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Why Everyone Hates This Economy (Even Though Wages Are Up) · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada,
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Speaker 1: and Mark Fandetti.
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Speaker 2: Chuck, Mark and Tucker with you here, and as we
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Speaker 2: kick things off today, I want to talk a little
1:19
Speaker 2: bit about a little bit about just what popped up
1:24
Speaker 2: this morning. At around eight thirty this morning, Iranian State
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Speaker 2: TV says that they have received a draft, unofficial framework
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Speaker 2: for a memorandum of understanding with the United States on
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Speaker 2: a potential deal. And again I caution everyone, like this
1:47
Speaker 2: is a draft, Like it's Iranian State media that's reporting this,
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Speaker 2: so who even knows if they're reporting of it is accurate.
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Speaker 2: But I bring it up simply because it did move
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Speaker 2: at least the bond market and oil market in pre
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Speaker 2: market trading. No real movement in equities as a result
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Speaker 2: of this, but we did see some wiggles in the
2:07
Speaker 2: bond market and oil market, and so I think it's
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Speaker 2: relevant just to again inform people as to what Iranian
2:16
Speaker 2: State media is at least putting out there, simply because
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Speaker 2: it was something that was market moving. And I don't
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Speaker 2: know if you're actually going to see this particular iteration
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Speaker 2: and of coming to fruition, but it's out there and
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Speaker 2: so it's worth talking about. Here are the details that
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Speaker 2: they put out. US military forces would withdraw from the
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Speaker 2: vicinity of Iran. US Navy lifts its blockade. Iran commits
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Speaker 2: to restoring the number of commercial transit ships through these
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Speaker 2: straight ofform moves to pre war levels within one month.
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Speaker 2: Military vessels are not included in this agreement. The management
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Speaker 2: and routing of ship traffic through the straight ofform moves
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Speaker 2: will be handled by Iran and cooperation with Oman, and
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Speaker 2: if a final deal is reached within sixty days, the
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Speaker 2: agreement will be approved in the form of a binding
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Speaker 2: UN Security Council resolution. So there's a lot of stuff
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Speaker 2: that isn't included in there, such as anything nuclear related.
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Speaker 2: There's not much in the way of specifics, but again
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Speaker 2: this is Iranian state media reporting on this, and it
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Speaker 2: had the impact of dropping the tenure treasury yield by
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Speaker 2: a few basis points. It dropped the price of oil
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Speaker 2: by a couple dollars, and so it is something that
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Speaker 2: did move markets in the pre market session. At this point,
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Speaker 2: the tenure treasury is basically back to where it was
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Speaker 2: before that publication. Crude oil still trading about fifty sixty
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Speaker 2: cents below where it was before this announcement from Iranian
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Speaker 2: state media. But again this is where we are. I
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Speaker 2: urge people not to overreact in any particular way as
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Speaker 2: to anything that's come out so far, just because we've
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Speaker 2: kind of been in this place for a while now,
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Speaker 2: and once there is a final deal that is reached,
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Speaker 2: if there is, again, like I don't know exactly where
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Speaker 2: things are, but it sure seems like the two sides
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Speaker 2: want to make progress on hammering something out. I don't
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Speaker 2: think there's a ton of appetite to go back to,
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Speaker 2: you know, full fled shooting at each other at this point.
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Speaker 2: And so we'll see, you know, kind of what the
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Speaker 2: deal is and where things go. But this is again
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Speaker 2: kind of what was what came out early today that
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Speaker 2: had a little bit of an influence on markets, and
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Speaker 2: we'll see where things go. Piece here from Barons, why
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Speaker 2: you feel so much worse about the economy today than
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Speaker 2: during the nineteen seventies. What's the crux of this piece? Mark?
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Speaker 3: Well, thankfully they summarize it, because this piece is ponderous
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Speaker 3: and I didn't get through it after thinking about many
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Speaker 3: the reasons that researchers have already.
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Speaker 2: Thought about reading it and then decided.
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Speaker 3: In the age of well, the stack is large, and
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Speaker 3: some of this stuff well, anyway we can. We'll dig
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Speaker 3: into other stuff as the show progresses. But why they
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Speaker 3: don't use more charts and bullet point summaries and articles
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Speaker 3: like this, particularly the age of AI when it's.
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Speaker 2: Easy to distill on the website.
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Speaker 4: There's charts on there for this item.
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Speaker 3: Yeah, but just like make it all about the graphics
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Speaker 3: and a few key to get into editorial criticisms of
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Speaker 3: financial journalism. I guess I already did.
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Speaker 2: So.
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Speaker 3: Consumer sentiment is plumbing the depths. We know this. It's
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Speaker 3: widely reported. People are dissatisfied with gas prices, with select
5:36
Speaker 3: food items also something we know. So this is this
5:39
Speaker 3: to me, it was just a rehash of soft so
5:42
Speaker 3: called soft measures of how people feel about things. That's
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Speaker 3: a little bit redundant. I guess I wanted to point
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Speaker 3: out that the the likely real culprit is that real
5:57
Speaker 3: wages have more that's been stagnant since I want to say,
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Speaker 3: since like nineteen seventy. That's not fair because they're up
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Speaker 3: about like twenty five percent since then. But when you
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Speaker 3: compare it to the post war the immediate post war period,
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Speaker 3: when real wages doubled because productivity was proceeding at a
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Speaker 3: brisk clip.
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Speaker 2: I got a bone to pick with you on it, though, Yeah,
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Speaker 2: I got a bone to pick with.
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Speaker 3: You on I'm really know.
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Speaker 2: So here's what we've got when we talk about real
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Speaker 2: wage worth. The series that I use is median weekly
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Speaker 2: real earnings. Is that a fair one to look at?
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Speaker 3: Different researchers use different series, but yeah, go ahead.
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Speaker 2: It's the one that I'm going to use here. So
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Speaker 2: back in and again this is adjusted for inflation and everything.
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Speaker 2: Back in nineteen seventy nine, that series came into reading
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Speaker 2: of three hundred and thirty five I'm assuming that is dollars.
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Speaker 2: In twenty fourteen, it came in at a reading of
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Speaker 2: three thirty, which, as you indicate, it means that from
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Speaker 2: nineteen seventy nine to twenty v fourteen there was no
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Speaker 2: real wage growth. He had some wiggles up and down
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Speaker 2: and things like that, but he had a thirty five
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Speaker 2: year period of no real wage growth. From twenty fourteen
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Speaker 2: through twenty nineteen, then we saw real wages go from
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Speaker 2: three point thirty up to three sixty almost ten percent
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Speaker 2: real wage growth during the back half of the twenty tens,
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Speaker 2: kicking off you know again, late twenty fourteen, early twenty
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Speaker 2: fifteen and continuing through twenty nineteen. We then had the
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Speaker 2: you blow off in real real wages because remember income
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Speaker 2: are incomes of all kinds are included in here, and
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Speaker 2: so during the pandemic, we had all these transfer payments
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Speaker 2: that went out, and so you saw, you know, income
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Speaker 2: go through the roof because inflation dropped and everyone got
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Speaker 2: stimulus checks, got it. We then saw the suck of
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Speaker 2: twenty twenty one and twenty two. This was the economy
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Speaker 2: that people really hated because real wages went from three
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Speaker 2: seventy six in Q four of twenty twenty down to
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Speaker 2: three point fifty nine and Q two of twenty two,
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Speaker 2: So you saw three to four percent decline in real
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Speaker 2: wages during that time. That's a problem that makes you
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Speaker 2: feel bad. Hey, I'm earning more, but inflation's moving up
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Speaker 2: faster and so I have less spending power. The piece
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Speaker 2: that is interesting to me, piece that's interesting to me
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Speaker 2: on this is Q two of twenty twenty two is
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Speaker 2: when this series bottomed recently at three point fifty nine.
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Speaker 2: It has then risen basically for the last four years
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Speaker 2: three and a half years now, it's now at three
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Speaker 2: seventy six. I did the math so that you at
8:31
Speaker 2: home don't have to uh when you do the math out,
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Speaker 2: that is four point seven percent real wage growth over
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Speaker 2: the last three and a half years, and yet everyone
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Speaker 2: hates this economy. So what's the.
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Speaker 3: I'm sorry, when did you start that series?
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Speaker 2: This was since Q two of twenty two, So.
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Speaker 3: From nineteen eighty to present. What's been the real wage
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Speaker 3: growth according to that series?
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Speaker 2: About ten percent? Yeah, okay, so but no one now
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Speaker 2: is judging based on Hey, like the economy was bad
9:02
Speaker 2: in the not I'm talking hey, recent history. The last
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Speaker 2: three years now, real wages have actually gone up by
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Speaker 2: about one to one and a half percent a year,
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Speaker 2: and yet people are still sitting here going this economy sucks. Yeah.
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Speaker 3: I guess my point was it's because of the cumulative
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Speaker 3: effect of sluggish and it has been sluggish real wage growth.
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Speaker 2: I don't buy that.
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Speaker 3: In the modern I don't buy that.
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Speaker 2: The reason I don't buy that is because you can
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Speaker 2: look through that. I can look at the consumer sentiment
9:36
Speaker 2: data over the period in which real wage of growth
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Speaker 2: was sluggish, and it never got to hear these surveys,
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Speaker 2: specifically the two that are out, they're the big ones.
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Speaker 2: You get the University of Michigan Consumer Sentiment and Conference
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Speaker 2: Board Consumer Confidence. I am convinced that the consumer Sentiment
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Speaker 2: survey from University of Michigan is broken. Okay changed their
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Speaker 2: methodology to online only about two and a half years ago,
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Speaker 2: and ever since then they have just been printing consistently
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Speaker 2: Americans feel worse about the economy than pretty much they
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Speaker 2: ever have. It's been just like a steady like down
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Speaker 2: trend there. I'm convinced that that survey is broken. The
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Speaker 2: Conference Board one, when we take a look at the
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Speaker 2: data there, the consumer confidence data has weakened in the
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Speaker 2: last several years, but is still showing a significantly higher
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Speaker 2: reading than the Great Recession and things along those lines.
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Speaker 2: They've maintained a more consistent process and everything, and so
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Speaker 2: this I can support that. Hey, Americans don't feel as
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Speaker 2: good about the economy right now as they did in
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Speaker 2: twenty seventeen, eighteen and nineteen, you know, when things were
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Speaker 2: low unemployment and low inflation. I cannot get behind a
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Speaker 2: survey that says Americans feel worse about the economy now
10:59
Speaker 2: than two thousand eight.
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Speaker 3: Yeah, I wouldn't try to compare across periods. I think
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Speaker 3: that's that's tricky because the sample.
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Speaker 2: But that's what everyone does. Yeah, and quite. I just
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Speaker 2: think that this. I think the Michigan survey is broken.
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Speaker 3: I don't know enough about it to say whether it's broken.
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Speaker 2: I mean, you know, I can tell you it's if
11:16
Speaker 2: you're getting results that say Americans are less optimistic now
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Speaker 2: than any other time we've done this survey, which includes
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Speaker 2: the nineteen seventies, early nineteen eighties, bursting of the tech bubble,
11:29
Speaker 2: financial crisis, COVID. Something's wrong. Because I've said this before.
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Speaker 2: If you were to take an American and pop them
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Speaker 2: into twenty ten, with unemployment at ten percent, millions of
11:42
Speaker 2: homes being foreclosed on banks being shut down every week,
11:47
Speaker 2: they'd be like, no, take me back to twenty twenty six.
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Speaker 3: I think what probably makes this different. One of the
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Speaker 3: things that makes this I wasn't an adult in the seventies,
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Speaker 3: but heady times were uh palpa, but they were very recent,
12:02
Speaker 3: so people viewed the seventies as as an avarition, a blip. Sure,
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Speaker 3: whereas things have been sort of stagnant since the Great Recession.
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Speaker 3: We had some decent growth years, but nothing Gangbusters two
12:17
Speaker 3: thousand and two to two thousand and six looks like
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Speaker 3: an economic and three to two thousand and six looks
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Speaker 3: like a golden era compared to more or less what
12:23
Speaker 3: we've experienced since it's been so long, we've experienced prolonged prosperity.
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Speaker 2: I do think the big thing is, Look, if you
12:32
Speaker 2: want to tell me Americans are just exhausted by all of.
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Speaker 3: This, yeah, maybe that's what.
12:36
Speaker 2: The last seven years has just been exhausting. Twenty twenty pandemic,
12:41
Speaker 2: you got that going on twenty twenty one. Now you've
12:44
Speaker 2: got supply chain disruptions from the pandemic. Twenty two, you've
12:47
Speaker 2: got inflation twenty three, Silicon valley banks blowing up, twenty four, Hey,
12:51
Speaker 2: the labor markets starting to slow. Twenty five, you got
12:54
Speaker 2: tariff things that everyone's worried about. Twenty six, you've got
12:57
Speaker 2: Middle East stuff. Every year for the last seven years
13:01
Speaker 2: has been something pretty big that we've had to deal with,
13:05
Speaker 2: and I think people are just exhausted by it. Quite honestly,
13:08
Speaker 2: it's been seven years of just one major issue after another,
13:13
Speaker 2: and all of them are different too, like none of it,
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Speaker 2: it's none of them are the same. It's not like, well,
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Speaker 2: we work through that and now we're no it's just
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Speaker 2: like one big thing after another. And so I don't
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Speaker 2: blame Americans for saying, hey, I'm exhausted by this and
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Speaker 2: like my finances are stretched. But I don't think that
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Speaker 2: we can realistically say, hey, things are worse than two
13:37
Speaker 2: thousand and nine twenty ten right now, because that is
13:41
Speaker 2: the worst economy that any of us will ever live through. Hopefully,
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Speaker 2: let's take a quick break. When we return, we'll talk
13:48
Speaker 2: about what we're seeing in grocery prices, and then we're
13:50
Speaker 2: talking micron technology as well.
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Speaker 2: All right, we got a piece here from Bloomberg. It's
14:48
Speaker 2: titled Americans are about to pay even more at the
14:50
Speaker 2: grocery store. Kind of hard to argue with the logic
14:54
Speaker 2: on it. And the logic is this, there are three
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Speaker 2: potential things that can push up food prices at a
15:03
Speaker 2: faster pace over the rest of this year. The first
15:07
Speaker 2: is higher energy prices, which transmit through the agriculture sector
15:13
Speaker 2: in the form of, uh, you know, higher costs for
15:16
Speaker 2: operating machinery on farms and things like that, higher cost
15:20
Speaker 2: of transporting you know, different products to and from you know, farms,
15:27
Speaker 2: and so that can be you know, one piece that
15:30
Speaker 2: you see. The second is shortages of key fertilizers and
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Speaker 2: things like that that reduce crop yields, either for human
15:40
Speaker 2: consumption or as feedstock for livestock. The third is that apparently, Tuck,
15:48
Speaker 2: you got any Chris Farley for me on this? Probably
15:52
Speaker 2: not you got an alninio for me, So you got
15:57
Speaker 2: apparently this this big El Nino this year that is
16:02
Speaker 2: coming in El Nino, if you're not familiar with it,
16:06
Speaker 2: is basically a you can see it. It's actually kind
16:10
Speaker 2: of cool. They do these you know, these graphs and
16:14
Speaker 2: charts of like water temperature at different levels, and it's
16:16
Speaker 2: basically this hot water pocket that moves up from the
16:20
Speaker 2: bottom of the Pacific Ocean and gradually reaches the surface,
16:23
Speaker 2: and when it does, it can cause significant impacts on
16:28
Speaker 2: US weather. The impact of a big El Nino is
16:32
Speaker 2: supposedly less rain that comes through in the major areas
16:38
Speaker 2: that are important for farming, so you know, the bread
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Speaker 2: basket of the US. And so the thought is that
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Speaker 2: the combination of these factors is likely to lead to
16:51
Speaker 2: higher food price inflation than we would have otherwise seen
16:58
Speaker 2: at this point. Right now, food as a whole is
17:01
Speaker 2: up three point two percent year over year, but you
17:05
Speaker 2: did see a big move in the last month of
17:08
Speaker 2: half a percent for the month of April, and you
17:11
Speaker 2: play that out and say, hey, even if April is
17:13
Speaker 2: what we get continuing now, you're talking about food prices rising,
17:16
Speaker 2: you know, six percent going forward, you know, for the
17:19
Speaker 2: over a twelve month period, and that obviously, you know,
17:23
Speaker 2: gets people to a pretty uncomfortable place.
17:25
Speaker 3: When you're starting at four percent year over year inflation
17:28
Speaker 3: and higher rates if you annualize the last few months. Sure, yeah,
17:35
Speaker 3: it's kind of alarming. I mean I'm being, you know, trite.
17:39
Speaker 3: I'm not really saying anything inside.
17:40
Speaker 2: No, there's not much else you can do about it.
17:42
Speaker 3: Yea, it is, So what is the FED?
17:43
Speaker 1: Yeah?
17:43
Speaker 3: I guess we'll talk monetary policy later, but it always
17:48
Speaker 3: to me comes back to the FED and what it
17:50
Speaker 3: should do. It's we're faced with oil price shocks which
17:54
Speaker 3: are feeding into this problem, and idiosyncratic factors are compounding it.
17:59
Speaker 3: It is reminiscent of the early nineteen seventies. I say
18:02
Speaker 3: this every time we talk about the early seventies. But
18:04
Speaker 3: there was like an anchovy shortage. Anchovies are apparently I'm
18:08
Speaker 3: laughing because it's funny and retros or.
18:10
Speaker 2: Does one have an anchovy shortage?
18:12
Speaker 3: Well, they just disappeared the population of anchovies. Apparently they
18:16
Speaker 3: migrate to somewhere.
18:18
Speaker 2: Anchovies migrate, Well, wow.
18:20
Speaker 3: Something like that. I don't I am not authority. I
18:23
Speaker 3: am not the authority. I will only say that they
18:25
Speaker 3: disappeared off like the Peruvian coast. I read this in
18:27
Speaker 3: a Econ book a long time ago, and this this
18:31
Speaker 3: contributed to the food christ Right, there was an anchovy
18:34
Speaker 3: mysterious disappearance of anchovies in the early nineties. I just
18:38
Speaker 3: keep saying it over and over. I don't know why
18:41
Speaker 3: in the early nineteen seventies, and it contributed to the
18:43
Speaker 3: inflation spike of seventy three seventy four. I guess my
18:47
Speaker 3: point is, when it rains, it pours sometimes, and this
18:50
Speaker 3: is why it's so important for the FED to get
18:53
Speaker 3: inflation down to its target before declaring the victory, and
18:57
Speaker 3: it never did that in the most recent episode.
18:59
Speaker 2: So again we'll see where food prices go. But these
19:03
Speaker 2: are kind of the key ideas behind why food prices
19:06
Speaker 2: may see their price increases accelerate over the next six
19:11
Speaker 2: to twelve months. Whether it actually plays out like that
19:14
Speaker 2: open question, but it's something that I think a lot
19:16
Speaker 2: of people are watching now because again, this is stuff
19:21
Speaker 2: that a lot of it you can't really do anything about.
19:23
Speaker 2: We don't have an anti El Nino team to the
19:29
Speaker 2: best of my knowledge. Let's take a quick break here.
19:31
Speaker 2: When we come back, we got Wall Street Watch, and
19:33
Speaker 2: then Todd Lotski joins us. Get your estate planning questions ready.
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Speaker 4: Markets are mixed and oil prices are declining after a
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Speaker 4: we'll see more tech INAI earnings from Marvel Technology and Salesforce.
21:27
Speaker 4: I'm Tucker Silva and that is Wall Street Watch.
21:31
Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
21:35
Speaker 1: If you have an existing estate plan or in the
21:37
Speaker 1: market for one, Todd Lutsky is here to answer your
21:40
Speaker 1: questions and help you plan for later life. Ask Tod
21:43
Speaker 1: is presented by Cushing and Dolan, serving Massachusetts and New
21:46
Speaker 1: England for more than thirty five years, helping families with
21:49
Speaker 1: the state and tax planning, medicaid planning, and probate law.
21:52
Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
21:59
Speaker 2: And Todd Lutz. He is now with us for Ask Todd.
22:03
Speaker 2: This is your chance to ask Todd your estate planning
22:06
Speaker 2: questions live on air right now. And so we got
22:10
Speaker 2: the phone lines opened up at eight eight eight two
22:13
Speaker 2: zero five two two six three. We can usually get
22:16
Speaker 2: through two to three calls, So get calling early and
22:19
Speaker 2: often so you can get in line to chat with
22:23
Speaker 2: Todd live on air right now. Again, that phone number
22:26
Speaker 2: is eight eight eight two zero five two two six
22:29
Speaker 2: three eight eight eight two zero five two two six three.
22:34
Speaker 2: Mister Lutsky, how are you doing today?
22:37
Speaker 5: I'm doing good, doing really good.
22:39
Speaker 2: It's good.
22:40
Speaker 1: God?
22:40
Speaker 5: What about you?
22:40
Speaker 2: Pretty good? No? No problems today? No, I'm good. I
22:44
Speaker 2: do think invisible planes will ever be a thing?
22:48
Speaker 5: Invisible planes? Yeah, yeah, like that kind of fly.
22:51
Speaker 2: Yeah. I can't see him taking off either, Yeah, I
22:53
Speaker 2: mean neither. Yeah, I can't. Todd. I want to talk
22:56
Speaker 2: to you today about trustees for trusts, as one would
23:02
Speaker 2: expect when it comes to naming a trustee for your trust.
23:10
Speaker 2: Do you have general guidelines or general ways that most
23:13
Speaker 2: people tend to think about naming a trustee?
23:16
Speaker 5: Again, I think the answer comes down to what kind
23:19
Speaker 5: of trust we're talking about, because that will also affect
23:21
Speaker 5: how you do it. So, okay, let's start while you're alive.
23:25
Speaker 2: So if it's a revocably when.
23:26
Speaker 5: You should be doing your trust work, yeah, that's a
23:28
Speaker 5: good good time. So while you're living, who should be
23:33
Speaker 5: the trustee on a revocable trust, probably yourself and your
23:37
Speaker 5: spouse if you're married, so it's always each other, or
23:41
Speaker 5: if you're single, just yourself. If it's revocable while you're alive.
23:45
Speaker 5: For an irrevocable medicaid type trust, again, they will also vary.
23:50
Speaker 5: While you're alive, you create an irrevocable trust, well, if
23:52
Speaker 5: it's an irrevocable medicaid trust, likely it should not be
23:56
Speaker 5: you or your spouse. It should be someone else. Generally speaking,
24:00
Speaker 5: it would be a child, or if you don't have children,
24:02
Speaker 5: it might be a niece or nephew or a sibling.
24:04
Speaker 2: But not you.
24:07
Speaker 5: Okay, Now let's go back to the irrevocable trust. Let's
24:11
Speaker 5: talk about an irrevocable gifting trust, same kind of idea.
24:15
Speaker 5: If you have an irrevocable life insurance trust, it would
24:18
Speaker 5: be if you're the creator and it's a life insurance
24:21
Speaker 5: is on your life, your spouse could be the trustee
24:24
Speaker 5: while you're alive, but not you, and vice versa. Okay,
24:30
Speaker 5: And from a gifting trust, while you're putting things to
24:32
Speaker 5: be completely out of your estate, likely you'll be putting
24:35
Speaker 5: someone other than you or your spouse as trustee, unless,
24:38
Speaker 5: of course, it's a spousal lifetime access trust. See how
24:40
Speaker 5: many different kinds of trust there are? So during life,
24:43
Speaker 5: if I set up a spousal lifetime access trust, I
24:46
Speaker 5: cannot be the trustee, but my wife can and vice versa.
24:50
Speaker 5: Wow we're alive, folks. That covers a lot of the
24:54
Speaker 5: wow we're alive type who can be trustees on trusts?
24:59
Speaker 5: But I think we're if you are headed, chuck and
25:01
Speaker 5: check me on this is What about when you're gone? Yes,
25:04
Speaker 5: I mean that's probably the bigger issue, but you have
25:06
Speaker 5: to think about both. So when you're gone, so in
25:10
Speaker 5: a revocable trust, again, probably your children. If you're leaving
25:13
Speaker 5: things to your children, you might list them as the
25:15
Speaker 5: general trustee of the trust to make all managerial investment decisions,
25:20
Speaker 5: et cetera. But if the goal is to protect assets
25:25
Speaker 5: from their future divorces and their creditors and skip generation
25:30
Speaker 5: skipping tax purposes to get it down a generation tax free,
25:34
Speaker 5: then you might have the kids as general trustees. But
25:37
Speaker 5: you might also appoint an independent, not related, or subordinate
25:41
Speaker 5: trustee to make distributions to these kids grandkids, and that
25:46
Speaker 5: will help protect it from future divorces and skipping an
25:50
Speaker 5: estate for generations skipping tax purposes. So you have to
25:53
Speaker 5: think about that. So that's probably about as deep as
25:57
Speaker 5: you need to get in these discussions about who the
26:00
Speaker 5: trustee might or might not be.
26:03
Speaker 2: Talking with Todd Lutsky from Cushing and Dolan. Still have
26:06
Speaker 2: room on the phone lines for your estate planning questions
26:08
Speaker 2: for Todd. Eight eight eight to zero five two two
26:12
Speaker 2: sixty three. Is the number again, That is eight eight
26:15
Speaker 2: eight to zero five two two six three. We're gonna
26:20
Speaker 2: take a quick break, but when we come back, we
26:22
Speaker 2: are getting right to your questions with Todd. That phone
26:25
Speaker 2: number again is eight eight eight two zero five two
26:29
Speaker 2: two six three. One more time. Eight eight eight to
26:33
Speaker 2: zero five two two six three.
26:36
Speaker 1: Ask Todd with Todd Letsky every Wednesday at ten thirty
26:40
Speaker 1: only here on the Financial Exchange Radio Network. Todd Letsky
26:45
Speaker 1: answers your questions about a state and elder life planning
26:48
Speaker 1: every Wednesday at ten thirty, right here on the Financial
26:51
Speaker 1: Exchange Radio Network.
27:03
Speaker 2: Still got room on the phone lines for your questions
27:06
Speaker 2: for Todd. Eight eight eight two zero five two two
27:10
Speaker 2: six three. That number again is eight eight eight two
27:14
Speaker 2: zero five two two six three. Let's go to Dan
27:18
Speaker 2: in Peabody, Dan, what is your question for Todd Lutsky? Dan?
27:24
Speaker 2: Are you there? Nope, I'll try him. We'll keep working
27:31
Speaker 2: on Dan, Todd, I've got one in the interim. Sure. Uh.
27:35
Speaker 2: When considering who to name as a trustee, one person
27:40
Speaker 2: or multiple trustees.
27:43
Speaker 5: I think it sounds like we might have him, But
27:45
Speaker 5: I would say, is it one trustee or multiple? I
27:47
Speaker 5: would say that's definitely going to be a family member
27:50
Speaker 5: of family decision. So you know, to me, if you're
27:54
Speaker 5: depending on how you're leaving the assets, you might say, well,
27:58
Speaker 5: I guess one trustee you'll be a fine they'll just
27:59
Speaker 5: do what it says, or you know, I might need
28:02
Speaker 5: a check in a balance.
28:03
Speaker 2: All right, I think we got Dan back here. Dan.
28:05
Speaker 2: What's your question for Toddlutsky? Still know Dan?
28:12
Speaker 5: I guess we don't have Dan?
28:13
Speaker 2: Okay, we will. Uh, well, we'll see what happens with Dan.
28:18
Speaker 2: Let's dig in more on that trustee questions. So what
28:21
Speaker 2: are some of the considerations for whether one trustee is
28:25
Speaker 2: appropriate for a trust or if multiple ones are the
28:28
Speaker 2: way to go.
28:29
Speaker 5: So the way you look at this is, how are
28:32
Speaker 5: we leaving our assets to our children? Let's say it says, Oh,
28:38
Speaker 5: when I pass away, I just leave everything equally to
28:41
Speaker 5: my kids and pay it out. A lot of times,
28:43
Speaker 5: that's a simple approach that a lot of families have. Yeah,
28:47
Speaker 5: I probably just need one trustee. I'm fine with that, Okay.
28:50
Speaker 5: I think that one trustee is going to do everything
28:53
Speaker 5: that they have to do anyway. Any trustee does what
28:55
Speaker 5: the trust says, so that's not a problem. I think
28:58
Speaker 5: if you start getting into a situation where now I'm
29:02
Speaker 5: going to be holding assets in trust to protect these
29:05
Speaker 5: assets from the kid's own creditors, divorces, et cetera, and
29:09
Speaker 5: generation skipping tax benefits for grandchildren to sort of to
29:13
Speaker 5: keep the trust. They call them dynasty trust to keep
29:16
Speaker 5: them going longer generations.
29:18
Speaker 2: Okay, well, one general.
29:21
Speaker 5: Trustee might be okay, but now you're probably gonna have
29:23
Speaker 5: to add at least that independent trustee for distributions out
29:28
Speaker 5: to these kids. So that would be a separate trustee
29:31
Speaker 5: for that matter. Now, when you're doing this, if you've
29:34
Speaker 5: got three separate buckets for three kids and you only
29:37
Speaker 5: have one trustee, you might say, well, maybe I don't
29:40
Speaker 5: want one to feel like it's you know, in control
29:44
Speaker 5: of everything, even though you can't rob Peter to pay
29:46
Speaker 5: Paul in these separate buckets. You can add another one.
29:49
Speaker 5: It doesn't gain a lot. I mean, I don't think
29:51
Speaker 5: you ever need to put three and four trustees on
29:53
Speaker 5: at one time. I think that just creates almost like
29:56
Speaker 5: it it's almost very hard to get anything done if
29:59
Speaker 5: you need multiple.
30:00
Speaker 2: Signature and everything.
30:01
Speaker 5: Yeah, too many signatures. I think at the end of
30:03
Speaker 5: the day, you know, our trusts usually say that it
30:06
Speaker 5: requires the majority of the trustees to act once the
30:10
Speaker 5: donor is gone. So if you have two, it's unanimous.
30:13
Speaker 5: If you have three, and then you got to worry
30:14
Speaker 5: are we ganging up on one? So you kind of
30:17
Speaker 5: have to watch all those things. But but at the
30:19
Speaker 5: end of the day, folks, you know, I think you know,
30:23
Speaker 5: planning is very important, and these are potholes that that
30:27
Speaker 5: you know, Chuck is actually talking about. These are potholes
30:30
Speaker 5: to avoid. You know, when you do your estate plan,
30:33
Speaker 5: think about who the trustees should be. I think one
30:35
Speaker 5: of the biggest potholes to avoid is not funding your
30:39
Speaker 5: trust I think for people that have done their plan
30:42
Speaker 5: already but have life events like what it's been ten
30:45
Speaker 5: to fifteen years since I did my plan, it's been Uh,
30:49
Speaker 5: I've got a spouse who died. Don't I have to
30:52
Speaker 5: make adjustments to my plan after one spouse dies? Yes,
30:56
Speaker 5: we decided to move to Florida or in New Hampshire
30:58
Speaker 5: to avoid a state taxes. Do I need to adjust
31:01
Speaker 5: my plan?
31:01
Speaker 2: Yes? Right.
31:02
Speaker 5: So there's so many life events that might cause you
31:06
Speaker 5: to adjust an existing plan. This guide can help you
31:09
Speaker 5: look for those people who haven't done their planning. Very
31:12
Speaker 5: important to get it so you don't run into potholes
31:15
Speaker 5: while you're going forward, Like what you know? How do
31:17
Speaker 5: I pick a trustee? Don't rely on a will. Don't
31:21
Speaker 5: think I just need designated beneficiaries or join accounts to
31:24
Speaker 5: satisfy my estate plan. Oh, all I need is a
31:27
Speaker 5: nominee realty trust that ain't going to do it. So
31:30
Speaker 5: there's many things to think about. If you haven't done
31:33
Speaker 5: your planning, this will get you off the dime. And
31:36
Speaker 5: if you have done your planning, this will help you
31:39
Speaker 5: figure out what the next steps are in the planning
31:42
Speaker 5: that you've done. Call and get it eight six six
31:45
Speaker 5: eight four eight five six nine nine. We are approaching
31:48
Speaker 5: the end of the month again eight six six eight
31:52
Speaker 5: four eight five six nine nine or Legal Exchange show
31:55
Speaker 5: dot com. You can download it there and always. You
31:58
Speaker 5: could go to Cushing Dolan pc are Instagram page for
32:01
Speaker 5: more information.
32:02
Speaker 2: Todd, when we talk about actually getting assets into the
32:05
Speaker 2: hands of beneficiaries after someone passes, what are the benefits
32:11
Speaker 2: of using trusts to accomplish that versus just a will.
32:15
Speaker 2: Let's assume everything else has gone fine during your life,
32:18
Speaker 2: but what advantages do trusts have in terms of conveying
32:21
Speaker 2: assets to the beneficiaries.
32:24
Speaker 5: I think you can control a little better. I mean,
32:27
Speaker 5: you probably could do it in a will, most people don't,
32:30
Speaker 5: but you can control from the grave better. If you
32:33
Speaker 5: want to control from the grave through a will, then
32:37
Speaker 5: it's going to be a testamentary trust built into the will.
32:40
Speaker 5: And the problem with that is you're in probate and
32:42
Speaker 5: you never can close probate. You got to keep it
32:44
Speaker 5: open and open and open because the will contains the
32:48
Speaker 5: trust sure, so that that's a big problem in and
32:51
Speaker 5: of itself. Whereas with a trust, it's not in probate
32:57
Speaker 5: and you can control from the grave. Meaning I want
33:00
Speaker 5: to protect from future divorces. I want to protect from
33:03
Speaker 5: generation skipping taxes. I have a special needs child who
33:07
Speaker 5: might need to not get the assets up front. I
33:10
Speaker 5: have a drug addicted child who I need to protect
33:12
Speaker 5: from themselves. There's any number of things I want to
33:15
Speaker 5: skip a generation, have it go directly to the grandchildren.
33:19
Speaker 5: You can do it. These are all ways in which
33:22
Speaker 5: assets can be distributed to the kids.
33:24
Speaker 2: Todd, got another caller for you. We've got Marie in Palmer. Marie,
33:28
Speaker 2: what's your question for Tom Lutsky? All right, clearly we
33:33
Speaker 2: have an issue at the phone.
33:34
Speaker 1: So I apologize for that.
33:36
Speaker 2: Okay, not sure what's going on.
33:37
Speaker 5: Something wrong.
33:38
Speaker 2: Apologies to Marie and to Dan earlier.
33:42
Speaker 5: But uh, we can now say that it wasn't their fault.
33:45
Speaker 2: It's our fault, you know it's I'm not gonna let
33:49
Speaker 2: them completely off the hook. Okay, No I will. So
33:53
Speaker 2: when we're talking about you know, beneficiaries then and the
33:58
Speaker 2: idea of you know, controlling ben fisheries from beyond the grave,
34:01
Speaker 2: what does that look like in practice? What does that mean?
34:04
Speaker 5: So you basically would say the trust would an end.
34:08
Speaker 5: You would create a separate account in the name of
34:12
Speaker 5: the trust, get ID numbers for that account. It becomes
34:14
Speaker 5: a real issue, right, it becomes a real entity, and
34:18
Speaker 5: you retitle things, just like you retitle. When you talked
34:20
Speaker 5: about funding earlier, chuck funding a trust while you're alive.
34:24
Speaker 5: Similar when you die, you fund the new buckets that
34:27
Speaker 5: are created inside the trust. Example, you know Todd Lutsky
34:31
Speaker 5: Family Trust, FBO share, you know Alexa, Okay, great, that's
34:37
Speaker 5: a child. You've got an FBO share. You get an
34:39
Speaker 5: ID number, you attach it to that to that share,
34:43
Speaker 5: and then that share starts owning things. And then that's
34:48
Speaker 5: kind of how it works right now. It's a separate
34:50
Speaker 5: entity and you can use that document to govern how
34:53
Speaker 5: distributions are made. When they're made, they follow all the
34:55
Speaker 5: language that's in there. So I think I think that
34:57
Speaker 5: answers that.
34:58
Speaker 2: Okay, and when we look at let's look at someone
35:04
Speaker 2: who just has done a will, so some of that
35:06
Speaker 2: stuff obviously you can't do. What are the other issues
35:09
Speaker 2: with using a will as opposed to a trust as
35:12
Speaker 2: your primary estate plan?
35:15
Speaker 5: You know, I think the biggest issue with having just
35:17
Speaker 5: a will is the fact that everything goes to probate.
35:22
Speaker 5: Like example, I was dealing with a case the other
35:25
Speaker 5: day where someone came in and they said that someone
35:27
Speaker 5: had passed actually and they had you know, had designated
35:31
Speaker 5: beneficiaries set up on their accounts to go to a child.
35:35
Speaker 5: Then they wanted to change that and have the designated
35:38
Speaker 5: beneficiaries go to their grandkids and skip the child. Well
35:42
Speaker 5: you can do that, and they said why, I know, Well,
35:44
Speaker 5: they'll update their will, and they updated their will to
35:47
Speaker 5: address that those assets are to go to the to
35:50
Speaker 5: the grandchildren. Folks, understand this. This is a problem. I think,
35:53
Speaker 5: Chuck that if you update your will to address assets
35:58
Speaker 5: that you've already put a design beneficiary on, that's not helpful.
36:03
Speaker 5: Why because assets that go to probate have to be
36:06
Speaker 5: in your name alone with no designated beneficiary, and those
36:08
Speaker 5: are the only assets addressed in your will, which is
36:11
Speaker 5: why you can't avoid probate with a will.
36:13
Speaker 2: But if you went.
36:14
Speaker 5: Ahead and then change the designated beneficiary on the accounts
36:17
Speaker 5: to grandkids, well that's never going to get in the
36:19
Speaker 5: will anyway. That's going to completely avoid probate, which is great,
36:23
Speaker 5: but it goes directly to the grandkids. So you've got
36:26
Speaker 5: to be consistent in what you're doing. If you're going
36:28
Speaker 5: to leave assets through your will and you want to
36:30
Speaker 5: direct how they go, you better make sure that those
36:33
Speaker 5: assets don't have designated beneficiaries listed on them, Otherwise they
36:37
Speaker 5: will accidentally maybe avoid probate and find their way to
36:41
Speaker 5: the beneficiary. And your will really didn't accomplish what you
36:45
Speaker 5: thought it would, so I think those are kind of
36:48
Speaker 5: things that you need to think about with a will.
36:50
Speaker 5: I think ultimately a will is a won't It doesn't
36:52
Speaker 5: do nearly what a trust could do.
36:55
Speaker 2: Mister Lutsky. As always, we appreciate you joining us today.
36:59
Speaker 2: Thanks so much for we're taking the time.
37:01
Speaker 5: Always a pleasure. Thank you