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Ask Todd: The current state of federal estate taxes · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  If you have an existing estate plan or in the
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  market for one, Todd Lutsky is here to answer your
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  questions and help you plan for a later life. Ask
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  Todd is presented by Cushing and Dolan, serving Massachusetts and
• 0:15
  New England for more than thirty five years, helping families
• 0:18
  with a state and tax planning, Medicaid planning, and probate law.
• 0:22
  Visit Cushingdolan dot com. Now here's Todd Lutsky as problems.
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  Speaker 2: We're now joined by Todd Lutsky from the law firm
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  of Cushing and Dolan. The segment here has Asked Todd
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  and we got the phone lines open so you can
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  ask Todd your questions about your estate plans. Eight eight
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  eight two zero five two two sixty three. That is
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  the number to call. Last few weeks, we have been
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  getting quite a few calls, so if you do want
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  to make sure that we get to you, call early.
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  It's the only way to do it. Eight eight eight
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  two zero five two two sixty three again is the number,
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  and we're happy to take your calls for uh again
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  your questions with Todd. That number again is eight eight
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  eight two zero five two two six three. Mister Latsky,
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  how are you today?
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  Speaker 3: I'm doing great?
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  Speaker 2: You uh good. I got asked yesterday if someone someone
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  asked me if I could name a country that does
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  not have the letter R.
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  Speaker 3: In it, country that doesn't have the letter ARE in it, And.
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  Speaker 2: I said, no, way, no, no, oh, yeah, that's good, yeah, Norway, Todd,
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  I want to talk a little bit about the current
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  state of federal estate taxes. What are the current exemption amounts?
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  What are the current tax rates like today?
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  Speaker 3: So those are going to be changing too, So it's
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  good that we're sort of talking about those.
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  Speaker 2: You've taken all the stuff where I'm going to go.
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  Speaker 3: Todd, all right, sorry, so.
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  Speaker 2: Today I only asked you where they are today.
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  Speaker 3: Today I'm trying. I try to be a good witness. Okay.
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  I appreciate that today the mass of shoot its estate
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  tax exemption it's two million.
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  Speaker 1: Okay.
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  Speaker 3: The federal estate tax exemption is thirteen point six one million,
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  and the federal gift tax exemption is thirteen point six
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  to one million. And there are no state gift tax
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  is except Connecticut.
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  Speaker 2: Let's say that you are over those thresholds, what's the
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  actual tax rate, like how much do you actually have
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  to pay if you're over the Massachusetts or federal estate
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  tax thresholds.
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  Speaker 3: So federally it's a flat forty percent. So if you're
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  worth on the overage or on everything, so it's on
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  the overage. So federally, you would calculate it by saying,
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  let's say i'm worth I'm worth twenty million, and I
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  can shelter just round it to thirteen million for easy numbers, right,
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  So that means that there is seven million million subject
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  to tax the amount over. You take this seven million
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  and you hit it really pretty much with a flat
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  forty percent. There's a little bit of a calculation on
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  a chart you use, but you're pretty close, you know.
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  So if you took seventy times forty percent, it gives
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  you a pretty good idea of where you're at. That's
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  a lot of tax two point eight million.
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  Speaker 2: What does the situation look like as we head into
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  twenty twenty five? Are there any changes expected next year?
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  Speaker 3: There is? Let me begin with the gift tax exemption,
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  because the gift tax in the federal estate tax exemption
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  are the same. But on the gift tax side, there's
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  actually two components. There's something called the present interest exclusion,
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  which means today it is eighteen thousand dollars per year
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  per person that you can give, right and in twenty
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  twenty one, I'm sorry, in twenty twenty five, it's going
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  to go to nineteen by thousand, okay, okay. And the
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  federal exemption and by the way, that's the amount you
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  can give, I say said annually per year per person.
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  The federal estate tax and federal gift tax exemption are
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  currently thirteen million six y ten and they are jumping
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  up to thirteen million nine ten. I believe thirteen million
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  nine in change. I don't have the exact number, but
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  that's a big jump from thirteen six to thirteen nine. Okay.
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  So those will be the new federal estate and federal
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  once in a lifetime gift tax exemptions and the state.
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  Staying at two, talking with Todd W. Lotski from the
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  law firm of Kushing and Dolan. If you've got questions
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  about your estate plan, this is the time to talk
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  to Todd right now live on air. Eight eight eight
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  two zero five two two six three is the number.
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  We still have room on the phone lines. If you've
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  got questions for Todd. That number is eight eight eight
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  to zero five two two six three. We're gonna take
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  a quick break here, but when we come back, it's
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  gonna be right to your questions with Todd. Again.
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  Speaker 2: We still have room on the phone lines at eight
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  eight eight to zero five two two sixty three. Get calling.
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  When we return, it's right to your questions with Todd.
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  That number one more time is eight eight eight to
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  zero five two two sixty three.
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  only here on the Financial Exchange Radio Network. You're listening
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  to Ask Todd with Todd Lutsky on the Financial Exchange
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  Radio Network.
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  Speaker 2: All right, Todd, We've got a few callers for you here.
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  Let's go first to Eileen in Chelsea. Eileen, you are
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  on with Todd Lutsky.
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  Speaker 4: Hi, Hello, Hello, go ahead.
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  Speaker 2: Hi.
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  Speaker 4: Yeah. So my mom is ninety and she recently went
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  into assisted here privately paid uh huh, and she is
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  in the process of selling her condo. So at this
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  point we are not sure what to do with like
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  if we should just put it, wad have put it
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  for my mom because she's going to need it for
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  her care.
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  Speaker 3: Here, Yeah, let me ask you this is is she
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  going to be able to stay in the assisted living
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  you thing for for a while? I mean, it's based
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  on her health. It's not like it's declining and she
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  needs to go to a nursing home.
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  Speaker 4: No, we're hoping that she can stay there and go
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  through all her money and stay as long as possible.
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  She's in big care. You know, she has a walker,
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  but she's healthy.
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  Speaker 3: And is there other money that your mom has? Forget
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  that the house for a minute. By by the way,
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  how much could you sell the condo for?
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  Speaker 4: I''m guessing maybe four hundred, all right?
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  Speaker 3: And is there other money that your mom has other
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  than that four hundred. Let's assume that becomes four hundred
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  thousand for the moment. But is there other money currently
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  that she can use to pay the assisted living?
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  Speaker 4: Yeah?
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  Speaker 3: About how much?
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  Speaker 4: Probably about eighty all right?
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  Speaker 3: So not a lot there for the assisted living at
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  the end of the day. So the four hundred sounds
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  like it will be needed. Now. My thought would be,
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  you know, in the event over the however long it
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  takes to spend that eighty, it's going to last over
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  a year anyway. I would think in the assisted living
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  and if you want, you can wait a year only
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  because if her health does decline and she went to
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  a long term care facility, a house by itself, as
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  a house is a non countable asset, so at least
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  she'd be eligible for you know, Medica Caid benefits, and
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  you'd pay a lot less money in the nursing home
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  if her health declines and she goes there. So, you know,
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  I wouldn't jump to sell the house because it's it's
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  a possibility that you could save it. Whereas if you
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  convert it to money and you wait a year and
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  she needs the same thing happens, she needs you know,
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  long more care, then it's money and it's a lot
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  harder for a ninety one year old to actually try to,
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  you know, save those dollars. It can be done, but
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  it's a little easier in the form of a house.
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  Doesn't mean you don't sell it. I just want to
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  give you those options. But if you do sell it, yeah,
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  go ahead, sell it. The money will sit in her
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  bank account. Hopefully one of you have power of attorney
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  that can you know, administer the money, pay the bills,
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  pay the assisted living for her, and likely with a
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  two hundred and fifty thousand dollars exclusion for selling her
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  primary residence. She's probably not going to have much capital
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  gains tax to pay on the property, so those are
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  your two options. But yes, she could absolutely sell it
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  or hang on to it. Folks. Speaking of hanging on
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  to things, we have a guide that we are coming
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  up to the end of the month on in terms
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  of getting you this information. It is why name your
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  Estate an IRA beneficiary? It's right near the end of
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  the month. It is one of these assets that are
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  very complicated in dealing with your estate from an estate
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  planning standpoint. It has both an income tax issue and
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  an estate tax issue, and that's what makes it complicated.
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  It's hard to plan for. But this guide why name
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  your Estate and IRA beneficiary is under the New Secure Act.
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  It explains to you in here how you can actually
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  name the estate provided you generally would do this if
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  you're married and you're at seventy three years of age,
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  you name the estate the beneficiary and you can now
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  shelter it for estate tax purposes and at the same
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  time immediately protected from the nursing home with no five
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  year waiting period for the surviving spouse. Seems a little complicated, folks,
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  but it's really worth your time to take a look
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  at how this works. So we are at the end
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  of the month, call and get the guide eight six
• 10:10
  six eight four eight five six ninety nine or Legal
• 10:15
  Exchange Show dot com again eight six six eight four
• 10:19
  eight five six ninety nine or Legal Exchange Show dot com.
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  Speaker 2: Todd, I've got another caller for you, hero. Let's go
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  to John in Sandwich. John, what is your question for
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  Todd Luvsky?
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  Speaker 5: Thanks for taking my call. Sure, my father passed away
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  in February. He was ninety seven years old. He has
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  no assets, I mean, no house or anything. The only
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  thing he has is about ninety plus thousand dollars in
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  its checking account. My question is to settle that out.
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  Maybe one of my brother and I are both named
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  in the will as the ones to get to split
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  that money. So do I have to go to probate
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  for that? And number two is and I just can
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  we just split it out all in one chunker? Do
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  we have to do that? Eighteen thousand fit per year?
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  Speaker 3: So yeah, that's a great, great question. So let me
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  ask you a few follow up questions, and this one
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  is really going to be the most important. Is that
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  account with the ninety thousand dollars in it in your
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  dad's name alone, or does it have your name listed
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  as a joint owner or your brother's name as a
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  joint owner.
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  Speaker 5: My name is in as a joint owner.
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  Speaker 3: So this has your dad's name and your name joint
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  on the account. Correct?
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  Speaker 5: Correct?
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  Speaker 4: Correct?
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  Speaker 3: Okay, So here's the lung and the short of it.
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  And folks, this is exactly why I don't love joint accounts.
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  But there's pros and cons here for you, John. So
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  here's the pros and cons.
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  Speaker 4: Uh.
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  Speaker 3: One, Because it's a joint account, you do not have
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  to go to probate. Okay, you do not have to
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  go to probate. It would pass to the surviving joint owner. However,
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  it passes to the surviving joint owner not only outside
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  of probate. You could just go in and take the money.
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  But if effectively your dad effectively disinherited your brother because
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  it's your money. Now, I'm not saying you wouldn't do
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  the right thing and give him half, but you don't
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  have to. And this is why I'm telling this to
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  everybody else that's listening. If you run into this situation,
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  that's why we don't do this, because there's no obligation
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  by the surviving joint owner to actually give it to
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  the child and say, I want to do what dad
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  wanted and he really wanted to treat people equally, even
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  though his will says that by skipping the will and
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  bypassing the will and going directly to you, you don't
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  have to give it to him. Now, let's assume you say, well, Todd,
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  I want to fine. You're allowed to give him half
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  forty five thousand dollars. If you want to go eighteen
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  thousand per year per person, you can do that, and
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  those don't require any gift tax filings and no gift
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  tax at all. You have the ability, though, to give
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  away thirteen point six million without hurting you, so there'll
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  be no estate tax or no gift tax on that.
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  If you want to just give them the forty five
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  in one fell swoop, so that's an option for you.
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  So those are your two options on the gifting front.
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  Now I would check the will because in our document
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  we have a convenience clause in the will. We know
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  people do this as a matter of convenience, right. Sometimes
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  people just throw on like your dad threw your name
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  on there because you know you're close by, you can
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  pay the bills, you can access the money, and it's
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  done out of convenience. So the benefit of that is
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  we put in our trusts in our wills that say
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  there may be joint accounts when I die, and I
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  acknowledge that, but I want them treated as that for
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  convenience only, and ignore the avoiding probate effect of the
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  joint account and instead ordering those accounts to go to probate,
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  to go through the will, and then be paid out
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  according to the will. So now nobody's disinherited. The upside
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  of that is that now you don't have to worry
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  about gifting. There's no worry about getting him forty five
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  thousand dollars because it would be through the will and
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  there's no gift involved. Just do it. The only downside
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  is it's got to go to probate in order to
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  do that, so you got to trade those off. But
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  the good news is we do it because we don't
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  want to accidentally disinherit children. We don't want to have
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  a parent, you know, accidentally create this this what could
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  be rifted that probably doesn't exist between you and your brother,
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  but could exist among family members saying, hah, three bank
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  accounts were in my name and they're all mine now
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  and I don't have to give them to you. And
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  arguably without that convenience clause in the will, the answer
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  is that's right, you don't have to, So keep that
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  in mind when you're when you're drafting wills out there, folks,
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  if you have it. But that's the answer, could be
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  a little tricky. Seemed like a sa simple question, Chuck,
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  but had a lot of issues with it.
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  Speaker 2: Well, Todd, I certainly appreciate you joining us today. Thank
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  you so much for the time, and we'll be talking
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  to you soon.
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  Speaker 3: Thank you always a pleasure.
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  Speaker 1: This has been asked Todd on the Financial Exchange Radio network.
• 15:14
  Ask Todd with Todd. Lutsky has been presented by Cushing
• 15:17
  and Dolan, serving Massachusetts and New England for more than
• 15:19
  thirty years, helping families with the state and tax planning,
• 15:22
  Medicaid planning, and probate law. Call eight hundred and three
• 15:25
  nine three four thousand and one or visit Cushingdolan dot com.
• 15:29
  The views expressed in this segment are solely those of
• 15:31
  Cushing and Dolan. Armstrong advisor. He does not provide any
• 15:33
  legal or tax advice. Please consult with your legal or
• 15:35
  tax advisor on such matters. Cushing and Armstrong do not
• 15:38
  endorse each other and are not affiliated.