Latest / The Financial Exchange Show / Ask Todd: Taking advantage of exemptions

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Ask Todd: Taking advantage of exemptions · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Letsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with a state and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As promised, Todd Lutsky from Cushing and Dolan joins us
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  Speaker 2: now live on air. It's your chance to ask him
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  Speaker 2: your estate planning questions live on air, which is why
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  Speaker 2: we call the segment Ask Todd. Studio lines are open
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  Speaker 2: at eight eight eight to zero five two two sixty three.
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  Speaker 2: That number again is eight eight eight two zero five
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  Speaker 2: three calls, so get calling early and often. If you
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  Speaker 2: want to make sure we get to you again, that
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  Speaker 2: phone number is eight eight eight zero five two two
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  Speaker 2: six three. One more time, it is eight eight eight
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  Speaker 2: to zero five two two six three. Mister Lutsky, how
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  Speaker 2: are you doing today?
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  Speaker 3: I am never better. How are you not great? No,
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  Speaker 3: it's always something with you.
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  Speaker 2: Well, wife says she is. She's considering a divorce because
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  Speaker 2: I care more about sports than our marriage.
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  Speaker 3: Oh yeah, I'll tell you.
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  Speaker 2: Well, here's the thing. We almost made it through seven seasons.
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  Speaker 3: That's true.
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  Speaker 2: So is that Todd. I want to talk to you
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  Speaker 2: a little bit about what's going on when it comes
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  Speaker 2: to estate planning and estate taxes. How do trusts help
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  Speaker 2: to mitigate issues with estate taxes, either at the state
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  Speaker 2: or federal level.
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  Speaker 3: So it's funny. I was just meeting with a client
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  Speaker 3: and they're always wondering, all what we always hear that
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  Speaker 3: we should be doing this. We hear it, we hear it,
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  Speaker 3: but we haven't done it, you know. And these folks
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  Speaker 3: come in and let's say they're worth that was about
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  Speaker 3: eighteen million. Well yeah, huh, should be doing it right,
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  Speaker 3: And remember it's giving away free money if you don't
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  Speaker 3: do your planning, is really what it comes down to.
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  Speaker 3: And you're making a gift to the state in a
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  Speaker 3: lot of ways. So that's the first much is taxes.
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  Speaker 3: That's what you're asking about. So now, federally, for a
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  Speaker 3: lot of people, it might be well, no, it's not
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  Speaker 3: a big deal, right because the federal exemption will is
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  Speaker 3: at thirteen point nine million. It will soon be fifteen
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  Speaker 3: million come twenty twenty six under the new act that passed,
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  Speaker 3: but who knows, it's not permanent. We have a new
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  Speaker 3: president in the future that a new regime could lower
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  Speaker 3: the exemption. It's been all over the map, so you
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  Speaker 3: always got to be planning for whatever that exemption is
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  Speaker 3: to take advantage of it, because you never know what
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  Speaker 3: it's going to be when you die, but you want
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  Speaker 3: to make sure you get it and use it. And
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  Speaker 3: by the way, these exemptions are the amount of assets
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  Speaker 3: you can pass a state tax free. Go over this number,
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  Speaker 3: and you got to pay taxes. If it's to somebody
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  Speaker 3: other than a spouse, you can leave an unlimited amount
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  Speaker 3: to a spouse, which of course is what they want
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  Speaker 3: you to do, because if you don't do planning and
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  Speaker 3: you die and you have everything jointly owned with your spouse,
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  Speaker 3: everything just passes to your spouse. Hey, that was easy. Yeah,
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  Speaker 3: but now your spouse has all the assets and it
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  Speaker 3: might be larger number than that spouse is exemption and
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  Speaker 3: they don't mind waiting and they get to pay the
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  Speaker 3: tax on the survivor's death. So always want to grab
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  Speaker 3: whatever the exemption is on the first death to shelter
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  Speaker 3: as much as you possibly can. When I say shelter,
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  Speaker 3: it means whatever's in the trust. Back to your point, Chuck,
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  Speaker 3: whatever's in the trust that's potentially taxed on the first
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  Speaker 3: death will not be taxed when the survivor dies. That's
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  Speaker 3: how we shelter it. So there's less taxed when the
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  Speaker 3: survivor dies, and when the first death it's always designed
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  Speaker 3: to never exceed. The shelter never exceeds whatever the exemption is,
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  Speaker 3: so there's never going to be any tax on the
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  Speaker 3: first death. Now, having said that, federally, you might be saying, yeah, yeah, todd,
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  Speaker 3: So what it's a big number. What about mass Massachusetts
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  Speaker 3: only has a two million dollar exemption. You could have
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  Speaker 3: your home alone could be a million. Right, you have
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  Speaker 3: a life insurance policy for a million. You're a two
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  Speaker 3: million and you have only talked about two items. So
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  Speaker 3: it sneaks up on you, right, So at some kinds
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  Speaker 3: you have to at some point you have to realize
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  Speaker 3: that trust will also shelter the same way I discussed
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  Speaker 3: it for fed IT shelters for mass the two million,
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  Speaker 3: so that the survivor, if they're worth less than two million,
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  Speaker 3: no tax. So on a four million dollar Massachusetts a
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  Speaker 3: state more reasonable?
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  Speaker 4: Right?
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  Speaker 3: More like, Hey, that's me. I can eliminate mass at
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  Speaker 3: tax with basic estate planning using trusts on four million.
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  Speaker 3: So there are good reasons to do it.
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  Speaker 2: Chuck talking with Todd Lutsky from the law firm of
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  Speaker 2: Cushing and Dolan. This is your chance to ask your
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  Speaker 2: estate planning questions. Lit I've on air right now. Phone
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  Speaker 2: lines still have some room at eight eight eight two
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  Speaker 2: gonna take a quick break here, but when we come back,
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  Speaker 2: it's going to be right to your questions with Todd
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  Speaker 2: Lutsky again. Still a little bit of room, So get
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  Speaker 2: calling at eight eight eight two zero five two two
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  Speaker 2: All right, yes, promise, let's get right to your calls
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  Speaker 2: for Todd. Let's gi First up, we've got Phil on
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  Speaker 2: the Cape. Phil, what's your question for Todd?
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  Speaker 5: Yes, Tod, more than five years ago you made a
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  Speaker 5: irrevocable trust for me. And now my question is if
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  Speaker 5: I get cryptocurrency or gold bars, can I put that
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  Speaker 5: in the trust? Or do I have to make a
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  Speaker 5: new trust.
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  Speaker 3: So I'll answer it this way. Yes, you can put
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  Speaker 3: any kind of investment you want into these trusts, whether
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  Speaker 3: it's gold, crypto, stocks, bonds, you know, real estate. It
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  Speaker 3: can be added to the trust titled to the trust.
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  Speaker 3: I do that for almost all assets. I help you
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  Speaker 3: do that. So it will create a new five year
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  Speaker 3: waiting period, but only for the new addition that you're
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  Speaker 3: putting in the trust. It will not affect what we
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  Speaker 3: did five years ago. My last caveat to your question is, well,
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  Speaker 3: yes you can put crypto and gold in there. I
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  Speaker 3: am not sure how you transfer crypto to the name
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  Speaker 3: of the trust, but if you're involved in crypto, maybe
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  Speaker 3: you know how. And we can get whatever paperwork you
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  Speaker 3: need together to do that, and so that that would
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  Speaker 3: be the answer. So yes, go ahead and contribute. And folks, okay, yeah,
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  Speaker 3: go ahead.
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  Speaker 5: You definitely you definitely have to put in a new
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  Speaker 5: five year waiting period, but only.
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  Speaker 3: For the new addition. Only for the new addition. Okay, excellent.
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  Speaker 6: Uh.
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  Speaker 3: And and so folks, that's just and again he's got
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  Speaker 3: the irrevocable trust in place, which is great. He's beyond
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  Speaker 3: the five years. That's just one of the trusts that
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  Speaker 3: we're talking about in our guide this month, which is
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  Speaker 3: the top seven estate planning trust I've sort of over
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  Speaker 3: the years thought about what these are that I see
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  Speaker 3: most of the time, and I put together this guide.
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  Speaker 3: It tells you not only how they work from an
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  Speaker 3: estate tax standpoint and income tax standpoint. They're irrevocable. They're
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  Speaker 3: revocable trusts in here. Medicaid like the one Phil has
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  Speaker 3: an irrevocable trust that protects from nursing homes. There's you know,
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  Speaker 3: special needs trusts if you have special needs children.
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  Speaker 1: Uh.
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  Speaker 3: There's even the dreaded Nominee Realty trust that a lot
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  Speaker 3: of people have but really don't understand because it's not
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  Speaker 3: really a trust, and it also explains the day to
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  Speaker 3: day operations of how they work to not you know,
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  Speaker 3: encumber your life in any way. So if you haven't
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  Speaker 3: gotten started in a state planning, this will help you
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  Speaker 3: get started. If you've gotten started, maybe you want to
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  Speaker 3: adjust the kind of trust you have something for everyone
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  Speaker 3: in this guide, folks, call and get it eight six
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  Speaker 3: six eight four eight five six nine nine or Legal
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  Speaker 3: Exchange Show dot com. Again Top seven estate planning trusts
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  Speaker 3: eight six six eight four eight five six nine nine
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  Speaker 3: or Legal Exchange Show dot com.
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  Speaker 2: Let's stick with the Cape. Let's go to Dave on
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  Speaker 2: the Cape. Now, Dave, what is your question for Todd Lunsky?
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  Speaker 6: OHI, good morning, Todd. I've got several My wife and
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  Speaker 6: I have several million dollars in irais what's the best
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  Speaker 6: way to protect that pass it on to my kids?
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  Speaker 3: So as a percentage of your overall estate, let's say
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  Speaker 3: several means three uh of that of your overall estate,
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  Speaker 3: how much is the IRA? Like, if you're worth four million,
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  Speaker 3: you'll most of it's an IRA. That's what I'm trying
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  Speaker 3: to find out.
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  Speaker 6: Yeah, the majority, I've got five million in I rays
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  Speaker 6: and my real estate equity in two houses just a
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  Speaker 6: little over a million. And that's like of your assets
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  Speaker 6: besides equity in the house, ninety five percent of our
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  Speaker 6: investments are in irais.
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  Speaker 3: So six million dollar estate? And how old are you?
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  Speaker 1: Uh?
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  Speaker 6: Sixty three?
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  Speaker 3: So when your your question is how do you protect
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  Speaker 3: it from a nursing home?
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  Speaker 6: No, I just like, what's the best way to pass
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  Speaker 6: on to my kids?
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  Speaker 3: Yeah? Great, great question. So so and I agree. I
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  Speaker 3: don't think you need to be worried about nursing homes.
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  Speaker 3: I think you're probably self insured when you talk about
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  Speaker 3: investing five million dollars. The income that it generates alone
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  Speaker 3: will be helpful. But estate tax wise, yes, you've got
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  Speaker 3: we've got to avoid probate. We want to reduce significantly
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  Speaker 3: the mass estate tax at least federally. You're fine. And
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  Speaker 3: so then the idea is how do I leave this
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  Speaker 3: to them? Probably in your case, a revocable trust. Put
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  Speaker 3: the houses in now, put the bank accounts in now,
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  Speaker 3: leave the iras out for now. The designated beneficiary would
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  Speaker 3: be each other, and then the contingent beneficiary would be
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  Speaker 3: the new family revocable trust that we put together, so
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  Speaker 3: that ultimately this five million will get into the trust. Yes,
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  Speaker 3: it will shelter, you know, allow us to shelter assets
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  Speaker 3: for state tax purposes, at least for mass federally. Again,
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  Speaker 3: it's doing it, but it's not critical. Depending on exactly
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  Speaker 3: how much we can get into the trust while you're
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  Speaker 3: both alive, we may need to direct some of the
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  Speaker 3: first to die ira to the trust rather than to
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  Speaker 3: the spouse. But that's something we would find tune when
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  Speaker 3: we're together, or with whenever you're working with whatever, whoever
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  Speaker 3: you're working with in the estate planning attorney world, you
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  Speaker 3: would fine tune that. But the beauty is not only
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  Speaker 3: does it avoid probate and help you shelter the estate taxes,
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  Speaker 3: but with that kind of money, you can design the
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  Speaker 3: trust so that when you die, the assets are going
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  Speaker 3: to be sheltered for your kids from future creditors, future divorces.
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  Speaker 3: I mean, this is a big enough dollar amount that
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  Speaker 3: you might want to think about doing that, and so
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  Speaker 3: the trust can live on even after you die and
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  Speaker 3: really provide nicely for your family. So great, great question,
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  Speaker 3: and I think you're on the right track, But I
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  Speaker 3: do think you need to do some planning to save
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  Speaker 3: the taxes.
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  Speaker 2: Got another one for you here, Todd, Let's go to
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  Speaker 2: Dale in newbury Dale. What's your question for Todd Lutski.
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  Speaker 5: Good morning, Todd.
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  Speaker 7: I'm seventy five, my wife is sixty two. We have
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  Speaker 7: a house paid for worth about one point two mil,
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  Speaker 7: and we have one hundred one million in iras. My
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  Speaker 7: question is am I in the need for a credit
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  Speaker 7: shelter trust?
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  Speaker 3: So so your your when you say so, let's look
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  Speaker 3: at two point two million dollar estate right, Well, Massachusetts
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  Speaker 3: remembers only only a two million dollar exemption, So yeah,
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  Speaker 3: I mean I would I would want the credit shelter
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  Speaker 3: if I'm going to do a trust for you anyway, right,
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  Speaker 3: which which I'm going to ask you another question in
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  Speaker 3: a minute, But if I was going to be doing
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  Speaker 3: a trust for you anyways, I would want that trust
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  Speaker 3: to include credit shelter Q TIP language. So that again,
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  Speaker 3: seventy five and sixty two, there's a long time before
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  Speaker 3: both of you are gone, and we want to make
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  Speaker 3: sure that on the first death we shelter what we can.
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  Speaker 3: So there's no no, not just reduced but zero mass
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  Speaker 3: estate tax. So that would be yes on a credit
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  Speaker 3: shelter trust. And then lastly, I would just think about well,
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  Speaker 3: you know, if you both have kids or you're trying
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  Speaker 3: to leave assets to the next generation, you might want
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  Speaker 3: to think about the type of trust you do, which
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  Speaker 3: might be irrevocable if you want to protect the house
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  Speaker 3: from the nursing home and maybe even some of the
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  Speaker 3: IRA from the nursing home a little longer. I don't
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  Speaker 3: have a discussion for that now, but there's a way
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  Speaker 3: to do both. I would think the irrevocable trust approach
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  Speaker 3: would be right for you. And yes, that trust would
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  Speaker 3: include the q TIP language, so you can get asset
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  Speaker 3: protection and estate tax planning at the same time. So yes,
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  Speaker 3: you're on the right track as well. But I think
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  Speaker 3: you need to seek out a lawyer to get it done.
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  Speaker 2: Todd, I got one more for you. We're gonna have
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  Speaker 2: to be quick. But Peter and Wooster, what's your question
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  Speaker 2: for Toddalletsky only got about a minute, all.
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  Speaker 4: Right, so I thanks to take Michael real quick. I
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  Speaker 4: have a revocable trust. I'm sixty five years old, I
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  Speaker 4: have two children that are basically named as in the
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  Speaker 4: will and trust. My question to you is I have
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  Speaker 4: a four to fifty seven fe plan that I was
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  Speaker 4: instructed by my lawyer put into the trust as the beneficiary.
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  Speaker 4: The trust is the beneficiary, but my two daughters got it.
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  Speaker 6: Uh.
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  Speaker 4: My question to you is is that okay? Or should
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  Speaker 4: I just basically name my two daughters as beneficiary.
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  Speaker 3: Here, here's the answer. Is really going to be up
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  Speaker 3: to you, and here's why. If you are saying, Todd,
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  Speaker 3: I'm okay with my daughters taking the money as they
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  Speaker 3: want to take it from the front, you know, over
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  Speaker 3: ten years, just name them. If it's a large enough number.
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  Speaker 3: And you're saying I also want to make sure it's
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  Speaker 3: protected from creditors, future divorces of the kids, et cetera.
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  Speaker 3: Then name the trust and have that language built into
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  Speaker 3: the trust. So it's really up to you how much
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  Speaker 3: it is and how much protection you think you really
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  Speaker 3: want for your children. So hopefully that answers the question,
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  Speaker 3: and I think we're out of time.
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  Speaker 2: Mister Wenski, thanks so much for joining us.
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  Speaker 3: Always a pleasure.
• 15:01
  Speaker 1: This has been asked Todd on the Financial Exchange Radio network.
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  Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
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  Speaker 1: thirty years, helping families with the State and tax planning,
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  Speaker 1: Medicaid planning and Probate law Call eight hundred three nine
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  Speaker 1: views expressed in this segment are solely those of Cushing
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