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Ask Todd: Limiting estate tax exposure for beneficiaries · 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 Letsky 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 estate 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: Todd Lotskey joins us now for Ask Todd.
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  Speaker 3: Which is your chance to ask Todd your estate planning
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  Speaker 3: questions live on air Right now.
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  Speaker 2: Phone lines are wide open, all clear for you.
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  Speaker 3: Eight eight eight to zero five two two sixty three.
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  Speaker 3: That is the number to call to ask Todd your
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  Speaker 3: estate planning questions right now on air again. Eight eight
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  Speaker 3: eight to zero five two two sixty three is the number.
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  Speaker 2: One more time.
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  Speaker 3: It is eight eight eight zero five two two six three.
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  Speaker 3: A reminder, we can usually get through a couple of calls,
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  Speaker 3: so make sure that you call early in order to
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  Speaker 3: get in line to speak with Todd right now. That
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  Speaker 3: number again is eight eight eight two zero five two
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  Speaker 3: two six three, mister Lutsky, how are you doing today?
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  Speaker 4: I am doing great. How about yourself?
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  Speaker 2: Good?
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  Speaker 3: I was out at the bar the other night, Yeah,
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  Speaker 3: and this Mobias strip walked in and it was it
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  Speaker 3: was crying, and the bartender said, hey, what's what's what's wrong, buddy?
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  Speaker 3: And the Mobia strip goes, where do I even begin?
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  Speaker 3: And it was it was just.
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  Speaker 2: It was very sad, very sad. Todd, I want to.
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  Speaker 3: Talk to you about UH estate taxes within the concept
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  Speaker 3: of naming beneficiaries. Yeah, is there anything that people can
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  Speaker 3: do as it relates to beneficiaries, either on investment accounts,
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  Speaker 3: insurance products, or anything else that can help with estate
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  Speaker 3: taxes as far as how they're naming those bennies?
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  Speaker 4: Yeah, I think you need to think about a lot.
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  Speaker 4: You have to think about all of you of your
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  Speaker 4: assets really, so when you're doing your estate plan, you know,
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  Speaker 4: if you're dealing with a and by the way, the
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  Speaker 4: answer will vary depending on whether it's a revocable trust
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  Speaker 4: situation or an irrevocable trust situation, so there can be
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  Speaker 4: some differences. But you know, like if you're funding your
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  Speaker 4: revocable trust, you probably want to change the owner, not
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  Speaker 4: necessarily the beneficiary, right, So the owner on your bank accounts,
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  Speaker 4: the owner on your investment accounts, the owner on I
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  Speaker 4: guess that's it, brokerage, investment accounts, bank accounts, CDs. The
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  Speaker 4: owner can be the trust don't really need to get
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  Speaker 4: into beneficiaries, really, because you want it to be owned
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  Speaker 4: by the trust, and then the language of the trust
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  Speaker 4: is going to sort of dictate where those assets go. So,
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  Speaker 4: for example, I had a client was convinced all they
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  Speaker 4: needed they were not married, but they had certain people
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  Speaker 4: that they wanted to take care of, and certain nieces
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  Speaker 4: and nephews, et cetera whole laundry list of people, and
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  Speaker 4: they said, all we really need to do is name beneficiaries.
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  Speaker 4: We don't need to bother because you know we're not
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  Speaker 4: we're married, but we don't we don't have any kids.
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  Speaker 4: I said, well, then you're gonna have to run around
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  Speaker 4: and make sure that you know if you spend money
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  Speaker 4: out of one account and then spend money out of
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  Speaker 4: another account, and then that particular person who was a
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  Speaker 4: beneficiary on that account doesn't get anything, and you've got
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  Speaker 4: to keep track all the time of where the money is.
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  Speaker 4: I mean, that's just not helpful. But if you just
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  Speaker 4: put all those assets in a revocable trust, now spend
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  Speaker 4: whatever you want to spend, because everybody in the trust
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  Speaker 4: will benefit from every dollar that's in there, from every account, right,
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  Speaker 4: and it's great. And you don't even name dollar amounts.
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  Speaker 4: You name percentages. So if the tide rises, everybody gets
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  Speaker 4: a little more. The tide shrinks, everybody gets a little less.
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  Speaker 4: So it's a wonderful way of doing it. It's easy,
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  Speaker 4: it's simple. Change the owner. Don't need to worry about
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  Speaker 4: the beneficiary. Not for iras, not for four h one
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  Speaker 4: k's or any qualified retirement account. And now, by the way,
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  Speaker 4: for an irrevocable trust, it's similar to the extent I'm
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  Speaker 4: putting things in the trust. I don't need to name
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  Speaker 4: a beneficiary. I need to just change the owner. However,
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  Speaker 4: for iras and or life insurance, you want to think.
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  Speaker 4: If you're concerned about protecting assets from the nursing home,
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  Speaker 4: then you need to think about naming the beneficiary of
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  Speaker 4: those items. Something so revocable or irrevocable. The beneficiary of
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  Speaker 4: an IRA is generally a spouse, and the contingent is
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  Speaker 4: generally kids, or a trust. You can name a trust
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  Speaker 4: a beneficiary when you die. If you're concerned about nursing
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  Speaker 4: home planning and you want to protect the asset from
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  Speaker 4: a nursing home, then there are ways and times and rules.
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  Speaker 4: But you can name the estate the beneficiary of the
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  Speaker 4: IRA first ahead of the spouse and get all kinds
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  Speaker 4: of other nursing home planning benefits at so much to
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  Speaker 4: talk about. It was a great question, Chuck, but I
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  Speaker 4: can't even that just tip tip of the iceberg.
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  Speaker 3: Talking with Todd Lutsky from Kushian Dolan. You've got questions
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  Speaker 3: for Todd. This is your chance to ask them. Eight
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  Speaker 3: is right to your questions with Todd. That number is
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  Speaker 3: One last time, that is eight eight eight to zero
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  Speaker 3: five two two six 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. You're listening
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  Speaker 3: All right, let's get right to your questions with Todd.
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  Speaker 3: Let's be first up. We've got Anna in Massachusetts. Anna,
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  Speaker 3: what's your question for Todd.
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  Speaker 5: I'd like to know when both spouses have irrevocable trust
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  Speaker 5: and the first spouse that, how does does the second
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  Speaker 5: spouse have access to the past or the deceased sous assets?
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  Speaker 5: How does that work?
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  Speaker 2: So?
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  Speaker 4: Are you are you suggesting that we have a married
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  Speaker 4: couple and they're doing one joint irrevocable medicaid type trust
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  Speaker 4: nursing home protection trust? Or are we doing two separate trusts,
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  Speaker 4: one for husband and wife.
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  Speaker 5: Each fouse has their own irrevocable trust, got it?
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  Speaker 4: And and is the irrevocable trust designed to protect assets
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  Speaker 4: from the nursing home? I assume right.
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  Speaker 5: I don't know about that. It's just I don't want
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  Speaker 5: to care about that. I just want to know when
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  Speaker 5: the first stout ses, if I die tomorrow, does my
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  Speaker 5: husband have access to the assets in my trust?
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  Speaker 4: Okay? So, first and foremost, just to help everybody understand
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  Speaker 4: that you would never do an irrevocable trust for you know,
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  Speaker 4: to keep control over it if you're giving things away
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  Speaker 4: outside of your state. So I assume the value of
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  Speaker 4: this estate is probably under five million dollars. Correct, yes, okay,
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  Speaker 4: So then you folks would be doing probably if you
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  Speaker 4: don't care about nursing home. It would be a revocable trust,
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  Speaker 4: and it would be joint. But to your question, even
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  Speaker 4: if it's a joint revocable trust while you're living, and
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  Speaker 4: that that was your question, you're both in control. But
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  Speaker 4: then let's say your husband dies, and then how would
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  Speaker 4: you have access to the ass sets that are in
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  Speaker 4: this once joint revocable trust that now automatically becomes irrevocable.
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  Speaker 4: That's correct, So as soon as one dies, it becomes irrevocable,
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  Speaker 4: and the surviving spouse, let's say it's you, and it
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  Speaker 4: would be considered, would become the trustee. So now you
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  Speaker 4: are the sole trustee, when before it was you and
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  Speaker 4: your husband. And so now that you're the sole trustee,
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  Speaker 4: you read the language of the trust to determine the
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  Speaker 4: access that you have. So with a revocable trust that
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  Speaker 4: is now irrevocable, there'd be two buckets in there, probably
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  Speaker 4: two maybe three buckets, a marital share, a state marital share,
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  Speaker 4: and a remainder share. And then these buckets are going
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  Speaker 4: to be filled with the assets that were in the
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  Speaker 4: overall joint trust. So if you had three million dollars
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  Speaker 4: of stuff in the trust when you were alive, that
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  Speaker 4: three million dollars is now sprinkled between these three buckets,
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  Speaker 4: call them A, B, and C, the trustee of which
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  Speaker 4: is Anna. So you're in charge, Anna, and then you
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  Speaker 4: need to read the language. So if it's three million dollars,
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  Speaker 4: I can tell you that two million would be in
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  Speaker 4: the sea bucket and one million would be in the
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  Speaker 4: B bucket, and the A bucket would be empty. That
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  Speaker 4: is driven by the value by the estate tax laws
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  Speaker 4: that are that are in place. So in Massachusetts you
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  Speaker 4: can shelter two million each. That's why the two million
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  Speaker 4: ended up in the sea bucket because it equals the
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  Speaker 4: mass exemption and the amount over the two million. But
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  Speaker 4: under the thirteen excuse me, the thirteen point nine million
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  Speaker 4: would end up in the B bucket. So that's why
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  Speaker 4: the one million is there. Now, Anna, you're probably saying, Okay,
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  Speaker 4: there's three million dollars there, Todd, but what can I
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  Speaker 4: do with it? Well, you're in charge. You get to
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  Speaker 4: take the in, you manage it, you invest it, you
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  Speaker 4: buy and sell stocks and bonds, you buy and sell
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  Speaker 4: real estate, and you can take out all the income
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  Speaker 4: because the trust says you're entitled to the income, and
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  Speaker 4: it says you can take out the three million dollars
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  Speaker 4: which is principal, but you're supposed to take it as
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  Speaker 4: you need it to maintain your standard of living that
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  Speaker 4: you enjoyed when your husband was alive. Follow those rules.
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  Speaker 4: The assets are still yours, but the design of the
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  Speaker 4: trust will shelter the assets from a state taxes. So
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  Speaker 4: big answer to your question. But I wanted you to
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  Speaker 4: hope that helps. Hope that helps everybody. But folks, that's
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  Speaker 4: not the only items we talk about. That's great for
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  Speaker 4: what's in the trust, but the guide we're giving away
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  Speaker 4: deals with life insurance and iras, which are a little
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  Speaker 4: more complicated because they can't go into the trust right away.
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  Speaker 4: So if you're concerned about nursing home planning and you're married,
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  Speaker 4: right this guide is for you because it offers guidance
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  Speaker 4: on how to protect an IRA well, basically naming the
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  Speaker 4: estate the IRA beneficiary is going to help you with
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  Speaker 4: not only life insurance but with iras. It will provide
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  Speaker 4: nursing home protection. It will shelter from the costs of
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  Speaker 4: estate taxes, and it will be done without providing adverse
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  Speaker 4: income tax consequences. And that's the real wild card with IRA.
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  Speaker 4: So learn how to do this, folks. If you're doing
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  Speaker 4: a state planning and concerned about the nursing home, call
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  Speaker 4: and get this guide eight six six eight four eight
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  Speaker 4: five six nine to nine or Legal Exchange Show dot
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  Speaker 4: com eight six six eight four eight five six nine
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  Speaker 4: nine or Legal Exchange Show dot Com.
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  Speaker 3: Let's go now to Norman in Portland. Norman, what is
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  Speaker 3: your question for Todd Lutsky?
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  Speaker 5: Oh?
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  Speaker 6: Hi? I was wondering how I tell if the transfer
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  Speaker 6: on disk uh language has been transferred to the financial
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  Speaker 6: institutions that are in my revocable trust. And the lawyer
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  Speaker 6: said the girl Friday would do it, and I'm just
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  Speaker 6: wondering if she ever did, And I guess I should
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  Speaker 6: just call. But is that what you do?
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  Speaker 2: Well?
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  Speaker 4: Let me let me ask you a couple of questions
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  Speaker 4: so I can follow this. So, Norman, are you are
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  Speaker 4: you married?
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  Speaker 1: Oh?
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  Speaker 6: Yes?
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  Speaker 4: And you did a revocable trust you and your wife? Yes, okay,
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  Speaker 4: And the revocable trust needs to have assets put in it.
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  Speaker 4: That's what you're just so everybody understands what we're talking about.
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  Speaker 4: We're suggesting that you fund the trust with your brokerage account,
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  Speaker 4: with your bank account, and I totally agree and funding
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  Speaker 4: the trust, I would stay if it's a revocable trust,
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  Speaker 4: like what Chuck was asking earlier in the show, I
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  Speaker 4: would stay away from transfers on death. There's no need
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  Speaker 4: to do that, right, why not just change the owner
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  Speaker 4: on the on the account, on the bank account, on
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  Speaker 4: the brokerage account, make the owner the name of the trust.
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  Speaker 4: So like if I've done a trust and I'm married,
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  Speaker 4: and it's a joint revocable trust, the name on my
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  Speaker 4: brokerage account will be Lotsky Family Trust, bank account Lotski
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  Speaker 4: Family Trust, And then you don't have to worry about
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  Speaker 4: who the beneficiary is because the trust owns it. And
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  Speaker 4: the trust's language will say where all the assets of
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  Speaker 4: the trust go when you die. Right, so if we
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  Speaker 4: both die, my wife and I, everything is equally to
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  Speaker 4: our kids. Well, everything that's owned by the trust will
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  Speaker 4: be divided amongst the children, and you're completely covered. So
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  Speaker 4: that's probably my advice. And yes to your question, Yeah,
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  Speaker 4: call them, ask them if they did it or send
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  Speaker 4: a statement to you. The next statement you get, take
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  Speaker 4: a look at it and see if it says, you know,
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  Speaker 4: Norman Family Trust or whatever the name is on your trust.
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  Speaker 4: If it says that, then you know that particular asset
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  Speaker 4: is in that trust.
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  Speaker 3: Todd, we were talking earlier about beneficiaries. Any last items
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  Speaker 3: that you want to add as it relates to that
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  Speaker 3: earlier conversation we were having.
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  Speaker 4: Yeah, and again, it's kind of good to talk about
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  Speaker 4: the Norman case, right. He was just talking about doing that, right,
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  Speaker 4: So that's that's how you do it for revocable trusts,
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  Speaker 4: and we talked it's similar for an irrevocable trust. But
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  Speaker 4: kind of like you know, I think that the wild
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  Speaker 4: card is is what this guide is really all about,
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  Speaker 4: and it's the iras of the world and the life
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  Speaker 4: insurance policies of the world. So folks, when you're dealing
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  Speaker 4: with those, if you're thinking about nursing home protection, instead
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  Speaker 4: of making the life insurance policy, you know the benefit.
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  Speaker 4: You never change the owner, you don't need to, but
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  Speaker 4: you change the life insurance beneficiary. Instead of putting it
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  Speaker 4: in the trust, you might put it into the estate
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  Speaker 4: of kind of what we were talking about, and that
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  Speaker 4: way it will flow into this testamentary trust and be
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  Speaker 4: protected for the surviving spouse from nursing homes, but at
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  Speaker 4: the same time allow access to it and shelter it
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  Speaker 4: for a state taxes. So those are the tricky assets.
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  Speaker 2: Mister Lutski, thank you so much for joining us today.
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  Speaker 4: Always a pleasure.
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  Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
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  Speaker 1: Askedd with Todd Ludsky has been presented by Cushing and Dolan,
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  Speaker 1: serving Massachusetts and New England for more than thirty years,
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  Speaker 1: helping families with the state and tax planning, Medicaid planning
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  Speaker 1: and probate law. Call eight hundred three nine three four
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  Speaker 1: thousand and one or visit Cushingdolan dot com. The views
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  Speaker 1: expressed in this segment are solely those of Cushing and Dolan.
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  Speaker 1: Armstrong Advisory does not provide any legal or tax advice.
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  Speaker 1: Please consult with your illegal or tax advisor on such matters.
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