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What happens when you don't fund your trust? · The Legal Exchange

• 0:01
  Speaker 1: This is the Legal Exchange with Todd Lutsky from the
• 0:04
  Speaker 1: law firm of Cushing and Dolan and Susan Powers of
• 0:07
  Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
• 0:10
  Speaker 1: discuss many topics, including estate planning, how to avoid probate,
• 0:13
  Speaker 1: and protecting your money from a nursing home. If you
• 0:16
  Speaker 1: need assistance in any of these areas, or have a
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  Speaker 1: question about another issue that may affect your future, call
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  Speaker 1: eight six six eight four eight five six ninety nine
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  Speaker 1: to make an appointment. That's eight sixty six eight four
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  Speaker 1: eight five six ninety nine. Operators are standing by. Now
• 0:31
  Speaker 1: Here are your hosts, Todd Lutsky and Susan Powers.
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  Speaker 2: Welcome into legal Exchange with Todd Latsky. 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 Latsky, a partner with the law firm
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  Speaker 2: of Cushing and Dolan with a Masters in taxation. Welcome Todd.
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  Speaker 2: How are you today?
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  Speaker 3: I am never better on you?
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  Speaker 2: I am great? Thank you. What do you have for
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  Speaker 2: us this week?
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  Speaker 3: Couple of things.
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  Speaker 4: We've got a Missouri Appellate Court case dealing with the
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  Speaker 4: term distribution what does that really mean, you might ask.
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  Speaker 2: Giving me free stuff?
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  Speaker 4: Yeah, well, it's this interesting case because it's an estate
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  Speaker 4: plan done that has real estate and money, and it
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  Speaker 4: talks about distributing real estate to one but using money
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  Speaker 4: to equalize that distribution.
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  Speaker 3: And where does that.
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  Speaker 4: Money come from to equalize the distribution from the beneficiary
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  Speaker 4: or from the trust or the estate or interesting, be
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  Speaker 4: clear when you're drafting, be clear when you're dealing with
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  Speaker 4: real estate, folks. We're going to learn a lot from
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  Speaker 4: that case. And then a real life story. Sometimes I
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  Speaker 4: like these better. So this is really a classic example
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  Speaker 4: of somebody who did some planning but didn't actually complete
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  Speaker 4: the planning enough, didn't follow through with what they should
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  Speaker 4: have done with the planning. And I'm going to explain
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  Speaker 4: now revocable trusts were set up, but I'm going to
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  Speaker 4: explain what happens and what's funded and what's not funded,
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  Speaker 4: and you know it happens when one dies, and what
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  Speaker 4: kind of how the lack of funding caused a problem.
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  Speaker 4: What can be done post mortem, folks, lots to think
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  Speaker 4: about when you're doing your planning. Don't just get it
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  Speaker 4: in place, but push it across the goal line. Do
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  Speaker 4: it all, and you're going to see from this story
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  Speaker 4: how that plays out.
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  Speaker 3: Folks.
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  Speaker 4: There's also people who don't do any planning and are
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  Speaker 4: faced with long term care situations. Last minute. I want you,
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  Speaker 4: if nothing else, not to write the check. If you're
• 2:29
  Speaker 4: that person, there might be things that can be done
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• 2:35
  Speaker 4: for single people and married couples. They're different, but they
• 2:38
  Speaker 4: save the monetary assets. Get the guide and learn how
• 2:42
  Speaker 4: to save the real estate assets. Homes, vacation homes, rental properties,
• 2:47
  Speaker 4: all treated differently, but maybe saveable. Last minute, Learn how
• 2:52
  Speaker 4: these things work. Learn how pood trust works. They're back, folks.
• 2:55
  Speaker 4: I know they've been on and off, but they're around
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  Speaker 4: term care planning for procrastinators new for the month. Get
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  Speaker 4: nine nine or Legal Exchange Show dot com again eight
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  Speaker 4: six six eight four eight five six nine nine or
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  Speaker 4: Legal Exchange Show dot Com.
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  Speaker 3: Where are we going? Missouri?
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  Speaker 4: So we got this Missouri Appellate Court case facts Stephen
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  Speaker 4: and Karen. They have a dispute over the payment of
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  Speaker 4: assets from their late mother's trust. So these are siblings.
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  Speaker 4: It provided the trust provided a caste distribution to be
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  Speaker 4: made to Stephen to equalize the real estate that was
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  Speaker 4: going to Karen. Now there might be a reason Karen
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  Speaker 4: needed this property, who knows. Stephen argued that the distribution
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  Speaker 4: was to come from Karen personally and not from the trust.
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  Speaker 4: That's a leap, if you ask me, Yeah, it is.
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  Speaker 1: Now.
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  Speaker 4: I don't know what's going on here, how the try
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  Speaker 4: us was drafted.
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  Speaker 3: But that's a leap.
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  Speaker 4: Why are we gonna make Karen come out of pocket?
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  Speaker 2: Right?
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  Speaker 3: Wow?
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  Speaker 4: Anyways, so they go to trial court and the trial
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  Speaker 4: court says the language is ambiguous because it did not clarify.
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  Speaker 4: But the court reasoned that there were to be that
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  Speaker 4: they were to be treated equally, So they ordered Karen
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  Speaker 4: to pay an additional amount from her share or to
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  Speaker 4: pay from personal funds.
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  Speaker 2: So from her share, so not out of pockets in.
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  Speaker 4: Their pocket yeah, or from personal funds apparently if there
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  Speaker 4: wasn't enough assets in the trust to equalize the estate. Wow. Right,
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  Speaker 4: So that was the trial court. Well, needless to say,
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  Speaker 4: Karen wasn't thrilled with that result, so she appealed and
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  Speaker 4: the appellate court revert and I think probably rightfully so
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  Speaker 4: said yes, they want to treat them equally, but the
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  Speaker 4: distribution should come from the trust. The trust did not
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  Speaker 4: require equal distributions of trust assets, so they could bargain
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  Speaker 4: away their portion distribution throughout the trust did refer to
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  Speaker 4: distributions from trust assets, so it should not be interpreted
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  Speaker 4: differently than that. So they they said that the trust
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  Speaker 4: was pretty clear that it was to come from the trust,
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  Speaker 4: and I think that they got the answer right. I've
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  Speaker 4: never seen a trust drafted where they say, you know,
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  Speaker 4: one daughter, you get a house, but in order for
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  Speaker 4: you to get the house, you have to come out
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  Speaker 4: of pocket to buy. Well, well, it's not entirely true
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  Speaker 4: if you're buying the house. I guess, yeah, you would
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  Speaker 4: have to buy the house if you will. But in
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  Speaker 4: this case, they were trying to equalize, saying I want
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  Speaker 4: you to you know, you can't force them so that
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  Speaker 4: if you can't afford to buy the house, you just wouldn't.
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  Speaker 4: You just wouldn't buy it, so you're not out of pocket.
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  Speaker 3: Right.
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  Speaker 4: But whenever you start thinking about treating kids differently, giving
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  Speaker 4: one asset to one kid and one asset to another kid,
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  Speaker 4: you have to almost almost have to accept the fact
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  Speaker 4: that likely you will not have equality, right, It's possible,
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  Speaker 4: but doesn't always happen.
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  Speaker 2: Like you and I have a mutual client Todd where
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  Speaker 2: she has two rental properties, a daughter lives in one,
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  Speaker 2: a son lives in the other, and there's money in
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  Speaker 2: the trust and other properties and stuff. So she wants
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  Speaker 2: to make sure whoever's living in your house gets their
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  Speaker 2: respective houses. But you have it set up so that
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  Speaker 2: one house is worth more than the other one, and
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  Speaker 2: the other one's made whole from a distribution from the
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  Speaker 2: trust on top of.
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  Speaker 4: It to equalize because there's enough money to do it. Yeah, right,
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  Speaker 4: If there's enough money to do it, that's fine. And
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  Speaker 4: that's where I think the drafting needs to be clear
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  Speaker 4: when you're doing it here. So so let's just run
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  Speaker 4: through this some drafting tips and lessons. So to me, again,
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  Speaker 4: it's always important to be clear. But the beauty of
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  Speaker 4: a trust is that you can do exactly and control
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  Speaker 4: exactly who gets what, how when, why?
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  Speaker 3: Right? Just write it, write it down.
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  Speaker 4: So if this is done correctly and they share equally,
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  Speaker 4: that's easy, you know, just give them their share made
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  Speaker 4: up of different assets. Now Karen got real estate, fine,
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  Speaker 4: and the share you know, Steven got more money. Well,
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  Speaker 4: that's fine. If you have enough money to equalize the
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  Speaker 4: value of the real estate. That's an easy fix, Steven.
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  Speaker 4: You get you know, the house is worth five hundred thousand,
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  Speaker 4: You get five hundred thousand dollars, and Karen gets a
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  Speaker 4: house and not really five hundred thousand, because if you're
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  Speaker 4: splitting everything equally, it's only two fifty, right, so you
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  Speaker 4: give her two fifty and you get two fifty more. Yeah,
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  Speaker 4: easy enough to do if you have the money. Now,
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  Speaker 4: to prevent any fighting over real estate, we have Cushing
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  Speaker 4: and Dolan. We generally say, if you're treating people equally,
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  Speaker 4: it's easy.
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  Speaker 3: Right.
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  Speaker 4: Real estate is sold unless they all want it. If
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  Speaker 4: one wants it, then they can buy out the interest
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  Speaker 4: of the one who doesn't want it at fair market value,
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  Speaker 4: and therefore everybody gets what they want. Their buckets are
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  Speaker 4: filled and there's no fighting, and you're equally treated, and
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  Speaker 4: you can ensure equality that way. Now if and again,
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  Speaker 4: almost nobody, it almost never happens where all the kids
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  Speaker 4: want it. It just doesn't happen. So you know, oftentimes
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  Speaker 4: it's sold or one buys them out. Now, if you
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  Speaker 4: really wanted Karen in this case to get that house. Well,
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  Speaker 4: then give Karen a first right of refusal. Don't make
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  Speaker 4: it up to all the kids. Say look, Karen, if
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  Speaker 4: there's two kids, you get the right to buy out
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  Speaker 4: your brother at fair market value for his half.
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  Speaker 3: First.
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  Speaker 4: If you have money left from me to do that,
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  Speaker 4: please do allocate your share of the money to him
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  Speaker 4: and take the house. If it's not quite enough, you
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  Speaker 4: might have to get a mortgage for the difference. So
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  Speaker 4: what you got your house, he got his money. Everybody's happy,
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  Speaker 4: everybody's going to Thanksgiving dinner. Yes, And that's really how
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  Speaker 4: to do it. And you can still make sure that happens.
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  Speaker 3: Now.
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  Speaker 4: If you simply want to allocate one property to one kid,
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  Speaker 4: you know you can do that, but again, offer the buyout.
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  Speaker 4: If you offer a buyout, it's fine. But again, the
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  Speaker 4: easiest way to do it is if you just treat
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  Speaker 4: everybody equally with the language we use. There's never fighting.
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  Speaker 4: But you know, sometimes you might say, I want the
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  Speaker 4: kid to have it all, to have one house and
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  Speaker 4: just use it pay the bills, and then later it
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  Speaker 4: goes to both kids. So many ways to leave your assets, folks,
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  Speaker 4: When it comes to real estate, you really need the
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  Speaker 4: trust to do it to make sure your wishes are
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  Speaker 4: being honored. But in some cases people plan, don't plan,
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  Speaker 4: and find themselves in a nursing home long term care
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  Speaker 4: planning for procrastinators, don't write to check if you're faced
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  Speaker 4: with this situation. Learn how houses, real estate, vacation homes,
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  Speaker 4: Last Minute eight six six eight four eight five six
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  Speaker 4: nine nine or Legal Exchange show dot com.
• 10:22
  Speaker 2: You've been listening to Todd Lutsky, a partner with the
• 10:24
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 10:28
  Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
• 10:31
  Speaker 2: more to come when we return to the Legal Exchange
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  Speaker 2: with Todd Lutsky.
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  Speaker 1: That's eight sixty six eight four eight five six ninety nine.
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  Speaker 2: Welcome back into the legal exchange with Todd Lotsky, partner
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  Speaker 2: with the law firm of Cushing and Dolan with a
• 13:59
  Speaker 2: master's in taxation. I'm Susan Power as a financial advisor
• 14:03
  Speaker 2: with the Armstrong Advisory Group. Todd, where are we headed now?
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  Speaker 4: We are headed to a real life story. We're not
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  Speaker 4: going anywhere excellent, staying right here. So at this situation,
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  Speaker 4: it's a classic example of planning but not funding, and
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  Speaker 4: they kind of not did everything they're supposed to do.
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  Speaker 4: So they planned and they kind of failed a little.
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  Speaker 3: Let's see, so.
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  Speaker 4: Husband and wife, right, they did a revocable trust plan
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  Speaker 4: over twenty years ago, back in nineteen ninety eight, and
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  Speaker 4: they created two revocable trusts and are for each other.
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  Speaker 4: These revocable trusts were for each other. However, they only
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  Speaker 4: funded them with the house, so they put half of
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  Speaker 4: the house in each trust.
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  Speaker 2: So you funded him with half the house. Probably is
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  Speaker 2: this your client? No?
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  Speaker 4: No, I think this is just a real life story.
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  Speaker 4: They came in, got it, got it yep, And the
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  Speaker 4: wife died because would have helped them fund a lot more.
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  Speaker 4: And the wife died in twenty twenty one, got it,
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  Speaker 4: and they were worth about two point five million, but
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  Speaker 4: one half the value of the house, for whatever reason,
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  Speaker 4: was only about one hundred and fifty grands, or like
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  Speaker 4: a three hundred thousand dollars home. All the investible assets
• 15:18
  Speaker 4: were jointly owned, and the bank accounts were jointly owned,
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  Speaker 4: and the husband's one half of the assets were close
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  Speaker 4: to three million dollars. Wow, he's now eighty seven years old.
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  Speaker 4: What is the result of this lack of complete planning?
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  Speaker 4: And all of the assets he gets from her are
• 15:39
  Speaker 4: totaling about five million dollars. So this was a pretty
• 15:44
  Speaker 4: big estate, you know, when she died. And now they're
• 15:47
  Speaker 4: trying to figure out what do we do? We've already
• 15:51
  Speaker 4: lost the spouse. How do we go about doing planning now?
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  Speaker 4: When at the end of the day, it looks like
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  Speaker 4: his piece of three million plus whatever was joint that
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  Speaker 4: passed to him gives him a total estate looks like
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  Speaker 4: of about five million yep, as I can see. And
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  Speaker 4: how much was sheltered on her death? Wow, one hundred
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  Speaker 4: and fifty thousand dollars Wow, which would have been half
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  Speaker 4: the house in her trust. Why simply because there wasn't
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  Speaker 4: enough planning done. And folks, this is one of the
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  Speaker 4: things we talk about a lot. We do, not only
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  Speaker 4: the drafting. And when I draw my diagram on the board,
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  Speaker 4: I show clients this is what it looks like and
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  Speaker 4: it's funded. I go, and when you leave the second meeting,
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  Speaker 4: it's going to look like that. It's going to be
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  Speaker 4: a box full of stuff. Because if it's not full
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  Speaker 4: of what we can put in it, it's not doing
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  Speaker 4: everything that it can for.
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  Speaker 2: You, because not all attorney's fund right.
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  Speaker 3: I don't think so.
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  Speaker 4: I think for whatever reason, you know, they might put
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  Speaker 4: the real estate in.
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  Speaker 3: That's it. Now we can't move the.
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  Speaker 4: Money, but we sure it can work with planners you
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  Speaker 4: share other people to move the money for them into
• 17:03
  Speaker 4: that trust. So I want to stress how important funding is.
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  Speaker 4: And now I'm going to give you some tips and
• 17:09
  Speaker 4: lessons as to why that matters in this case now
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  Speaker 4: that one died. But before I do, I also want
• 17:16
  Speaker 4: to mention to you long term care planning. For procrastinators,
• 17:20
  Speaker 4: what happens when you don't plan, and that happens, folks,
• 17:24
  Speaker 4: you sometimes don't get to it. You find yourself faced
• 17:26
  Speaker 4: with going into a nursing home. And by the way,
• 17:28
  Speaker 4: it's not just for people going into a nursing home
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  Speaker 4: that haven't planned. It's people that have planned that still
• 17:34
  Speaker 4: have assets outside the trust. It's going to happen, So
• 17:37
  Speaker 4: it's not just for that. Anybody faced with this. Get
• 17:41
  Speaker 4: the guide. Learn how to protect money last minute through
• 17:44
  Speaker 4: annuities for single people and married couples. Learn how pooled
• 17:49
  Speaker 4: trusts work if you're single. Learn how homes and rental
• 17:52
  Speaker 4: properties and vacation homes are treated very different but could
• 17:57
  Speaker 4: be saved last minute times. Get the guide eight six
• 18:02
  Speaker 4: six eight four eight five six nine nine or Legal
• 18:06
  Speaker 4: Exchange Show dot com again eight six six eight four
• 18:10
  Speaker 4: eight five six nine nine, or go to Legal Exchange
• 18:14
  Speaker 4: Show dot com download it there. Okay, Tips and lessons
• 18:20
  Speaker 4: Number one probate, Well, what happened in this case? Person died?
• 18:26
  Speaker 4: What about probate? Well, they accidentally avoided probate. Why because
• 18:29
  Speaker 4: all the assets that were not in the trust were
• 18:32
  Speaker 4: own jointly. Remember they just passed to the survivor spouse.
• 18:35
  Speaker 2: So if there's I or raise, he was probably named
• 18:38
  Speaker 2: as the beneficiary. Life insurance and so forth.
• 18:41
  Speaker 4: I would think absolutely right. Okay, well is that all bad?
• 18:45
  Speaker 3: Nope?
• 18:45
  Speaker 4: Avoiding probate's good. Let's let's acknowledge that. What else happened?
• 18:50
  Speaker 4: What about from an income tax standpoint? They got a
• 18:53
  Speaker 4: half step up in basis? Yep, not a full step up.
• 18:56
  Speaker 4: Remember my article about the joint trust and how important
• 18:59
  Speaker 4: joint revocable trust sarring cramming down and getting a full
• 19:03
  Speaker 4: step up in basis on the first death. Not here,
• 19:07
  Speaker 4: they got a half step up in basis. Better than nothing.
• 19:10
  Speaker 4: I'm happy. And again, folks, what does that mean? That
• 19:14
  Speaker 4: means it reduces the capital gains tax when the beneficiary
• 19:19
  Speaker 4: would sell the property, either kids or the surviving spouse,
• 19:24
  Speaker 4: who in this case is eighty seven okay.
• 19:29
  Speaker 3: Number two.
• 19:29
  Speaker 4: State taxes, well a seventy percent. So at this case,
• 19:35
  Speaker 4: well we have well, at you know, twenty percent or
• 19:40
  Speaker 4: seventy percent mass tax return will be required. So I'm
• 19:44
  Speaker 4: sorry there will be a Massachusetts a state tax return
• 19:48
  Speaker 4: required because it will be due nine months after the
• 19:52
  Speaker 4: date of death. Why because the exemption back then was.
• 19:55
  Speaker 3: Only a million dollars.
• 19:57
  Speaker 4: Today the mass exemption is two million.
• 20:00
  Speaker 3: Get that? Still half the file.
• 20:02
  Speaker 2: Which makes it even worse that they lost two million
• 20:04
  Speaker 2: dollars of exemption.
• 20:05
  Speaker 3: Well, you're you're driving at the point.
• 20:07
  Speaker 4: So the federal exemption right then was about eleven million
• 20:12
  Speaker 4: when he died, and the state exemption you get taxed
• 20:15
  Speaker 4: on all the assets over well, in this case, all
• 20:18
  Speaker 4: the assets that were in the trust except one half
• 20:21
  Speaker 4: the house. Everything passed under the marital reduction except for
• 20:25
  Speaker 4: that one half of the house that was tucked away
• 20:28
  Speaker 4: in her trust. Okay, so the problem is that the
• 20:32
  Speaker 4: willy will the surviving spouse, will be taxed on all
• 20:36
  Speaker 4: the assets and all the growth when the surviving spouse dies.
• 20:40
  Speaker 4: Remember surviving spouse is at about five million right now.
• 20:45
  Speaker 4: So the lack of funding here was the problem. Only
• 20:48
  Speaker 4: one half the house was in the trust. One hundred
• 20:50
  Speaker 4: and fifty thousand dollars will be sheltered, wasting eight hundred
• 20:55
  Speaker 4: and fifty thousand dollars of the Massachusetts then one million
• 21:00
  Speaker 4: dollar exemption. Wow, that's a big waste. Remember there's no
• 21:04
  Speaker 4: portability there.
• 21:05
  Speaker 3: Now.
• 21:06
  Speaker 4: If it was funded with let's say, you know, two
• 21:09
  Speaker 4: and a half million half the assets, then you would
• 21:12
  Speaker 4: have sheltered the full million and the remainder share for Mass,
• 21:16
  Speaker 4: and you would have sheltered the additional one point five
• 21:19
  Speaker 4: million in the marital share, So thereby sheltering the full
• 21:23
  Speaker 4: two point five million for federal estate tax and the
• 21:28
  Speaker 4: full one million for Mass. Yeah, and remember, at least
• 21:33
  Speaker 4: for federal, any unused exemption we could port over through
• 21:39
  Speaker 4: that thing called portability of Unused Exemptions, the coon the coupon,
• 21:44
  Speaker 4: So we would have been able to save the unused exemptions.
• 21:48
  Speaker 4: So federally, he's going to be Okay, here, we don't
• 21:51
  Speaker 4: have a problem. Can we do post mortem planning? Yeah,
• 21:55
  Speaker 4: we'll file the seven oh six elect portability which we
• 21:57
  Speaker 4: just talked about to save the unused excitemption. Then we
• 22:01
  Speaker 4: can talk about gifting. Well, he's eighty seven, maybe he
• 22:03
  Speaker 4: doesn't need five million dollars. Yeah, Well, at least we
• 22:08
  Speaker 4: got a half step up in basis. Remember, so that
• 22:11
  Speaker 4: half step up in basis might mean that take those
• 22:15
  Speaker 4: assets that are now high basis assets so we're not
• 22:18
  Speaker 4: trapping any capital gain, and gift them to a gifting
• 22:21
  Speaker 4: trust for the kids. Maybe gift away two two and
• 22:24
  Speaker 4: a half million. There's no gift tax in Mass. We
• 22:28
  Speaker 4: have a huge estate tax exemption. Plus we got a
• 22:32
  Speaker 4: coupon yep, so there'll be no federal gift tax and
• 22:37
  Speaker 4: you can move these assets out of the estate available
• 22:40
  Speaker 4: for the survivor for the kids, and thereby reducing your
• 22:44
  Speaker 4: future Massachusetts state tax. So some post mortem planning really
• 22:50
  Speaker 4: needs to be discussed here with the client and help
• 22:52
  Speaker 4: them figure out the best way to do it going forward.
• 22:55
  Speaker 2: So something can be done.
• 22:56
  Speaker 4: Something can be done. Absolute planning for this person can
• 22:59
  Speaker 4: be done. So post mortem planning always important to consider, folks.
• 23:05
  Speaker 4: But for people who haven't done their planning, you could
• 23:08
  Speaker 4: be faced with nursing home situations. You could be faced
• 23:12
  Speaker 4: with how to protect assets last minute. That's what the
• 23:15
  Speaker 4: guide is all about. Long term care planning for procrastinators,
• 23:19
  Speaker 4: deals with annuities for money and how to deal with
• 23:22
  Speaker 4: all the real estate eight six six eight four eight
• 23:27
  Speaker 4: five six ninety nine or Legal Exchange show dot com
• 23:30
  Speaker 4: Learn how to protect your assets last minute eight six
• 23:34
  Speaker 4: six eight four eight five six nine to nine.
• 23:38
  Speaker 2: You've been listening to Todd Lutski, a partner with the
• 23:41
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 23:44
  Speaker 2: financial advisor with the Armstrong Advisory Group, and Todd will
• 23:48
  Speaker 2: be answering your listener questions. When we return to the
• 23:51
  Speaker 2: Legal Exchange with Todd Leutsky.
• 23:54
  Speaker 1: From the other law attorneys at Cushing and Dolan. Here's
• 23:56
  Speaker 1: something you need to hear. Most people think long term
• 23:59
  Speaker 1: care planning is something they'll get to someday, until suddenly
• 24:02
  Speaker 1: someday is today. When a spouse or parent needs nursing
• 24:05
  Speaker 1: home care and no planning was done, the costs can
• 24:08
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• 24:26
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• 24:28
  Speaker 1: right now, time matters. Call Cushing and Dolin today at
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  Speaker 1: eight six six eight four eight five six ninet nine
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• 24:39
  Speaker 1: it online by visiting Legal Exchange show dot com. That's
• 24:42
  Speaker 1: Legal Exchange show dot Com. The proceeding was paid for
• 24:45
  Speaker 1: in the music expressed are solely those of Cushing and Dolan.
• 24:47
  Speaker 1: Pushing and Dolin in or Armstrong advisorymay contact you're offering
• 24:49
  Speaker 1: legal or investment services. Cushing and Dolan in Armstrong Advisory
• 24:52
  Speaker 1: do not endorse each other and are not affiliated.
• 24:54
  Speaker 5: Social Security and Medicare are oftentimes lumped together, but may
• 24:57
  Speaker 5: be handled separately, and depending on your strategy, could shape
• 25:00
  Speaker 5: your entire retirement plan. Hi, this is Mike Armstrong from
• 25:03
  Speaker 5: the Armstrong Advisory Group. Choosing when to start social Security
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  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 25:43
  Speaker 1: registered investment advisor. Nothing in the ad or in any
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  Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
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• 27:25
  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 Lutsky and Susan Powers.
• 27:40
  Speaker 2: Welcome back, Todd. We have a few questions from listeners
• 27:43
  Speaker 2: for you. First question comes from Jack and Malden Mass
• 27:46
  Speaker 2: and Jack writes, my mother gave me around one hundred
• 27:50
  Speaker 2: thousand four years ago, and I've been using it to
• 27:53
  Speaker 2: pay her bills because she cannot manage them any longer.
• 27:56
  Speaker 2: I keep it in a separate bank account. She is
• 27:59
  Speaker 2: now going into the nursing home. Will we run into
• 28:02
  Speaker 2: an issue if I've only been using the money for
• 28:05
  Speaker 2: her expenses. I have a lot of receipts, but I'm
• 28:08
  Speaker 2: not sure if I can account for everything. We have
• 28:10
  Speaker 2: around fifty thousand left. Aside from that, she has three
• 28:14
  Speaker 2: thousand in a checking account, and her home is worth
• 28:17
  Speaker 2: four hundred thousand.
• 28:19
  Speaker 4: Okay, so this is a nursing home situation right now.
• 28:23
  Speaker 4: So folks, this is the kind of thing where you
• 28:25
  Speaker 4: really want to know what can be done last minute, right.
• 28:29
  Speaker 4: So couple of problems here. The one hundred thousand dollars gift,
• 28:34
  Speaker 4: which you weren't thinking it was a gift, was actually
• 28:38
  Speaker 4: a gift, and so that created a five year waiting period.
• 28:42
  Speaker 4: So you're four years in r if you were five
• 28:45
  Speaker 4: years in, it wouldn't matter, okay, wouldn't matter what you
• 28:47
  Speaker 4: did with the money. But because you're four years in,
• 28:51
  Speaker 4: they're going to see it when we apply from Etiquaide, right,
• 28:56
  Speaker 4: they're going to see it, yep, and they're going to
• 28:58
  Speaker 4: say there's a five year waiting period. And you're gonna say, well,
• 29:00
  Speaker 4: wait a minute, it's not a gift. I didn't do
• 29:02
  Speaker 4: anything with it but pay mom's bills. Well, that's curing, right.
• 29:07
  Speaker 4: So long as you can show that this hundred thousand
• 29:11
  Speaker 4: dollars only was used for her, then that cures the gift, right,
• 29:19
  Speaker 4: because it says, yes, it looks like a gift, but
• 29:22
  Speaker 4: I actually got something in return. I gave him the money,
• 29:26
  Speaker 4: and he paid this bill, and he paid my house,
• 29:29
  Speaker 4: and he paid this all for me. So as long
• 29:33
  Speaker 4: as you can demonstrate not some all of the transfers
• 29:40
  Speaker 4: were used for her care, and whatever was left in
• 29:43
  Speaker 4: the account that wasn't used for her care needs to
• 29:47
  Speaker 4: be put back in her account.
• 29:49
  Speaker 2: So now there's around fifty thousand left there.
• 29:52
  Speaker 4: So if that, oh, there's fifty thousand left that he hasn't.
• 29:55
  Speaker 2: Started one hundred, yes, so now she'll have fifty three
• 29:57
  Speaker 2: thousand in the bank and a houseworth four hundred thousand.
• 30:01
  Speaker 4: So now we need to start looking at you know,
• 30:04
  Speaker 4: what do we do last minute to help her get
• 30:07
  Speaker 4: eligible for Medicaid Assuming we've fixed the penalty period problem. Sure,
• 30:12
  Speaker 4: and let's go with that. The house will be non
• 30:16
  Speaker 4: countable because it's under the magic valuation number for a
• 30:21
  Speaker 4: single person, which is somewhere around one point one million,
• 30:25
  Speaker 4: So it meets that test. And as long as we
• 30:28
  Speaker 4: check a box saying I intend to return home, then
• 30:32
  Speaker 4: this house for a single person will be non countable,
• 30:35
  Speaker 4: which means it won't disqualify her from Medicaid, but they
• 30:39
  Speaker 4: will put a lean on it.
• 30:41
  Speaker 3: But that's okay.
• 30:41
  Speaker 4: We want to get on Medicaid because the rate is
• 30:43
  Speaker 4: fifty percent the cost of private pay way cheaper, way cheaper. However,
• 30:48
  Speaker 4: she can also only have two thousand dollars of money
• 30:51
  Speaker 4: and she's got fifty three. So in order to do that,
• 30:53
  Speaker 4: depending on her age, we will either consider using a
• 30:58
  Speaker 4: Medicaid annuity. We work with someone like you, perhaps Susan,
• 31:02
  Speaker 4: who could buy these annuities, and then this magic Medicaid
• 31:07
  Speaker 4: annuity converts it to a income stream to her. And
• 31:11
  Speaker 4: so now it's not an asset anymore. But yes, it's
• 31:14
  Speaker 4: an income stream and there'll be a payback provision to
• 31:17
  Speaker 4: the state on that annuity.
• 31:19
  Speaker 2: Okay, but it's a very specific type of annuity.
• 31:22
  Speaker 4: Yes, this is not something that you would buy on
• 31:24
  Speaker 4: your own, Susan. We need financial planners that are licensed
• 31:27
  Speaker 4: to buy the product. But we will dictate to you
• 31:30
  Speaker 4: the rules of that annuity that have to be met
• 31:34
  Speaker 4: in order to satisfy the Medicaid protections that we're looking for. So, yes,
• 31:39
  Speaker 4: we can do the annuity. So and the annuity will
• 31:42
  Speaker 4: have a payback provision, but who cares now you're on Medicaid,
• 31:46
  Speaker 4: and so instead of paying sixteen thousand a month, it's
• 31:49
  Speaker 4: sixty five hundred a month, give or take less, two
• 31:52
  Speaker 4: thousand a month Social Security less the annuity, less the annuity.
• 31:56
  Speaker 4: I mean, it's really a small amount of payback. So
• 32:00
  Speaker 4: it really stretches the money out and maybe even protects
• 32:04
  Speaker 4: the house entirely, depending on how long the individual lives
• 32:07
  Speaker 4: in the nursing home. Folks, that is a great example
• 32:11
  Speaker 4: of this guide long term care planning for procrastinators. Something
• 32:15
  Speaker 4: can be done last minute, married couples, single people. It's
• 32:20
  Speaker 4: explained in the guide. They're treated differently, right, and assets
• 32:25
  Speaker 4: are treated differently when you're married versus when you're single,
• 32:29
  Speaker 4: like how a home works, how vacation homes work, how
• 32:33
  Speaker 4: rental properties are treated, and of course the annuities single
• 32:37
  Speaker 4: people versus married couple, different approach under the annuities as well.
• 32:42
  Speaker 4: Call and get the guide learn how to do things
• 32:45
  Speaker 4: last minute in case you're in that situation or you've
• 32:48
  Speaker 4: done planning and you have assets left over eight six
• 32:52
  Speaker 4: six eight four eight five six nine to nine or
• 32:56
  Speaker 4: legal Exchange Show dot com. Downloaded there again six eight
• 33:01
  Speaker 4: four eight five six nine nine or Legal Exchange Show
• 33:05
  Speaker 4: dot com.
• 33:06
  Speaker 2: Our last question comes from Kim in mash p Mass
• 33:09
  Speaker 2: and Kim Wrights. I moved in with my mother around
• 33:12
  Speaker 2: seven years ago, and I have been paying all of
• 33:15
  Speaker 2: the expenses, including the mortgage. I've now finished paying the
• 33:19
  Speaker 2: mortgage off, and my mother has agreed to transfer the
• 33:22
  Speaker 2: deed to my name. If she signs it over to
• 33:25
  Speaker 2: me now, will we have issues if she ends up
• 33:27
  Speaker 2: going into a nursing home. Will it be considered a
• 33:30
  Speaker 2: bad transfer even though I've been paying the mortgage and
• 33:33
  Speaker 2: expenses all along.
• 33:36
  Speaker 4: I love the way they called it a bad transfer.
• 33:38
  Speaker 4: It's a bad tran it's acute way of saying it's
• 33:40
  Speaker 4: a bad transfer. You did a bad thing, and that's
• 33:42
  Speaker 4: exactly right. That's a bad thing, right transferring giving assets
• 33:46
  Speaker 4: away is a bad thing. Never mind the fact that
• 33:49
  Speaker 4: I say, nothing good ever comes from giving things to
• 33:51
  Speaker 4: your children while you're alive. It's even worse. Perhaps if
• 33:56
  Speaker 4: you're faced with last minute nursing home playing. There might
• 33:58
  Speaker 4: be a lot of good information in the guide. One
• 34:01
  Speaker 4: of them is not generally just giving things away. There's
• 34:03
  Speaker 4: some exceptions, so please get the guide. But I think
• 34:06
  Speaker 4: twice okay, So let's go through it. The fact that
• 34:11
  Speaker 4: you've she said she's been living there, she moved.
• 34:13
  Speaker 2: In with seven years ago. She moved in.
• 34:15
  Speaker 3: So is mom currently going in the nursing home? Sy?
• 34:19
  Speaker 2: She said, if it doesn't sound like she's in feeling
• 34:23
  Speaker 2: health now. But he's probably just wanting to make sure
• 34:25
  Speaker 2: she's doing the right thing here.
• 34:27
  Speaker 4: So I would think giving away a house is never
• 34:29
  Speaker 4: a good idea. Right, it creates a five year waiting
• 34:32
  Speaker 4: period for Medicaid eligibility. Mom has no right to live there.
• 34:36
  Speaker 4: I don't see anything here about a life estate. Mom
• 34:39
  Speaker 4: can get thrown out Kim could something could happen to
• 34:42
  Speaker 4: Kim financially, and now the house is at risk, which
• 34:44
  Speaker 4: is no good for Kim, no good for Mom. So
• 34:47
  Speaker 4: I don't love giving it away. It's a five year
• 34:49
  Speaker 4: waiting period. What I would do is I would say,
• 34:53
  Speaker 4: at least with the house, that's the biggest asset here.
• 34:56
  Speaker 4: I would say, set up a plan. You're not going
• 34:58
  Speaker 4: in the nursing home. Get your five year clock running.
• 35:03
  Speaker 4: Get your five year clock running, and see what happens.
• 35:08
  Speaker 2: And she can say in her trust that it goes
• 35:10
  Speaker 2: to Kim.
• 35:10
  Speaker 4: Right, she can say in her trust, it goes to Kim,
• 35:13
  Speaker 4: because you've paid all this money for it and I
• 35:14
  Speaker 4: want you to have it. You can do equalization if
• 35:17
  Speaker 4: it's possible for the other kids.
• 35:19
  Speaker 3: But get that running. A couple things it does.
• 35:21
  Speaker 4: It gets the clock running, it avoids probate, and it
• 35:25
  Speaker 4: keeps Mom in charge. Unlike an outright gift to Kim,
• 35:30
  Speaker 4: in this case, it keeps Mom in charge. Yes, the
• 35:34
  Speaker 4: five year clock is running, just like it would be
• 35:37
  Speaker 4: if you gave it away. But the one exception you
• 35:40
  Speaker 4: have here is something called the caretaker child exception. It's
• 35:44
  Speaker 4: a wild card, right, love a wild card since you've
• 35:47
  Speaker 4: been living there for seven years. And if you can
• 35:51
  Speaker 4: show that you've lived there for two years or more
• 35:56
  Speaker 4: and provided nursing home level care for those two years
• 36:00
  Speaker 4: before she went to the nursing home, then the house
• 36:02
  Speaker 4: can be transferred to you with no five year waiting period. Again,
• 36:06
  Speaker 4: I'd reserve a life state just in case and get
• 36:09
  Speaker 4: the step up in basis so very helpful to get
• 36:13
  Speaker 4: your plan going because even if you don't make the
• 36:15
  Speaker 4: five years in this case, Kim, you've got that little
• 36:19
  Speaker 4: wild card exception in your back pocket that will help
• 36:22
  Speaker 4: you protect this asset last.
• 36:25
  Speaker 2: Minute because you have a five year waiting period. Whether
• 36:27
  Speaker 2: she gives it to you or she puts it in
• 36:29
  Speaker 2: the trust right.
• 36:30
  Speaker 4: Either way, you're going to be faced with that. So, folks,
• 36:33
  Speaker 4: that's a little extra nugget. But the guide itself is
• 36:37
  Speaker 4: all about what can we do to protect assets last
• 36:41
  Speaker 4: minute long term care planning For the procrastinator, understand how
• 36:46
  Speaker 4: it works, how you protect assets for married couples and
• 36:49
  Speaker 4: for single people. It's very different. Call and get the
• 36:53
  Speaker 4: guide eight six six eight four eight five six nine
• 36:57
  Speaker 4: to nine or Legal Exchange show dot com Download it
• 37:00
  Speaker 4: there again eight six six eight four, eight, five, six,
• 37:04
  Speaker 4: nine to nine, or Legal Exchange Show dot com.
• 37:08
  Speaker 2: If you have a question you would like to ask Todd,
• 37:10
  Speaker 2: visit his website Legal Exchange Show dot com and click
• 37:14
  Speaker 2: on the ask Tod tab. Maybe I'll be able to
• 37:17
  Speaker 2: read your question on the air, and hopefully his answer
• 37:19
  Speaker 2: will stop you from becoming one of his next real
• 37:22
  Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
• 37:25
  Speaker 2: with the law firm of Cushing and Dolan. I'm Susan Powers,
• 37:29
  Speaker 2: a financial advisor with the Armstrong Advisory Group. We'll be
• 37:32
  Speaker 2: back with more after this quick break on the Legal
• 37:35
  Speaker 2: Exchange with Todd Lutsky.
• 37:38
  Speaker 1: From the other law attorneys at Cushing and Dolan. Here's
• 37:40
  Speaker 1: something you need to hear. Most people think long term
• 37:43
  Speaker 1: care planning is something they'll get to someday, until suddenly
• 37:46
  Speaker 1: someday is today. When a spouse or parent needs nursing
• 37:49
  Speaker 1: home care and no planning was done, the costs can
• 37:52
  Speaker 1: be overwhelming. Cushing and Dolan our elder law and estate
• 37:55
  Speaker 1: planning attorneys who help New England families protect their homes,
• 37:58
  Speaker 1: savings and retirement even when both crisis comes out of nowhere.
• 38:01
  Speaker 1: They've just released a new guide called long Term Care
• 38:03
  Speaker 1: Planning for procrastinators. It explains what options may still be
• 38:07
  Speaker 1: available and what steps you should take before writing that
• 38:09
  Speaker 1: first check to a nursing home. If you've been putting
• 38:11
  Speaker 1: this off, or a loved one needs care right now,
• 38:13
  Speaker 1: time matters. Call Cushing and Dolin today at eight six
• 38:16
  Speaker 1: six eight four eight five six ninet nine to get
• 38:19
  Speaker 1: your free guide. That's eight six six eight four eight
• 38:21
  Speaker 1: five six nine nine, or you can request it online
• 38:24
  Speaker 1: by visiting Legal Exchange Show dot com. That's Legal exchange
• 38:27
  Speaker 1: Show dot com. The proceeding was paid for in The
• 38:29
  Speaker 1: music expressed are solely those of Cushing and Dolan. Pushing
• 38:31
  Speaker 1: and Dolin In or Armstrong advisorymay contact you're offering legal
• 38:34
  Speaker 1: investment services. Cushing In, Doolin in Armstrong Advisory do not
• 38:36
  Speaker 1: endorse each other and are not affiliated. If you've been
• 38:39
  Speaker 1: dreaming about a getaway that feels far away but easy
• 38:42
  Speaker 1: to get to, it's time to think about the US
• 38:44
  Speaker 1: Virgin Islands America's Caribbean. This is a place where you
• 38:48
  Speaker 1: can fall naturally in rhythm with the heartbeat of the islands.
• 38:50
  Speaker 1: Enjoy crystal clear water and Pounder soft beaches, world class dining,
• 38:54
  Speaker 1: sailing and unforgettable sunsets. And here's the best part. Travel
• 38:58
  Speaker 1: from New England is easy. The US Virgin Islands are
• 39:01
  Speaker 1: part of the United States, which means no passport required
• 39:04
  Speaker 1: and no money to exchange. Just pack your bags and go.
• 39:08
  Speaker 1: Spend your day snorkeling, sailing, hiking, or simply relaxing by
• 39:11
  Speaker 1: the water, and your evenings enjoying local cuisine, live music
• 39:15
  Speaker 1: and warm island breezes. Explore Saint Thomas, Saint John and
• 39:18
  Speaker 1: Saint Croix, three distinct islands, each with its own vibe,
• 39:21
  Speaker 1: its own flavor, and its own way of helping you
• 39:24
  Speaker 1: unplug and reset. Start planning your Caribbean escape today and
• 39:27
  Speaker 1: visit USVII dot com. Discover why the US Virgin Islands
• 39:31
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• 39:34
  Speaker 1: your trip, head to visit USVII dot com. That's visit
• 39:37
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• 39:40
  Speaker 4: Hi.
• 39:40
  Speaker 5: As Mike Armstrong from the Armstrong Advisory Group, retirement comes
• 39:43
  Speaker 5: with a lot of exciting freedom, but also with some
• 39:46
  Speaker 5: permanent decisions. Two of the most important ones are when
• 39:49
  Speaker 5: to file for source security and how to set up
• 39:51
  Speaker 5: your Medicare coverage claim. Source Security too early and your
• 39:54
  Speaker 5: monthly check may be permanently reduced. Missing Medicare enrollment deadlines
• 39:58
  Speaker 5: might mean significant penalties and get apps and coverage. We
• 40:01
  Speaker 5: have a new guide available called how to Apply for
• 40:03
  Speaker 5: Social Security and Medicare. It breaks down when you can apply,
• 40:07
  Speaker 5: what information you'll need, and how these decisions fit into
• 40:10
  Speaker 5: a smart coordinated retirement plan. Get your copy today by
• 40:14
  Speaker 5: calling eight hundred three nine three four zero zero one.
• 40:17
  Speaker 5: That's eight hundred three nine three four zero zero one,
• 40:21
  Speaker 5: or you can request the guide online at Armstrong Advisory
• 40:24
  Speaker 5: dot com.
• 40:25
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 40:27
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 40:30
  Speaker 1: Armstrong guide is specific financial, legal or tax advice. Consult
• 40:33
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 40:36
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 40:39
  Speaker 1: advisory services. Your tune to the legal exchange with Todd Lutsky.
• 40:43
  Speaker 1: If you are a loved one needs a nursing homestay,
• 40:45
  Speaker 1: call Todd right now at eight sixty six eight four
• 40:48
  Speaker 1: eight five six nine nine and let him make sure
• 40:50
  Speaker 1: your assets are protected. That's eight six six eight four
• 40:53
  Speaker 1: eight five six nine nine or visit him online at
• 40:56
  Speaker 1: Legal Exchange show dot com.
• 41:00
  Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
• 41:03
  Speaker 2: Susan Power as a financial advisor the Armstrong Advisory Group
• 41:07
  Speaker 2: and I'm joined of course by Todd Lutsky, a partner
• 41:10
  Speaker 2: with the law firm of Cushing and Dolan with a
• 41:13
  Speaker 2: master's in taxation. So Todd all about long term care
• 41:17
  Speaker 2: planning for procrastinators this month and a lot of people
• 41:22
  Speaker 2: they might be self employed. So if you own a business,
• 41:27
  Speaker 2: how is that treated in the eyes of the nursing
• 41:30
  Speaker 2: home because you could have a spouse going into the
• 41:33
  Speaker 2: nursing home while you're still working your business. Self employed
• 41:37
  Speaker 2: people they're not hanging it up at sixty five. They're
• 41:39
  Speaker 2: usually you know, working later in life.
• 41:42
  Speaker 4: I do think it's not as common, but you're right, Susan.
• 41:45
  Speaker 4: You could absolutely have an individual who you're saying they
• 41:48
  Speaker 4: own their own business. Ye're not employed somewhere yeah, no, no, no.
• 41:51
  Speaker 2: They own their own business. Could be a family business.
• 41:54
  Speaker 4: So if they own their own business and they're working there,
• 41:56
  Speaker 4: a couple of things come to mind. One, there might
• 41:58
  Speaker 4: be a four to h one K plan in that business,
• 42:01
  Speaker 4: right for them and the employees, and that's an asset. Right,
• 42:06
  Speaker 4: you're married, this is a married couple situation. Maybe going
• 42:09
  Speaker 4: to a nursing home, I'm thinking. So, first thing is
• 42:15
  Speaker 4: that four oh one K asset of the healthy community
• 42:19
  Speaker 4: spouse whoever that is. It's not available. It's not even countable.
• 42:25
  Speaker 4: It's nothing as long as you're working, and it's your
• 42:29
  Speaker 4: current employers for current employer, not a rolled over one
• 42:37
  Speaker 4: current employer only that would be non countable. Well that's great,
• 42:43
  Speaker 4: so please take a leave of absence, but don't quit. Plus,
• 42:47
  Speaker 4: it's your job, it's your company, so you can continue
• 42:51
  Speaker 4: to tell, you know, to medicaid folks that this is
• 42:54
  Speaker 4: my current employer. So that would take the four oh
• 42:58
  Speaker 4: one k off the table, not the six spouses IRA,
• 43:02
  Speaker 4: none of that stuff.
• 43:03
  Speaker 2: Just not the IRA or the sep IRA.
• 43:06
  Speaker 3: Good point.
• 43:07
  Speaker 2: Yeah, specifically the four to one case.
• 43:09
  Speaker 4: Not even the spouse's IRA or sep ira. You're right, right, right,
• 43:12
  Speaker 4: it's just a four to one ky Okay. Then the
• 43:17
  Speaker 4: business itself is an asset. Well, the business itself, it
• 43:23
  Speaker 4: is an asset. But there's this regulation that says if
• 43:30
  Speaker 4: you have a business asset that is essential to self support,
• 43:37
  Speaker 4: then it's non countable.
• 43:40
  Speaker 3: What does that mean?
• 43:41
  Speaker 4: I think of that as, Okay, this is my business.
• 43:44
  Speaker 3: I work there.
• 43:45
  Speaker 4: Therefore it should be non countable because it's a business asset.
• 43:49
  Speaker 4: I agree. I've not really dealt with that a lot,
• 43:53
  Speaker 4: but I can make an analogy, sure to like a
• 43:56
  Speaker 4: rental property. Yeah, so that I see a lot same idea.
• 44:01
  Speaker 4: A rental property would be a business asset essential to
• 44:03
  Speaker 4: self support what it's rental, right, but that's an asset
• 44:08
  Speaker 4: that is essential to self support, it's generating income. So
• 44:12
  Speaker 4: those ideas would be that those two assets would be
• 44:17
  Speaker 4: would be non countable, but I believe they would be leanable.
• 44:21
  Speaker 2: Okay.
• 44:22
  Speaker 4: So at that point, again, let's look at it from
• 44:27
  Speaker 4: just the business ownership. Maybe the community spouse is one
• 44:31
  Speaker 4: hundred percent business owner.
• 44:32
  Speaker 3: Okay, well, at.
• 44:33
  Speaker 4: Least it's in their name. Won't even be leanable because
• 44:35
  Speaker 4: it's in their name. If it's a joint rental property,
• 44:38
  Speaker 4: it's non countable as long as you're renting it and
• 44:41
  Speaker 4: you get to use the rent to maintain the property.
• 44:45
  Speaker 4: It's only the net rent that would be at risk
• 44:47
  Speaker 4: to pay for things. I would probably say transfer that
• 44:53
  Speaker 4: to the healthy spouse.
• 44:54
  Speaker 2: Yep.
• 44:55
  Speaker 4: And if you do that, then when the six spouse dies,
• 44:57
  Speaker 4: there would be no lean. So give that a shot.
• 45:00
  Speaker 4: So there are some things that can be done with
• 45:02
  Speaker 4: a business asset.
• 45:04
  Speaker 2: Does it have to be owned in a special way?
• 45:06
  Speaker 2: Like I know with rental properties, a lot of times
• 45:09
  Speaker 2: you'll recommend putting them into an LLC. Would you have
• 45:12
  Speaker 2: to do that with your business as well? Let's say,
• 45:15
  Speaker 2: let's just for purposes, it's a pizza shop, right, and
• 45:18
  Speaker 2: you've got this little restaurant. Do you have to own
• 45:21
  Speaker 2: it so as.
• 45:23
  Speaker 4: That I'm going to give you a hard answer. No, Okay,
• 45:27
  Speaker 4: it does not need to be owned in an LLC
• 45:30
  Speaker 4: in order to qualify for this exception where it's generating
• 45:36
  Speaker 4: income essential to self support. Okay, But to your point,
• 45:40
  Speaker 4: it should be in an LLC simply because you're worried
• 45:44
  Speaker 4: about getting sued by the tenant, right, by the slip
• 45:47
  Speaker 4: and falls, by the business people coming in and out
• 45:49
  Speaker 4: of your restaurant, whatever. So it should be there for
• 45:54
  Speaker 4: creditor protection purposes in an LLC. But it doesn't have
• 45:58
  Speaker 4: to be for nursing home eligibility purposes. Again, these distinctions
• 46:03
  Speaker 4: are important, so folks call get the guide. This is
• 46:07
  Speaker 4: just one asset we're talking about. This guide is long
• 46:10
  Speaker 4: term care planning for the procrastinator. It deals with how
• 46:14
  Speaker 4: to treat assets when they're monetary annuities for single people,
• 46:19
  Speaker 4: annuities for married couples. It deals with pooled trusts for
• 46:23
  Speaker 4: elderly people, last minute ways of protecting assets, and it
• 46:26
  Speaker 4: deals with real estate, home rental, vacation homes. And again
• 46:32
  Speaker 4: they are special properties and treated differently if you're married
• 46:35
  Speaker 4: or single, but might be non countable. Last minute folks,
• 46:39
  Speaker 4: call and get the guide. Don't write the check to
• 46:42
  Speaker 4: the nursing home. Long Term Care Planning for the Procrastinator
• 46:45
  Speaker 4: eight six six eight four eight five six nine nine
• 46:49
  Speaker 4: or Legal exchange show dot com. Even if you've done
• 46:52
  Speaker 4: your planning, there's going to be assets outside the trusts
• 46:55
  Speaker 4: eight six six eight four eight five six nine nine
• 47:00
  Speaker 4: Legal exchange show dot Com.
• 47:02
  Speaker 2: So if someone's listening Todd, and they have a business
• 47:04
  Speaker 2: and they're not going into nursing them, their spouses not,
• 47:07
  Speaker 2: but they're listening thinking, you know what, I'm hoping that
• 47:11
  Speaker 2: this business goes to my children and it stays for generations.
• 47:16
  Speaker 2: Could they actually protect their business itself in advance?
• 47:21
  Speaker 4: Yes, they could. From I mean I don't know what
• 47:23
  Speaker 4: kind of business. Let's say it's an LLC. Let's say
• 47:26
  Speaker 4: it's an S corp or something like that. Yes, you can.
• 47:31
  Speaker 4: The question becomes, you know, how old are you as
• 47:35
  Speaker 4: clients right now doing the planning? How actively involved are
• 47:39
  Speaker 4: you in the business?
• 47:40
  Speaker 3: Still?
• 47:41
  Speaker 4: Do you want to keep control or not keep control?
• 47:44
  Speaker 4: Things like that have to be considered when you're doing it.
• 47:48
  Speaker 4: So let's air on the side of control. Everybody likes control.
• 47:52
  Speaker 2: We love control.
• 47:53
  Speaker 4: So if somebody had like an LLC set up that
• 47:55
  Speaker 4: pizza shop LLC or whatever they're doing, I would suggest
• 48:01
  Speaker 4: doing a nine to one non voting stock dividend, which
• 48:06
  Speaker 4: in English means if you have one hundred shares, you're
• 48:09
  Speaker 4: going to have nine hundred shares of non voting and
• 48:12
  Speaker 4: one hundred shares of voting nine to one. Now you
• 48:16
  Speaker 4: have a thousand shares. Yep, ten percent is voting, but
• 48:21
  Speaker 4: it's one hundred percent control. Okay, ninety percent of the
• 48:25
  Speaker 4: value is non voting, no control. Take the non voting
• 48:31
  Speaker 4: shares and put them in these medicaida revocable trusts.
• 48:35
  Speaker 2: Okay.
• 48:36
  Speaker 4: Remember, generally a child is going to be trustee over
• 48:41
  Speaker 4: what's in that trust. But if what's in that trust
• 48:45
  Speaker 4: is non voting shares. They have no control over the business.
• 48:51
  Speaker 4: You still own the business, run it, make decisions, sell it, decisions,
• 48:56
  Speaker 4: you know everything, distributions, you name it. Yeah, if you
• 49:01
  Speaker 4: get sick, you still got this ten percent piece. But
• 49:06
  Speaker 4: if it's essential generating income, es central to non support,
• 49:09
  Speaker 4: to self support, it would be non countable but leanable.
• 49:14
  Speaker 4: But against it's only ten percent, So maybe that's an
• 49:17
  Speaker 4: option if you're not worried about it. You remember, even
• 49:21
  Speaker 4: though you're not trustee of the trust, you can remove
• 49:23
  Speaker 4: and replace the trustee, so you kind of control the trustee.
• 49:26
  Speaker 4: And if you have a good relationship with the kids,
• 49:29
  Speaker 4: you could just put all the shares in the trust
• 49:32
  Speaker 4: and now none of it's outside the trust. The only
• 49:35
  Speaker 4: difference there is make sure you keep taking a W
• 49:37
  Speaker 4: two to pay yourself so that doesn't run through the trust.
• 49:41
  Speaker 4: Take a W two and pay yourself. If not, distributions
• 49:46
  Speaker 4: are going to have to run into the trust as income,
• 49:49
  Speaker 4: and all that income is available to you. Remember, so
• 49:52
  Speaker 4: you're the mom and dads of the world. You still
• 49:54
  Speaker 4: get all the income from these irrevocable trusts. So it's
• 49:57
  Speaker 4: a way of living. It's a way of protecting and
• 50:00
  Speaker 4: keeping a cash flow to yourself.
• 50:03
  Speaker 2: So ideally do your advance planning. But if you don't,
• 50:06
  Speaker 2: just know there's plenty that can be done.
• 50:09
  Speaker 4: That's the key. And folks, every asset is different. Susan
• 50:12
  Speaker 4: was smart to bring up the fact that, you know,
• 50:14
  Speaker 4: we talk about real estate and money, but what about
• 50:16
  Speaker 4: a business and rental property is kind of a business.
• 50:20
  Speaker 4: Learn how assets are treated differently for married couples and
• 50:23
  Speaker 4: single people. Call and get the guide. Don't write the
• 50:26
  Speaker 4: check to the nursing home last minute eight six six
• 50:30
  Speaker 4: eight four eight five six nine nine or Legal Exchange
• 50:34
  Speaker 4: Show dot com again eight six six eight four eight
• 50:38
  Speaker 4: five six nine nine or Legal Exchange Show dot com.
• 50:42
  Speaker 2: Todd Lutsky from the law firm of Cushing and dol
• 50:45
  Speaker 2: and thank you so much.
• 50:46
  Speaker 3: Thank you, Susan, always a pleasure.
• 50:48
  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 Lutsky.
• 51:00
  Speaker 1: And the other law attorneys at Cushing and Dolan. Here's
• 51:02
  Speaker 1: something you need to hear. Most people think long term
• 51:05
  Speaker 1: care planning is something they'll get to someday until suddenly
• 51:08
  Speaker 1: someday is today. When a spouse or parent needs nursing
• 51:11
  Speaker 1: home care and no planning was done, the costs can
• 51:13
  Speaker 1: be overwhelming. Cushing and Dolan our elder law and estate
• 51:16
  Speaker 1: planning attorneys who help New England families protect their homes,
• 51:19
  Speaker 1: savings and retirement even when a health crisis comes out
• 51:22
  Speaker 1: of nowhere. They've just released a new guide called Long
• 51:24
  Speaker 1: Term Care Planning for Procrastinators. It explains what options may
• 51:28
  Speaker 1: still be available and what steps you should take before
• 51:30
  Speaker 1: writing that first check to a nursing home. If you've
• 51:32
  Speaker 1: been putting this off, or a loved one needs care
• 51:34
  Speaker 1: right now, time matters. Call Cushing and Dolin today at
• 51:37
  Speaker 1: eight six six eight four eight five six ninet nine
• 51:40
  Speaker 1: to get your free guide. That's eight six six eight
• 51:42
  Speaker 1: four eight five six nine nine, or you can request
• 51:45
  Speaker 1: it online by visiting Legal exchange Show dot com. That's
• 51:48
  Speaker 1: Legal exchange Show dot com. The proceeding was paid for
• 51:50
  Speaker 1: in The music expressed are solely those of Cushing and Dolan.
• 51:52
  Speaker 1: Pushing and Dolin in or Armstrong advisorymay contact through offering
• 51:55
  Speaker 1: legal investment services. Cushing and Dolan in Armstrong Advisory do
• 51:58
  Speaker 1: not endorse each other and are not affiliated.
• 52:00
  Speaker 5: Social Security and Medicare are oftentimes lumped together, but may
• 52:03
  Speaker 5: be handled separately, and depending on your strategy, they could
• 52:06
  Speaker 5: shape your entire retirement plan.
• 52:08
  Speaker 1: Hi.
• 52:08
  Speaker 5: This is Mike Armstrong from the Armstrong Advisory Group. Choosing
• 52:11
  Speaker 5: when to start social Security has many effects, including determining
• 52:14
  Speaker 5: the amount of guaranteed income you receive each month. Medicare
• 52:17
  Speaker 5: decisions go beyond coverage as they can impact premiums, out
• 52:20
  Speaker 5: of pocket costs, and access to providers throughout retirement. Our
• 52:23
  Speaker 5: new guide is called How to Apply for Social Security
• 52:26
  Speaker 5: and Medicare. It will help you learn how these decisions
• 52:28
  Speaker 5: may fit together and how to take the right steps
• 52:31
  Speaker 5: at the right time to build a secure retirement plan.
• 52:34
  Speaker 5: Call us at eight hundred three nine three for zero
• 52:36
  Speaker 5: zero one to get your copy of How to Apply
• 52:39
  Speaker 5: for Social Security and Medicare. That's eight hundred three nine
• 52:42
  Speaker 5: three for zero zero one, or you can request it
• 52:44
  Speaker 5: online from our website Armstrong Advisory dot com.
• 52:47
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 52:49
  Speaker 1: registered investment advisor. Nothing in the ad or any Armstrong
• 52:51
  Speaker 1: guide a specific financial, legal, or tax advice consult your
• 52:54
  Speaker 1: own financial tax into state planning advisors before making any
• 52:56
  Speaker 1: investment decisions. Armstrong may contact you to offer investment advisory services.
• 53:00
  Speaker 1: If you've been dreaming about a ghetaway that feels far
• 53:02
  Speaker 1: away but easy to get to, it's time to think
• 53:05
  Speaker 1: about the US Virgin Islands, America's Caribbean. This is a
• 53:08
  Speaker 1: place where you can fall naturally in rhythm with the
• 53:10
  Speaker 1: heartbeat of the islands. Enjoy crystal clear water and powder
• 53:13
  Speaker 1: soft beaches, world class dining, sailing and unforgettable sunsets. And
• 53:18
  Speaker 1: here's the best part. Travel from New England is easy.
• 53:21
  Speaker 1: The US Virgin Islands are part of the United States,
• 53:23
  Speaker 1: which means no passport required and no money to exchange.
• 53:27
  Speaker 1: Just pack your bags and go. Spend your day snorkeling, sailing, hiking,
• 53:31
  Speaker 1: or simply relaxing by the water, and your evenings enjoying
• 53:34
  Speaker 1: local cuisine, live music and warm island breezes. Explore Saint Thomas,
• 53:38
  Speaker 1: Saint John and Saint Croix, three distinct islands, each with
• 53:41
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