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Arbitration Agreements, Undue Influence & The Real Risks of Life Estates · The Legal Exchange

• 0:01
  Speaker 1: This is the Legal Exchange with Todd Lutsky from the
• 0:04
  Speaker 1: law firm of Cushing and Dolan and Susan Powers of
• 0:07
  Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
• 0:10
  Speaker 1: discuss many topics, including estate planning, how to avoid probate,
• 0:13
  Speaker 1: and protecting your money from a nursing home. If you
• 0:16
  Speaker 1: need assistance in any of these areas, or have a
• 0:18
  Speaker 1: question about another issue that may affect your future, call
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  Speaker 1: eight six six eight four eight five six ninety nine
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  Speaker 1: to make an appointment. That's eight sixty six eight four
• 0:27
  Speaker 1: eight five six ninety nine. Operators are standing by. Now
• 0:31
  Speaker 1: Here are your hosts, Todd Lutsky and Susan Powers.
• 0:37
  Speaker 2: Welcome into Legal Exchange with Todd Lutsky. I'm Susan Powers,
• 0:41
  Speaker 2: a financial advisor with the Armstrong Advisory Group, and I'm
• 0:44
  Speaker 2: joined by Todd Lutsky, a partner with the law firm
• 0:46
  Speaker 2: of Cushing and Dolan with a master's in taxation. Welcome Todd.
• 0:51
  Speaker 2: How are you today?
• 0:52
  Speaker 3: I'm never better in you.
• 0:54
  Speaker 2: I'm great, Thank you. What do you have for us
• 0:55
  Speaker 2: this week?
• 0:56
  Speaker 3: Couple of things. One, We're going to go to Mississippi.
• 1:00
  Speaker 3: We have a Supreme Court case there actually dealing with
• 1:04
  Speaker 3: arbitration agreements. I had to bring it up because it
• 1:06
  Speaker 3: got such a high level court issue. We've talked about
• 1:09
  Speaker 3: arbitration agreements a lot, folks. That's why I was mentioning
• 1:12
  Speaker 3: that to Susan. She knows them. It deals with when
• 1:14
  Speaker 3: you're admitting somebody to a nursing home and whether you
• 1:18
  Speaker 3: sign an arbitration agreement or not. When you're going through
• 1:22
  Speaker 3: that admission process and they're throwing all kinds of paperwork
• 1:25
  Speaker 3: at you and you're emotionally upset, and what should you'd
• 1:28
  Speaker 3: sign and how should you sign it? Personally durable power
• 1:33
  Speaker 3: health care products, there's ways, folks. This case is all
• 1:37
  Speaker 3: about that issue and whether or not the arbitration agreement
• 1:42
  Speaker 3: is enforceable, usually when there's a wrongful death situation in
• 1:47
  Speaker 3: the case, and that's what happened here when what debt
• 1:50
  Speaker 3: got admitted, he ultimately died and a wrongful death claim
• 1:54
  Speaker 3: came and there was an arbitration agreement. So I just
• 1:56
  Speaker 3: want to educate everybody about how to go about signing
• 2:01
  Speaker 3: all documents when you're going through the admission process to
• 2:04
  Speaker 3: a nursing home. And many people are faced with that
• 2:07
  Speaker 3: decision and process. So we'll spend some time talking about
• 2:11
  Speaker 3: that case. That's why I wanted to talk about it.
• 2:13
  Speaker 3: And then we're going to head over to Arizona. There's
• 2:15
  Speaker 3: an appellate court case there. Interesting case here. It's an
• 2:19
  Speaker 3: undue influenced case, but it's an undue influenced case by
• 2:22
  Speaker 3: a charity. And it also talks about drafting a trust,
• 2:26
  Speaker 3: which was I thought a great trust put together. It's
• 2:29
  Speaker 3: a revocable I think it's a joint revocable trust that
• 2:31
  Speaker 3: Carolyn James put together. But they added alternative dispute resolution
• 2:36
  Speaker 3: provisions in there, and again like an arbitration agreement to
• 2:41
  Speaker 3: settle disputes among trustees and beneficiaries. And whether or not
• 2:45
  Speaker 3: you're allowed to do that to force that if a
• 2:49
  Speaker 3: beneficiary wants to challenge the validity of an amendment to
• 2:54
  Speaker 3: the trust, can you actually draft that in your document
• 2:58
  Speaker 3: or not? Never really came up before, So I wanted
• 3:00
  Speaker 3: to explain when you're drafting whether you can put provisions
• 3:04
  Speaker 3: like this in one of your trusts.
• 3:05
  Speaker 2: Look at you bring in a new topics. Twenty years
• 3:08
  Speaker 2: into the radio.
• 3:09
  Speaker 3: Folks, I learn something new every day, and I hope
• 3:12
  Speaker 3: you do as well. That said I'm hopefully're going to
• 3:16
  Speaker 3: learn something if you get this guide Calculating the Consequences
• 3:19
  Speaker 3: of a life estate because so many people use them
• 3:23
  Speaker 3: all the time. I'll throw your house into a life state.
• 3:26
  Speaker 3: Learn what you've done, or learn how they work before
• 3:30
  Speaker 3: you do it right. You know, did I give away
• 3:32
  Speaker 3: my house to the kids in reserve a life estate?
• 3:35
  Speaker 3: A better way might be giving it to a trust?
• 3:37
  Speaker 3: In reserving a life estate? You know when do I
• 3:40
  Speaker 3: do it? There's three times I do it. They're in
• 3:42
  Speaker 3: the guide. Understand the control you give up when you
• 3:45
  Speaker 3: do it. Understand the gift and income tax ramifications when
• 3:49
  Speaker 3: you do it. You know if you sell it, how
• 3:51
  Speaker 3: does that impact the capital gains tax? Who gets the money? Folks?
• 3:56
  Speaker 3: So much to learn about when you create this life
• 3:59
  Speaker 3: estate arrangement, usually with your primary residence. Also important, hate
• 4:04
  Speaker 3: to give up too much control over your home, Folks.
• 4:07
  Speaker 3: Get the guide Calculating Consequences of a Life Estate eight
• 4:10
  Speaker 3: sixty six eight four eight five six ninety nine or
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  Speaker 3: Legal Exchange Show dot com again eight six six eight
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  Speaker 3: four eight five six nine nine or Legal Exchange Show
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  Speaker 3: dot com. You can download it there and always go
• 4:25
  Speaker 3: to our Instagram page Cushing Dolan PC for lots more information, Mississippi.
• 4:32
  Speaker 3: Off we go, folks, what debt was admitted to a
• 4:37
  Speaker 3: nursing home in I guess nursing home is called Manhattan
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  Speaker 3: Nursing Home LLC November seventeenth, twenty twenty one. The wife
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  Speaker 3: signed all the paperwork, all the admission paperwork, including an
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  Speaker 3: arbitration agreement. February tenth, twenty twenty two two, he was
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  Speaker 3: transferred to the hospital due to low level of consciousness.
• 5:05
  Speaker 3: February twenty one, eleven days later, he died in hospice
• 5:10
  Speaker 3: due to Alzheimer's. Verna files a wrongful death claim on
• 5:17
  Speaker 3: the individually, which I guess is his wife individually, and
• 5:22
  Speaker 3: on behalf of all the wrongful death beneficiaries against the
• 5:25
  Speaker 3: LLC and two nurses, alleging he was oversedated, dehydrated, chemically restrained, abused,
• 5:33
  Speaker 3: and neglected. Wow, it's a lot of stuff. The LLC,
• 5:38
  Speaker 3: of course, the nursing home said, wait a minute, we
• 5:40
  Speaker 3: want to compel arbitration. You signed an arbitration agreement. We
• 5:43
  Speaker 3: don't want to go to court, arguing that Verna had
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  Speaker 3: the ability to make a health care decision for a
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  Speaker 3: wad debt and that the execution of an arbitration agreement
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  Speaker 3: is in fact a health care decision. Well, the trial
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  Speaker 3: court denied the motion, and as the execution of an
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  Speaker 3: arbitration agreement is not a health care decision because it's
• 6:07
  Speaker 3: not an essential part of receiving health care good, Well,
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  Speaker 3: the LLC nursing Home didn't like that, so they went
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  Speaker 3: to the Supreme Court and appealed it, and the Supreme
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  Speaker 3: Court of course affirmed the trial court two reasons. One,
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  Speaker 3: in order to have a health care proxy, by the way,
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  Speaker 3: first and foremost, to act as a healthcare agent, there
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  Speaker 3: needs to be a determination of lack of capacity by
• 6:34
  Speaker 3: your primary physician, and that was actually not never clearly
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  Speaker 3: provided here, so we don't even know if she was
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  Speaker 3: acting as a health care agent, although they're saying, you
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  Speaker 3: know that it's not a medical And then number two,
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  Speaker 3: arbitration agreement itself is not a condition of admission to
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  Speaker 3: a nursing home, and therefore you lack authority to enter
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  Speaker 3: such an agreement anyway, so you know you don't. It's
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  Speaker 3: not obviously of since it's not a condition of admission,
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  Speaker 3: it can't possibly be a medical decision, right, so you know,
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  Speaker 3: denied throughout. Basically, they're they're going to court.
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  Speaker 2: I'm so surprised that they can still have these things
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  Speaker 2: in existence because Obama got basically that he's the one
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  Speaker 2: that came up with that. Yeah, it's not a condition
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  Speaker 2: that they can't do it.
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  Speaker 3: So, yeah, you're right, that's a very I've rid of
• 7:31
  Speaker 3: them already. Yeah, I know, we've talked about it a lot,
• 7:35
  Speaker 3: and I don't bring it up all the time, and
• 7:36
  Speaker 3: I haven't in a long time. But when I saw
• 7:37
  Speaker 3: this one, I said, you know, it just sort of
• 7:39
  Speaker 3: jumped off the page at me. But I also want
• 7:41
  Speaker 3: to bring it up because now I want to tell
• 7:43
  Speaker 3: you what to do, what to look for. But also,
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  Speaker 3: at least it's another consistent decision telling us that an
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  Speaker 3: arbitration agreement is not a condition of admission. Please folks,
• 7:55
  Speaker 3: don't sign it. But nevertheless, what is an arbitration agreement?
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  Speaker 3: Let's start with that. It basically is you signing an
• 8:02
  Speaker 3: agreement for somebody else so they waive their right to
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  Speaker 3: a jury trial. Well, you really don't want to do that.
• 8:10
  Speaker 3: You know, it's nice to get in front of the
• 8:12
  Speaker 3: jury of your peers and let them hear and make
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  Speaker 3: an emotional decision on your behalf. Now, when you're entering
• 8:18
  Speaker 3: a nursing home, remember what to sign what not to sign. Well,
• 8:21
  Speaker 3: there's a whole ton of admission forms that, unfortunately you
• 8:23
  Speaker 3: do have to sign, financial forms, etc. And oftentimes in
• 8:28
  Speaker 3: that flurry of paperwork that they're going to be sending
• 8:31
  Speaker 3: you or you're going to be sitting down thrown in
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  Speaker 3: front of you to sign, one of them is going
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  Speaker 3: to be an arbitration agreement. Mostly. Now, how do we
• 8:42
  Speaker 3: sign all documents, including and I'm focusing on the arbitration agreement?
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  Speaker 3: Please never sign them personally. Never say you are personally
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  Speaker 3: signing something. Yep, Okay, you don't want to bind yourself
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  Speaker 3: to any of the costs of a nursing homes accidentally, right,
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  Speaker 3: So don't do that. A lot of people have a
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  Speaker 3: durable power of attorney. Please don't ever sign as durable
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  Speaker 3: power of attorney. Because if you sign an arbitration agreement
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  Speaker 3: as a durable power of attorney, if you look at
• 9:09
  Speaker 3: the language of that document, it lays out a whole
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  Speaker 3: bunch of powers that you're allowed to do, from banking
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  Speaker 3: to changing beneficiaries, to selling real estate to buying real estate. Well,
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  Speaker 3: it might also allow you to bind the individual when
• 9:23
  Speaker 3: you sign contracts. Well, an arbitration is a kind of
• 9:26
  Speaker 3: a contract, so you could end up binding somebody by
• 9:30
  Speaker 3: signing as a power of attorney. Don't do that. You
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  Speaker 3: can sign as a spouse, but I don't think that's
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  Speaker 3: enough to bind you as a power of attorney. Healthcare
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  Speaker 3: proxy best way to sign. Put HCP after your name
• 9:44
  Speaker 3: on everything, because, as this case says, many other cases
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  Speaker 3: have said, signing as a healthcare proxy cannot be It's
• 9:52
  Speaker 3: a medical decision only and doesn't bind you to your
• 9:56
  Speaker 3: arbitration agreements. And so those are some of the the
• 10:00
  Speaker 3: main issues there. Folks learn about life estates and how
• 10:05
  Speaker 3: they work because so many people have them. Learn what
• 10:10
  Speaker 3: you've done or whether you even want to do them
• 10:12
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• 10:21
  Speaker 2: You've been listening to Todd Lutsky, a partner with the
• 10:24
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 10:27
  Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
• 10:31
  Speaker 2: more to come when we return to the Legal Exchange
• 10:33
  Speaker 2: with Todd.
• 10:34
  Speaker 1: Lutsky, Life estates are sometimes used to protect your home
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  Speaker 1: as part of your future, but it's important to understand
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• 11:02
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  Speaker 1: sign any deed or transfer property, be sure you understand
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  Speaker 1: You're listening to the Legal Exchange with Todd Lutsky, an
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  Speaker 2: Welcome back into Legal Exchange with Todd Lotsky. I'm Susan
• 13:58
  Speaker 2: Powers of financial Advice with the Armstrong Advisory Group, and
• 14:01
  Speaker 2: I'm joined by Todd Letsky, a partner with the law
• 14:04
  Speaker 2: firm of Cushing and Dolan with a master's in taxation.
• 14:08
  Speaker 2: Where are we going now, Todd? Somewhere warm again?
• 14:11
  Speaker 3: Uh yeah, yeah, Arizona. Nice. That's nice. Hello Arizona folks.
• 14:15
  Speaker 3: We have an appellate court case. They are dealing with
• 14:17
  Speaker 3: undue influence by a charity and this new idea of
• 14:22
  Speaker 3: drafting your document and putting an alternative dispute resolution provision
• 14:26
  Speaker 3: in it. Check this out. So Carol and James executed
• 14:31
  Speaker 3: a revocable joint trust in two thousand and three they
• 14:36
  Speaker 3: were way ahead of the curve, so and that's great.
• 14:39
  Speaker 3: That put their assets in there in control. They amended
• 14:42
  Speaker 3: it in two thousand and nine to add an Alternative
• 14:44
  Speaker 3: Dispute Provision Alternative Dispute Resolution Provision authorizing the appointment of
• 14:51
  Speaker 3: special co trustees to resolve disputes among trustees and beneficiaries
• 14:58
  Speaker 3: and to use an arbitry or a mediation agreement.
• 15:03
  Speaker 2: They're expecting that.
• 15:04
  Speaker 3: Well, yeah, it's interesting that that was the amendment that
• 15:06
  Speaker 3: was done. And I'm like, okay, so so be it,
• 15:11
  Speaker 3: because again, you could never tell what might come up.
• 15:13
  Speaker 3: I kind of liked the ideas on its face. Twenty
• 15:18
  Speaker 3: seventeen comes wrong and James dies, Well, Carol's still alive. Well,
• 15:22
  Speaker 3: in twenty nineteen, Carol amends the trust. Ah the limited
• 15:26
  Speaker 3: power of appointment rears its head, so we'll talk about that.
• 15:30
  Speaker 3: So twenty nineteen, Carol amends the trust to remove three
• 15:36
  Speaker 3: of their four children, Mike, Shannon, and Aaron, as beneficiaries
• 15:41
  Speaker 3: and instead to name the May Family Foundation as the
• 15:45
  Speaker 3: primary beneficiary, and the May Family Foundation establishes as a
• 15:49
  Speaker 3: donor advised fund. Oh interesting, they're the May family or
• 15:54
  Speaker 3: is this a chair?
• 15:55
  Speaker 4: No?
• 15:55
  Speaker 3: It doesn't say their last name, so maybe that is
• 15:57
  Speaker 3: they didn't give me the last name, but it could
• 15:59
  Speaker 3: be could be a family found.
• 16:00
  Speaker 2: Yeah, usually a donor advice fund. Is you would set
• 16:03
  Speaker 2: one up for yourself. Yeah, okay.
• 16:06
  Speaker 3: So twenty twenty one, Carol dies Stephen, the fourth child
• 16:11
  Speaker 3: who's not disinherited of all things, alleges that the twenty
• 16:15
  Speaker 3: nineteen amendment is void due to undue influence by Attorney Richard,
• 16:22
  Speaker 3: the Legacy Foundation attorney and CFO Shannon, who was disinherited, agree,
• 16:31
  Speaker 3: of course, of course. In March twenty twenty three, Shannon
• 16:36
  Speaker 3: and Mike, the two disinherited beneficiaries as co trustees. Interestingly
• 16:42
  Speaker 3: enough that.
• 16:43
  Speaker 2: They inherited, they're still the trustee.
• 16:45
  Speaker 3: Yeah, this is life, this is what we deal with.
• 16:48
  Speaker 3: They appointed a special co trustee according to this amendment
• 16:52
  Speaker 3: to resolve the dispute and to have the enforceability of
• 16:56
  Speaker 3: the twenty nineteen amendment challenged, meaning it shouldn't be there. Well,
• 17:01
  Speaker 3: the Legacy Group asked the court to declare that the
• 17:05
  Speaker 3: law in Arizona does not allow a set law to
• 17:08
  Speaker 3: require beneficiaries to submit challenges to validity of a trust
• 17:12
  Speaker 3: via an alternative dispute resolution document. You can't do that.
• 17:16
  Speaker 3: You can't force a beneficiary to waive the judicial process. Interesting,
• 17:23
  Speaker 3: So Shannon says, the challenge is not to challenge the
• 17:28
  Speaker 3: validity of the trust. It's an administrative decision only, and
• 17:31
  Speaker 3: that can be done by the ADR. Well, the trial
• 17:34
  Speaker 3: court agreed and said it's okay to do this with
• 17:37
  Speaker 3: the ADR. Well the appellate court. Of course, the Legacy
• 17:42
  Speaker 3: Group appeals and the Appellate Court reverses, which I think
• 17:45
  Speaker 3: they should, stating that Shannon's claim really was to challenge
• 17:50
  Speaker 3: the validity of that twenty nineteen amendment. Yeah, it's completely
• 17:54
  Speaker 3: to challenge it. And Arizona law does not allow a
• 17:58
  Speaker 3: set law n I beneficiaries the right to a judicial
• 18:03
  Speaker 3: resolution of claims challenging the validity of a trust. So
• 18:07
  Speaker 3: you cannot in Arizona, folks draft a document that takes
• 18:14
  Speaker 3: away the beneficiary's right to file a claim using the
• 18:20
  Speaker 3: court system to challenge the validity of the document.
• 18:24
  Speaker 2: So is that is that the same thing as a
• 18:27
  Speaker 2: basically a new contry.
• 18:28
  Speaker 3: No, no, no, that's just alternative dispute resolution. It's like
• 18:30
  Speaker 3: signing an arbitration agreement where you don't go to court,
• 18:34
  Speaker 3: you go to mediator, got it and they say you
• 18:37
  Speaker 3: can't do that? Kind of like that. Yeah, it was
• 18:40
  Speaker 3: very interesting. Uh you know, to me, this is why
• 18:43
  Speaker 3: I don't have a life. I get excited over things
• 18:45
  Speaker 3: like this.
• 18:45
  Speaker 2: Do you're not telling me where we landed?
• 18:46
  Speaker 5: Right?
• 18:47
  Speaker 3: Well? No, this was just basically saying go to court.
• 18:49
  Speaker 2: Yeah, yeah, thank you.
• 18:50
  Speaker 3: Well it's okay. You had to know that.
• 18:52
  Speaker 2: List have all the unresolved cases you've left us, all
• 18:57
  Speaker 2: me and all these listeners wondering about, Well, go.
• 19:00
  Speaker 3: Back and find them and see if I can give
• 19:02
  Speaker 3: you answers. Folks, Try to give you some answers with
• 19:06
  Speaker 3: this new guide. Calculating the consequences of life estates why
• 19:09
  Speaker 3: it's so heavily used. Oftentimes you'll buy a piece of
• 19:12
  Speaker 3: property and your real estate attorney might just say, oh,
• 19:15
  Speaker 3: you know, why don't you throw it in a life
• 19:17
  Speaker 3: estate arrangement and protect it somehow? Well, folks, it happens
• 19:20
  Speaker 3: a lot. This guide will help you understand what you've
• 19:24
  Speaker 3: got and whether or not you want to keep it,
• 19:27
  Speaker 3: or whether or not you ever want to do it
• 19:28
  Speaker 3: before you do it. So it explains the two ways
• 19:32
  Speaker 3: to do it. I like to say the right way
• 19:34
  Speaker 3: and the wrong way. It explains all of your control
• 19:37
  Speaker 3: issues that you give up, your gift tax issues, your
• 19:41
  Speaker 3: sale issues, your capital gains tax issues when you sell it,
• 19:44
  Speaker 3: maybe your ability to sell it. What did you actually
• 19:47
  Speaker 3: create and what do you actually have when you have
• 19:50
  Speaker 3: this life estate? I think you might be surprised. And
• 19:54
  Speaker 3: it also tells you the three times in which I
• 19:56
  Speaker 3: recommend using a life estate, and only those three times.
• 20:00
  Speaker 3: Folks call and get the guide eight six six eight
• 20:03
  Speaker 3: four eight five six ninety nine or Legal Exchange Show
• 20:06
  Speaker 3: dot com again eight sixty six eight four eight five
• 20:10
  Speaker 3: six ninety nine or Legal Exchange Show dot com and
• 20:13
  Speaker 3: as always, go to our Instagram page Cushing and Dolan
• 20:16
  Speaker 3: Cushing Dolan PC for lots more information. So what do
• 20:22
  Speaker 3: we learn here?
• 20:24
  Speaker 2: If you're going to disinherit someone, get them off as trustee.
• 20:28
  Speaker 3: Yeah, Why they didn't do that, I don't know.
• 20:30
  Speaker 2: It's like you're asking someone to train their replacement.
• 20:33
  Speaker 3: First and foremost. The trust is a joint trust, which
• 20:36
  Speaker 3: I like. It certainly worked folks. It accomplished their wishes,
• 20:40
  Speaker 3: it kept them in control. It's going to shelter for
• 20:43
  Speaker 3: estate taxes, it's going to avoid probate, provided flexibility. I
• 20:47
  Speaker 3: love it, but drafting is nonetheless important. Notice here, by
• 20:52
  Speaker 3: the way, folks, that limited power of appointment must have
• 20:54
  Speaker 3: been in this document. Why because one spouse died and
• 20:58
  Speaker 3: then the surviving spouse was able to change the beneficiaries
• 21:02
  Speaker 3: of that trust even though one spouse is dead, and
• 21:05
  Speaker 3: they did they remove beneficiaries, they altered percentage amounts. Generally,
• 21:09
  Speaker 3: that's all, okay, And I like giving that power in
• 21:13
  Speaker 3: a first marriage. Yes, folks, be careful. It does provide flexibility, right,
• 21:19
  Speaker 3: But it's in a first marriage, right, So one person
• 21:22
  Speaker 3: may need to you know, may need something more than
• 21:25
  Speaker 3: another person after you lose a spouse, And I love
• 21:28
  Speaker 3: the flexibility to provide that to a child, a grandchild, whatnot.
• 21:33
  Speaker 2: You just have to be careful if it's a second marriage,
• 21:36
  Speaker 2: kids from different.
• 21:37
  Speaker 3: Yeah, if it's a second marriage, you really have to
• 21:39
  Speaker 3: talk to the folks and say, you know, are you
• 21:41
  Speaker 3: worried that if you die, your spouse will then exercise
• 21:45
  Speaker 3: this limited power of appointment cutting out your kids and
• 21:47
  Speaker 3: giving it all to her kids or his kids.
• 21:49
  Speaker 2: I would never agree to that, So probably I think
• 21:52
  Speaker 2: I'm going to do this again. I'm going to keep
• 21:53
  Speaker 2: the one I have. It's twenty some years.
• 21:55
  Speaker 3: Yeah, so keep them. But at the end of the day,
• 21:58
  Speaker 3: you know, this is very important that that you know,
• 22:01
  Speaker 3: you talk it through before you throw that power in
• 22:04
  Speaker 3: a second marriage. I don't got the impression this was
• 22:07
  Speaker 3: not a second marriage, so wow. Nevertheless, of course, when
• 22:12
  Speaker 3: she did that amendment to cut out those three kids,
• 22:14
  Speaker 3: she probably should have added a no contest clause as
• 22:16
  Speaker 3: well to make it you know, don't challenge this. However,
• 22:21
  Speaker 3: when you think about undue influence here, folks, Again, drafting
• 22:24
  Speaker 3: is important. Make sure you figure out what you put
• 22:26
  Speaker 3: in your trust. But in this case, you know it
• 22:30
  Speaker 3: it might have been an undue influence. I mean when
• 22:32
  Speaker 3: you wonder if this case is going to how it's
• 22:34
  Speaker 3: going to turn out. But they're basically saying, yeah, you
• 22:37
  Speaker 3: got to go back and find out whether or not
• 22:39
  Speaker 3: this amendment they did is in fact enforceable. Why, you know,
• 22:44
  Speaker 3: I start to think about it. You know, Richard was
• 22:46
  Speaker 3: the attorney the CFO. He might have, you know, talked
• 22:51
  Speaker 3: to them a lot, might have told them to go
• 22:53
  Speaker 3: to a lawyer, might have influenced them. At the end
• 22:56
  Speaker 3: of the day, he walks away way better off than
• 23:01
  Speaker 3: he did before because their charity got stuff. I mean,
• 23:04
  Speaker 3: that's classic undue influence. Again, I don't have any of
• 23:07
  Speaker 3: those facts. I don't know. Maybe he didn't know anything
• 23:09
  Speaker 3: about it, maybe he never talked to these people. Well
• 23:11
  Speaker 3: then it wouldn't be undue influence. But folks, just important
• 23:14
  Speaker 3: to understand that's how it works, and so always get
• 23:18
  Speaker 3: your ducks in a row. Do your planning in advance.
• 23:23
  Speaker 3: Get this guide and learn a little bit about life
• 23:25
  Speaker 3: estates in case you haven't done any other kind of
• 23:27
  Speaker 3: planning eight six six eight four eight five six nine
• 23:31
  Speaker 3: to nine or Legal Exchange show dot com and download
• 23:35
  Speaker 3: the guide and understand what you got with a life estate.
• 23:39
  Speaker 2: You've been listening to Todd Lutsky, a partner with the
• 23:41
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 23:45
  Speaker 2: financial advisor with the Armstrong Advisory Group, and Todd will
• 23:48
  Speaker 2: be answering your listener questions when we return to the
• 23:51
  Speaker 2: Legal Exchange with Todd Lutsky.
• 23:54
  Speaker 1: Life estates are sometimes used to protect your home as
• 23:57
  Speaker 1: part of your future, but it's important to understand how
• 23:59
  Speaker 1: they really work before making any changes to your state plan.
• 24:03
  Speaker 1: Cushing and Dolan are experts and elder law and taxation.
• 24:06
  Speaker 1: Their new guide called Calculating the Consequences of Life Estates
• 24:09
  Speaker 1: explains the pros and cons and why careful planning is
• 24:12
  Speaker 1: so critical. A life estate can allow you to remain
• 24:15
  Speaker 1: in your home while transferring future ownership, but decisions like
• 24:18
  Speaker 1: putting the property in your children's names versus using a
• 24:21
  Speaker 1: trust can have very different consequences when it comes to taxes, control,
• 24:25
  Speaker 1: and protection from creditors. Before you sign any deed or
• 24:28
  Speaker 1: transfer property, be sure you understand your options. Call Cushing
• 24:32
  Speaker 1: and Dolan at eight sixty six eight four eight five
• 24:34
  Speaker 1: six ninety nine and ask for your free guide today.
• 24:37
  Speaker 1: That's eight six six eight four eight five six nine nine,
• 24:40
  Speaker 1: or you can request the guide online by visiting Legal
• 24:42
  Speaker 1: exchange show dot com. The proceeding was paid for in
• 24:45
  Speaker 1: The views expressed are solely those of Cushing and Dolan.
• 24:47
  Speaker 1: Cushing and Dolan and Armstrong Advisory may contact you offering
• 24:50
  Speaker 1: legal or investment services. Cushing and Dolan in Armstrong Advisory
• 24:52
  Speaker 1: do not endorse each other and are not affiliated.
• 24:55
  Speaker 6: When going through a divorce, understanding the rules around your
• 24:58
  Speaker 6: finances can make a real day. This is Chuck Zada
• 25:01
  Speaker 6: from the Armstrong Advisory group. State law plays a major
• 25:04
  Speaker 6: role in how assets are divided, whether that means a
• 25:06
  Speaker 6: strict split or a distribution based on what the court
• 25:09
  Speaker 6: considers fair. Health insurance and social security benefits are other
• 25:12
  Speaker 6: considerations that you'll need to prepare for. You may have
• 25:15
  Speaker 6: been covered under a spouse's plan and now need to
• 25:17
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• 25:20
  Speaker 6: benefits based on your former spouse's record. Our new guide,
• 25:23
  Speaker 6: Divorce in your Financial Plan will walk you through these
• 25:26
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• 25:29
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• 25:35
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• 25:38
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• 25:41
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 25:43
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 25:46
  Speaker 1: Armstrong Guide a specific financial, legal, or tax advice. Consult
• 25:49
  Speaker 1: your own financial, tax into state planning advisors before making
• 25:51
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 25:54
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• 27:26
  Speaker 1: You're listening to the Legal Exchange, and it's time for
• 27:30
  Speaker 1: Ask Todd, the segment where Todd will answer your questions
• 27:33
  Speaker 1: about anything and everything that's included in the estate planning process.
• 27:37
  Speaker 1: Once again, here's Todd Lutsky and Susan Powers.
• 27:41
  Speaker 2: Welcome back, Todd. We have a couple of questions from listeners.
• 27:45
  Speaker 2: First question comes from Michelle in Norton, mass And Michelle writes,
• 27:49
  Speaker 2: my mother recently died and I learned that she transferred
• 27:52
  Speaker 2: her home to me back in two thousand and six
• 27:55
  Speaker 2: and kept a life estate. I'm an only child in
• 27:58
  Speaker 2: her beneficiary. I'm the only beneficiary. She only had her
• 28:02
  Speaker 2: home worth around two hundred and sixty thousand, a joint
• 28:05
  Speaker 2: checking account that I was on, and a small IRA
• 28:08
  Speaker 2: worth around twenty two thousand that I was listed as
• 28:10
  Speaker 2: the sole beneficiary. Do I need to do anything more
• 28:14
  Speaker 2: than change these accounts into my name alone? Will I
• 28:18
  Speaker 2: need to pay capital gains tax on her home when
• 28:21
  Speaker 2: I sell it?
• 28:22
  Speaker 3: Oh? So this isn't this isn't horrible. I mean, I
• 28:27
  Speaker 3: don't love the arrangement, but I think it's going to
• 28:29
  Speaker 3: work out. It worked out in her case, right, because
• 28:31
  Speaker 3: you said that she did pass away.
• 28:33
  Speaker 2: I'm passed.
• 28:34
  Speaker 3: Yeah, I'm on passed. So so you know, there's really
• 28:38
  Speaker 3: two questions here. You know, while she was living, what
• 28:42
  Speaker 3: did she have? Right, But that's kind of a mood
• 28:45
  Speaker 3: point now because she's dead. So it all happened to
• 28:48
  Speaker 3: work out, and I just want people to know that. Yeah,
• 28:51
  Speaker 3: I just want people to know that I'm jumping to
• 28:53
  Speaker 3: the dying part to answer this question. But she only
• 28:57
  Speaker 3: got to the dying part because uckily everything worked out
• 29:01
  Speaker 3: while she was alive. That's that's really the message here.
• 29:04
  Speaker 3: But this is some of the benefits that exist with
• 29:09
  Speaker 3: a life estate, right, So she did this apparently back
• 29:12
  Speaker 3: in two thousand and six, so that would have won
• 29:16
  Speaker 3: triggered the beginning of a five year waiting period for
• 29:20
  Speaker 3: nursing home protection. And so because we got past five years,
• 29:26
  Speaker 3: actually if she had gone to a nursing home, the
• 29:29
  Speaker 3: house would have been protected. So it does protect it
• 29:34
  Speaker 3: from a nursing home. Years have to wait to five
• 29:37
  Speaker 3: years from the day she created it back in six
• 29:41
  Speaker 3: So at least during life that would have been worked
• 29:43
  Speaker 3: out for her. And again, the life estate at least
• 29:46
  Speaker 3: allows her the right to live there, not so much,
• 29:48
  Speaker 3: sell it not so much, avoid capital gains taxes not
• 29:52
  Speaker 3: so much. You know, avoid creditors of the daughter. I mean,
• 29:55
  Speaker 3: there's problems built in here that she just didn't need
• 30:01
  Speaker 3: to worry about. It didn't apply to her. But I
• 30:05
  Speaker 3: don't like to take away options for my client, and
• 30:09
  Speaker 3: I think with life estates, you give up certain options
• 30:14
  Speaker 3: that you wouldn't otherwise need to do to get the
• 30:17
  Speaker 3: same protection and maybe better protection. Okay, So life went
• 30:22
  Speaker 3: on and she was able to live there and it
• 30:24
  Speaker 3: worked out that it was protected from the nursing home.
• 30:26
  Speaker 3: So now when she passes away, which is where we
• 30:30
  Speaker 3: are in this question, you know what happens. Well, luckily
• 30:36
  Speaker 3: for her, the house avoids probate. Why because her life
• 30:40
  Speaker 3: interest basically evaporates the moment she dies. It's gone. Why,
• 30:45
  Speaker 3: it was a life estate and now it avoids probate
• 30:48
  Speaker 3: and it automatically vests one hundred percent in the name
• 30:53
  Speaker 3: of the remainderman, which was the daughter. Yeah, okay, so
• 30:58
  Speaker 3: she now has the house, and if she doesn't take
• 31:01
  Speaker 3: another step and do anything, she's the owner by default.
• 31:06
  Speaker 3: But it's done. Yeah, it's it's done. So it doesn't
• 31:09
  Speaker 3: mean when she goes to sell it that you won't
• 31:11
  Speaker 3: have to probably document the fact that there's, you know,
• 31:13
  Speaker 3: a death certificate for her mom who died to show
• 31:16
  Speaker 3: why she's not signing it. But she owns it.
• 31:19
  Speaker 2: So when she goes to sell it, Todd, what is
• 31:21
  Speaker 2: she going to be faced with in terms of capital
• 31:23
  Speaker 2: gains taxes? Because it's likely that mom but the house
• 31:27
  Speaker 2: you know, yep, I think my parents paid thirteen grand
• 31:29
  Speaker 2: for their house originally, so yeah, probably.
• 31:32
  Speaker 3: Sure it's one of those long yeah, built in capital gains, right,
• 31:35
  Speaker 3: it would have been a lot. But you said the
• 31:36
  Speaker 3: house itself was worthelling about quarter million sixty Yeah, yeah,
• 31:39
  Speaker 3: so but again you're right, she probably paid almost nothing
• 31:41
  Speaker 3: for it, so there was a lot of buildings.
• 31:43
  Speaker 2: Again, you say she's got two hundred thousand of gain
• 31:46
  Speaker 2: just to use some around.
• 31:47
  Speaker 3: There, which is probably accurate. So because you think that
• 31:52
  Speaker 3: there's two hundred thousand dollars of built in gain on
• 31:55
  Speaker 3: this property there, there actually isn't. In this case the
• 32:00
  Speaker 3: because that house was given away, but she retained the
• 32:03
  Speaker 3: right to live there. The government says, when you give
• 32:06
  Speaker 3: something away, but retain a little nugget of ownership and
• 32:10
  Speaker 3: enjoy what you gave away, you didn't give it away.
• 32:14
  Speaker 3: So the entire property is included in the estate for
• 32:17
  Speaker 3: state tax purposes. She's way under two million dollars here
• 32:21
  Speaker 3: in Massachusetts when you add up all the estate assets,
• 32:25
  Speaker 3: so that doesn't create an estate tax. But by having
• 32:29
  Speaker 3: it included in the estate for estate tax purposes, you
• 32:33
  Speaker 3: get a step up in basis. So the daughter now
• 32:36
  Speaker 3: has a cost basis of not her thirteen thousand dollars
• 32:40
  Speaker 3: that mom paid, but a cost basis equal to two
• 32:43
  Speaker 3: sixty which is fair market value. Date of death. She
• 32:46
  Speaker 3: sells it, no capital gains tax, she pockets all the money,
• 32:51
  Speaker 3: and there was no death tax because mom was under Yeah,
• 32:54
  Speaker 3: so this really did work out, But folks, not the
• 32:56
  Speaker 3: way I would have done it. Okay, you give up
• 32:59
  Speaker 3: too much and you create life estates. And that's why
• 33:01
  Speaker 3: I want you to get this guide calculating the consequences
• 33:04
  Speaker 3: of a life estate. If you've done one, get the guide,
• 33:08
  Speaker 3: learn what you've done. If you haven't done one, get
• 33:11
  Speaker 3: the guide and learn before you do it. And also
• 33:14
  Speaker 3: if you've done one and maybe want to get out
• 33:15
  Speaker 3: of it, this will help you as well. So folks,
• 33:19
  Speaker 3: call and get the guide. Learn about all the tax
• 33:21
  Speaker 3: consequences and control losses that you have with this arrangement,
• 33:27
  Speaker 3: and the three ways I tell you when to do
• 33:29
  Speaker 3: it eight six six eight four eight five six nine
• 33:33
  Speaker 3: nine or Legal Exchange Show dot com again eight sixty
• 33:37
  Speaker 3: six eight four eight five six nine nine or Legal
• 33:41
  Speaker 3: Exchange Show dot com. And of course, go to our
• 33:44
  Speaker 3: Instagram page Pushing Dolan PC for lots more information.
• 33:48
  Speaker 2: Our last question comes from Donna in Newton, mass And
• 33:51
  Speaker 2: Donna writes, my mother passed away and had a trust
• 33:54
  Speaker 2: that gave my sister the ability to stay in my
• 33:56
  Speaker 2: mother's home for as long as she wants to. My
• 34:00
  Speaker 2: sister does not have any money to take care of
• 34:02
  Speaker 2: the property and pay the real estate taxes, which are substantial.
• 34:06
  Speaker 2: Are my siblings and I now responsible to pay for
• 34:09
  Speaker 2: the expenses with a little money that is left in
• 34:12
  Speaker 2: the trust.
• 34:12
  Speaker 3: Okay. So the house went into a trust, yep, and
• 34:16
  Speaker 3: the trust is drafted in a way that says home
• 34:20
  Speaker 3: stays in trust for one child yep, for life, Okay.
• 34:25
  Speaker 2: For as long as she wants it.
• 34:26
  Speaker 3: The reason I'm going down that road and sort of
• 34:27
  Speaker 3: repeating this is just to get to the next question
• 34:30
  Speaker 3: is and I'm guessing there's no language in there that indicates, oh, yeah,
• 34:34
  Speaker 3: we want to hold money aside in the trust to
• 34:36
  Speaker 3: pay for the bills of the trust, or obligating the
• 34:40
  Speaker 3: sister who's living there to pay those bills.
• 34:42
  Speaker 2: It doesn't seem like that. She said, there's only a
• 34:45
  Speaker 2: little money that's left in the trust.
• 34:47
  Speaker 3: Okay. So again, if it doesn't even have the language
• 34:49
  Speaker 3: in there to obligate, you're right. Whenever you leave assets
• 34:53
  Speaker 3: in a trust like a house, and you want it
• 34:56
  Speaker 3: to be held for a child to use it, please
• 35:00
  Speaker 3: make sure you figure out how it's going to be maintained.
• 35:05
  Speaker 3: Otherwise it's not helpful for anybody. Right, they're gonna take
• 35:09
  Speaker 3: it for real estate taxes that aren't paid, they're gonna
• 35:11
  Speaker 3: shut off the heat, the water. You know, if you
• 35:14
  Speaker 3: don't pay bills. Folks, these are just natural things that
• 35:17
  Speaker 3: you have to do.
• 35:19
  Speaker 2: And your other kids shouldn't be holding the bag supporting this.
• 35:22
  Speaker 3: The one system, Yeah, because it probably says after the
• 35:25
  Speaker 3: sister either moves out or doesn't live there or dies,
• 35:27
  Speaker 3: it goes equally to all the kids. So ultimately the
• 35:30
  Speaker 3: other kids are saying, well, we kind of have an
• 35:33
  Speaker 3: interest in this, Yeah, we would like to ultimately enjoy it.
• 35:37
  Speaker 3: We also know that and maybe they do realize that
• 35:40
  Speaker 3: their sister doesn't have a place to live and this
• 35:42
  Speaker 3: is important, so it can be important that there's a
• 35:45
  Speaker 3: place for her to live. So, folks, my comment is,
• 35:50
  Speaker 3: when we do this draft the document and say either
• 35:54
  Speaker 3: I want to allocate a fund in the trust to
• 35:57
  Speaker 3: pay these bills, or when there's no money, tell the dotter, look,
• 36:02
  Speaker 3: you're getting a free place to live. But in the trust,
• 36:05
  Speaker 3: put language that says she can live there for life
• 36:09
  Speaker 3: or until one of these events occur. You have to
• 36:12
  Speaker 3: pay all the bills, the real estate taxes, the upkeep,
• 36:16
  Speaker 3: the maintenance. Put language in there that says, if like
• 36:19
  Speaker 3: a bill goes unpaid for ninety consecutive days. Consecutive days,
• 36:24
  Speaker 3: you know you lose your right. If you abandon the
• 36:27
  Speaker 3: property for six consecutive months and have moved out, well,
• 36:31
  Speaker 3: you lose your right. If you die, you lose your right.
• 36:34
  Speaker 3: If you sign a paper that says I'm done living here,
• 36:37
  Speaker 3: you lose your right. And then that way, there's language
• 36:40
  Speaker 3: in there to preserve the house for the other beneficiaries
• 36:44
  Speaker 3: and also gives this person an out right. So put
• 36:48
  Speaker 3: that language in. Folks, learn how if you're not going
• 36:53
  Speaker 3: to do the trust. If you've got a life estate,
• 36:55
  Speaker 3: how they work. There are pros and cons associated with
• 36:58
  Speaker 3: life estates. The guide eight six six eight four eight
• 37:03
  Speaker 3: five six nine nine, or go to our website Legal
• 37:06
  Speaker 3: Exchange Show dot com and you can download the new
• 37:09
  Speaker 3: guide right there.
• 37:10
  Speaker 2: If you have a question you'd like to ask Todd,
• 37:12
  Speaker 2: visit his website Legal Exchange Show dot com and click
• 37:16
  Speaker 2: on the ask Tod tab. Maybe I'll be able to
• 37:18
  Speaker 2: read your question on the air, and hopefully his answer
• 37:21
  Speaker 2: will stop you from becoming one of his next real
• 37:23
  Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
• 37:27
  Speaker 2: with the law firm of Cushing and Dolan. I'm Susan Powers,
• 37:30
  Speaker 2: a financial advisor with the Armstrong Advisory Group. We'll be
• 37:34
  Speaker 2: back with more after this quick break on the Legal
• 37:37
  Speaker 2: Exchange with Todd Lutsky.
• 37:40
  Speaker 1: Life estates are sometimes used to protect your home as
• 37:42
  Speaker 1: part of your future, but it's important to understand how
• 37:45
  Speaker 1: they really work before making any changes to your state plan.
• 37:48
  Speaker 1: Cushing and Dolan are experts and held your law and taxation.
• 37:51
  Speaker 1: Their new guide, called Calculating the Consequences of Life Estates
• 37:54
  Speaker 1: explains the pros and cons and why careful planning is
• 37:57
  Speaker 1: so critical. A life estate can allow you to rem
• 38:00
  Speaker 1: in your home while transferring future ownership, but decisions like
• 38:03
  Speaker 1: putting the property in your children's names versus using a
• 38:06
  Speaker 1: trust can have very different consequences when it comes to taxes, control,
• 38:10
  Speaker 1: and protection from creditors. Before you sign any deed or
• 38:13
  Speaker 1: transfer property, be sure you understand your options. Call Cushing
• 38:17
  Speaker 1: and Dolan at eight sixty six eight four eight five
• 38:19
  Speaker 1: six ninet nine and ask for your free guide today.
• 38:22
  Speaker 1: That's eight six six eight four eight five six nine nine,
• 38:25
  Speaker 1: or you can request the guide online by visiting Legal
• 38:27
  Speaker 1: Exchange show dot com.
• 38:29
  Speaker 5: The proceeding was.
• 38:30
  Speaker 1: Paid for and the views expressed are solely those of
• 38:31
  Speaker 1: Cushing and Dolan. Cushing and Dolan and Armstrong Advisory may
• 38:34
  Speaker 1: contact you offering legal or investment services. Cushing and Dolan
• 38:37
  Speaker 1: and Armstrong Advisory do not endorse each other and are
• 38:39
  Speaker 1: not affiliated. If you're ready for a getaway that feels easy, relaxed,
• 38:43
  Speaker 1: and completely refreshing, it's time to discover the US Virgin Islands.
• 38:46
  Speaker 1: This is your invitation to fall naturally in rhythm with
• 38:49
  Speaker 1: the heartbeat of the islands, where the water is warm,
• 38:51
  Speaker 1: the breezes are gentle, and every day moves at just
• 38:54
  Speaker 1: the right pace. Getting there is simple. There's no money
• 38:57
  Speaker 1: to exchange and no passport required. Just pack your bags
• 39:00
  Speaker 1: and go right now. Experience Saint Croix special promotion, a
• 39:03
  Speaker 1: vibe like no other. You may be eligible for a
• 39:05
  Speaker 1: two hundred and fifty dollars per person airfare credit when
• 39:08
  Speaker 1: you book through participating hotels using promo code Vibe twenty
• 39:11
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• 39:38
  Speaker 5: That's visit USVII dot com.
• 39:40
  Speaker 4: Divorce isn't just a legal process, it's a financial reset. Hi,
• 39:44
  Speaker 4: this is Mike Armstrong from the Armstrong Advisory Group and
• 39:46
  Speaker 4: our new guide, Divorce and your Financial Plan walks you
• 39:50
  Speaker 4: through how to take inventory of your assets, avoid common
• 39:52
  Speaker 4: mistakes when splitting accounts, update beneficiaries, and start building a
• 39:56
  Speaker 4: plan that works for your next chapter. Divorce is complicated
• 39:59
  Speaker 4: enough without all of its financial ramifications. The decisions you
• 40:02
  Speaker 4: make now can have lasting consequences for your future, because
• 40:05
  Speaker 4: after a divorce, it's not just about who gets what.
• 40:08
  Speaker 4: It's about making sure your financial life is truly separated
• 40:12
  Speaker 4: and set up to support your goals going forward. Call
• 40:14
  Speaker 4: the Armstrong Advisory Group right now at eight hundred three
• 40:18
  Speaker 4: nine three four zero zero one and get your free
• 40:20
  Speaker 4: guide Divorce and your Financial Plan. That's eight hundred three
• 40:23
  Speaker 4: nine three four zero zero one. Request the guide online
• 40:26
  Speaker 4: at Armstrong Advisory dot com.
• 40:28
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 40:30
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 40:32
  Speaker 1: Armstrong guide is specific financial, legal or tax advice. Consult
• 40:35
  Speaker 1: your own financial tax into state planning advisors before making
• 40:37
  Speaker 1: any investment decisions. Armstrong make contact you to offer investment
• 40:39
  Speaker 1: advisory services. Your tune to the Legal Exchange with Todd Lutsky.
• 40:45
  Speaker 1: If you are a loved one needs a nursing homestay,
• 40:47
  Speaker 1: call Todd right now at eight six six eight four
• 40:50
  Speaker 1: eight five six nine nine and let him make sure
• 40:52
  Speaker 1: your assets are protected. That's eight six six eight four
• 40:55
  Speaker 1: eight five six nine nine, or visit him online at
• 40:58
  Speaker 1: Legal Exchange Show dot com.
• 41:00
  Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
• 41:03
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 41:07
  Speaker 2: and I'm joined of course by Todd Lutsky, a partner
• 41:10
  Speaker 2: with a law firm of Cushing and Dolan with a
• 41:12
  Speaker 2: master's in taxation. So, Todd, your guide this month is
• 41:16
  Speaker 2: all about calculating the consequences of a life estate and
• 41:21
  Speaker 2: just to there are many Yeah, so if folks are
• 41:24
  Speaker 2: just joining in. Can you give me a quick little
• 41:26
  Speaker 2: definition what is a life estate? So they understand.
• 41:29
  Speaker 3: Yeah, So a life estate is the creation of a
• 41:33
  Speaker 3: nugget of ownership for yourself while you give away give
• 41:37
  Speaker 3: away most of the everything else. It's a remainder interest
• 41:42
  Speaker 3: we call it. So you keep a little right to
• 41:44
  Speaker 3: live there and right to collect income from the property,
• 41:48
  Speaker 3: but you give away the future ownership. Okay, and your
• 41:52
  Speaker 3: ownership interest comes down in value the older you get
• 41:56
  Speaker 3: as you age it, so if you sell it, you
• 41:58
  Speaker 3: get less. Yeah, because of how you are perfect.
• 42:01
  Speaker 2: So when I asked you that first question from Michelle
• 42:04
  Speaker 2: and Norton, they the mom dodged a bullet because she died.
• 42:08
  Speaker 2: I mean, she had this life state for twenty years.
• 42:11
  Speaker 2: You made a comment saying there are options that you
• 42:14
  Speaker 2: give up when you set up a life estate. So
• 42:17
  Speaker 2: I just want to expand on that. So because we
• 42:19
  Speaker 2: talked about this positive case, I mean, she didn't have
• 42:22
  Speaker 2: to go to probate, she didn't have to pay any taxes.
• 42:25
  Speaker 2: What are you actually giving up? What's the downside of
• 42:27
  Speaker 2: doing a life as state.
• 42:29
  Speaker 3: I mean, that's really a that's really the real reason
• 42:31
  Speaker 3: you think twice about doing these right when you're going
• 42:35
  Speaker 3: to do them, think twice why, Because you're going to
• 42:38
  Speaker 3: live with it for a long time. It's still your house,
• 42:41
  Speaker 3: so well, it's your house at least a little nutting
• 42:43
  Speaker 3: little bit is of ownership that you kept. So and
• 42:46
  Speaker 3: herein lies the problem right first and foremost, when you
• 42:50
  Speaker 3: do it the way Michelle did it, yep, which is
• 42:54
  Speaker 3: one way to do it, the most common way. Unfortunately,
• 42:59
  Speaker 3: people give the house to the child. Remember the child
• 43:02
  Speaker 3: owned it, yep, and took back this right to live there,
• 43:06
  Speaker 3: so she kept a little peace she gave away. So first,
• 43:08
  Speaker 3: you have a gift tax problem. You made a completed
• 43:13
  Speaker 3: gift the moment you added the child's name to the deed.
• 43:18
  Speaker 3: So now we've got a gift tax problem. They got
• 43:20
  Speaker 3: the giver has to file the gift tax return, now
• 43:24
  Speaker 3: get it. There may or may not be any gift
• 43:26
  Speaker 3: tax due because you've got a huge exemption today fifteen million.
• 43:30
  Speaker 3: So great. I'm not harmed by it, but I still
• 43:34
  Speaker 3: need to acknowledge that happened. Okay, Now what else have
• 43:37
  Speaker 3: I done?
• 43:38
  Speaker 4: Well?
• 43:38
  Speaker 3: I retained the right to live there, and if we
• 43:40
  Speaker 3: choose to rent the property, I retain the right to
• 43:43
  Speaker 3: collect the rent all seems good, sounds good, But as
• 43:47
  Speaker 3: I age, I don't want to live in the snow
• 43:50
  Speaker 3: world anymore, and I want to move to Florida.
• 43:52
  Speaker 2: Me too. Yeah, I know, not necessarily Florida, but yes, South, Yes, So.
• 43:58
  Speaker 3: Can I do that? Well? Maybe?
• 44:03
  Speaker 4: Maybe?
• 44:03
  Speaker 3: Why? Well, in order to sell your house after you
• 44:07
  Speaker 3: have created this life estate, two people would need to
• 44:10
  Speaker 3: sign off. In Michelle's case, it would be Michelle and
• 44:13
  Speaker 3: the daughter. Okay, they would both have to sign on
• 44:17
  Speaker 3: the deed. Why because two people own it now? So
• 44:23
  Speaker 3: what if the daughter doesn't want to sell?
• 44:26
  Speaker 2: What if she says no thanks?
• 44:27
  Speaker 3: I mean, I guess if you don't have a lot
• 44:29
  Speaker 3: of other assets, as was the case here, there wasn't
• 44:33
  Speaker 3: a lot of other assets to threaten disinheritance for the daughter.
• 44:38
  Speaker 3: If you don't have any any money in the back
• 44:41
  Speaker 3: pocket to do that, well, I don't know what you do.
• 44:45
  Speaker 3: I mean, you're kind of you're kind of stuck, right
• 44:48
  Speaker 3: because I mean, you could force the sale by filing
• 44:51
  Speaker 3: a petition to partition and make her sell it. But
• 44:54
  Speaker 3: even if you went down that road and made her
• 44:56
  Speaker 3: sell it, what would happen? Or if she agreed to
• 44:59
  Speaker 3: sell on her own, what would happen. Well, a large
• 45:04
  Speaker 3: portion of the money based on your age. You got
• 45:06
  Speaker 3: to go to an IRS table to figure out what
• 45:08
  Speaker 3: percentage you gave away and what percentage you're worth. Like,
• 45:11
  Speaker 3: if you're in your eighties, the percentage for you is
• 45:14
  Speaker 3: pretty small twenty percent, fifteen percent. So most of the
• 45:17
  Speaker 3: money ends up going to the daughter. So now you
• 45:21
  Speaker 3: don't have the money you need to buy the new
• 45:23
  Speaker 3: house to move to Florida Number one. Number two. If
• 45:27
  Speaker 3: your daughter doesn't live there, most of the capital gain.
• 45:31
  Speaker 3: Remember when you give away the property you give her
• 45:33
  Speaker 3: the basis, So the daughter is going to have a
• 45:36
  Speaker 3: lot of capital gain allocated to the daughter who doesn't
• 45:40
  Speaker 3: live there. So that daughter doesn't get the capital gains
• 45:43
  Speaker 3: exclusion associated with owning and selling your primary residence. So
• 45:48
  Speaker 3: now there's more tax to be paid than would otherwise
• 45:51
  Speaker 3: be the case by the daughter. And so even if
• 45:54
  Speaker 3: the daughter was kind enough to give back the money,
• 45:57
  Speaker 3: she'll be giving back less money because she had to
• 46:01
  Speaker 3: pay income tax on the sale. I mean, folks, this
• 46:04
  Speaker 3: is a huge rabbit hole you don't want to go down.
• 46:07
  Speaker 3: Calculating the consequences of a life estate is the name
• 46:10
  Speaker 3: of the guide.
• 46:11
  Speaker 2: Consequences there are.
• 46:13
  Speaker 3: This is one of the consequences, one of many. But folks,
• 46:16
  Speaker 3: learn the two ways to do it, which is one
• 46:20
  Speaker 3: way we described the other as to a trust, which
• 46:22
  Speaker 3: we can maybe compare that later. Also understand the three
• 46:27
  Speaker 3: times that I recommend doing a life estate and how
• 46:30
  Speaker 3: to do them, and then all the you know consequences
• 46:33
  Speaker 3: you know selling. We just talked about, gift tax, capital
• 46:37
  Speaker 3: gains tax, how much control do I keep? Credit or
• 46:40
  Speaker 3: protection issues? Folks goes on and on. Learn about these
• 46:44
  Speaker 3: before you do them, or learn how not to do
• 46:46
  Speaker 3: them if you haven't done them. Eight six six eight
• 46:49
  Speaker 3: four eight five six nine nine or Legal Exchange Show
• 46:53
  Speaker 3: dot com again eight six six eight four eight five
• 46:57
  Speaker 3: six nine nine or Legal Exchange Show dot com. You
• 47:00
  Speaker 3: can download it right there. Otherwise go to our Instagram
• 47:03
  Speaker 3: page Cushing Dolan PC for lots more information.
• 47:07
  Speaker 2: So let's say, using this same example, and Michelle has
• 47:12
  Speaker 2: the remainder interest because Mom put her house in the
• 47:14
  Speaker 2: life estate. What would happen if Michelle ran into some
• 47:18
  Speaker 2: legal trouble and she got divorced or she got sued.
• 47:23
  Speaker 2: What happens to Mom's house?
• 47:24
  Speaker 3: So let's let's do the divorce one, because that's always
• 47:27
  Speaker 3: remonates so well with people. Well, there is one upside
• 47:33
  Speaker 3: to having the life estate. There's others, but this one.
• 47:38
  Speaker 3: At least you have the right to live there, the
• 47:40
  Speaker 3: right to the income, and a creditor of the remainderman
• 47:45
  Speaker 3: i e. The divorcing daughter yep, can't really move against
• 47:50
  Speaker 3: the property. Well, the life tenant is living there. So
• 47:54
  Speaker 3: Mom can't be kicked out, not because of that creditor,
• 47:58
  Speaker 3: because she does. She is the present owner and does
• 48:02
  Speaker 3: have the right and it's not her creditor, so at
• 48:05
  Speaker 3: least she can't be kicked out. But that doesn't end
• 48:08
  Speaker 3: the discussion. There was a completed gift of the remainder interest,
• 48:14
  Speaker 3: and depending on how old Mom is at the time,
• 48:17
  Speaker 3: will determine what percentage of the value of that property
• 48:21
  Speaker 3: is worth. So if it's an eight hundred thousand dollars property, yep,
• 48:24
  Speaker 3: and technically eighty percent of it is considered the remainderment,
• 48:29
  Speaker 3: Well that's a big number. Sure is that that is
• 48:33
  Speaker 3: really the value of what that divorcing daughter owns?
• 48:36
  Speaker 2: Six hundred just for easy.
• 48:37
  Speaker 3: Math, probably is. So let's say it's six hundred thousand. Well,
• 48:41
  Speaker 3: that divorcing daughter is going to have to deal with
• 48:45
  Speaker 3: that asset and say it's an asset of the marriage,
• 48:48
  Speaker 3: and so six hundred divide by two is three hundred thousand.
• 48:53
  Speaker 3: If I'm the one getting, you know, on the other side,
• 48:56
  Speaker 3: I might say, you can keep the house, but you're
• 49:00
  Speaker 3: going to have to come up with three hundred other
• 49:01
  Speaker 3: thousand dollars of assets to shift over to me, and
• 49:04
  Speaker 3: I'll give you my half of that interest in the house.
• 49:08
  Speaker 3: So that's probably what would happen. I don't know that
• 49:12
  Speaker 3: that the in law, the soon to be ex in
• 49:14
  Speaker 3: law would would want to own a house with a
• 49:17
  Speaker 3: life tenant. Maybe, but I don't really see the need
• 49:21
  Speaker 3: to do that. But ultimately, when the life tenant dies,
• 49:24
  Speaker 3: if you do own the remainder of interest, you'll get
• 49:26
  Speaker 3: the whole house. So maybe maybe they do.
• 49:30
  Speaker 2: So someone has this life estate for some reason and
• 49:34
  Speaker 2: they're listening to this and saying, I want out of
• 49:37
  Speaker 2: this thing. Can they undo it?
• 49:39
  Speaker 3: Yeah? Again, it's it's all about family dynamics. Yeah, you know,
• 49:43
  Speaker 3: so in this case you have to ask the child
• 49:46
  Speaker 3: or remember you might have many children, and if you
• 49:49
  Speaker 3: set this up and you have three kids and your
• 49:52
  Speaker 3: goal has always been to treat the kids equally. Well,
• 49:54
  Speaker 3: then it's very possible that that you had put three
• 49:58
  Speaker 3: names on the property. And if you did, you're gonna
• 50:01
  Speaker 3: need all three kids to say, yeah, I'm ready to
• 50:04
  Speaker 3: agree to give up my life interest or my remainder interest,
• 50:07
  Speaker 3: excuse me, and give it back to mom.
• 50:10
  Speaker 2: And have their spouses go along with it too, right.
• 50:13
  Speaker 3: Right, So I mean they don't I mean have a say,
• 50:15
  Speaker 3: but I guess they could say yeah. So yeah, you
• 50:18
  Speaker 3: got to be careful, folks. You don't want to just,
• 50:20
  Speaker 3: you know, just set up a life estate because it's
• 50:23
  Speaker 3: can it be undone? Yes? Ask the kids?
• 50:25
  Speaker 2: Yeah, permission no?
• 50:27
  Speaker 3: Thanks not loving the permission idea, folks, call and get
• 50:30
  Speaker 3: the guide calculating the consequences of a life estate commonly
• 50:34
  Speaker 3: used more commonly misunderstood eight six six eight four eight
• 50:40
  Speaker 3: five six nine nine or Legal Exchange show dot com.
• 50:45
  Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan,
• 50:47
  Speaker 2: thank you so much.
• 50:48
  Speaker 3: Thank you, Susan. Always a pleasure.
• 50:50
  Speaker 2: I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
• 50:53
  Speaker 2: We thank you for joining us today and we'll be
• 50:55
  Speaker 2: back again next week on the Legal Exchange with Todd Lutsky.
• 51:00
  Speaker 1: Life estates are sometimes used to protect your home as
• 51:02
  Speaker 1: part of your future, but it's important to understand how
• 51:05
  Speaker 1: they really work before making any changes to your state plan.
• 51:08
  Speaker 1: Cushing and Dolan are experts and held your law and taxation.
• 51:11
  Speaker 1: Their new guide, called Calculating the Consequences of Life Estates
• 51:14
  Speaker 1: explains the pros and cons and why careful planning is
• 51:17
  Speaker 1: so critical. A life estate can allow you to remain
• 51:20
  Speaker 1: in your home while transferring future ownership, but decisions like
• 51:23
  Speaker 1: putting the property in your children's names versus using a
• 51:26
  Speaker 1: trust can have very different consequences when it comes to taxes, control,
• 51:30
  Speaker 1: and protection from creditors. Before you sign any deed or
• 51:33
  Speaker 1: transfer property, be sure you understand your options. Call Cushing
• 51:37
  Speaker 1: and Dolan at eight sixty six eight four eight five
• 51:39
  Speaker 1: six ninet nine and ask for your free guide today.
• 51:42
  Speaker 1: That's eight six six eight four eight five six nine nine,
• 51:45
  Speaker 1: or you can request the guide online by visiting Legal
• 51:47
  Speaker 1: exchange show dot com. The proceeding was paid for in
• 51:50
  Speaker 1: The views expressed are solely those of Cushing and Dolan.
• 51:52
  Speaker 1: Cushing and Dolan and Armstrong Advisory may contact you offering
• 51:55
  Speaker 1: legal or investment services Cushing and Dolan and Armstrong Advisory
• 51:58
  Speaker 1: do not endorse each other and are not affiliated.
• 52:00
  Speaker 4: As you navigate life after divorce, planning for your family's
• 52:03
  Speaker 4: future becomes even more important.
• 52:05
  Speaker 3: HI.
• 52:05
  Speaker 4: This is Mike Armstrong from the Armstrong Advisory Group. From
• 52:08
  Speaker 4: everyday expenses to thinking about how college will be funded,
• 52:11
  Speaker 4: it's important to have a clear plan for how all
• 52:13
  Speaker 4: of your upcoming costs will be handled over time. Divorce
• 52:16
  Speaker 4: also means adjusting to a new financial reality where one
• 52:20
  Speaker 4: household becomes two, and your budget saving strategy and long
• 52:23
  Speaker 4: term goals may need to be reevaluated. Our new guide
• 52:26
  Speaker 4: is called Divorce in your Financial Plan, and it discusses
• 52:29
  Speaker 4: ways to build a financial strategy that supports your family's
• 52:33
  Speaker 4: next chapter. You can get your free guide today by
• 52:35
  Speaker 4: calling eight hundred three nine three four zero zero one.
• 52:38
  Speaker 4: That's eight hundred three nine three four zero zero one,
• 52:41
  Speaker 4: or you can request the guide online at Armstrong Advisory
• 52:44
  Speaker 4: dot com.
• 52:45
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 52:47
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 52:50
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 52:53
  Speaker 1: your own financial tax into state planning advisors before making
• 52:56
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 52:59
  Speaker 1: advisory services. If you're ready for a getaway that feels easy, relaxed,
• 53:02
  Speaker 1: and completely refreshing, it's time to discover the US Virgin Islands.
• 53:06
  Speaker 1: This is your invitation to fall naturally in rhythm with
• 53:09
  Speaker 1: the heartbeat of the islands, where the water is warm,
• 53:11
  Speaker 1: the breezes are gentle, and every day moves at just
• 53:14
  Speaker 1: the right pace. Getting there is simple. There's no money
• 53:17
  Speaker 1: to exchange and no passport required. Just pack your bags
• 53:19
  Speaker 1: and go right now. Experience Saint Croix special promotion, a
• 53:23
  Speaker 1: vibe like no other. You may be eligible for a
• 53:25
  Speaker 1: two hundred and fifty dollars per person airfare credit when
• 53:28
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