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Ask Todd: What are pooled trusts? · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
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  If you have an existing estate plan or in the
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  market for one, Todd Lutsky is here to answer your
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  questions and help you plan for a later life. Ask
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  Todd is presented by Cushing and Dolan, serving Massachusetts and
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  New England for more than thirty five years, helping families
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  with a state and tax planning, medicaid planning, and probate law.
• 0:22
  Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As promised, We're now joined by Todd Lutsky from the
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  law firm of Cushing and Dole, and the segment is
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  Asked Todd, and it's your chance to speak with Todd
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  Lutsky live on air about your estate planning questions. Phone
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  lines are open at eight eight eight two zero five
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  two two six three. We got plenty of room on
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  him right now, but they do fill up. In the
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  last couple weeks, We've not gotten through all of the calls,
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  so get call on early to make sure you get
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  in line and we can get to you again. That
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  number is eight eight eight two zero five two two
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  sixty three. That is the number to call to Todd
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  Lutsky about your estate planning questions again. It's eight eight
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  eight to zero five two two six three, and we'll
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  get to your questions in just a little bit one
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  more time. Eight eight eight to zero five two two
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  six ' three. Mister Lutsky, how are you doing today?
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  Speaker 3: I am doing fine. I'm afraid to ask you, though,
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  I'm good.
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  Speaker 2: Did you see there was big news yesterday?
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  Speaker 3: No, what happened?
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  Speaker 2: I'm kind of a dinosaur geek. Oh are archaeologist? They
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  just found a fossilized dinosaur fart.
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  Speaker 3: Well, no, I didn't realize that.
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  Speaker 2: They called it a blast from the past. Just very
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  exciting news, Todd, I want to talk a little bit
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  about emergency nursing home situations. Let's say that someone is
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  in a case where they didn't necessarily do any planning
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  and now they have a long term care situation that
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  is imminent. Yeah, is there scenario in which it still
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  makes sense to do updated estate planning documents, including trusts
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  as you are heading into a long term care situation?
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  Speaker 3: So generally not the normal estate planning trust that you
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  would think about. Right, that's probably too late for that,
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  because like the Medicaid irrevocable trust that we were referencing
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  the guide and things like that you need. There's a
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  five year waiting rule that many of us have learned
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  about in the past, and so it's hard to overcome that,
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  but there is, and it is somewhat breaking news. The
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  pooled trust, which by the way, was around for my
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  whole careers as practicing in the elder law world, and
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  then in I believe March of twenty twenty four, it
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  went away by legislation or went Yeah, they took it
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  away as an option. So just earlier this year, earlier
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  this year and then lo and behold. Effective now I
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  think it's effective December of this year. Pool trusts are
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  back by legislation. They actually decided to pass a law
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  and not allow these regulations to apply anymore. And they
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  went at the legislative level here in Massachusetts. They've brought
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  back pool trust And that would be the kind of
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  trust that you're referring to here, Chuck, I believe, So.
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  Speaker 2: What is a pool trust?
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  Speaker 3: A pool trust is one that we actually don't even prepare.
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  But when you're applying for medicaid in this scenario you mentioned,
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  that's when these would come up. So like a financial institution,
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  would prepare this pool trust and then there's this charity
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  pool called Plan of Massachusetts and Rhode Island. They're the charity,
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  they serve as trustee, and then this money gets put
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  into this trust along with other people's money, and it
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  gets invested and managed for who for the person who
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  put it in, and that money can be used for
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  their benefit. But the key is that by transferring it
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  into this pooled trust, there's no five year waiting period.
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  So again last minute, as you mentioned, you're going into
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  the nursing home, this is when you would use this
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  and then there's no five year waiting period to put
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  it in. The catch is that there's a payback provision.
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  So when you pass away, if you've been in the
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  nursing home for less than two years, then you need
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  to not only give ten percent to charity Plan of
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  Massachusetts and Rhode Island and repay the state for your
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  care that you receive benefits that you received again at
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  a Medicaid rate way better, and then the balance can
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  go to the family. Or if you've been in there
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  for two years or longer, then you've got to give
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  twenty percent to charity, pay back the state balance to
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  a family. Still it's a wonderful way of getting on
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  Medicaid last minute and leveraging private pay against the Medicaid rate,
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  and everybody wins, from the nursing home, to the state,
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  to the family to the applicant.
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  Speaker 2: Talking with Todd A. Lotski from the law firm of
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  Cushing and Dolan. If you have a question to ask
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  Todd about your estate plan, still room on the phone
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  lines at eight eight eight to zero five two two
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  six three. That number again is eight eight eight to
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  zero five two two six three. We're gonna take a
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  quick break here, but when we come back, it's going
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  to be right to your questions with Todd Lotsky. So again,
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  still some room on the phone lines at eight eight
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  eight to zero five two two sixty three. When we
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  come back, right to your questions with Todd. That number
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  one last time is eight eight eight to zero five
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  two two sixty three.
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  only here on the Financial Exchange Radio Network. Todd Letsky
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  answers your questions about a state and elder life planning
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  every Wednesday at ten thirty right here on the Financial
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  Exchange Radio Network.
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  Speaker 2: Still room for one more call for Toddlotski at eight
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  eight eight zero five two two six three. Let's go
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  now to our first caller, though, Mark in Boston. Mark,
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  what is your question for Todd?
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  Speaker 1: Hey?
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  Speaker 3: How you doing?
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  Speaker 4: Banks of taking the call? Quick question? I just set
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  up a a will and and a trust, a revocable trust,
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  and I've got my home. I own my home and
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  it's in an LLC. I've got some life insurance and
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  stock stuff. But everybody, everything, the beneficiary of everything is
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  the the revocable trust. Now what do I have to
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  do to protect this and all my stuff against arsenal?
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  Can I drop that in a sookable trust?
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  Speaker 3: So yeah, let me And interestingly enough and for everybody listening,
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  it just sounds a little like Mark, you're you're kind
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  of all over the place. So let me You said
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  a lot of things that mean a lot of things
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  to me legally, So let me ask you a couple
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  of clarifying questions. One and the one that's most disconcerting
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  to me is that you said your home, your primary residence,
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  is in a limited liability company. Is that correct?
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  Speaker 4: Yes, it's a it's a multi family home.
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  Speaker 2: Put it, oh, put it?
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  Speaker 3: I can understand why you did it partly. But the
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  thing you need to really remember, and I generally don't
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  do this, is even though it's a two family or
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  a multi family home. You know, I get that you're
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  renting it and you want to protect it, but when
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  you put it in an LLC, you immediately lose any
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  of the capital gains exclusion that you would get if
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  you were to sell it. So if it's a two
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  family home, fifty percent of the gain would be you know,
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  if you're married, fifty percent of the gain would be
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  allowed or available to shelter up to five hundred thousand
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  dollars of that gain from taxes. You lose that immediately
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  by putting it into an LLC because now you're telling
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  the government that it's not my home anymore. It's now
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  a commercial residential property. So that's something we might want
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  to fix on. Obviously, I get the protection side of it,
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  but you might want to have a lot of umbrella
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  coverage on insurance. Umbrella insurance could maybe help with that.
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  Then the other piece would be it sounds like everything
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  else is centered around your revocable trust. So depending on
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  how much you're worth, right, not everybody needs to do
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  irrevocable trust. I mean, if you're self insured for the
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  nursing home, then you probably don't need to worry. But
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  depending on the size of your estate and your age
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  like sixty and over, sort of what I think about
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  in my head when I mentioned this to clients. But
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  if you're in that category and you want to protect
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  assets from the nursing home, then we would completely get
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  rid of what you have and you would start fresh
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  with an irrevocable or if you're married and you're worth
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  more than two million dollars, then two irrevocable medicaid trusts,
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  and we would take your house and put it in
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  that new trust. You know, whether it stays in the
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  LLC or not, we would have to discuss. I don't
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  love the idea, but you know, we certainly can do it,
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  along with some of your investment portfolios, not IRA accounts,
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  not retirement accounts, and we would put those non retirement
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  accounts and some of your real estate into these irrevocable trusts.
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  And that's the way to go to provide the protection
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  from the nursing home while continuing to get the benefits
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  of avoiding probate and eliminating or sheltering or reducing your
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  estate tax both at the federal and the state level,
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  so and of course providing for your family. So it
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  does everything the revocable trust does that you have, but
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  it adds nursing, home protection planning. So that's probably the
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  way to go for you, Mark, and you can figure
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  out how best to do that. Reach out to an
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  estate planning attorney and they can help get your ducks
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  in a row. That said, Mark made us touch on
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  two of the top seven estate planning trusts. Mark mentioned
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  the revocable, I came back with the irrevocable. Those are
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  two of the top seven state planning trust mentioned in
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  this guide this month. And there's others from irrevocable life
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  insurance trusts to sole benefit trust to special needs trusts.
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  But we think the top seven not only from a
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  tax perspective, does it explain it. It explains that how
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  it operates. And most importantly, if you've never done your planning,
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  get this learn which trust might be right for you
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  before you go in to see the estate planning attorney.
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  And if you've already done your planning, like Mark, maybe
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  get this and learn how shifting from a revocable to
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  an irrevocable might be right for you eight six six
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  eight four eight five six nine nine or Legal Exchange
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  Show dot com again eight six six eight four eight
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  five six nine nine or Legal Exchange Show dot com.
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  Speaker 2: Todd, We've got another one q'ed up for you here.
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  Let's go to Mike on the Cape. Mike, what is
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  your question for Todd Lunsky?
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  Speaker 5: Wellski, I'm a seventy eight year old and my wife
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  is sixty nine. We have property and we have a
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  few hundred thousand dollars in the bank, but my wife
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  refuses to get a trust or will. I don't know
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  what to do about it. I've tried for a couple
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  of years now and I'm not getting any younger, so
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  I'm not sure what to do. If you've got any
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  answers for me, I would appreciate it.
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  Speaker 3: Yeah, So that is a that is a complicated situation,
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  right because when clients come in, and I've had a
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  few of these, not many, but you know, when clients
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  come in, I always say I want both clients. You know,
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  Sometimes like a husband or a wife will come in
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  and they'll say, oh, you know, my my spouse is
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  not interested in this. She'll just do or he'll just
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  do whatever whatever we decide to do, or you know,
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  and if that's the case, I always tell me, you
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  know what, I really want to have the meeting with
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  both people here. Why because it's not about numbers, it's
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  not about taxes, it's not about probate. While it is
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  about those things, it's really about the family behind the
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  estate plan. And I need to understand what their wishes
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  are and who they want to be, and not only
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  who they want to be fiduciaries, but also to understand
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  how a trust works when one person passes away, because
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  the other one might be the survivor and they need
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  to know how it works. So I generally want both there. Now,
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  that said, in your case, you sometimes get people who
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  just don't want to participate. That doesn't mean that you
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  can't do an estate plan for yourself. As long as
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  we know we're only representing one party, we can do that.
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  You can come in and you can set up a
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  trust or a will. Again, you probably need more than
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  just a will, and at least deal with the assets
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  that you have access to or your half or you know,
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  and get some of the stuff in the trust. And remember,
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  we're not going to disinherit your spouse, but to the
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  extent possible, you can provide for your spouse through your
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  own estate plan. So I'm gonna say you could probably
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  do a state planning for at least some of the
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  assets and try to take care of you, your family,
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  and your spouse, even though your spouse isn't technically participating
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  in that plan. So that that might be a way
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  to look at that.
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  Speaker 2: Todd Earlier, we had talked a little bit about the
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  idea of hey, do you update your a state plan
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  if you have an imminent long term care situation? I
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  think we covered that decently well. But yeah, as far
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  as what else you can consider if you have an
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  imminent long term care situation? What are other options that
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  might be on the table for people depending on the
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  situation they find themselves in.
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  Speaker 3: So if we're if we're looking at this is last minute? Again, yes,
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  So if you're looking at last minute, the pool trust
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  ideas is really the way to go when you're older
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  and annuities don't work. Short of that, if you're married,
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  and this is an important part of the pool trust,
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  if you're married, you likely will never do the pool trust.
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  Why because if you're married you're likely going to have
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  that one spouse at home. And if that spouse is
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  at home, now we have options because that spouse can
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  have all the excess resources. So if you're faced with
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  nursing home planning and you have a spouse at home,
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  you can take all the excess money over one hundred
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  and forty eight thousand and change for the healthy spouse
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  and two thousand for the six spouse. So the first
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  one hundred and fifty thousand dollars of assets you can
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  reach in, take out and give to the healthy spouse.
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  The excess regardless of how much it is is allowed
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  to come over to that spouse, we wouldn't need the
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  pooled trust. We instead would buy a Medicaid annuity for
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  the healthy spouse, converts those assets into an income stream
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  for the spouse, thereby taking what once was a countable
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  asset and making it non countable by converting it into
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  a stream of payments, a stream of income that they get,
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  and that technique would allow the six spouse to become
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  eligible for Medicaid right away. So that's when you use
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  a pool trust and when you would not use one.
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  Mister Lutsky, thank you so much for joining US today.
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  Always pleasure, Thank you.
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  Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
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  Askedd with Todd. Lutsky has been presented by Cushing and Dolan,
• 15:34
  serving Massachusetts and New England for more than thirty years,
• 15:37
  helping families with the state and tax planning, Medicaid planning,
• 15:40
  and probate law. Call eight hundred and three nine three,
• 15:42
  four thousand and one or visit Cushingdolan dot com. The
• 15:46
  views expressed in this segment are solely those of Cushing
• 15:48
  and Dolan Armstrong advisor. He does not provide any legal
• 15:50
  or tax advice. Please consult with your legal or tax
• 15:52
  advisor on such matters. Cushing and Armstrong do not endorse
• 15:55
  each other and are not affiliated.