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Ask Todd: How long do you have to wait for your inheritance? · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Letsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with a state and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutzky and we are.
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  Speaker 2: Now joined by the one and only Todd Lutsky here
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  Speaker 2: for Ask Todd. We got the phone lines open at
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  Speaker 2: eight eight eight to zero five two two six three. Again.
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  Speaker 2: Remember we only get through two to three of your call,
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  Speaker 2: so get calling early, get calling often in order to
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  Speaker 2: be able to speak with Todd Lutsky about your estate
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  Speaker 2: planning questions. That number again is eight eight eight to
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  Speaker 2: zero five two two six three. One more time eight
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  Speaker 2: eight eight to zero, five two two six three. Mister Lutsky,
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  Speaker 2: how are you doing today?
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  Speaker 3: I am doing great and you I'm doing well.
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  Speaker 2: I was I was thinking about my daughters yesterday, where
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  Speaker 2: the older one really likes riding and elevators. But the
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  Speaker 2: younger one prefers escalators. Yeah, they're raised differently.
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  Speaker 3: Yeah, they definitely are raised differently. That's true, they are, Todd.
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  Speaker 2: I want to talk to you a little bit about,
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  Speaker 2: you know, more on kind of naming of beneficiaries and
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  Speaker 2: specifically focusing on retirement accounts. A few years back, the
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  Speaker 2: ten year rule for inherited iras was put into place,
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  Speaker 2: requiring them to be emptied within ten years of going
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  Speaker 2: to a non spouse individual other than a few exceptions.
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  Speaker 2: Has that impacted how estate planning factors into the choice
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  Speaker 2: of beneficiary in these cases at all?
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  Speaker 3: I'm going to say it it really had.
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  Speaker 4: That particular part of the Secure Act, which is what
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  Speaker 4: you're referring to, sure, has not really impacted it. What
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  Speaker 4: it has done, though, is it has clarified I believe
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  Speaker 4: the fact that you can name a trust as the
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  Speaker 4: beneficiary of an IRA and allow that trust to be
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  Speaker 4: what they call an accumulation trust, meaning the trust doesn't
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  Speaker 4: have to be a conduit where it just flows through
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  Speaker 4: and out to the beneficiary. So while it did change
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  Speaker 4: the distribution rules a lot, as you mentioned, making it
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  Speaker 4: come out of an IRA over ten years instead of
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  Speaker 4: an entire lifetime of the children, which is a huge
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  Speaker 4: tax difference. Of course, it also added this ability to
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  Speaker 4: name the trust as the beneficiary or at least clarify
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  Speaker 4: how you can name the trust as the beneficiary, and
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  Speaker 4: so in that regard it has helped. And remember when
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  Speaker 4: would you name the trust a beneficiary of an IRA?
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  Speaker 4: Not all the time, primary, always the spouse ninety percent
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  Speaker 4: of the time. That's the way to go is name
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  Speaker 4: the spouse as the primary. The contingent can be the trust.
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  Speaker 4: But if the trust simply says distribute to property equally
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  Speaker 4: out to the kids, and you're not holding it back
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  Speaker 4: for any reason, you're not protecting it from future creditors,
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  Speaker 4: you're not trying to get generation skipping tax benefits out
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  Speaker 4: of it in future divorce protection. Instead the trust just
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  Speaker 4: pays it out to the kids. Well, then I don't
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  Speaker 4: think you need to name the designated beneficiary on the
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  Speaker 4: IRA the trust, just name the kids. It'll come out
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  Speaker 4: over ten years and that's fine. However, if the IRA
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  Speaker 4: is a decent size, right a good chunk of the estate,
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  Speaker 4: and you are protecting all the assets in the trust
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  Speaker 4: saying hold it in trust for the benefit of the kids,
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  Speaker 4: divorce proof it credit or protect it and provide for
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  Speaker 4: generation skipping tax benefits. Well, then yeah, I probably want
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  Speaker 4: my IRA protected from all of those problems as well,
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  Speaker 4: and so then I would name the designated beneficiary contingent
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  Speaker 4: designated beneficiary.
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  Speaker 3: Of the IRA the trust. So long winded answer, but
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  Speaker 3: there's a lot involved with iras, folks.
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  Speaker 2: Talking with Todd Lotski from the law firm of Cushing
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  Speaker 2: and Dolan. Still room on the phone lines for your
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  Speaker 2: estate planning questions. That number is eight eight eight to
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  Speaker 2: zero five two two sixty three. That is the number
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  Speaker 2: to call to ask Todd your estate planning questions live
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  Speaker 2: on air right now. Again, still a little bit of room,
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  Speaker 2: So do get calling if you've got a question for
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  Speaker 2: Todd that you want answered. That number again is eight
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  Speaker 2: eight eight to zero five two two six three.
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  Speaker 3: We're gonna take.
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  Speaker 2: A quick right now, but when we come back it
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  Speaker 2: is going to be right to your questions with Todd.
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  Speaker 2: That phone number, one last time is eight eight eight
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  Speaker 2: two zero five two two six three.
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  Speaker 1: only here on the Financial Exchange Radio Network. Todd Letsky
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  Speaker 1: answers your questions about a state and elder life planning
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  Speaker 1: every Wednesday at ten thirty right here on the Financial
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  Speaker 1: Exchange Radio Network.
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  Speaker 2: All right, let's get right to your questions with Todd Lutsky.
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  Speaker 2: First up, we've got Eric in Springfield. Eric, You're on
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  Speaker 2: with Todd Lutsky.
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  Speaker 5: Good morning, guys.
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  Speaker 3: Morning.
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  Speaker 5: Quick question. I my father passed left the house to
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  Speaker 5: me and my brother. He's buying me out of the house.
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  Speaker 5: He's residing in the house. Who's responsible for the property taxes?
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  Speaker 5: So technically still half the house.
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  Speaker 3: Yeah, So let me ask a couple of questions about
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  Speaker 3: uh that.
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  Speaker 4: What what has happened here? First of all, has dad died?
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  Speaker 4: Is your mom living?
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  Speaker 3: Okay?
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  Speaker 4: Well that no big piece of this, Okay, So Dad's
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  Speaker 4: basically a single person. Did Dad have a will or
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  Speaker 4: did Dad have a will and a trust when he died?
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  Speaker 5: Trust? I'm in charge of the trust.
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  Speaker 4: So was the property that was left deeded to the
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  Speaker 4: trust on the date of death or was it in
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  Speaker 4: Dad's name alone?
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  Speaker 3: When Dad died, it was in his name alone, So
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  Speaker 3: you had.
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  Speaker 4: A trust, but it was not funded as we always
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  Speaker 4: use the term funded, right, so that that house was
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  Speaker 4: not titled in the name of the trust.
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  Speaker 3: Okay. So now that.
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  Speaker 4: Because the will was a poor over will, the will
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  Speaker 4: said I leave all my assets to my trust.
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  Speaker 3: Is how it got in there.
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  Speaker 5: Because it can sell, sell the house, divide it equally,
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  Speaker 5: or you know, he's buying me out of it.
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  Speaker 3: Okay. So so the house went to probate. And this
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  Speaker 3: is important for everybody.
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  Speaker 4: Eric, I was trying to explain to answer your question,
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  Speaker 4: but let other listeners understand what's gone on here. So,
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  Speaker 4: because the house was not in the trust on the
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  Speaker 4: date of death, that had to go to probate. But
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  Speaker 4: he had a poor over will. So the will actually
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  Speaker 4: saves the day and puts the house into the trust.
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  Speaker 3: And that's how it got there.
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  Speaker 4: So now the house is in a trust, and the
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  Speaker 4: trust says to do what distributed out equally to the
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  Speaker 4: kids or does it say buy each other out if
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  Speaker 4: one wants the other one to buy him out.
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  Speaker 5: It's not even specific. It's either he gets half of
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  Speaker 5: it if we sell it, or he buys me out
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  Speaker 5: of it, or I buy him.
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  Speaker 1: Out of it.
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  Speaker 4: But there's no language that says divide everything in the
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  Speaker 4: trust equally to the kids.
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  Speaker 3: First. Does it just say that that I'm not one
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  Speaker 3: hundred percent positive.
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  Speaker 4: Okay, so we got to really so first and foremost,
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  Speaker 4: the important thing is to figure out what the trust says.
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  Speaker 4: So let's assume the trust does say divide everything equally.
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  Speaker 4: Otherwise you guys wouldn't be thinking that it's equal. So
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  Speaker 4: I assume that it says that. Now, if it says
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  Speaker 4: divide and pay it out, well, then arguably the house
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  Speaker 4: should come out of the trust into both of your hands,
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  Speaker 4: and then you guys can sell it or you could
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  Speaker 4: buy it out. But right now, as long as it's
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  Speaker 4: sitting in the trust, and if it says pay it out,
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  Speaker 4: then you guys are both really on the hook to
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  Speaker 4: pay the bills. I mean, the trust doesn't really own it.
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  Speaker 4: The trust only owns it temporarily until it comes out
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  Speaker 4: to you guys. If the trust says hold it in
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  Speaker 4: trust for the benefit of you guys, now the trust
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  Speaker 4: owns it, well, then the trust has to pay these bills.
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  Speaker 4: But if there's no money in the trust to pay
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  Speaker 4: the bills, then you kids kind of default have to
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  Speaker 4: pay the bills, the maintenance, the upkeep, et cetera. But
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  Speaker 4: it sounds to me like you don't really want the
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  Speaker 4: house is that correct.
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  Speaker 5: Yeah, he's buying my half out. Okay, we agreed upon
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  Speaker 5: a price, and then I'm basically the bank with loaning
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  Speaker 5: him the money, so he's paying me monthly.
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  Speaker 4: Oh so what will happen is you will have to
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  Speaker 4: do a purchase and sale agreement. You will have the
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  Speaker 4: house valued whatever you agreed on. I assume it's fair
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  Speaker 4: market value, and when you sell it to him, yes, you.
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  Speaker 3: Will have a deed prepared from the trust.
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  Speaker 4: I mean, I think if that's what you're doing, I
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  Speaker 4: think you got to get it out of the trust
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  Speaker 4: because you're you're going to be the one that wants
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  Speaker 4: the note right in your name. You're probably not gonna
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  Speaker 4: want the note in the trust.
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  Speaker 5: So well, he's buying me out, So it's gonna end
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  Speaker 5: up being still in the trust, I believe because I'm
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  Speaker 5: the trustee.
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  Speaker 4: But again, I think if the trust says, if the
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  Speaker 4: trust says, divide and pay it out, then you've got
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  Speaker 4: to take the property out of the trust. If the
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  Speaker 4: trust doesn't require it to be held in the trust,
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  Speaker 4: then you got to pay out the trust and then
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  Speaker 4: both of you would own the property personally, and then
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  Speaker 4: you can sell him your half and you personally can
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  Speaker 4: own the note so that the payments will come directly
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  Speaker 4: to you. And the good news is there won't be
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  Speaker 4: any capital gains tax because you've got to step up
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  Speaker 4: in basis on the date of death, so you don't
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  Speaker 4: have to worry about a capital gains tax situation here.
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  Speaker 4: So it should be a tax free transaction. But you
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  Speaker 4: probably want the deed to the note, or you want
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  Speaker 4: the note in your hands, not in the trust only
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  Speaker 4: because I don't know what the trust says. If the
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  Speaker 4: money goes into the trust and the trust has to
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  Speaker 4: pay out money equally to the kids, well then you're
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  Speaker 4: only getting half the money from the note, and you
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  Speaker 4: don't want that. You want all the money from the
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  Speaker 4: note because you sold your entire half. So hope this
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  Speaker 4: helps a little. It's a little hard to answer specifics
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  Speaker 4: about a trust when I don't have it, but I
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  Speaker 4: hope I gave you something to at least go look
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  Speaker 4: at and check out that trust and see what it
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  Speaker 4: says and just follow the terms. But it certainly sounds
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  Speaker 4: doable for you, So I hope that that helped a little.
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  Speaker 4: And folks, speaking of help, when people do these estate
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  Speaker 4: plans like this case with Eric you know how you
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  Speaker 4: leave assets to the beneficiaries. What the document says, which
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  Speaker 4: is exactly what we were talking about, is exactly what's
• 11:18
  Speaker 4: in this guide. And folks, it's the end of the month,
• 11:20
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• 11:24
  Speaker 4: to get this guide how to Leave Assets to Beneficiaries.
• 11:27
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• 11:30
  Speaker 4: already got it set up right, look at this guide
• 11:33
  Speaker 4: and look at all the different ways you can leave
• 11:35
  Speaker 4: assets to beneficiaries. Controlled generation skipping, bloodline planning, divorce proofing,
• 11:42
  Speaker 4: you name it, it's in the guide and it might
• 11:44
  Speaker 4: help you. If you've already done your planning, make an
• 11:48
  Speaker 4: adjustment if you want. For those of who have not
• 11:52
  Speaker 4: done their planning, is a great place to start because
• 11:55
  Speaker 4: you'll at least learn how options you have to leave
• 11:59
  Speaker 4: your assets when you're doing your trust planning. So call
• 12:02
  Speaker 4: get the guide How to Leave Assets to Beneficiaries Last
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  Speaker 2: Todd When it comes to you know, a beneficiary receiving
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  Speaker 2: their actual inheritance, can you give a little bit of
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  Speaker 2: color as to the timeline as it relates to Hey,
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  Speaker 2: if someone has done trust planning, how long does it
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  Speaker 2: typically take for a beneficiary to receive that inheritance? Whereas
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  Speaker 2: someone hasn't and maybe there's just a will or in
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  Speaker 2: some cases no will, how long does it take in
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  Speaker 2: those cases?
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  Speaker 3: Yeah? So great question? What really dovetails onto Eric? Right?
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  Speaker 4: So I was focusing on Eric saying, Eric, what does
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  Speaker 4: the document say? Does it say you can actually distribute
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  Speaker 4: to property out right away?
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  Speaker 1: Well?
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  Speaker 4: If you can, then the timing on something like that
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  Speaker 4: would be what really short? Right, So let's play out
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  Speaker 4: the strength the timing on something like that would say, Hey,
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  Speaker 4: divide and paid out. I don't have probate, I don't
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  Speaker 4: have a headache, I don't have to wait to file anything.
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  Speaker 4: I can just get the trustee appointed, make the distribution
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  Speaker 4: technically so short. However, if you've not done any planning,
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  Speaker 4: right and it has to go to probate, well, now
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  Speaker 4: we're kind of dealing with filing the will, getting somebody
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  Speaker 4: appointed personal representative, notifying the heirrors at law, waiting for
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  Speaker 4: a return day to go back to court, get the appointment.
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  Speaker 4: You know, and then file an inventory, filing an accounting.
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  Speaker 4: There's just a lot to go through before distributions can
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  Speaker 4: be made. Now, during the year long process that probate takes,
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  Speaker 4: you can start making distributions. You can pay bills out
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  Speaker 4: of the estate account.
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  Speaker 3: It can be done. You don't have to wait.
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  Speaker 4: I don't want to make you feel like you have
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  Speaker 4: to await the entire year, but you know, certainly it's longer.
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  Speaker 3: And then back to the.
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  Speaker 4: Idea of a trust, the trust as I described it
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  Speaker 4: in the Eric situation, Yeah, it could come out right away,
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  Speaker 4: same token. You could have a trust designed to say
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  Speaker 4: I want to hold assets in trust for my children,
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  Speaker 4: maybe for their whole life. Wow, that's a long time.
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  Speaker 4: Well that doesn't mean that they're never gonna get it.
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  Speaker 4: You could have it set up where discretionary distributions come
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  Speaker 4: out to the kids over the life of the kids.
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  Speaker 4: And those discretionary distributions are what protects it from future creditors,
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  Speaker 4: future generation skipping tax benefits, right, because if you don't
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  Speaker 4: own it, then it's not available to the creditor. But
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  Speaker 4: it can come out as needed so the kids can
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  Speaker 4: still enjoy it over their lifetime, but it's protected you know,
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  Speaker 4: from creditors and ultimately from future divorces. So really it's
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  Speaker 4: the terms of the trust that dictate the time, and
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  Speaker 4: of course no planning could be a really long time.
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  Speaker 2: Mister Lutski, thank you so much for joining us today.
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  Speaker 3: Always pleasure.
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  Speaker 1: This has been Askedd on the Financial Exchange Radio Network.
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  Speaker 1: Askedd with Todd Lutsky has been presented by Cushing and Dolan,
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  Speaker 1: serving Massachusetts and New England for more than thirty years,
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  Speaker 1: expressed in this segment are solely those of Cushing and Dolan.
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