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How to Protect Your Home and Family Business From Estate Planning Mistakes · The Legal Exchange

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  Speaker 1: This is The Legal Exchange with Todd Lutzke from the
• 0:04
  Speaker 1: law firm of Cushing & Dolan and Susan Powers of
• 0:07
  Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
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  Speaker 1: discuss many topics, including estate planning, how to avoid probate,
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  Speaker 1: and protecting your money from a nursing home. If you
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  Speaker 1: need assistance in any of these areas or have a
• 0:18
  Speaker 1: question about another issue that may affect your future, call
• 0:21
  Speaker 1: 866-848-5699 to make an appointment. That's 866-848-5699. Operators are standing by. Now,
• 0:31
  Speaker 1: here are your hosts, Todd Lutzke and Susan Powers.
• 0:37
  Speaker 2: Welcome into The Legal Exchange with Todd Lutzke. I'm Susan Powers,
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  Speaker 2: a financial advisor with the Armstrong Advisory Group, and I'm
• 0:43
  Speaker 2: joined by Todd Lutzke, a partner with the law firm
• 0:46
  Speaker 2: of Cushing & Dolan with a master's in taxation. Welcome, Todd.
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  Speaker 2: How are you today?
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  Speaker 3: I'm never better than you.
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  Speaker 2: I'm great, thank you. What do you have for us today?
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  Speaker 3: A couple of cases. I got a California... appellate court case.
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  Speaker 3: Then we're going to head over to a Supreme court
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  Speaker 3: case in Idaho. So this one is, uh, you know,
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  Speaker 3: basically I'll title it as, you know, how much do you,
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  Speaker 3: how much can a state recover under the estate recovery
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  Speaker 3: rules from a nursing home? And by the way, folks,
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  Speaker 3: it is different per state. So I'm going to explain
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  Speaker 3: how this one went and then More importantly, it's just
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  Speaker 3: to set you up to show you how it works
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  Speaker 3: here in Massachusetts. So very important. It's more about after
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  Speaker 3: you've gone into a nursing home and the state paid
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  Speaker 3: a lot of your care, are they allowed to recover?
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  Speaker 3: And how do they do that? And what assets can
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  Speaker 3: they go after? And in this case, a trust is involved.
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  Speaker 3: And why is a trust involved, which may not be
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  Speaker 3: the case in Massachusetts? So stay tuned for that because
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  Speaker 3: I think that's the back end of the planning. Then
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  Speaker 3: we're going to scoot over to Idaho and I'll sort
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  Speaker 3: of title this one, how best to leave your business,
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  Speaker 3: your family business, in this case, there's two farms or
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  Speaker 3: really multiple farms, how to leave real estate and a
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  Speaker 3: family business to the next generation. So business succession planning
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  Speaker 3: is really one of the more complicated things to fit
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  Speaker 3: into your estate plan, especially when you have one child
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  Speaker 3: who might be actively involved and maybe the other children aren't.
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  Speaker 3: And then you're still worried about equality and how do
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  Speaker 3: I treat them equally? And, you know, but one was,
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  Speaker 3: one kind of has sweat equity already, didn't they already
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  Speaker 3: earn it? And you have all these other issues to
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  Speaker 3: think about. And, uh, you'll see what sort of went
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  Speaker 3: wrong in this case in terms of how they dealt
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  Speaker 3: with this business. Folks, those are just two items in
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  Speaker 3: your estate. When you're doing estate planning, sometimes gifting might
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  Speaker 3: be important in your estate. And how do you make
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  Speaker 3: the most of gifting? That is the title to the
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  Speaker 3: guide that we're giving away this month. You need to
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  Speaker 3: think about it. Do I even gift? Does it make
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  Speaker 3: sense to gift? If I'm going to gift, what kind
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  Speaker 3: of assets am I going to gift? high basis versus
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  Speaker 3: low basis assets? You know, am I going to give
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  Speaker 3: away the asset so I can't enjoy it? Or do
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  Speaker 3: I want to put it in a trust for my kids?
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  Speaker 3: Or do I want to put it in a trust
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  Speaker 3: that I can still enjoy and control? So many ways
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  Speaker 3: to give control option.
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  Speaker 4: Yes.
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  Speaker 3: Controlling is, is, is much better and enjoying. Otherwise I'm
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  Speaker 3: not going to give it away. So folks, really a
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  Speaker 3: lot to think about in terms of whether or not
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  Speaker 3: gifting even fits into your plan. 866-848-5699 or LegalExchangeShow.com. It
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  Speaker 3: is the last chance to get the guide, so it's
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  Speaker 3: the end of the month, folks. 866-848-5699 or LegalExchangeShow.com. Okay, California,
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  Speaker 3: here we come. Theodosa received medical benefits from a nursing
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  Speaker 3: home on October 2010 through her death in 2015. The state,
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  Speaker 3: they call them the Department of Health and Community Services
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  Speaker 3: or whatever they call it in California, made $ 292, 000 in
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  Speaker 3: what they call capitation payments to a managed care provider, CENTCAL.
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  Speaker 3: CENTCAL then pays the managed health care provider $ 106, 000 for
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  Speaker 3: medical services provided to Theodosa. Well, after Theodosa's death, the
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  Speaker 3: state sought $ 407, 000 in estate recovery payments, including not only
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  Speaker 3: the capitation payments they made, but also Medicare Part B, interest,
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  Speaker 3: et cetera. Well, Theodosa, as the trustee of Theodosa's trust,
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  Speaker 3: disputed the claims. And the state then filed a suit
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  Speaker 3: and claims that two of Theodosa's beneficiaries were Cross-complained after that, saying,
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  Speaker 3: we want a mandate to compel the state to be
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  Speaker 3: limited to their state recovery in the amounts paid by
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  Speaker 3: the managed care providers for the health care services received
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  Speaker 3: by Medi-Cal. Now, this is a little complicated. So basically,
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  Speaker 3: they're saying you should only get paid for what the
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  Speaker 3: state actually paid for the care of the person in
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  Speaker 3: the nursing home. And that's it. And the trial court
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  Speaker 3: determined that the state cannot recover more than the, they
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  Speaker 3: call them the capitation payments made, which is what they paid.
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  Speaker 2: Sure.
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  Speaker 3: Which makes sense.
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  Speaker 2: Why should they get more?
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  Speaker 5: Yeah.
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  Speaker 3: And cannot try to collect payments that are untethered, as
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  Speaker 3: they call it, to the services received by Theodosa. They appealed.
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  Speaker 3: Of course they did. The appellate court affirmed, stating, yes.
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  Speaker 3: You can only collect payments for services received by the
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  Speaker 3: Medi-Cal recipient. We call it in MassHealth here.
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  Speaker 1: Sure.
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  Speaker 3: They call it Medicaid, Medi-Cal there. And not excess amounts.
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  Speaker 2: Yeah, why should they get it?
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  Speaker 3: Yeah, I don't even understand what the lawsuit was over here.
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  Speaker 3: So if you're as confused as I am, it's fine.
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  Speaker 3: Because I don't even know what they're fighting over. This
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  Speaker 3: seems like a no-brainer.
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  Speaker 2: How do we stop them from coming after us?
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  Speaker 1: Yeah.
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  Speaker 3: That's what I care about. So I said, this actually,
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  Speaker 3: I don't care so much about the outcome of this
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  Speaker 3: case as I do in helping you folks listening to
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  Speaker 3: understand how mass health recovery happens here, right? What happens here?
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  Speaker 3: There is something called estate recovery. So in mass, we
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  Speaker 3: limit the estate recovery for benefits received by an individual
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  Speaker 3: who from MassHealth payments to only assets held in the
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  Speaker 3: decedent's probate estate.
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  Speaker 2: Just probate.
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  Speaker 3: Just probate. So this would be only assets in the
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  Speaker 3: decedent's name alone without a designated beneficiary. Okay, Todd, that's
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  Speaker 3: probate asset. Okay, example. So you cannot even get on Medicaid, MassHealth,
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  Speaker 3: as a single person Unless you have less than $ 2, 000
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  Speaker 3: in your own name. That's the general rule.
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  Speaker 1: Yep.
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  Speaker 3: So, of course, I would say, so what does a
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  Speaker 3: state recovery even matter? You're on Medicaid. You only have $ 2, 000.
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  Speaker 3: Who cares?
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  Speaker 2: You could have a house, though, right?
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  Speaker 3: Ah, Susan. You've been listening to the show. So you
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  Speaker 3: could have a home that's non-countable but leanable. You can
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  Speaker 3: also have rental property that's non-countable if it's generating income
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  Speaker 3: essential to self-support but leanable. upon your death. And you
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  Speaker 3: could even have an annuity that converts assets to income stream,
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  Speaker 3: but then there's a lien or a payback provision on
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  Speaker 3: the annuity. So estate recovery still can matter here. The
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  Speaker 3: benefits though is remember, okay, well then why would I
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  Speaker 3: get on Medicaid if they're just going to recover? Well,
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  Speaker 3: it's okay. Remember estate recovery is not all bad because
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  Speaker 3: it's still okay. Because even if you're If there's no
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  Speaker 3: Medicaid planning done and you get on Medicaid with these
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  Speaker 3: last-minute techniques that I just briefly explained, remember the Medicaid
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  Speaker 3: rate is about $ 6, 500 to $ 7, 000 a month, depending on
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  Speaker 3: your care. Private pay, maybe $ 17, 000.
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  Speaker 6: Easy.
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  Speaker 2: Could be more.
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  Speaker 3: Plus, let's say you have $ 3, 000 a month of Social
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  Speaker 3: Security coming in. Or a pension. Well, if you take $ 6, 500
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  Speaker 3: minus three, you only have $ 3, 500 that the state is paying.
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  Speaker 1: Yeah.
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  Speaker 3: Well, if the state's only paying $ 3, 500, then the lien
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  Speaker 3: on your house or your rental property is only $ 3, 500
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  Speaker 3: a month. If I got a million dollar home, I'm
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  Speaker 3: pretty happy with that. Even if I live 24 months,
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  Speaker 3: 36 months. I'm good.
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  Speaker 2: Way less than if you had to private pay.
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  Speaker 3: It's all about the leverage, folks. And that's why getting
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  Speaker 3: on Medicaid is so important, even though there's a state recovery.
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  Speaker 3: But remember, in mass, and the confusing thing here for
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  Speaker 3: me was, why was the trustee even involved in this?
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  Speaker 3: Because in mass, if we had set up our Medicaid
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  Speaker 3: trust five years before we ever went into a nursing home,
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  Speaker 3: the assets in there would be protected from the nursing home.
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  Speaker 3: And also... not available for estate recovery. There would be
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  Speaker 3: no lien. The trustee wouldn't care that there's this payback
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  Speaker 3: because it wouldn't apply to those assets. However, maybe in California,
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  Speaker 3: it does. Folks, that's a little bit about the Medicaid side.
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  Speaker 3: Learn whether or not gifting assets is part of your
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  Speaker 3: estate plan, should even be a part of your estate plan.
• 10:05
  Speaker 3: To gift or not to gift, lots of information in
• 10:08
  Speaker 3: this guide, 866-848-5699 or LegalExchangeShow.com. It's the last chance to
• 10:13
  Speaker 3: get it, folks.
• 10:14
  Speaker 5: 866-848-5699.
• 10:22
  Speaker 2: You've been listening to Todd Lutzky, a partner with the
• 10:24
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 10:28
  Speaker 2: financial advisor with the Armstrong Advisory Group. Thank you for
• 10:32
  Speaker 2: joining us. We'll be back in just a few minutes
• 10:34
  Speaker 2: on The Legal Exchange with Todd Lutzky.
• 10:38
  Speaker 1: Giving assets to your children during your lifetime may sound
• 10:40
  Speaker 1: like a simple way to pass along your wealth, but
• 10:43
  Speaker 1: the way you make the gift can have important tax consequences.
• 10:46
  Speaker 1: Cushing and Dolan's new guide, Making the Most of Gifting Assets,
• 10:50
  Speaker 1: explains what you should consider before transferring property, investments, or
• 10:54
  Speaker 1: other appreciative assets to your family. If you give away
• 10:56
  Speaker 1: an asset too soon, your children could end up with
• 10:59
  Speaker 1: a larger tax bill when they eventually sell it. In
• 11:01
  Speaker 1: some cases, holding on to that asset and letting your
• 11:04
  Speaker 1: children inherit it later could reduce the capital gains tax
• 11:07
  Speaker 1: they have to pay. That's why gifting isn't just about
• 11:09
  Speaker 1: what you give. When and how you give it can
• 11:12
  Speaker 1: make a big difference. Get Cushing and Dolan's new guide,
• 11:15
  Speaker 1: Making the Most of Gifting Assets, by calling 866-848-5699. That's 866-848-5699.
• 11:23
  Speaker 1: Or you can request the guide online by visiting LegalExchangeShow.com.
• 11:27
  Speaker 1: The proceeding was paid for and the views expressed are
• 11:29
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 11:31
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 11:34
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 11:36
  Speaker 1: other and are not affiliated.
• 11:41
  Speaker 2: You've been saying one more year for the past five years,
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  Speaker 2: and now you're still sitting in the same traffic, taking
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  Speaker 2: the same exits, wondering when work finally becomes optional. At
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  Speaker 2: the Armstrong Advisory Group, we help people create personalized retirement
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  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
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  Speaker 1: registered investment advisor. Nothing in the ad or in any
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  Speaker 1: your own financial, tax, and estate planning advisors before making
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  Speaker 4: For 10 years now, Circle K has been a proud
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  Speaker 4: supporter of the DAV Department of Massachusetts. And Circle K
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  Speaker 3: It's a commitment.
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  Speaker 4: Circle K, proudly supporting the DAV Department of Massachusetts for
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• 13:09
  Speaker 1: Giving assets to your children during your lifetime may sound
• 13:11
  Speaker 1: like a simple way to pass along your wealth, but
• 13:14
  Speaker 1: the way you make the gift can have important tax consequences.
• 13:17
  Speaker 1: Cushing and Dolan's new guide, Making the Most of Gifting Assets,
• 13:21
  Speaker 1: explains what you should consider before transferring property, investments, or
• 13:25
  Speaker 1: other appreciative assets to your family. If you give away
• 13:27
  Speaker 1: an asset too soon, your children could end up with
• 13:30
  Speaker 1: a larger tax bill when they eventually sell it. In
• 13:32
  Speaker 1: some cases, holding on to that asset and letting your
• 13:35
  Speaker 1: children inherit it later could reduce the capital gains tax
• 13:38
  Speaker 1: they have to pay. That's why gifting isn't just about
• 13:40
  Speaker 1: what you give. When and how you give it can
• 13:43
  Speaker 1: make a big difference. Get Cushing and Dolan's new guide,
• 13:46
  Speaker 1: Making the Most of Gifting Assets, by calling 866-848-5699. That's 866-848-5699.
• 13:54
  Speaker 1: Or you can request the guide online by visiting LegalExchangeShow.com.
• 13:58
  Speaker 1: The proceeding was paid for and the views expressed are
• 14:00
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 14:02
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 14:05
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 14:07
  Speaker 1: other and are not affiliated. You're listening to The Legal
• 14:10
  Speaker 1: Exchange with Todd Lutzke, an expert in elder life planning
• 14:14
  Speaker 1: and taxation. Need help with your estate plan? Call Todd
• 14:17
  Speaker 1: right now and make an appointment. 866-848-5699. That's 866-848-5699.
• 14:25
  Speaker 2: Welcome back into The Legal Exchange with Todd Lutzke. I'm
• 14:28
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 14:31
  Speaker 2: and I'm joined by Todd Lutzke, a partner with the
• 14:34
  Speaker 2: law firm of Cushing & Dolan with a master's in taxation.
• 14:39
  Speaker 2: Where are we headed now, Todd? Doing a little farm planning?
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  Speaker 3: Yeah, out in Idaho. Supreme Court case. So here we go.
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  Speaker 3: John and Connie Clark. They were buying properties from the
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  Speaker 3: 60s to the 80s as part of their farm business.
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  Speaker 3: November 1988, they conveyed two parcels, Black Farm and Farm Home,
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  Speaker 3: to Son Jay. In 1992... Jay conveys these properties to
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  Speaker 3: Clover Hollow Farms, Inc. John, the dad, is a director
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  Speaker 3: and president, and Jay is a director and vice president.
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  Speaker 3: They don't mention who the owner is yet. Remember, officers
• 15:23
  Speaker 3: and directors don't have to be owners.
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  Speaker 1: Right.
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  Speaker 3: Okay. Jay wanted to safeguard his ownership as premarital assets,
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  Speaker 3: and Connie and John agreed to hold them in trust
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  Speaker 3: and return them to Jay upon demand.
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  Speaker 2: Okay.
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  Speaker 3: Interesting. Well, in 2020, Judith, a conservator of John, which
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  Speaker 3: is kind of strange, that's dad, filed a complaint to
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  Speaker 3: declare that John is the sole owner of Clover Hollow stock,
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  Speaker 3: which I'm not surprised, which of course owned Black Farm
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  Speaker 3: and Farm Home because Jay put them there.
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  Speaker 5: Right.
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  Speaker 3: Remember? So Jay... would have no interest or legal title
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  Speaker 3: in these properties. She files this. Well, John dies during
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  Speaker 3: the litigation, so Judith, as executor, continues the litigation.
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  Speaker 2: Judith was the conservator.
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  Speaker 1: Or the wife?
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  Speaker 3: Yeah, conservator. She was a conservator. And she's going to
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  Speaker 3: continue as executor. Not sure if wife's alive or not
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  Speaker 3: at this point. And she continues the litigation. Judith... called
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  Speaker 3: a special meeting of Clover Hollow stockholders and on her
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  Speaker 3: vote unanimously adopted a resolution removing Jay and his authority
• 16:41
  Speaker 3: as officer and director. Well, Jay didn't like that, so
• 16:46
  Speaker 3: he appealed, claiming that the corporate resolution was adopted invalidly
• 16:51
  Speaker 3: and therefore is ineffective. The court, through summary judgment for Judith,
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  Speaker 3: stating that Judith did have the power as executor, to
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  Speaker 3: act and call the meeting and continue to act on
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  Speaker 3: behalf of this as a shareholder because the shares are owned. Well,
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  Speaker 3: the Supreme Court, they went up to the Supreme Court. Now,
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  Speaker 3: of course, they objected. And up to the Supreme Court
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  Speaker 3: we go, and they reversed. And they said, look, the
• 17:19
  Speaker 3: executor could act on behalf of the corporation but cannot
• 17:25
  Speaker 3: ignore corporate formalities. And this is what we're going to
• 17:28
  Speaker 3: talk about. Could not ignore corporate formalities and unilaterally, you know,
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  Speaker 3: remove Jay as director and could not unilaterally even call
• 17:38
  Speaker 3: the special meeting of officers and directors. And Jay was
• 17:42
  Speaker 3: a director.
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  Speaker 2: Yeah.
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  Speaker 3: And vice president. So. Hooray, Jay is correct here that,
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  Speaker 3: you know, you can't just you can't just remove Jay
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  Speaker 3: as a officer or director. Not sure it matters too
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  Speaker 3: much anymore. I'm wondering what the will says as to
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  Speaker 3: where this stock goes. Does it go back to Jay?
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  Speaker 3: Should Jay be the owner of Clover Hollow Farms or not?
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  Speaker 3: To me, there's a much bigger picture going on here
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  Speaker 3: than whether or not you could remove him as officer
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  Speaker 3: and director.
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  Speaker 2: There's got to be a better way to plan for
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  Speaker 2: your business.
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  Speaker 3: Yeah, so folks, this is just horrible. I mean, why
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  Speaker 3: were the shares of Clover Hollow Farms not in a trust?
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  Speaker 3: Why is a conservative... Well, never mind that. After he died,
• 18:26
  Speaker 3: why do we even have to be in probate with
• 18:29
  Speaker 3: these assets? Folks, lots to talk about here, and I'm
• 18:33
  Speaker 3: going to come back to that in a minute. But
• 18:34
  Speaker 3: before we do, it's the end of the month, and
• 18:35
  Speaker 3: I want to at least bring you up to speed
• 18:37
  Speaker 3: on gifting because gifting could work with a business, but
• 18:40
  Speaker 3: we'll talk about how to do it. Again, if you
• 18:42
  Speaker 3: want a gift... Find out whether or not it's right
• 18:45
  Speaker 3: for you. What kind of assets do I gift? High
• 18:49
  Speaker 3: basis versus low basis assets. There's gift tax concerns. There's
• 18:53
  Speaker 3: income tax concerns. There's estate tax concerns. Of course, there's control.
• 18:58
  Speaker 3: Who's going to benefit after I make the gift? Folks,
• 19:01
  Speaker 3: so much to understand about gifting and whether or not
• 19:04
  Speaker 3: it's a part of your estate plan. End of the month,
• 19:07
  Speaker 3: please get it.
• 19:07
  Speaker 5: 866-848-5699.
• 19:12
  Speaker 3: Or LegalExchangeShow.com. Again, 866-848-5699. Or LegalExchangeShow.com because it is the
• 19:21
  Speaker 3: end of the month. Okay. What are we going to learn?
• 19:26
  Speaker 3: We're going to learn how to transfer a business if
• 19:28
  Speaker 3: you have it. Yeah. And it's a part of your family. First,
• 19:32
  Speaker 3: it's a good idea to keep devoting shares, obviously. If
• 19:37
  Speaker 3: I'm representing the mom and dads of the world who
• 19:39
  Speaker 3: own this business, they need to keep control.
• 19:41
  Speaker 5: Mm-hmm.
• 19:42
  Speaker 3: And they should keep control of the business while they're alive. Probably, though,
• 19:46
  Speaker 3: you should put the stock of the company into your family.
• 19:50
  Speaker 1: Trust.
• 19:50
  Speaker 3: We just talked about that, Susan. Why wasn't this stock
• 19:54
  Speaker 3: in that family trust? To this day, I don't get that.
• 19:58
  Speaker 3: This way, upon his death or incapacity, he could have
• 20:02
  Speaker 3: appointed the trustee who could have been Jay, right? And
• 20:06
  Speaker 3: controlled the voting shares of the stock, right? Because If
• 20:10
  Speaker 3: you have the shares of the stock, the voting shares
• 20:14
  Speaker 3: of the stock in the family trust and you died
• 20:18
  Speaker 3: or became incapacitated because there was a conservator here. And again,
• 20:23
  Speaker 3: why they needed a conservator. They didn't have a power
• 20:25
  Speaker 3: of attorney or anything. I'm like this.
• 20:27
  Speaker 2: That kind of business going on.
• 20:28
  Speaker 3: There's so much lack of planning in this case, folks.
• 20:32
  Speaker 3: It's just staggering. So, you know, if the stock is
• 20:36
  Speaker 3: owned in a family trust and you become incapacitated or
• 20:39
  Speaker 3: die and you're successor trustee could in fact be Jay
• 20:43
  Speaker 3: in this case, or the child who's involved in the business,
• 20:47
  Speaker 3: because then that child would have the ability to control
• 20:50
  Speaker 3: the stock and run the voting shares. This would have
• 20:56
  Speaker 3: prevented the personal representative from even dealing with this stock.
• 21:03
  Speaker 5: All right.
• 21:04
  Speaker 3: Now, when trying to plan to transfer the business to
• 21:08
  Speaker 3: a child who is involved in the business. It's a
• 21:12
  Speaker 3: good idea, I think, during life to have voting and
• 21:15
  Speaker 3: non-voting shares created for your company. And then you can
• 21:20
  Speaker 3: consider maybe gifting some, and this is part of the guide, right?
• 21:24
  Speaker 3: Gifting some non-voting shares to the child who's involved in
• 21:31
  Speaker 3: the business to give the child a sense of ownership.
• 21:35
  Speaker 1: Yeah.
• 21:36
  Speaker 3: And I think that's important. But again, non-voting, no control.
• 21:40
  Speaker 3: This way, if dad sells the business and he gets
• 21:43
  Speaker 3: to decide when to sell the business, because he is
• 21:47
  Speaker 3: still running the show, he's the voting control. If it
• 21:52
  Speaker 3: gets sold, then the kid at least is going to
• 21:56
  Speaker 3: get a percentage of the proceeds, even though dad kept control.
• 22:01
  Speaker 2: So he's got some skin in the game.
• 22:03
  Speaker 3: Yeah, I think you give him 10%, 15%, 20%, slowly
• 22:06
  Speaker 3: build it up over time, and he gets this sense
• 22:08
  Speaker 3: of ownership. Of course, another idea when it comes to gifting,
• 22:12
  Speaker 3: just to, again, sort of tie in the guide here,
• 22:15
  Speaker 3: this might be a way where I would decide to
• 22:17
  Speaker 3: gift the non-voting shares to an irrevocable gifting trust for
• 22:22
  Speaker 3: the kid. The kid could be trustee of that trust,
• 22:25
  Speaker 3: so involved in that trust. And that way it's avoiding probate.
• 22:30
  Speaker 3: When he dies, it's protected from his creditors, his divorces,
• 22:33
  Speaker 3: and it can even get to grandchildren. So I may
• 22:36
  Speaker 3: or may not want to put the non-voting shares in
• 22:39
  Speaker 3: the hands of the child. Now, remember, you can even,
• 22:44
  Speaker 3: and now what we worry about is upon death, if
• 22:46
  Speaker 3: you want the other kids, how do we keep them equal, right?
• 22:51
  Speaker 3: You can allocate non-voting shares to the other children who
• 22:55
  Speaker 3: are not involved in the business. And give the voting
• 22:58
  Speaker 3: shares to the child who's involved in the business. And
• 23:01
  Speaker 3: maybe give the voting shares and some non-voting shares to
• 23:04
  Speaker 3: the kid who's involved. Let them have a little bit more.
• 23:06
  Speaker 3: But again, that's a way of if the person who's
• 23:09
  Speaker 3: running the business has control of the business, decides to
• 23:13
  Speaker 3: sell it, then the kids that have the non-voting shares
• 23:17
  Speaker 3: that were not involved in the business, at least they're
• 23:19
  Speaker 3: kind of made whole.
• 23:20
  Speaker 2: They'll get a payout.
• 23:21
  Speaker 3: They'll get something from the trust. So, you know, it's
• 23:25
  Speaker 3: important to figure out how to do this. And it's
• 23:28
  Speaker 3: a combination of gifting, voting, non-voting. Folks, lots to think
• 23:32
  Speaker 3: about in a business and how that fits into your plan.
• 23:36
  Speaker 3: There's also lots to think about if you're thinking about gifting.
• 23:40
  Speaker 3: Please don't just run out and gift because you have
• 23:43
  Speaker 3: the ability to give $ 15 million tax-free. Not a good idea.
• 23:47
  Speaker 3: Get the guide. It's the end of the month. Learn
• 23:49
  Speaker 3: whether or not gifting is right for you. and which
• 23:52
  Speaker 3: assets to gift and how to gift them and all
• 23:56
  Speaker 3: the tax consequences. 866-848-5699 or LegalExchangeShow.com. It's the end of
• 24:01
  Speaker 3: the month, folks.
• 24:02
  Speaker 5: 866-848-5699.
• 24:09
  Speaker 2: You've been listening to Todd Lutzky, a partner with the
• 24:12
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 24:15
  Speaker 2: financial advisor with the Armstrong Advisory Group. Todd will be
• 24:18
  Speaker 2: answering your listener questions when we return to The Legal
• 24:22
  Speaker 2: Exchange with Todd Lutzky.
• 24:24
  Speaker 1: Giving assets to your children during your lifetime may sound
• 24:27
  Speaker 1: like a simple way to pass along your wealth, but
• 24:30
  Speaker 1: the way you make the gift can have important tax consequences.
• 24:33
  Speaker 1: Cushing and Dolan's new guide, Making the Most of Gifting Assets,
• 24:36
  Speaker 1: explains what you should consider before transferring property, investments, or
• 24:40
  Speaker 1: other appreciative assets to your family. If you give away
• 24:43
  Speaker 1: an asset too soon, your children could end up with
• 24:45
  Speaker 1: a larger tax bill when they eventually sell it. In
• 24:48
  Speaker 1: some cases, holding on to that asset and letting your
• 24:51
  Speaker 1: children inherit it later could reduce the capital gains tax
• 24:54
  Speaker 1: they have to pay. That's why gifting isn't just about
• 24:56
  Speaker 1: what you give. When and how you give it can
• 24:58
  Speaker 1: make a big difference. Get Cushing and Dolan's new guide,
• 25:02
  Speaker 1: Making the Most of Gifting Assets, by calling 866-848-5699. That's 866-848-5699.
• 25:10
  Speaker 1: Or you can request the guide online by visiting LegalExchangeShow.com.
• 25:14
  Speaker 1: The proceeding was paid for and the views expressed are
• 25:16
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 25:18
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 25:21
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 25:23
  Speaker 1: other and are not affiliated.
• 25:25
  Speaker 6: An unexpected car repair, medical bill, or sudden loss of
• 25:28
  Speaker 6: income can put a strain on your finances. That's where
• 25:31
  Speaker 6: an emergency fund can help. This is Chuck Zada from
• 25:33
  Speaker 6: the Armstrong Advisory Group. Our new guide, Building and Sizing
• 25:36
  Speaker 6: Your Emergency Fund, helps explain how to build a cash
• 25:39
  Speaker 6: reserve for those unanticipated expenses. The key is to save
• 25:42
  Speaker 6: regularly and make it part of your monthly budget. Start
• 25:45
  Speaker 6: with an amount you can manage and build from there.
• 25:47
  Speaker 6: You can also use things like a bonus or tax
• 25:50
  Speaker 6: refund to help grow the fund faster. Just as important
• 25:53
  Speaker 6: is knowing when to use that money. Routine bills and
• 25:55
  Speaker 6: planned expenses should be part of your regular budget, helping
• 25:58
  Speaker 6: you preserve your emergency fund for when you really need it.
• 26:01
  Speaker 6: Get your free copy of this new guide by calling 800-393-4001.
• 26:03
  Speaker 1: That's 800-393-4001.
• 26:03
  Speaker 6: Or you can request the guide at armstrongadvisory.com. The proceeding
• 26:06
  Speaker 6: was paid for by Armstrong Advisory Group.
• 26:14
  Speaker 1: A registered investment advisor. Nothing in the ad or in
• 26:16
  Speaker 1: any Armstrong guide is specific financial, legal, or tax advice.
• 26:19
  Speaker 1: Consult your own financial, tax, and estate planning advisors before
• 26:21
  Speaker 1: making any investment decisions. Armstrong may contact you to offer
• 26:24
  Speaker 1: investment advisory services. Giving assets directly to your children may
• 26:27
  Speaker 1: create problems you didn't expect. Cushing and Dolan's new guide,
• 26:31
  Speaker 1: Making the Most of Gifting Assets, explains how giving away
• 26:34
  Speaker 1: property or investments could mean losing control of those assets.
• 26:38
  Speaker 1: Learn about your options before you give assets away. Call
• 26:41
  Speaker 1: 866-848-5699 or visit LegalExchangeShow.com. The proceeding was paid for and
• 26:46
  Speaker 1: the views expressed are solely those of Cushing and Dolan.
• 26:48
  Speaker 1: Cushing and Dolan and or Armstrong Advisory may contact you
• 26:51
  Speaker 1: offering legal or investment services. Cushing and Dolan and Armstrong
• 26:53
  Speaker 1: Advisory do not endorse each other and are not affiliated.
• 26:55
  Speaker 7: For many Massachusetts veterans, getting to a medical appointment isn't
• 26:59
  Speaker 7: always easy. That's why the Disabled American Veterans Department of
• 27:02
  Speaker 7: Massachusetts provides free transportation to VA medical appointments through its
• 27:07
  Speaker 7: network of dedicated drivers. Every mile helps a veteran get
• 27:11
  Speaker 7: the care they've earned through their service. You can help
• 27:14
  Speaker 7: by volunteering or making a donation. Learn more at DAVMA.org.
• 27:20
  Speaker 7: That's DAVMA.org.
• 27:26
  Speaker 1: You're listening to The Legal Exchange, and it's time for
• 27:29
  Speaker 1: Ask Todd, the segment where Todd will answer your questions
• 27:32
  Speaker 1: about anything and everything that's included in the estate planning process.
• 27:36
  Speaker 1: Once again, here's Todd Lutzke and Susan Powers.
• 27:41
  Speaker 2: Welcome back, Todd. We have a few questions from listeners
• 27:44
  Speaker 2: for you. First question comes from Robert in Danvers, Mass.
• 27:48
  Speaker 2: And Robert writes, My father has been married to his
• 27:50
  Speaker 2: second wife for over 20 years. She recently went into
• 27:54
  Speaker 2: a nursing home, and the home they live in was
• 27:56
  Speaker 2: hers originally, but it's in both of their names now.
• 28:00
  Speaker 2: Her adult children are trying to get my dad to
• 28:03
  Speaker 2: agree to move out so they can sell the house
• 28:05
  Speaker 2: because they claim the house has been willed to them,
• 28:09
  Speaker 2: even though their mother is still alive. Does he need
• 28:11
  Speaker 2: to vacate the house or is he entitled to stay there?
• 28:17
  Speaker 3: Well, in this case.
• 28:20
  Speaker 2: She's not dead yet.
• 28:20
  Speaker 3: Yeah, I'm trying to figure this out. So the house
• 28:22
  Speaker 3: is now technically owned in both of their names. Jointly.
• 28:27
  Speaker 3: We'll assume joint with right of survivorship.
• 28:29
  Speaker 1: Sure.
• 28:30
  Speaker 3: Okay. And in this case, no one died.
• 28:34
  Speaker 2: No one died. Wife is in the nursing home.
• 28:37
  Speaker 1: Wow.
• 28:38
  Speaker 2: Husband is still there. Step kids are chomping at the bit.
• 28:42
  Speaker 3: I'm still wondering how these step kids even think there's
• 28:44
  Speaker 3: an issue, but no one has died. So how could
• 28:48
  Speaker 3: you possibly be a beneficiary if your name is nowhere
• 28:50
  Speaker 3: on the deed? In other words, since no one has died,
• 28:53
  Speaker 3: this property remains jointly owned. The admission to a nursing
• 28:57
  Speaker 3: home is irrelevant as to the ownership of this property,
• 29:01
  Speaker 3: which is why I was sort of Pausing. Yes. Saying,
• 29:05
  Speaker 3: what am I even addressing here? And so ownership of
• 29:09
  Speaker 3: this property is completely unaffected by entering a nursing home.
• 29:14
  Speaker 3: The kids have zero right. Either side. Yep. Neither side
• 29:20
  Speaker 3: of the family children have anything they can do. So
• 29:25
  Speaker 3: what are they asking now? Who's kicking who out?
• 29:27
  Speaker 2: They want to kick their stepfather out because they say
• 29:31
  Speaker 2: that the house is theirs now because mom's in a
• 29:34
  Speaker 2: nursing home.
• 29:34
  Speaker 3: So the answer is not only do they not have
• 29:38
  Speaker 3: the power to kick... stepdad out because they have no
• 29:43
  Speaker 3: ownership at all in this case, they have bigger fish
• 29:47
  Speaker 3: to fry to figure out, you know, how are we
• 29:50
  Speaker 3: going to save mom's half of the house if... If
• 29:56
  Speaker 3: they think they're the owners now, one, they're not, and two,
• 29:59
  Speaker 3: maybe they should be thinking about what can we do
• 30:01
  Speaker 3: now to ensure that we at least get half the
• 30:04
  Speaker 3: house if that's what mom wants us to have when
• 30:07
  Speaker 3: mom does pass after being in the nursing home.
• 30:09
  Speaker 2: Because what happens legally when mom dies if the house
• 30:12
  Speaker 2: is owned jointly?
• 30:13
  Speaker 3: That's exactly right. In this case, they're stirring the pot,
• 30:18
  Speaker 3: and if they upset stepdad, if mom dies first, Her
• 30:23
  Speaker 3: half goes to stepdad. And now stepdad owns 100% of
• 30:28
  Speaker 3: the house and they have nothing. And he has no
• 30:31
  Speaker 3: legal obligation to give them anything. Right. So he could
• 30:34
  Speaker 3: just do his own plan and give it all to
• 30:37
  Speaker 3: his kids.
• 30:37
  Speaker 2: So they better be careful. But what should they have
• 30:40
  Speaker 2: done from this planning so others can learn a lesson
• 30:43
  Speaker 2: from this?
• 30:43
  Speaker 3: Yeah, this is really the question. Because when you have
• 30:46
  Speaker 3: a second marriage, folks, and you've got kids from both
• 30:49
  Speaker 3: sides of the marriage, and maybe the house was the
• 30:51
  Speaker 3: biggest asset. Sounds like it might have been. You know,
• 30:54
  Speaker 3: if you really want to make sure that that house
• 30:56
  Speaker 3: goes to your side of the family, one, you have
• 30:59
  Speaker 3: to protect it from the nursing home in case either
• 31:01
  Speaker 3: spouse gets sick. So that's the first thing I would
• 31:05
  Speaker 3: think an irrevocable Medicaid trust, number one. Number two, by
• 31:09
  Speaker 3: having it in the trust when one dies, it's in trust.
• 31:13
  Speaker 3: It doesn't go to the survivor. And that way the
• 31:16
  Speaker 3: survivor might be able to live there and enjoy it.
• 31:18
  Speaker 3: But ultimately, when the survivor dies, that property can be
• 31:22
  Speaker 3: divided the way you decide in the document. And if
• 31:26
  Speaker 3: it was always her house and she just threw his
• 31:30
  Speaker 3: name on it, well, then it should all go to
• 31:32
  Speaker 3: her side of the family. I get that. Or if
• 31:35
  Speaker 3: they both put money into it over the years, then fine,
• 31:37
  Speaker 3: split it.
• 31:38
  Speaker 2: But she can make sure that he doesn't get evicted,
• 31:41
  Speaker 2: that it doesn't get to her family until he dies, right?
• 31:44
  Speaker 7: Or moves out.
• 31:45
  Speaker 3: If it's in the trust, it's held there for the
• 31:47
  Speaker 3: benefit of the survivor. but maybe not owned by the survivor.
• 31:52
  Speaker 2: Yeah, got to do some planning for sure.
• 31:53
  Speaker 3: Yeah, folks, second marriage, forget all this other stuff. The
• 31:57
  Speaker 3: family behind the estate plan is really critical here, I
• 32:01
  Speaker 3: would think. And folks, in this case, I was worried
• 32:05
  Speaker 3: when I was listening to this that they had given
• 32:07
  Speaker 3: the house to the kids, but that didn't happen here.
• 32:10
  Speaker 3: So in this case, also think about gifting. Gifting things
• 32:14
  Speaker 3: outright to children is usually not a good idea. Okay,
• 32:18
  Speaker 3: never a good idea. But depends on what, how large
• 32:22
  Speaker 3: your estate is. Do I want to save gift tax?
• 32:24
  Speaker 3: Do I want to save estate tax? Do I want
• 32:26
  Speaker 3: to save income tax? That makes a difference. You need
• 32:29
  Speaker 3: to know whether you're giving away assets that have a
• 32:31
  Speaker 3: large built-in gain, trapping capital gain versus saving only estate tax.
• 32:38
  Speaker 3: Not worth it, right? Should I own my house joint
• 32:41
  Speaker 3: with my kids like here? Or should I put a
• 32:44
  Speaker 3: joint child on with a rental property? What are the
• 32:47
  Speaker 3: ramifications of this, folks? Don't just give away assets. Learn
• 32:51
  Speaker 3: how to do it or not do it if it's
• 32:54
  Speaker 3: not right for you. 866-848-5699 or LegalExchangeShow.com. End of the month, folks.
• 32:58
  Speaker 3: Last chance to get the guide. 866-848-5699 or LegalExchangeShow.com.
• 33:12
  Speaker 2: Last question comes from Joe in Worcester, Mass., and Joe writes,
• 33:15
  Speaker 2: can a state pension be protected for Medicaid planning? Also,
• 33:19
  Speaker 2: can IRA funds be protected without having to withdraw all
• 33:23
  Speaker 2: the money from the accounts and pay the taxes? I'd
• 33:26
  Speaker 2: like to protect my pension and my $ 400, 000 IRA for
• 33:29
  Speaker 2: my wife if I go into a nursing home. We
• 33:33
  Speaker 2: need some magic wand action here, Todd.
• 33:35
  Speaker 3: Yeah, you only picked the two hardest assets. on the
• 33:38
  Speaker 3: planet to deal with.
• 33:39
  Speaker 2: You and your fancy masters in taxation, I think you
• 33:42
  Speaker 2: should be able to work something up here for Joe.
• 33:44
  Speaker 3: So let's start with what I hope is the easier one,
• 33:47
  Speaker 3: which is the pension. Mm-hmm. So, you know, it's a
• 33:51
  Speaker 3: pretty hard stop, no, can't really protect a pension. So
• 33:56
  Speaker 3: if he, Joe, who has the pension, gets sick and
• 34:01
  Speaker 3: goes in the nursing home, the pension is likely to
• 34:05
  Speaker 3: go to the nursing home unless... Mm-hmm. The wife, in
• 34:09
  Speaker 3: this case, the wife at home doesn't have at least
• 34:14
  Speaker 3: what they call the minimum monthly maintenance needs allowance that
• 34:18
  Speaker 3: she's supposed to have.
• 34:19
  Speaker 2: Okay.
• 34:19
  Speaker 3: Which I think is somewhere around $ 2, 500 a month. I'd
• 34:23
  Speaker 3: have to check. It goes up every year.
• 34:25
  Speaker 2: So if her Social Security, let's say, is $ 1, 500 a month.
• 34:28
  Speaker 1: Yes.
• 34:29
  Speaker 2: She could keep $ 1, 000 out of Joe's pension.
• 34:31
  Speaker 3: Exactly.
• 34:32
  Speaker 7: Got it.
• 34:32
  Speaker 3: That would be the only way. But if she's got $ 3, 000
• 34:35
  Speaker 3: a month pension and Social Security on her own. She
• 34:38
  Speaker 3: ain't going to get to keep any of that pension.
• 34:39
  Speaker 2: But when he passes.
• 34:41
  Speaker 3: Yeah, different.
• 34:42
  Speaker 2: If there's a survivor benefit, she would still get that
• 34:44
  Speaker 2: pension survivor benefit.
• 34:45
  Speaker 3: That is correct. That is not an asset that's attachable
• 34:49
  Speaker 3: by the state.
• 34:50
  Speaker 2: Perfect.
• 34:51
  Speaker 3: It would just continue to pay at probably a reduced
• 34:53
  Speaker 3: amount to the surviving spouse. So is it really at
• 34:57
  Speaker 3: risk or is it protected? It's kind of protected because
• 35:00
  Speaker 3: you can get some of it while he's alive if
• 35:03
  Speaker 3: you don't have enough to equal that minimum amount you're
• 35:06
  Speaker 3: supposed to have. Or if you don't get it while
• 35:09
  Speaker 3: he's alive, you'll get it when he's dead if he
• 35:11
  Speaker 3: checked the right box.
• 35:12
  Speaker 1: Yep.
• 35:14
  Speaker 3: IRA money, a little more complicated. It cannot be protected
• 35:19
  Speaker 3: in advance of Joe going into the nursing home for
• 35:22
  Speaker 3: his wife. Cannot be. Well, it could be, but like
• 35:26
  Speaker 3: you said here, you'd have to take out all the
• 35:27
  Speaker 3: money and put it in a trust, but then you've
• 35:29
  Speaker 3: got to pay income tax.
• 35:31
  Speaker 2: Yeah.
• 35:31
  Speaker 3: On all the money you take out of the IRA.
• 35:33
  Speaker 2: Depending on his age, you could maybe baby step out
• 35:35
  Speaker 2: of it. Smaller withdrawals through the years.
• 35:38
  Speaker 3: You could. But again, then you have five year waiting
• 35:40
  Speaker 3: periods every time you put it in a trust and
• 35:42
  Speaker 3: you're never going to be eligible for Medicaid. So they're right.
• 35:45
  Speaker 3: Very hard to protect in advance, in advance of going
• 35:49
  Speaker 3: into nursing home. However, if they do planning and we
• 35:53
  Speaker 3: put other assets in the trust, like a house or money.
• 35:57
  Speaker 1: Yeah.
• 35:57
  Speaker 3: And that gets protected in advance of the nursing home.
• 36:01
  Speaker 3: For the wife and the kids. You then set up
• 36:05
  Speaker 3: a testamentary trust, which is a will trust, a trust
• 36:09
  Speaker 3: built into the will, in which if you're over 73
• 36:14
  Speaker 3: years of age, roughly, the required beginning date, whatever that
• 36:17
  Speaker 3: is for you, and you die having not gone to
• 36:22
  Speaker 3: a nursing home, then now this asset would be held
• 36:25
  Speaker 3: in a testamentary trust for the benefit of the wife
• 36:28
  Speaker 3: and the kids, but really the wife. So if she
• 36:31
  Speaker 3: could use it, but more importantly, if she got sick
• 36:34
  Speaker 3: and went to the nursing home, it would be protected
• 36:36
  Speaker 3: from the nursing home for the kids.
• 36:37
  Speaker 2: And right away, right?
• 36:38
  Speaker 3: Right away. No five-year waiting period. So there's a lot
• 36:42
  Speaker 3: that can be done with some planning. So folks, understand planning, yes,
• 36:47
  Speaker 3: but please get the guide. It's the end of the
• 36:49
  Speaker 3: month in terms of whether or not you understand gifting.
• 36:52
  Speaker 3: You know, what kind of assets? Who do I gift?
• 36:55
  Speaker 3: How do I gift? Folks, 866-848-5699 or LegalExchangeShow.com. End of
• 37:03
  Speaker 3: the month, 866-848-5699.
• 37:08
  Speaker 2: If you have a question you'd like to ask Todd,
• 37:10
  Speaker 2: visit his website, LegalExchangeShow.com and click on the Ask Todd tab.
• 37:15
  Speaker 2: Maybe I'll be able to read your question on the
• 37:17
  Speaker 2: air and hopefully his answer will stop you from becoming
• 37:20
  Speaker 2: one of his next real life stories. You've been listening
• 37:23
  Speaker 2: to Todd Lutzky, a partner with the law firm of
• 37:26
  Speaker 2: Cushing and Dolan. I'm Susan Powers, a financial advisor with
• 37:30
  Speaker 2: the Armstrong Advisory Group. And we'll be back with more
• 37:33
  Speaker 2: after this quick break on The Legal Exchange with Todd Lutzky.
• 37:38
  Speaker 1: Giving assets to your children during your lifetime may sound
• 37:40
  Speaker 1: like a simple way to pass along your wealth, but
• 37:43
  Speaker 1: the way you make the gift can have important tax consequences.
• 37:46
  Speaker 1: Cushing and Dolan's new guide, Making the Most of Gifting Assets,
• 37:50
  Speaker 1: explains what you should consider before transferring property, investments, or
• 37:54
  Speaker 1: other appreciative assets to your family. If you give away
• 37:56
  Speaker 1: an asset too soon, your children could end up with
• 37:59
  Speaker 1: a larger tax bill when they eventually sell it. In
• 38:01
  Speaker 1: some cases, holding onto that asset and letting your children
• 38:04
  Speaker 1: inherit it later could reduce the capital gains tax they
• 38:07
  Speaker 1: have to pay. That's why gifting isn't just about what
• 38:10
  Speaker 1: you give. When and how you give it can make
• 38:12
  Speaker 1: a big difference. Get Cushing and Dolan's new guide, Making
• 38:15
  Speaker 1: the Most of Gifting Assets, by calling 866-848-5699.
• 38:17
  Speaker 3: That's 866-848-5699.
• 38:18
  Speaker 1: Or you can request the guide online by visiting LegalExchangeShow.com.
• 38:27
  Speaker 1: The proceeding was paid for and the views expressed are
• 38:29
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 38:31
  Speaker 1: or Armstrong Advisory may contact your offering legal or investment services.
• 38:34
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 38:36
  Speaker 1: other and are not affiliated.
• 38:38
  Speaker 5: Your life changes over time, and the amount you keep
• 38:41
  Speaker 5: in your emergency fund may need to change with it.
• 38:43
  Speaker 5: This is Mike Armstrong from the Armstrong Advisory Group. Our
• 38:46
  Speaker 5: new guide, Building and Sizing Your Emergency Fund, can help
• 38:49
  Speaker 5: you take a fresh look at the money you've set
• 38:52
  Speaker 5: aside for the unexpected. A new job, a move, a
• 38:55
  Speaker 5: growing family, or a sudden change in your income can
• 38:57
  Speaker 5: all affect how much you need in reserve. The guide
• 39:00
  Speaker 5: can help you review your essential monthly expenses, set a
• 39:04
  Speaker 5: target for your emergency savings, and decide where that money
• 39:07
  Speaker 5: should be kept so it's accessible when you need it.
• 39:10
  Speaker 5: Get your free copy of Building and Sizing Your Emergency
• 39:13
  Speaker 5: Fund by calling the Armstrong Advisory Group at 800-393-4001. That's 800-393-4001,
• 39:20
  Speaker 5: or you can request the guide online at armstrongadvisory.com.
• 39:25
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 39:27
  Speaker 1: registered investment advisor. Nothing in the ad or in any...
• 39:29
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 39:32
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 39:34
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 39:37
  Speaker 1: advisory services. Giving assets directly to your children may create
• 39:41
  Speaker 1: problems you didn't expect. Cushing and Dolan's new guide, Making
• 39:45
  Speaker 1: the Most of Gifting Assets, explains how giving away property
• 39:48
  Speaker 1: or investments could mean losing control of those assets. Learn
• 39:51
  Speaker 1: about your options before you give assets away. Call 866-848-5699
• 39:54
  Speaker 1: or visit LegalExchangeShow.com. The proceeding was paid for and the
• 40:00
  Speaker 1: views expressed are solely those of Cushing and Dolan. Cushing
• 40:02
  Speaker 1: and Dolan and or Armstrong Advisory may contact you offering
• 40:04
  Speaker 1: legal or investment services. Cushing and Dolan and Armstrong Advisory
• 40:06
  Speaker 1: do not endorse each other and are not affiliated.
• 40:08
  Speaker 7: For many Massachusetts veterans, getting to a medical appointment isn't
• 40:12
  Speaker 7: always easy. That's why the Disabled American Veterans Department of
• 40:16
  Speaker 7: Massachusetts provides free transportation to VA medical appointments through its
• 40:20
  Speaker 7: network of dedicated drivers. Every mile helps a veteran get
• 40:24
  Speaker 7: the care they've earned through their service. You can help
• 40:28
  Speaker 7: by volunteering or making a donation. Learn more at DAVMA.org.
• 40:33
  Speaker 7: That's DAVMA.org.
• 40:39
  Speaker 1: You're tuned to The Legal Exchange with Todd Lutzke. If
• 40:42
  Speaker 1: you or a loved one needs a nursing home stay,
• 40:44
  Speaker 1: call Todd right now at 866-848-5699 and let him make
• 40:49
  Speaker 1: sure your assets are protected. That's 866-848-5699 or visit him
• 40:52
  Speaker 1: online at LegalExchangeShow.com.
• 40:58
  Speaker 2: Welcome back into The Legal Exchange with Todd Lutzke. I'm
• 41:01
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 41:05
  Speaker 2: and I'm joined, of course, by Todd Lutzke, a partner
• 41:08
  Speaker 2: with the law firm of Cushing & Dolan with a
• 41:11
  Speaker 2: master's in taxation. So, Todd, I have a real-life story
• 41:14
  Speaker 2: for you. Okay. About one of my clients and.
• 41:19
  Speaker 5: Not mine. Nope.
• 41:22
  Speaker 3: Okay.
• 41:23
  Speaker 2: Not yours.
• 41:23
  Speaker 3: Just making sure.
• 41:24
  Speaker 5: Yeah.
• 41:24
  Speaker 1: Nope.
• 41:25
  Speaker 2: Not yours. They had already had an irrevocable trust when
• 41:29
  Speaker 2: we started working together. So they had, um, at one
• 41:33
  Speaker 2: point her husband, so there's a wife, she's 92, maybe
• 41:41
  Speaker 2: husband passed away. They had an irrevocable trust at the
• 41:45
  Speaker 2: time when he passed was a joint, a joint irrevocable trust.
• 41:49
  Speaker 1: Okay.
• 41:49
  Speaker 3: So, all right. Probably less than 2 million.
• 41:54
  Speaker 2: It was a little over $ 2 million when he died.
• 41:56
  Speaker 1: That's okay.
• 41:56
  Speaker 3: Good enough.
• 41:57
  Speaker 1: Yeah.
• 41:57
  Speaker 2: Pretty close to $ 2, though.
• 41:58
  Speaker 3: Good enough.
• 41:59
  Speaker 2: She has... And when he died, $ 1 million was carved
• 42:04
  Speaker 2: out into, I guess, the remainder share.
• 42:07
  Speaker 1: Yep.
• 42:08
  Speaker 2: And then... So there's still $ 1 million in the original trust.
• 42:11
  Speaker 3: So when he died, it must have been before 2023.
• 42:13
  Speaker 5: Yes.
• 42:14
  Speaker 3: Got it. Yes.
• 42:14
  Speaker 1: Yep.
• 42:15
  Speaker 3: Go ahead.
• 42:17
  Speaker 2: And then now... She has a million dollars in the
• 42:21
  Speaker 2: original trust left, plus about $ 2 million of assets outside
• 42:27
  Speaker 2: of the trust.
• 42:29
  Speaker 3: Okay. So things have grown.
• 42:31
  Speaker 2: Yes. Well, these are assets that weren't put into the
• 42:34
  Speaker 2: trust originally.
• 42:35
  Speaker 3: Right.
• 42:36
  Speaker 2: So there's a considerably sized, almost a million dollars, I think,
• 42:42
  Speaker 2: fixed annuity that has very low cost basis.
• 42:46
  Speaker 3: But out of this $ 2 million outside the trust, is
• 42:49
  Speaker 3: it any of it IRA money?
• 42:51
  Speaker 2: Very little.
• 42:51
  Speaker 3: Okay, so small IRA. Small IRA. But you have an annuity,
• 42:54
  Speaker 3: a non-qualified annuity.
• 42:56
  Speaker 4: Yeah.
• 42:57
  Speaker 3: Got it.
• 42:57
  Speaker 2: Which is worth almost a million.
• 42:59
  Speaker 3: Got it.
• 43:00
  Speaker 2: So family is wondering now, because mom is 92-ish, I
• 43:08
  Speaker 2: think I said 92. Yeah. Should they be gifting assets away?
• 43:16
  Speaker 2: now to bring mom under that $ 2 million mark for Massachusetts.
• 43:22
  Speaker 3: So this is really the catch 22 here, right? And
• 43:27
  Speaker 3: this is exactly what we talk about with the guide, right?
• 43:33
  Speaker 3: One at 92, if they're less worried about the nursing
• 43:37
  Speaker 3: home because she made it to 92 and is more
• 43:39
  Speaker 3: likely to just pass away rather than spend Yes, they're.
• 43:42
  Speaker 2: Not worried about the nursing home at all at this stage.
• 43:45
  Speaker 3: But my first comment would be when I see the
• 43:47
  Speaker 3: irrevocable trust there, they have to realize that if we
• 43:50
  Speaker 3: decide to start gifting now, we've likely given up being
• 43:55
  Speaker 3: eligible for Medicaid.
• 43:56
  Speaker 2: Yes.
• 43:57
  Speaker 3: Because it will create a fight. And these are all
• 43:59
  Speaker 3: considerations that you have to think about when you're gifting.
• 44:02
  Speaker 3: This is one of them, right? If you're older and
• 44:05
  Speaker 3: you want a gift, you have to realize that there's
• 44:08
  Speaker 3: a Medicaid component associated with gifting. So in this case,
• 44:13
  Speaker 3: I would first tell them, if you want a gift,
• 44:17
  Speaker 3: you will create a five-year ineligibility period for the nursing
• 44:22
  Speaker 3: home for a 92-year-old. If you're okay with that, then
• 44:27
  Speaker 3: put that on the back burner. We don't worry about it. Okay,
• 44:30
  Speaker 3: so that's not preventing us from making a gift yet. Next,
• 44:34
  Speaker 3: I look at, of course, we're only going to gift
• 44:36
  Speaker 3: the assets that are outside the trust. This comes down
• 44:38
  Speaker 3: to the what. assets do we gift, right? This is
• 44:42
  Speaker 3: another question that I've been asking every time I give
• 44:45
  Speaker 3: away the guide. What do you gift? Well, not the
• 44:47
  Speaker 3: assets that are tied up in the trust. Those are
• 44:50
  Speaker 3: already the remainder share assets of a million plus now
• 44:55
  Speaker 3: are no longer going to be estate taxed. So don't
• 44:58
  Speaker 3: give those away. And the Q-tip share, if there's like
• 45:02
  Speaker 3: a million in the Q-tip, well, you could reach in
• 45:05
  Speaker 3: and give those away, but those are also protected from
• 45:07
  Speaker 3: the nursing home. So I might leave that stuff there.
• 45:11
  Speaker 3: At least there's something protected from the nursing home. I
• 45:16
  Speaker 3: probably would then focus, and this is, I'm trying to
• 45:18
  Speaker 3: get you to why I'm focusing on the assets outside
• 45:21
  Speaker 3: the trust. So now outside the trust, I would begin my,
• 45:25
  Speaker 3: my attention on those. And the next thing we're going
• 45:28
  Speaker 3: to talk about in just a minute is the type
• 45:31
  Speaker 3: of assets that they are. And you mentioned that that's
• 45:33
  Speaker 3: an annuity and I'm going to tell you why that's
• 45:36
  Speaker 3: a problem. in just a minute, but I want to
• 45:38
  Speaker 3: mention this guide. This really ties right into the guide.
• 45:41
  Speaker 3: All those questions are things that are answered in the guide.
• 45:44
  Speaker 3: What to gift, when to gift, why to gift. And again,
• 45:48
  Speaker 3: now we're going to talk about how to gift it.
• 45:50
  Speaker 3: Does it go out right to kids? Do you keep
• 45:52
  Speaker 3: control over it? Gift it to a trust that you
• 45:56
  Speaker 3: can benefit from? And then more importantly, the type of
• 46:01
  Speaker 3: assets here. Are we worried about state estate tax and
• 46:06
  Speaker 3: capital gains tax? And which rate is higher? Folks, lots
• 46:11
  Speaker 3: to think about. End of the month, please get the
• 46:13
  Speaker 3: guide 866-848-5699 or LegalExchangeShow.com. You can download it there. Again,
• 46:17
  Speaker 3: 866-848-5699 or LegalExchangeShow.com. Okay. So the type of assets to gift.
• 46:21
  Speaker 3: All right. So You told me that there's a small
• 46:35
  Speaker 3: amount of IRA money, which you couldn't gift anyway. You
• 46:37
  Speaker 3: really would stay away from that, again, for tax purposes.
• 46:41
  Speaker 3: Then there's just a bunch in an annuity. Is the
• 46:45
  Speaker 3: annuity beyond seven years? Can you break it without any penalty?
• 46:49
  Speaker 2: Yeah, there's no surrender charges whatsoever on it. Okay, well,
• 46:51
  Speaker 2: that's the first thing.
• 46:52
  Speaker 3: You think about. So there's no penalty to break it,
• 46:54
  Speaker 3: but when we do break it, how much income tax
• 46:57
  Speaker 3: is going to be incurred when you break it?
• 46:58
  Speaker 2: If she took a full withdrawal, I mean, even if
• 47:02
  Speaker 2: she did a partial, everything that comes out first is
• 47:04
  Speaker 2: going to be taxed as ordinary income.
• 47:05
  Speaker 3: Right.
• 47:06
  Speaker 2: So there's at least $ 400, 000.
• 47:10
  Speaker 3: Of ordinary income?
• 47:11
  Speaker 2: Of ordinary income. They've owned this thing for a really
• 47:14
  Speaker 2: long time.
• 47:15
  Speaker 3: And you can't give away the annuity. That would trigger
• 47:16
  Speaker 3: the income. Right.
• 47:17
  Speaker 5: Wow.
• 47:19
  Speaker 1: Wow.
• 47:20
  Speaker 3: So you really have to think about it, right? Let's
• 47:22
  Speaker 3: play out this. You have to run the numbers. And folks,
• 47:24
  Speaker 3: that's exactly what we'd be doing here, right? If she
• 47:27
  Speaker 3: dies without making any more gifts, she preserves her estate plan.
• 47:32
  Speaker 3: She preserves the Medicaid protection that she's got. We don't
• 47:35
  Speaker 3: create a new five-year waiting period. And she dies. What's taxable?
• 47:40
  Speaker 3: The $ 2 million outside the trust and the $ 1 million
• 47:43
  Speaker 3: in the Q-tip for $ 3 million. $ 3 minus $ 2 is $ 1.
• 47:48
  Speaker 3: $ 1 million is not taxed at 16% because it's a
• 47:54
  Speaker 3: smaller number. Maybe it's $ 100, 000, give or take, in mass tax.
• 48:04
  Speaker 3: If I withdraw $ 400, 000 that's subject to tax at, I
• 48:09
  Speaker 3: don't know, 30%? Oh, easily.
• 48:10
  Speaker 1: Easily.
• 48:13
  Speaker 5: More.
• 48:13
  Speaker 2: Probably more because it's all capital income. So it's 35%
• 48:17
  Speaker 2: for a single person.
• 48:19
  Speaker 1: Right.
• 48:19
  Speaker 3: So, I mean, we're well over $ 100, 000. At 30%, it's $ 120, 000. Oh, easily.
• 48:24
  Speaker 3: So I think we're answering the question. Why am I
• 48:30
  Speaker 3: wanting to pay more in income tax now to save $ 100, 000? Well,
• 48:36
  Speaker 3: I guess... The answer here would be that income tax
• 48:47
  Speaker 3: is going to be paid no matter what.
• 48:49
  Speaker 7: Right.
• 48:49
  Speaker 2: Her kids are at a much higher rate than she
• 48:51
  Speaker 2: is as well.
• 48:53
  Speaker 5: Yeah.
• 48:53
  Speaker 3: Well, it could be.
• 48:54
  Speaker 2: Not if she takes the whole thing.
• 48:55
  Speaker 3: I mean, if she takes $ 400, 000, I don't think they are. Right.
• 48:58
  Speaker 3: So I think she's going to be at the top rate.
• 49:00
  Speaker 3: So I think the income tax analysis is it's going
• 49:06
  Speaker 3: to be paid anyway, whether... It's now or when she dies.
• 49:11
  Speaker 3: And it would be when she dies because that will
• 49:13
  Speaker 3: trigger it.
• 49:13
  Speaker 2: Right. But likely lower when they inherit because she's got
• 49:18
  Speaker 2: four kids.
• 49:18
  Speaker 3: It's going to be different. I think at the end
• 49:21
  Speaker 3: of the day, the analysis now is a little more
• 49:23
  Speaker 3: clear for me. That income tax is going to be
• 49:27
  Speaker 3: paid anyway. Well, why should I pay that and mass tax?
• 49:33
  Speaker 7: Right.
• 49:34
  Speaker 3: You're right. So if I can get rid of the
• 49:36
  Speaker 3: mass tax knowing I'm incurring that income tax at some point, Anyway,
• 49:42
  Speaker 3: maybe take it out now and maybe you have some
• 49:44
  Speaker 3: medical expense deductions. Maybe you have some, you know, we
• 49:46
  Speaker 3: want to give a little something to charity. You want
• 49:48
  Speaker 3: to play around with your income tax on her side.
• 49:51
  Speaker 3: You know, go ahead, liquidate it now, pay the tax,
• 49:54
  Speaker 3: give it away. Again, the present value of the dollar.
• 49:56
  Speaker 3: I get it. You could delay the tax until she's 92.
• 49:59
  Speaker 3: What am I delaying? So I think at this point,
• 50:04
  Speaker 3: my analysis would be why pay both? Right. We know
• 50:08
  Speaker 3: one has got to be paid.
• 50:09
  Speaker 2: And if she has other assets like bank accounts and things.
• 50:12
  Speaker 3: That have- Stick with cash. Give away cash. She can
• 50:14
  Speaker 3: give away- Cash is a no-brainer.
• 50:17
  Speaker 2: And she can give away as much as she wanted that, right?
• 50:19
  Speaker 3: Yeah, yeah, yeah. She got $ 15 million exemption.
• 50:21
  Speaker 2: Okay.
• 50:22
  Speaker 3: No worries on the gift tax. Folks, that's a lot
• 50:25
  Speaker 3: about gifting, and a lot of those answers are in
• 50:28
  Speaker 3: this guide. There's even examples. So call and get it,
• 50:31
  Speaker 3: 866-848-5699 or LegalExchangeShow.com. It's the end of the month, folks.
• 50:35
  Speaker 1: Get it.
• 50:40
  Speaker 3: 866-848-5699.
• 50:44
  Speaker 2: Todd Lutzke from the law firm of Cushing and Dolan,
• 50:46
  Speaker 2: thank you so much.
• 50:47
  Speaker 3: Thank you, Susan. Always a pleasure.
• 50:49
  Speaker 2: I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
• 50:52
  Speaker 2: We thank you for joining us today, and we'll be
• 50:54
  Speaker 2: back again next week on The Legal Exchange with Todd Lutzke.
• 51:00
  Speaker 1: Giving assets to your children during your lifetime may sound
• 51:03
  Speaker 1: like a simple way to pass along your wealth, but
• 51:05
  Speaker 1: the way you make the gift can have important tax consequences.
• 51:09
  Speaker 1: Cushing and Dolan's new guide, Making the Most of Gifting Assets,
• 51:12
  Speaker 1: explains what you should consider before transferring property, investments, or
• 51:16
  Speaker 1: other appreciative assets to your family. If you give away
• 51:18
  Speaker 1: an asset too soon, your children could end up with
• 51:21
  Speaker 1: a larger tax bill when they eventually sell it. In
• 51:23
  Speaker 1: some cases, holding onto that asset and letting your children
• 51:26
  Speaker 1: inherit it later could reduce the capital gains tax they
• 51:29
  Speaker 1: have to pay. That's why gifting isn't just about what
• 51:32
  Speaker 1: you give. When and how you give it can make
• 51:34
  Speaker 1: a big difference. Get Cushing and Dolan's new guide, Making
• 51:37
  Speaker 1: the Most of Gifting Assets, by calling 866-848-5699.
• 51:39
  Speaker 3: That's 866-848-5699.
• 51:40
  Speaker 1: Or you can request the guide online by visiting LegalExchangeShow.com.
• 51:49
  Speaker 1: The proceeding was paid for and the views expressed are
• 51:51
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 51:53
  Speaker 1: or Armstrong Advisory may contact your offering legal or investment services.
• 51:56
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 51:59
  Speaker 1: other and are not affiliated.
• 52:00
  Speaker 4: Seeing some high volume out there on those roads today, folks.
• 52:04
  Speaker 2: Sound familiar?
• 52:05
  Speaker 6: The Braintree split is backed up.
• 52:06
  Speaker 2: If your commute feels endless, it might be time to
• 52:09
  Speaker 2: ask a bigger question. Are you working because you want
• 52:12
  Speaker 2: to or because you think you have to? At the
• 52:14
  Speaker 2: Armstrong Advisory Group, our financial advisors help individuals and families
• 52:18
  Speaker 2: build retirement income plans designed around their goals, savings, Social Security,
• 52:23
  Speaker 2: investments and overall financial picture. Retirement shouldn't be a guessing game.
• 52:27
  Speaker 2: If you're concerned about what path you're on or have
• 52:30
  Speaker 2: questions about your financial plan, we may be able to help.
• 52:33
  Speaker 2: Visit armstrongadvisory.com and schedule a no-obligation meeting. The Armstrong Advisory Group.
• 52:39
  Speaker 2: We answer only to you. Schedule your meeting today at armstrongadvisory.com.
• 52:44
  Speaker 2: That's armstrongadvisory.com.
• 52:46
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 52:48
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 52:51
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 52:54
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 52:56
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 52:59
  Speaker 1: advisory services. Giving assets directly to your children. may create
• 53:02
  Speaker 1: problems you didn't expect. Cushing and Dolan's new guide, Making
• 53:06
  Speaker 1: the Most of Gifting Assets, explains how giving away property
• 53:09
  Speaker 1: or investments could mean losing control of those assets. Learn
• 53:13
  Speaker 1: about your options before you give assets away. Call 866-848-5699
• 53:15
  Speaker 1: or visit LegalExchangeShow.com. The proceeding was paid for and the
• 53:21
  Speaker 1: views expressed are solely those of Cushing and Dolan. Cushing
• 53:23
  Speaker 1: and Dolan and or Armstrong Advisory may contact you offering
• 53:25
  Speaker 1: legal or investment services. Cushing and Dolan and Armstrong Advisory
• 53:28
  Speaker 1: do not endorse each other and are not affiliated.
• 53:30
  Speaker 7: For many Massachusetts veterans, getting to a medical appointment isn't
• 53:33
  Speaker 7: always easy. That's why the Disabled American Veterans Department of
• 53:37
  Speaker 7: Massachusetts provides free transportation to VA medical appointments through its
• 53:42
  Speaker 7: network of dedicated drivers. Every mile helps a veteran get
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  Speaker 7: the care they've earned through their service. You can help
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  Speaker 7: by volunteering or making a donation. Learn more at DAVMA.org.
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  Speaker 7: That's DAVMA.org.