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Ask Todd: When Do You Really Need a Trust? · 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 Lutsky is here to answer your
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  Speaker 1: questions and help you plan for later life. Ask Todd
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  Speaker 1: is presented by Cushing and Dolan, serving Massachusetts and New
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  Speaker 1: England for more than thirty five years, helping families with
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  Speaker 1: a state and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As we do every single Wednesday, we are joined by
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  Speaker 2: Todd Lutsky from Cushion Dolan to answer any of your
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  Speaker 2: questions in the estate planning realm. If you have a
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  Speaker 2: question for Todd, get our studio line a call it
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  Speaker 2: eight eight eight two zero five two two sixty three.
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  Speaker 2: Again that number for any of your estate planning questions
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  Speaker 2: for Todd Lutsky eight eighty eight two zero five two
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  Speaker 2: two six'. Three, todd thank you so much for joining.
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  Speaker 2: Us how you doing?
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  Speaker 3: TODAY i am never better in you doing.
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  Speaker 2: Greats minus saw the snow that we've. Had but guess what's?
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  Speaker 3: Again, yeah just in case you.
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  Speaker 2: Want roll never stops question for? You is state? Planning
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  Speaker 2: and the grind never stops. Either and one QUESTION i
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  Speaker 2: have is Oftentimes i'll talk to clients about when is
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  Speaker 2: the appropriate time to consider doing trust work and what
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  Speaker 2: age is, appropriate and you can talk about that a
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  Speaker 2: little bit. Too but another set of documents separate from
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  Speaker 2: the trust side of things are sort of your what
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  Speaker 2: you'd call the estate basic planning, documents living, well healthcare,
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  Speaker 2: proxy and power of. Attorney those DOCUMENTS i often tell
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  Speaker 2: younger folks if they're getting, married that's something to consider right.
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  Speaker 2: Away do you have a general framework for the considerations
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  Speaker 2: on sort of those basic documents versus when you go
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  Speaker 2: up to that, elevated more sophisticated documents of putting a
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  Speaker 2: trust in place when you talk to, Clients.
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  Speaker 3: Yeah, Yeah AND i think that really does strike a
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  Speaker 3: chord with the guide we're giving, away which is back
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  Speaker 3: to the, basics because you've got to understand the whole
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  Speaker 3: process and it's not always for. Everybody so let's just
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  Speaker 3: take an. Example, start like you said theire let's just you're,
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  Speaker 3: single no, kids just starting out in. Life, well you,
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  Speaker 3: know probably have a bank, account an investment account in
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  Speaker 3: a new four oh ONE. K you, Know i'm going
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  Speaker 3: to say this might be the only time you probably
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  Speaker 3: don't need a. Plan i'm going to say you don't need.
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  Speaker 3: ANYTHING i think put designated beneficiary on, there like you,
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  Speaker 3: know for, You, paul if it were just start, now
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  Speaker 3: it would be you, know just put your your probably a,
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  Speaker 3: beneficiary your your. Siblings you could put your, parents but
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  Speaker 3: likely you'd want to make it go down a, generation
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  Speaker 3: so you might just leave your parents and something simple like.
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  Speaker 3: THAT i don't think you need to go out of your.
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  Speaker 3: WAY i think then if you enter into a situation
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  Speaker 3: where now you're, married and let's say you have, children
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  Speaker 3: so now you're still both a young, couple but you're
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  Speaker 3: married with, children that's a game, changer, right so as
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  Speaker 3: soon as you have the, CHILDREN i don't think it's
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  Speaker 3: so much the size of the estate that. Matters in other,
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  Speaker 3: words but by the same, token you might, have you,
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  Speaker 3: know a million dollar life insurance, policy you might have
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  Speaker 3: bought your first. Home you, know those two assets alone
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  Speaker 3: could put you up there in terms of the value
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  Speaker 3: of your. State but it's probably not driven by. That
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  Speaker 3: it's just going to be all my bank, accounts all
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  Speaker 3: my investment, accounts my, house Whatever i've, GOT i want
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  Speaker 3: to make sure now gets to my minor child or,
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  Speaker 3: children as the case may. Be so in order for
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  Speaker 3: that to, happen a trust really does need to come into.
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  Speaker 3: Play and so not so much just Because i'm trying
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  Speaker 3: to avoid probate or reduce my estate taxes BECAUSE i
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  Speaker 3: may not have that. Much but IF i, die don't
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  Speaker 3: want some person owning all my. Stuff two things. There, one,
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  Speaker 3: yes the, will the basic documents that you mentioned, Earlier,
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  Speaker 3: Paul you're gonna need the will because the will now
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  Speaker 3: becomes one of the most important documents when it's usually
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  Speaker 3: not when you're doing your estate, planning but when you
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  Speaker 3: have a minor. Child you got to appoint a, guardian
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  Speaker 3: and that's how you appoint the guardian through the. Will
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  Speaker 3: so you may want the custody of your child to
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  Speaker 3: be held by one, person BUT i might not want
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  Speaker 3: that person in control of my. Money so now you
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  Speaker 3: take all your other assets and you put them into
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  Speaker 3: a revocable trust would probably be the kind you would
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  Speaker 3: be using at this, age a revocable, trust and list
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  Speaker 3: a trustee who might be different than your. Guardian make
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  Speaker 3: the guardian come to the trustee to get the money
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  Speaker 3: to take care of the, child and the, language and
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  Speaker 3: the trust will be dictating how and when that money comes,
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  Speaker 3: out and the trustee will be the one making that.
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  Speaker 3: Distribution so really a game changer when you have you know,
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  Speaker 3: that and then if you jump ahead to just either
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  Speaker 3: being you, know let's say you've approached sixty sixty, five,
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  Speaker 3: well now you probably have more, assets you might have,
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  Speaker 3: grandchildren but more, importantly you might be thinking about switching
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  Speaker 3: from a revocable trust to an irrevocable trust BECAUSE i
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  Speaker 3: want to do some nursing home planning in addition to
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  Speaker 3: the state tax, savings bloodline, planning probate, avoidance things like.
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  Speaker 3: That so it's really a. Process family dynamics drive what
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  Speaker 3: kind of plan and you do all kinds of.
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  Speaker 2: THINGS a lot to consider. There if you have any
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  Speaker 2: questions in the estate playing, realm whether it be regarding
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  Speaker 2: trusts or some of the more basic documents or anything
• 5:08
  Speaker 2: in the tax, realm also give our studio line a
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  Speaker 2: call at eight eight eight to zero five two two sixty.
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  Speaker 2: Three we'll be taking your questions With Todd. Lotsky again
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  Speaker 2: that number for our studio line for any of your
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  Speaker 2: questions on the estate planning realm With Todd lusky eight
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  Speaker 2: eight eight to zero five two to six. Three we're
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  Speaker 2: going to take a quick break here on The Financial.
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  Speaker 2: Exchange when we come, back your questions With Todd lusky
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  Speaker 2: right after This Ask todd With.
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  Speaker 1: Todd lutsky Every wednesday at ten thirty only here on
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  Speaker 1: The Financial Exchange Radio. Network you're listening To Ask todd
• 5:42
  Speaker 1: With Todd lunsky on The Financial Exchange Radio.
• 5:45
  Speaker 2: Network we are back in studio With Todd lutsky From Cushion.
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  Speaker 2: Dolan if you have any questions about your estate plan or,
• 5:59
  Speaker 2: trusts are anything in that, realm give our studio line
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  Speaker 2: a call it eight eight eight to zero five two
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  Speaker 2: two six' three again that studio line phone number for
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  Speaker 2: any of your Questions For todd lutsky eight eight eight
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  Speaker 2: to zero five two to. Six three we're gonna hit
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  Speaker 2: the phones and kick It to John, In. Waterbury connecticut
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  Speaker 2: you were On With. Todd lutsky hi.
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  Speaker 4: Does gifting avoid the five year? Look Back? In connecticut so, you.
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  Speaker 3: Know that's a great question because many people confuse these.
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  Speaker 3: Two things first, and foremost let's describe what the look
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  Speaker 3: back is for people who aren't aware of what. It
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  Speaker 3: IS what i believe you're Referring, to john is the
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  Speaker 3: ability to take an asset and for less than fair
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  Speaker 3: market value transfer the asset somewhere where the nursing home
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  Speaker 3: can no longer. Get it and if you, do that
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  Speaker 3: that's called a. Disqualifying transfer, and yes you have to
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  Speaker 3: stay out of the nursing home for five years in
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  Speaker 3: order for us to sort of cleanse that transfer and
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  Speaker 3: make the. Asset protected another question you asked is does
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  Speaker 3: that five year rule Apply. To connecticut, in fact it
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  Speaker 3: applies to. Every state it's a, federal rule not a.
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  Speaker 3: State rule at least there's not a State that i'm
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  Speaker 3: aware of that does not. Do it medicaid is a
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  Speaker 3: federal statute implemented by. Each state, so yes the five
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  Speaker 3: year rule applies. To you now people know what the
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  Speaker 3: five year, rule IS but i also want to take
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  Speaker 3: it one step further because sometimes people confuse this with
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  Speaker 3: the estate tax. Gifting RULES and i know you might
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  Speaker 3: not have asked, About, that JOHN but i can't help
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  Speaker 3: but just educate people. On it some people, think, that
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  Speaker 3: WELL if i just gifted away to, my CHILDREN then
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  Speaker 3: i don't have a five year. Waiting period BUT if
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  Speaker 3: i gift it to, a TRUST then i do have
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  Speaker 3: a five year. Waiting, period no the five year waiting
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  Speaker 3: period applies to any kind of a transfer to anybody
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  Speaker 3: or a trust if it's for less than fair market value,
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  Speaker 3: in exchange so you can't avoid that. Number two some people, will,
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  Speaker 3: say oh wait, A minute i HEARD that i can
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  Speaker 3: give away nineteen thousand dollars per year per person TO anybody,
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  Speaker 3: i WANT and i don't have to pay a. Gift
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  Speaker 3: tax SO if i, DO that i just will avoid
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  Speaker 3: my five year waiting period. As well mutually exclusive, rules,
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  Speaker 3: here folks there's a difference between medicaid RULES and. Irs
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  Speaker 3: Rules for, medicaid purposes you give away one dollar and
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  Speaker 3: you have a five year. Waiting PERIOD for, irs purposes
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  Speaker 3: you're allowed to give away nineteen thousand dollars and not
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  Speaker 3: file a gift tax return at all and. Not pay
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  Speaker 3: you don't have, to report you don't have. To file
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  Speaker 3: it's just. A freebie two, separate rules. Mutually exclusive, so
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  Speaker 3: folks hope that helps a little bit in. That example
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  Speaker 3: but by the, same token one of the things that
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  Speaker 3: you can do when you're getting your estate plan together
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  Speaker 3: is get this guide because Folks like john that maybe
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  Speaker 3: are thinking about doing an estate plan he wants to
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  Speaker 3: protect his assets from the. Nursing home this guide back
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  Speaker 3: To the basics will help you kick off your. Estate
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  Speaker 3: plan gives you questions about what to, think about Like
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  Speaker 3: what paul was asking, us, earlier age, family dynamics value
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  Speaker 3: questions to be armed with before you get to your
• 9:24
  Speaker 3: estate planning attorney talks all about the basic documents from
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  Speaker 3: wills to powers of attorney and explains how in this
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  Speaker 3: case anyway an irrevocable trust happens to work two. OF
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  Speaker 3: them i put together a four million dollar hypothetical estate
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  Speaker 3: plan and then basically give my engagement letter outlining this
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  Speaker 3: entire plan puts your numbers. To it see if this
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  Speaker 3: guide will help you do this estate plan, for you
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  Speaker 3: or in any event at least help you kick off
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  Speaker 3: the estate plan for yourself in one way. Or another
• 9:56
  Speaker 3: it's getting close to the end of, the, month folks
• 9:58
  Speaker 3: so get the guide back to the base six eight
• 10:01
  Speaker 3: six six eight four eight five six nine Nine or
• 10:05
  Speaker 3: Legal exchange show. Dot com you can download it there
• 10:08
  Speaker 3: again eight six six eight four eight five six nine
• 10:11
  Speaker 3: Nine or legal exchange show dot com and for more
• 10:15
  Speaker 3: information go To our. Instagram Page cushing dolan we're.
• 10:18
  Speaker 2: Gonna go back to. The phones Here to sue In,
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  Speaker 2: mashby sue you're On With. Todd, lusky hello how are?
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  Speaker 3: You good how are you?
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  Speaker 5: Lovely weather i'm calling Up because i'm just trying to
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  Speaker 5: decide on. A trust my husband has passed away and
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  Speaker 5: now it's, just ME so i was looking at a.
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  Speaker 5: FEW things i don't like yourrevocable because you help you lose.
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  Speaker 5: Your control is?
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  Speaker 1: That?
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  Speaker 5: Correct?
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  Speaker 3: Yeah incorrect so many people think that's so you're. Not
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  Speaker 3: alone there are many kinds of, irrevocable trusts THE kind
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  Speaker 3: i think you're thinking about depending on your, net worth
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  Speaker 3: assuming for now you're worth less than let's say. Four
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  Speaker 3: million if that's, the case, then no the kind of
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  Speaker 3: trust we would probably be thinking about, for you you
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  Speaker 3: actually would end up keeping about ninety eight. Percent control
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  Speaker 3: THERE'S what i like to, Tell you But when i'm
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  Speaker 3: done explaining it, in detail you'd be amazed and, you'd,
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  Speaker 3: SAY wow i don't FEEL like i gave Up, any
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  Speaker 3: again different rules for different people and different levels of.
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  Speaker 3: Net worth so. You're right there are irrevocable trusts out
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  Speaker 3: there that you do lose, control over and that you
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  Speaker 3: do are, More rigid but there's also kinds that are
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  Speaker 3: drafted that aren't.
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  Speaker 1: Like that.
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  Speaker 5: So is it what would be the minimum amount for
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  Speaker 5: this particular one that you're thinking four million would be?
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  Speaker 1: Two?
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  Speaker 3: Million, No no, i'd say if you have a house
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  Speaker 3: and you have some money and you want to protect
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  Speaker 3: it for, your family that's up. To you in, other
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  Speaker 3: words the size doesn't matter. So much it's just that
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  Speaker 3: if you get to a, larger level you probably don't
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  Speaker 3: need nursing. Home planning but, if you, you know if you're,
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  Speaker 3: you know say you have a million dollar home or
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  Speaker 3: a half a million dollar home and half a million
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  Speaker 3: dollars in your in your, investment portfolio and you want
• 11:57
  Speaker 3: to protect, your house it might be good enough just
• 11:59
  Speaker 3: to protect. Your house so hopefully that helps you. A
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  Speaker 3: little i think you should probably just reach out to
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  Speaker 3: an estate planning elder law lawyer and learn more than
• 12:08
  Speaker 3: we can give you on the radio about how these irrevocable.
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  Speaker 3: TRUSTS work i think you'll be a. Mazed plust the
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  Speaker 3: guide actually has that in there. As well.
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  Speaker 2: We're going to go to our third, Caller here Charlie.
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  Speaker 2: In austinville you're On, With Todd.
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  Speaker 4: So todd hi also a couple, Of years i've been
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  Speaker 4: working on doing a lot of gifting and such to
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  Speaker 4: minimize my Exposure in massachusetts the. State, TAX okay i
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  Speaker 4: heard that there's also a new piece of legislation THAT
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  Speaker 4: if i purchased a property Outside of massachusetts if not
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  Speaker 4: considered part my estate CALCULATION. From us is? That true that's.
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  Speaker 3: Very true so many people don't think that that's. The
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  Speaker 3: case but when you Die, in massachusetts if you're a
• 12:53
  Speaker 3: resident of mass then property you own in another state
• 12:59
  Speaker 3: is not taxed In mass SO if i bought a
• 13:03
  Speaker 3: vacation home Down, in FLORIDA but i live in MASS when,
• 13:08
  Speaker 3: i die that vacation home is not factored into my mass.
• 13:11
  Speaker 3: Estate tax so, for example if my estate is worth,
• 13:14
  Speaker 3: four million but THE property i Bought in florida is
• 13:18
  Speaker 3: a two million dollar home on, the beach well my
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  Speaker 3: Estate for massachusetts is, two million. Not four, so yeah
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  Speaker 3: you don't have to be given, stuff AWAY and i
• 13:29
  Speaker 3: don't think you probably should be giving, Stuff away and
• 13:33
  Speaker 3: so does? That help it.
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  Speaker 4: Does help one other, quick question what is the decision
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  Speaker 4: point that you advise your client to do a disclaimer?
• 13:43
  Speaker 3: On inheritance you mean someone died and you're getting.
• 13:47
  Speaker 4: The, money yeah but YOU actually i think the word
• 13:50
  Speaker 4: is disclaim or you basically don't.
• 13:53
  Speaker 3: Accept, It, No no But what i'm ASKING is i understand what.
• 13:56
  Speaker 3: IT is i just want to make sure we were
• 13:57
  Speaker 3: on the. Same page so let's say your mom died
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  Speaker 3: and your mom left you two million dollars and you
• 14:03
  Speaker 3: want to. Disclaim it that's what. You're saying so, YOU
• 14:06
  Speaker 3: know i think it's all going to be a function
• 14:09
  Speaker 3: of how big your. Estate, is remember you know you
• 14:12
  Speaker 3: may or may not. Want it if if your estate's
• 14:15
  Speaker 3: already well over the, FEDERAL exemption I guess i don't
• 14:17
  Speaker 3: want to be, any wealthier, then YEAH maybe i. Disclaim
• 14:20
  Speaker 3: it but you got to find out where it goes
• 14:22
  Speaker 3: when you. Disclaim it it's not just. That easy you
• 14:24
  Speaker 3: can't direct where. It goes so you'd have to look
• 14:27
  Speaker 3: at their estate plan, AND say i. Disclaim it but
• 14:30
  Speaker 3: the estate plan then will treat you as if you're
• 14:32
  Speaker 3: dead and leave it accordingly into that. Estate plan so,
• 14:36
  Speaker 3: be careful make sure it goes where you want it.
• 14:38
  Speaker 3: To go, and again, you know If your massachusetts estate is,
• 14:42
  Speaker 3: you know, four million and you're married and you're getting more,
• 14:44
  Speaker 3: THAN that i don't know what the number is that
• 14:47
  Speaker 3: you would want to, disclaim it because remember you might
• 14:50
  Speaker 3: not have a federal, estate tax but you get a
• 14:52
  Speaker 3: step up in basis it's still. Your asset, you know
• 14:55
  Speaker 3: being a little bit in you know in mass isn't
• 14:58
  Speaker 3: isn't always a huge part problem because the rate. Is
• 15:01
  Speaker 3: lower so random there on that one in terms of.
• 15:04
  Speaker 3: How much but thanks for, the CALL and i hope
• 15:06
  Speaker 3: that that helped out A.
• 15:07
  Speaker 2: Little todd thanks so much for the time. This week
• 15:09
  Speaker 2: is always really appreciate a lot of.
• 15:11
  Speaker 3: Great information there always. A pleasure this has Been.
• 15:14
  Speaker 1: Asked todd On The Financial exchange. Radio Network ask Todd
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