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Ask Todd: Does the Type of Assets You Own Change Your Estate Plan? · 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: And as promised, we're now joined by the one and
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  Speaker 2: only Todd Letsky from the law firm of Cushing and Dolan.
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  Speaker 2: We got the phone lines wide open for your phone calls,
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  Speaker 2: so make sure you get calling. Eight eight eight two
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  Speaker 2: zero five two two sixty three is the number to
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  Speaker 2: ask Todd your estate planning questions, live on air right now.
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  Speaker 2: Again eight eight eight two zero five two two sixty
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  Speaker 2: three is the number we can usually get through two
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  Speaker 2: or three year calls, So make sure you get dialing
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  Speaker 2: in to get your spot in line, uh, because Todd
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  Speaker 2: tends to be in high demand. Again eight eight eight
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  Speaker 2: two zero five two two sixty three is the number.
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  Speaker 2: Mister Lutsky how are you doing today?
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  Speaker 3: I am never better?
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  Speaker 2: And you good? Did uh? Did you hear that the
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  Speaker 2: duck finally quacked?
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  Speaker 3: No, no, I didn't hear that.
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  Speaker 2: Confess to all its quimes. Oh yeah, that's that's funny.
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  Speaker 2: Now it was actually foul play. Yeah, it's not good, Todd.
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  Speaker 2: I want to talk a little bit about, Uh, someone
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  Speaker 2: who might not have put together in a state plan.
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  Speaker 3: Yeah.
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  Speaker 2: Does the type of assets or accounts that someone owns
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  Speaker 2: impact or influence the type of planning that they do?
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  Speaker 4: Uh?
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  Speaker 3: It can. Yeah, the type of assets make a big difference.
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  Speaker 3: How so, so let's let's put let's pick some assets
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  Speaker 3: to to sort of pick on first. I would say,
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  Speaker 3: when you're listing assets, and by the way, that's the
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  Speaker 3: first thing you should do when you're thinking about your
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  Speaker 3: state plan. List all your assets so you know what
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  Speaker 3: you're dealing with. But let's say someone comes in and
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  Speaker 3: they've got you know, you know, five rental properties four
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  Speaker 3: A rental proper doesn't have to be multiple sure, so
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  Speaker 3: in mind, they might have a home and a vacation
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  Speaker 3: home in this and that. But let's just stick on
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  Speaker 3: the real estate side. Once they throw in rental properties
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  Speaker 3: in the mix of their planning. Not only are you
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  Speaker 3: going to then say okay, well, you still need to
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  Speaker 3: do your basic estate plan, your will, your trust, your
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  Speaker 3: health care proxy, your power of attorney, all the basic
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  Speaker 3: documents are still going to apply to an individual like that.
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  Speaker 3: But in addition to that, I'm going to say, okay,
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  Speaker 3: so the objectives are avoid probate, you know, reduce or
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  Speaker 3: eliminate your estate taxes, provide a bloodline plan to your
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  Speaker 3: family however you want to leave that, and then decide
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  Speaker 3: how much control you want to keep. Okay, so those
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  Speaker 3: are your basic ideas. Then I'm going to add, well,
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  Speaker 3: since you happen to have a rental property or rental properties,
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  Speaker 3: are you at all concerned about protecting those assets or
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  Speaker 3: protecting yourself from potential creditors associated with those properties? For instance,
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  Speaker 3: the slip and fall, the party where someone falls off
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  Speaker 3: the balcony you name it, and someone gets hurt on
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  Speaker 3: the property, If you continue to own that property the
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  Speaker 3: way you own it, generally speaking your own name, or
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  Speaker 3: even if you just say I want to do the
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  Speaker 3: basic estate planning and then put that rental property into
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  Speaker 3: the trust that you're doing, you have not changed your
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  Speaker 3: credit or exposure. Example, if someone gets hurt under those
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  Speaker 3: circumstances on the property, they are going to sue the
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  Speaker 3: property owner, which is you, and they are going to
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  Speaker 3: go after all of your assets, not just that building.
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  Speaker 3: Whereas if instead you put that building into a limited
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  Speaker 3: liability company, and then you take the shares of that
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  Speaker 3: limited liability company and place them into the revocable trust. Now,
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  Speaker 3: when somebody gets hurt on that property and sues, they
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  Speaker 3: will not sue the shareholder, which is you. They will
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  Speaker 3: sue the entity. And the entity has a building in it.
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  Speaker 3: And guess what, most of the time, the individual creditor
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  Speaker 3: doesn't want the building. They want the money, sure, and
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  Speaker 3: so now they're going to settle with your homeowner's insurance
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  Speaker 3: or umbrella carrier and figure out how to resolve this.
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  Speaker 3: And you don't care. You're happy you got to keep
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  Speaker 3: the building and the lawsuit was handled by your insurance company.
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  Speaker 2: Talking with Todd Lonski from the law firm of Kushing
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  Speaker 2: and Dolan's still room at the phone on the phone
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  Speaker 2: lines for your estate planning questions. Phone number is eight
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  Speaker 2: eight eight two zero five two two sixty three, and
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  Speaker 2: you get to ask Todd your questions live on air.
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  Speaker 2: Right now. That number is eight eight eight to zero
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  Speaker 2: five two two six three. We're gonna take a quick
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  Speaker 2: break here, but when we come back we'll get some
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  Speaker 2: of your questions with Todd. That phone number again is
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  Speaker 2: eight eight eight to zero five two two sixty three.
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  Speaker 1: only here on the Financial Exchange Radio Network. Todd Letsky
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  Speaker 1: answers your questions about a state and elder life planning
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  Speaker 1: every Wednesday at ten thirty right here on the Financial
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  Speaker 1: Exchange Radio Network, talking.
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  Speaker 2: With Todd Lutsky. We still have room on the phone
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  Speaker 2: lines for your estate planning questions at eight eight eight
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  Speaker 2: to zero five two two six three. Again, that number
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  Speaker 2: is eight eight eight to zero five two two six three.
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  Speaker 2: Let's go to Norman in Portland. Norman, what's your question
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  Speaker 2: for Todd Lutsky?
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  Speaker 3: Right?
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  Speaker 4: Well, I think you just describing me. I got a
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  Speaker 4: house that I'm renting in Massachusetts, but I live in Maine.
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  Speaker 4: I was wondering, is that a special difficulty being out
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  Speaker 4: of state?
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  Speaker 3: No, No, it's not. It's not any difficult, more difficult
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  Speaker 3: at all. What I can tell you, though, is, and
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  Speaker 3: since you do live out of state. And I think
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  Speaker 3: this is a great question for everybody else who's listening
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  Speaker 3: right now. I understand living out of state. There's one
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  Speaker 3: other issue you might not have been thinking about, and
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  Speaker 3: that is I'll describe it this way. I did a
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  Speaker 3: seminar once for somebody called So you think you've changed
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  Speaker 3: your residency, It's not always so easy. And so when
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  Speaker 3: you are a non resident in Massachusetts and you own
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  Speaker 3: real estate in Massachusetts in your own name, Massachusetts will
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  Speaker 3: tax you when you die as an on resident on
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  Speaker 3: the value of the property you own in mass So,
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  Speaker 3: for example, if you had two million dollar property in
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  Speaker 3: mass and your entire estate, all the stuff you own
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  Speaker 3: on your own in Maine, wherever else, let's say adds
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  Speaker 3: up to four million, So your entire estate is four million,
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  Speaker 3: but two million of it is Massachusetts property. They will
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  Speaker 3: divide that out, so that's fifty percent, right, and then
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  Speaker 3: they will calculate the tax in mass on four million
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  Speaker 3: your entire estate, and then hit that number with fifty percent.
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  Speaker 3: So they'll take fifty percent of the tax on four million.
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  Speaker 3: So you need to be mindful that you don't want
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  Speaker 3: to be paying Massachusetts a state tax, even though you're
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  Speaker 3: a non resident. So one we got to do an LLC.
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  Speaker 3: How do we prevent this taxation by Massachusetts on non
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  Speaker 3: residents that own property in mass You take the property
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  Speaker 3: and you put it into an LLC. Once it's in
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  Speaker 3: an LLC, you've effectively converted the Massachusetts real estate to
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  Speaker 3: what they call an intangible. What do I mean intangible?
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  Speaker 3: It's a stock certificate. It's an intangible. You don't own
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  Speaker 3: real estate in mass anymore. And so then mass cannot
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  Speaker 3: tax non residents on intangibles. And so now you avoid
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  Speaker 3: the Massachusetts a state tax. So that's not why you called,
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  Speaker 3: but that's another reason you should be doing this. Now,
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  Speaker 3: the creditor reason you should be doing this is if
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  Speaker 3: somebody gets hurt. Right, so we simply put this into
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  Speaker 3: an LLC for you here in mass and the operating
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  Speaker 3: agreement will be here in mass You shouldn't have to
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  Speaker 3: file in Maine because you don't own the property in Maine.
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  Speaker 3: You just have to file in Mass. And now, if
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  Speaker 3: somebody gets hurt on the property, they will sue the
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  Speaker 3: entity here in mass. They will not sue you as
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  Speaker 3: the shareholder or hopefully your trust as the shareholder. And
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  Speaker 3: again the reason you want to put the shares of
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  Speaker 3: the LLC into the trust is because you want to
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  Speaker 3: make sure you avoid probate when you pass on all
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  Speaker 3: assets right and in all states. So you certainly don't
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  Speaker 3: want to have to go to probate in mass and
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  Speaker 3: basically file in Maine and do an ancillary probate in
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  Speaker 3: mass So seemingly simple question, but hopefully I gave you
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  Speaker 3: a lot of information, and folks, I hope I helped
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  Speaker 3: you a lot of you out. If you're someone listening
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  Speaker 3: who has property out of state or has property in state,
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  Speaker 3: but you've moved out of state to avoid Massachusetts estate tax.
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  Speaker 3: Folks that said, a lot of people haven't even done
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  Speaker 3: their estate planning. So how do we kick off your
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  Speaker 3: estate plan this year? How do we get your estate
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  Speaker 3: planning going? The guide called back to the Basics will
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  Speaker 3: really help you. That's where given away this month. It
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  Speaker 3: basically lays out things to think about before you go
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  Speaker 3: to the lawyer. You know, how old am I? What's
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  Speaker 3: the family dynamics? As Chuck asked me earlier, what's the
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  Speaker 3: value of the assets that I have?
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  Speaker 2: You know?
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  Speaker 3: And then the guide continues to basically give an estate
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  Speaker 3: plan my It's an engagement letter basically that I put
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  Speaker 3: together for a four million dollar client, advising them how
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  Speaker 3: the will works, how the trust works, how the living
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  Speaker 3: will the healthcare proxy work. In this case, we've recommended
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  Speaker 3: an irrevocable trust, so you'll learn all about how that
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  Speaker 3: irrevocable trust works, along with the basic documents as well. Folks,
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  Speaker 3: get your estate plan in order today. Get the guide
• 10:35
  Speaker 3: back to the basics eight six six eight four eight
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  Speaker 3: five six nine nine or Legal Exchange Show dot com
• 10:43
  Speaker 3: again eight sixty six eight four eight five six nine
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  Speaker 3: nine or Legal Exchange Show dot com. And you could
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  Speaker 3: go to our Instagram page Cushing Dolan PC for more information.
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  Speaker 2: Todd, when we talk about family dynamics influencing an estate plan,
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  Speaker 2: can you give a little bit more color as to
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  Speaker 2: exactly what may come into play on that front.
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  Speaker 3: Yeah. I think when we start asking clients about family dynamics,
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  Speaker 3: where meaning, you know, do we have you know, somebody
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  Speaker 3: who might be you know, drug addicted or alcohol addicted
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  Speaker 3: somehow that's a lifelong thing you have to deal with.
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  Speaker 3: What if you have children who are you know, you
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  Speaker 3: know they're level headed, but they're horrible with money, or
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  Speaker 3: they just spend money like there's no tomorrow. They don't
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  Speaker 3: how to deal with finances. Well, that's important. What if
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  Speaker 3: you have somebody who is a disability, has a disability
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  Speaker 3: as a special needs child, or or became disabled later
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  Speaker 3: in life and is getting some kind of governmental benefits, Well,
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  Speaker 3: we want to make sure that we don't, you know,
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  Speaker 3: lose those governmental benefits. So when you're setting up the trust,
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  Speaker 3: you know, and another thing to think about is just
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  Speaker 3: in general, if you don't have any of those things,
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  Speaker 3: what about you know, someone who's got married, has kids,
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  Speaker 3: and you're just worried about that relationship. You're worried about
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  Speaker 3: a future divorce from your children after you die. I mean, folks,
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  Speaker 3: family dynamics come in all kinds of flavors, and you
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  Speaker 3: with these trusts. We talk a lot about state taxes
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  Speaker 3: and probate and I get all that, but remember the
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  Speaker 3: family behind the estate plan is critical. And so these
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  Speaker 3: trusts can live on after you die, long after you die,
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  Speaker 3: and provide for your children, your grandchildren, even your great
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  Speaker 3: grandchildren sometimes and so you can really control things from
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  Speaker 3: the grave. So you know, the way you set up
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  Speaker 3: the trust might be with that disabled child, I don't
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  Speaker 3: want to leave it out right. I want to leave
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  Speaker 3: it in trust. I want to have it so that
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  Speaker 3: the child can continue to get the governmental benefits, but
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  Speaker 3: at the same time be able to enjoy what we're
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  Speaker 3: leaving them. In other words, you don't have to disinherit
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  Speaker 3: that particular child in order to provide for them. In addition,
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  Speaker 3: what if I've got you know, that special needs or
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  Speaker 3: not that I've got a drug related child. Well, again,
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  Speaker 3: this person or a spendthrift. I don't want to leave
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  Speaker 3: this money out right to the child because they'll just
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  Speaker 3: blow it. But I want to have it in trust
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  Speaker 3: so that it comes out over time, you know, and
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  Speaker 3: it provides for them for not only during their life,
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  Speaker 3: but maybe even into retirement.
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  Speaker 2: Is it generally accurate to say then that, regardless of
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  Speaker 2: the specific concern that you may have about a family
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  Speaker 2: member or family members and how they may inherit certain assets, Yeah,
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  Speaker 2: there's typically a legal tool available to help alleviate that
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  Speaker 2: concern to a certain extent. You just might not know
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  Speaker 2: what it is.
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  Speaker 3: Yeah, I think, And to be safe, you can use
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  Speaker 3: a general language that we do or we I mean,
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  Speaker 3: I think generally speaking, there's never any harm done if
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  Speaker 3: you draft something with a lot of flexibility that actually
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  Speaker 3: holds the holds the assets in trust rather than gives
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  Speaker 3: it out right. As a general rule, even if the
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  Speaker 3: kids are you know, great level headed, you still worry
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  Speaker 3: about future creditors, and a future creditor could be any creditor.
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  Speaker 3: It doesn't have to be a divorce, but certainly divorce
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  Speaker 3: resonates with people. So to me, even if you don't
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  Speaker 3: think that there's a lot of other, you know, standout
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  Speaker 3: reasons to provide the trust to live on, sure, why
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  Speaker 3: not just put it in a sole discretionary payout trust
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  Speaker 3: so that the kids don't own it right away. Therefore
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  Speaker 3: if something comes up later after you're dead, it's protected.
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  Speaker 3: Yet it's drafted in a way where you know they're
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  Speaker 3: the trustees, they're managing it, they're investing it, they're buying
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  Speaker 3: and selling property, but just not owning it, so that
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  Speaker 3: if something comes up later on, then the asset is
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  Speaker 3: protected from that particular creditor or more likely than not,
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  Speaker 3: a divorce. So I think just giving it out rights
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  Speaker 3: never a great idea.
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  Speaker 2: Mister Lutski, thank you so much for joining us today.
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  Speaker 2: We really appreciate it.
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  Speaker 3: Always a pleasure. Thanks for having me.
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  Speaker 1: This has been asked Todd on the Financial Exchange Radio network,
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  Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
• 15:14
  Speaker 1: and Dolan, serving Massachusetts and New England for more than
• 15:16
  Speaker 1: thirty years, helping families with the state and tax planning,
• 15:19
  Speaker 1: Medicaid planning, and probate law. Call eight hundred three nine
• 15:22
  Speaker 1: three four thousand and one or visit Cushingdolan dot com.
• 15:26
  Speaker 1: The views expressed in this segment are solely those of
• 15:28
  Speaker 1: Cushing and Dolan. Armstrong Advisory does not provide any legal
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  Speaker 1: or tax advice. Please consult with your illegal or tax
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  Speaker 1: advisor on such matters. Cushing and Armstrong do not endorse
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  Speaker 1: each other and are not affiliated