request the guide online at Legal exchange show dot com.
40:31
Speaker 1: The proceeding was paid for in the views expressed are
40:33
Speaker 1: sole leaders of Cushing and Dolan. Cushing and Dolan and
40:35
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
40:38
Speaker 1: Cushing and Dolan at Armstrong Advisory do not endorse each
40:40
Speaker 1: other and are not affiliated your tune to the Legal
40:43
Speaker 1: Exchange with Todd Lutsky. If you are a loved one
40:46
Speaker 1: needs a nursing homestay, call Todd right now at eight
40:49
Speaker 1: six six eight four eight five six ninet nine and
40:51
Speaker 1: let him make sure your assets are protected. That's eight
40:54
Speaker 1: six six eight four eight five six nine nine, or
40:57
Speaker 1: visit him online at Legal exchange Show dot com.
41:00
Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
41:04
Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
41:07
Speaker 2: and I'm joined of course by Todd Lutsky, partner with
41:10
Speaker 2: the law firm of Cushing and Dolan with a master's
41:13
Speaker 2: in taxation. So this guy you have this month, Todd,
41:17
Speaker 2: it's all about gifting, the right way to gift, the
41:19
Speaker 2: wrong way to gift. And as you mentioned at the
41:22
Speaker 2: start of the show, it's the season of giving. So
41:25
Speaker 2: maybe some folks want to write some checks to their
41:29
Speaker 2: family for the holidays. How much are you allowed to
41:33
Speaker 2: give away each year?
41:36
Speaker 3: And you know what, Susan, it's not even limited to family,
41:39
Speaker 3: so if they want to write us checks.
41:41
Speaker 2: So if you want to be will accept a check
41:44
Speaker 2: from you for Thanksgiving to thank me for being here
41:46
Speaker 2: with you.
41:46
Speaker 3: I agree, we could do this to anybody, folks. It's
41:50
Speaker 3: not limited to family, so to any person. So to
41:54
Speaker 3: keep it simple, which a lot of people like. And
41:57
Speaker 3: I don't think you really need to worry about tax
41:59
Speaker 3: and implications so much with the size of the gift
42:02
Speaker 3: that I'm about to explain. So if you're and plus
42:05
Speaker 3: if you're writing a check, it's likely cash and cash
42:08
Speaker 3: is always the best thing. Cash is king to give.
42:10
Speaker 3: So in this case, we currently can give away seventeen
42:18
Speaker 3: eighteen thousand dollars currently eighteen It goes up all the time.
42:22
Speaker 3: And by the way, let's tell you about the new number.
42:24
Speaker 3: So eighteen thousand dollars per year per person. You just
42:30
Speaker 3: write a check give it.
42:33
Speaker 2: So if you have a married couple, they can give
42:35
Speaker 2: thirty six grand to each kid or whoever they want.
42:37
Speaker 3: Each kid, each grandkid, each each head. Correct, that requires
42:42
Speaker 3: absolutely no filing of an of a gift tax return,
42:46
Speaker 3: no reporting of any kind.
42:49
Speaker 2: So what about for the recipient? Do they have to
42:51
Speaker 2: mark that down as income on their tax return?
42:54
Speaker 3: And great question? So on the flip side, so not
42:56
Speaker 3: only is there no gift tax issues for the giver
43:01
Speaker 3: the recipient and this applies not just to the eighteen thousand,
43:04
Speaker 3: but I'll take it one step further. There is never
43:08
Speaker 3: an income tax on a gift to recipient period, So
43:13
Speaker 3: it doesn't matter how much the recipient receives. The receipt
43:19
Speaker 3: of that money is not an income taxable event. We're
43:24
Speaker 3: not talking about basis and later selling and all that,
43:26
Speaker 3: but the receipt of what they get. So if they
43:29
Speaker 3: get a check, it is not income taxable event for them.
43:32
Speaker 2: Okay, in that eighteen thousand a year, it seems to
43:36
Speaker 2: go up slowly. Oh yeah, it doesn't go up every year,
43:39
Speaker 2: but it's not like a cost of living every year.
43:41
Speaker 3: Yeah, it's tied to an index, so it has to
43:44
Speaker 3: jump enough and you'll never see it go from eighteen
43:47
Speaker 3: to eighteen four. It has to move the index enough
43:53
Speaker 3: to be able to raise the exemption a full thousand.
43:56
Speaker 2: Okay, have we done that? Are we hitting that in January?
43:59
Speaker 3: We are so in January it will now jump to
44:04
Speaker 3: nineteen thousand per year per person.
44:08
Speaker 2: Okay.
44:09
Speaker 3: Now, just to tell you how old I am, it
44:12
Speaker 3: used to be and we've been true folks, and we
44:15
Speaker 3: probably all remember, ten thousand dollars a year was the
44:21
Speaker 3: annual gifting exclusion for a very long time. It's now
44:25
Speaker 3: up to eighteen so not bad. Yeah, so, folks, that's
44:30
Speaker 3: just one aspect of giving. That's the free amount. We
44:33
Speaker 3: also have the ability to gift up to the current
44:36
Speaker 3: federal estate tax exemption thirteen point six million. Learn how
44:41
Speaker 3: to use that exemption before you lose it if you
44:43
Speaker 3: are a higher net worth client, and learn how to
44:46
Speaker 3: not make mistakes gifting by getting the guide by adding
44:50
Speaker 3: names to accounts or to putting names on houses, et cetera.
44:55
Speaker 3: Get the Guide eight six six eight four eight five
44:59
Speaker 3: six nine or Legal Exchange show dot com. Making the
45:04
Speaker 3: most of gifting your assets eight sixty six eight four
45:07
Speaker 3: eight five six ninety nine or Legal Exchange show dot com.
45:12
Speaker 2: So, tob what if I'm a generous person and instead
45:15
Speaker 2: of giving away eighteen thousand, I want to give away
45:17
Speaker 2: one hundred and eighteen thousand? Am I allowed to do that?
45:20
Speaker 3: And that's very fair question. So this this amount that
45:23
Speaker 3: we're talking about, now we've moved beyond what is called
45:27
Speaker 3: the present interest exclusion and we've moved to a once
45:32
Speaker 3: in a lifetime exclusion. So many people always ask me
45:35
Speaker 3: that when I tell them, oh, you can just give
45:37
Speaker 3: this away, Well, isn't there a problem? Well, that's the
45:40
Speaker 3: difference present exclusion eighteen thousand per year per person, no filing,
45:47
Speaker 3: the freebe freebie. But if you want to make big gifts,
45:51
Speaker 3: and that's important, especially with the estate tax law changing
45:54
Speaker 3: as we're seeing it changed come twenty twenty six January one.
45:58
Speaker 3: Although we'll see how that plays out out, but it
46:01
Speaker 3: looks like unless there's an action, that's what's going to happen. Well,
46:05
Speaker 3: if that's the case and you want to give away
46:07
Speaker 3: a million, Let's say I got a million bucks, I'd
46:10
Speaker 3: like to move out of my estate, that might even
46:12
Speaker 3: help save Massachusetts a state tax or your state estate tax,
46:16
Speaker 3: and as long as you do it smartly, you can
46:20
Speaker 3: make that gift. And then the only difference will be
46:25
Speaker 3: that you now need to file a seven oh nine
46:28
Speaker 3: gift tax return to report the gift. Forget the eighteen thousand.
46:33
Speaker 3: Forer a minute. So if you gave away, well, if
46:34
Speaker 3: you gave away a million eighteen thousand, the eighteen thousand
46:39
Speaker 3: is tax free. The million is taxable, and so you
46:43
Speaker 3: report that and you don't pay tax on it because
46:47
Speaker 3: you then reach across the isle and reduce your gift
46:51
Speaker 3: tax exemption, which currently sits at thirteen point six million,
46:56
Speaker 3: and reduce it by a million.
46:58
Speaker 2: So by filing that form, that gift tax return, you're saying, hey,
47:02
Speaker 2: I ras when I die, instead of giving me a
47:05
Speaker 2: thirteen and a half million dollar exemption, give me twelve
47:08
Speaker 2: and a half because I just gave away a million.
47:10
Speaker 3: That's right, okay, it's you just simply reduce that exemption.
47:15
Speaker 3: So you report the gift, but it turns out to
47:17
Speaker 3: be a non taxable gift because you used up some
47:21
Speaker 3: of your.
47:21
Speaker 2: Credit, so tax reported, but not taxaball, not tax Okay.
47:25
Speaker 2: So I think about myself and not that I have
47:29
Speaker 2: a million bucks to give away, but if I did,
47:31
Speaker 2: I certainly do not want to hand my nineteen year
47:35
Speaker 2: old boys a million dollars. So how can I go
47:39
Speaker 2: about reducing the size of my estate while not putting
47:43
Speaker 2: it into their frivolous, greedy little hits.
47:46
Speaker 3: That's true, and it's it's even if they're good kids, right,
47:49
Speaker 3: I agree with you, you're.
47:50
Speaker 2: Excellent kids, but I'm not going to hand them a
47:53
Speaker 2: million bucks.
47:53
Speaker 3: I totally agree. Good kids, bad kids. There's future divorces
47:58
Speaker 3: down the line. Never mind you, in future divorces down
48:01
Speaker 3: the line. We hope that our kids will have their
48:04
Speaker 3: own net worth, their own assets. And why do we
48:09
Speaker 3: want to increase the estate of a child so that
48:14
Speaker 3: if they're growing their own assets, just to cause them
48:17
Speaker 3: to be in a possible higher estate tax situation when
48:21
Speaker 3: they die. We don't want that. So if we don't
48:24
Speaker 3: want that, set up a trust. Take the assets gifted
48:28
Speaker 3: to an irrevocable grant or trust, and you could put
48:34
Speaker 3: a spouse on as trustee. If you do the giving,
48:37
Speaker 3: you could put a spouse on as trustee. Now you
48:39
Speaker 3: could put the kids on as trustee if they're old enough.
48:42
Speaker 3: You can retain the power to remove and replace the trustee,
48:45
Speaker 3: so you keep control over it.
48:47
Speaker 2: Is this let me just interrupt for women. So you said,
48:49
Speaker 2: an irrevocable grand to our trust. Is that different than
48:51
Speaker 2: the medicaid irrevocable medicaid trusts you talk about?
48:54
Speaker 3: Very different. Well, they're both grand to our trust for
48:57
Speaker 3: income tax purposes. It's just that the one we're talking
48:59
Speaker 3: about now, Susan, and that's a good point, is a
49:01
Speaker 3: gifting trust versus a medicaid trust. It's a gifting trust
49:05
Speaker 3: because the assets you're putting in at this million dollar
49:08
Speaker 3: example that you speak of is out of the estate
49:12
Speaker 3: of the giver. The medicaid trust is still in the
49:15
Speaker 3: estate of the giver. They're getting a step up in
49:18
Speaker 3: basis you're not getting that on the assets you give away,
49:21
Speaker 3: but they're going to grow as state tax free.
49:23
Speaker 2: But likely the person that's doing that gifting trust is
49:26
Speaker 2: not doing medicaid planning.
49:28
Speaker 3: All. Yeah, it would not be you would never see that.
49:30
Speaker 3: And these are assets that in your mind you've given away.
49:33
Speaker 3: They're not yours anymore, and not that we are going
49:36
Speaker 3: to talk about it now. But that's very different than
49:38
Speaker 3: something we can talk about later, which our spousal lifetime
49:41
Speaker 3: access irrevocable trusts. So yet a third kind of irrevocable
49:46
Speaker 3: trust where it's a completed gift, but you can still
49:49
Speaker 3: enjoy what you gave away. And that's a song for
49:52
Speaker 3: another day. But in this case, don't just put the
49:57
Speaker 3: assets in the kid's hands. Stick with that analysis. Let
50:00
Speaker 3: this grow and be controlled by you and by the
50:03
Speaker 3: kids estate tax free and credit or protected. So and
50:08
Speaker 3: then decide what you want a gift and how do you.
50:10
Speaker 2: Get to it the kids that gifting trust.
50:13
Speaker 3: Oh yeah, yeah, you put language in there that says
50:15
Speaker 3: you can have discretionary distributions to the kids that have
50:17
Speaker 3: the divorce proof language everything. Yeah, it's not not theirs,
50:21
Speaker 3: just not owned by them, got it, So it'll be
50:23
Speaker 3: tax free, folks. Lots to think about when you're giving,
50:26
Speaker 3: what kind of assets to gift and how to gift
50:30
Speaker 3: high basis, low basis outright not outright. Call and get
50:34
Speaker 3: the guide learn how to make the most of your
50:36
Speaker 3: gifting of assets eight six six eight four eight five
50:40
Speaker 3: six nine nine or Legal Exchange show dot com.
50:44
Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan,
50:46
Speaker 2: thank you so much.
50:47
Speaker 3: Thank you, Susan 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: Legacy planning is incredibly important, but if it isn't done properly,
51:03
Speaker 1: you can create significant problems for your estate. Cushing and
51:06
Speaker 1: Dolan are expert to know their law, and their new
51:08
Speaker 1: guide out this month is called Making the Most of
51:11
Speaker 1: Gifting Assets. In it, you'll learn that while some gifts
51:13
Speaker 1: to your children can be beneficial, others may not be,
51:16
Speaker 1: especially if their financial difficulties or a divorce proceeding. Learn
51:20
Speaker 1: how to protect yourself and your family by calling Cushing
51:23
Speaker 1: and Dolan right now at eight sixty six eight four
51:25
Speaker 1: eight five six nine nine ask for their brand new
51:28
Speaker 1: guide called Making the Most of Gifting Assets. It contains
51:31
Speaker 1: a wealth of information about the gifting process, including important
51:34
Speaker 1: details about what tax issues may arise from a major
51:37
Speaker 1: gift like a home or a vacation property, and what
51:39
Speaker 1: happens to the asset up the child has creditor issues.
51:42
Speaker 1: Call eight sixty six eight four eight five six nine
51:45
Speaker 1: nine or request it online. From their website Legal Exchange
51:48
Speaker 1: show dot com. The proceeding was paid for in the
51:50
Speaker 1: Music Express or solely those of Cushing and Dolan. Cushing
51:52
Speaker 1: and Dolan and or Armstrong Advisory may contact you offering
51:55
Speaker 1: legal or investment services. Cushing and Dolan at Armstrong Advisory
51:58
Speaker 1: do not endorse each other and are not affiliated. Isn't
52:00
Speaker 1: it time for you to fall naturally in rhythm with
52:03
Speaker 1: America's Caribbean paradise. The US Virgin Islands are Saint Croix,
52:07
Speaker 1: Saint Thomas and Saint John, and they're the perfect spot
52:10
Speaker 1: for your next incredible vacation. Whether it's the rich history
52:13
Speaker 1: of Saint Croix, the pristine beaches of Saint Thomas, or
52:17
Speaker 1: the peace and tranquility of Saint John, the US Virgin
52:20
Speaker 1: Islands has everything you need to enjoy a spectacular holiday.
52:23
Speaker 1: Go to visit USVII dot com and check out the
52:26
Speaker 1: American Caribbean, where you'll find all the information you'll need
52:29
Speaker 1: to book a trip that you will never forget. Travel
52:32
Speaker 1: to and from New England is simple, and your stay
52:34
Speaker 1: will be hassle free. Because this is the American Caribbean,
52:38
Speaker 1: there's no passport required and no money to exchange. Make
52:42
Speaker 1: it a romantic getaway or a week long family vacation.
52:45
Speaker 1: The friendly folks of the USVII are waiting to welcome
52:48
Speaker 1: you with open arms. So get out of the cold
52:51
Speaker 1: and head to America's Caribbean paradise. Go to visit USVII
52:54
Speaker 1: dot com and book your trip of a lifetime today.
52:57
Speaker 1: That's visit USVII dot com.
53:00
Speaker 4: Hi, this is Mike Armstrong from the Armstrong Advisory Group.
53:03
Speaker 4: Fine Tuning your financial strategy as the year comes to
53:06
Speaker 4: a close is very important, so this month we're sharing
53:09
Speaker 4: what we believe are the most critical year end financial tips.
53:12
Speaker 4: As twenty twenty four winds down, there are several opportunities
53:15
Speaker 4: for you to consider that may help you end this
53:18
Speaker 4: year without worrying about your overall planning strategy, such as
53:21
Speaker 4: contributing the maximum amount of money to your IRA or
53:24
Speaker 4: four oh one K plan, offsetting your capital gains, and
53:26
Speaker 4: maximizing your charitable giving. We'll walk you through these issues
53:30
Speaker 4: and more in our new free guide called the Top
53:32
Speaker 4: Year end Financial Tips. Get yours today by calling eight
53:35
Speaker 4: hundred three nine three four zero zero one. Again it's
53:39
Speaker 4: the Top year end planning Tips from the Armstrong Advisory
53:42
Speaker 4: Group and you can request it by calling eight hundred
53:44
Speaker 4: three nine three four zero zero one.
53:46
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
53:49
Speaker 1: registered investment advisor. Nothing in the ad or in any
53:51
Speaker 1: Armstrong Guide a specific financial, legal or tax advice. Consult
53:54
Speaker 1: your own financial, tax into state planning advisors before making
53:56
Speaker 1: any investment decisions. Armstrong make contact you to offer investment
53:59
Speaker 1: advisory so versus