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Gifting and its impact on your estate plan · The Legal Exchange

• 0:01
  Speaker 1: This is the Legal Exchange with Todd Lutsky from the
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  Speaker 1: law firm of Cushing and Dolan and Susan Powers of
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  Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
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  Speaker 1: discuss many topics, including estate planning, how to avoid probate,
• 0:13
  Speaker 1: and protecting your money from a nursing home. If you
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  Speaker 1: need assistance in any of these areas, or have a
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  Speaker 1: question about another issue that may affect your future, call
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  Speaker 1: eight six six eight four eight five six ninety nine
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  Speaker 1: to make an appointment. That's eight sixty six eight four
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  Speaker 1: eight five six ninety nine. Operators are standing by. Now
• 0:31
  Speaker 1: Here are your hosts, Tod Lutsky and Susan Powers.
• 0:37
  Speaker 2: Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
• 0:40
  Speaker 2: a financial advisor with the Armstrong Advisory Group, and I'm
• 0:43
  Speaker 2: joined by Todd Lutsky, a partner with the law firm
• 0:46
  Speaker 2: of Cushing and Dolan with a Masters in taxation. Welcome Todd,
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  Speaker 2: how are you today?
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  Speaker 3: I'm never bettering you, I'm great.
• 0:53
  Speaker 2: Thanks. What do you have for us this week?
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  Speaker 3: As we approach the end of the month, and that
• 0:58
  Speaker 3: also means the end of the year. Of this time,
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  Speaker 3: by the way, got a New Hampshire Supreme Court case
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  Speaker 3: for you. And then basically it's a real life story,
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  Speaker 3: but it's more about just education. It's an education spot
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  Speaker 3: and I think that's going to be important. So the
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  Speaker 3: first one is, you know, just how do these anti
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  Speaker 3: lap statutes work. It's New Hampshire. Otherwise it's really just
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  Speaker 3: a fact pattern about drafting for the family after you're gone, controlling,
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  Speaker 3: you know, directing how your assets go when you're gone. Yeah.
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  Speaker 3: I know the guide's all about taxes and everything, but
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  Speaker 3: you know what, this piece of it might be more
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  Speaker 3: important than even the taxes. So I think we're gonna
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  Speaker 3: learn about that. And the second one is again sort
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  Speaker 3: of focused on the guide because it's the end of
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  Speaker 3: the month, but it's you know, state taxes versus gifting,
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  Speaker 3: and we're going to learn a little bit about how
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  Speaker 3: trusts work with federal taxes, how step up in basis works,
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  Speaker 3: and how Massachusetts a state tax and the Cliff rule,
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  Speaker 3: the old Cliff rule for gifting is gone, and I
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  Speaker 3: don't think people understand exactly how that works and why
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  Speaker 3: that can help making a gift better for mass But again,
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  Speaker 3: might not always be the way to go. So we're
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  Speaker 3: going to kind of use this one to compare both
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  Speaker 3: gift taxes and estate taxes, which really brings me back
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  Speaker 3: to the guide again. End of the month, end of
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  Speaker 3: the year, folks, learn how to reduce your taxes, both
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  Speaker 3: estate taxes federal and state. This guide talks about the
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  Speaker 3: revocable trust and examples on portability of exemptions federal tax,
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  Speaker 3: marital share, remainder share. How does it work. You can
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  Speaker 3: put your own formula in your own assets and run
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  Speaker 3: the numbers. And since there's something for everybody, it also
• 2:46
  Speaker 3: shifts gears and talks about how to accomplish those same
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  Speaker 3: things with an irrevocable trust, where you can also add
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  Speaker 3: nursing home protection if you care to do that. So
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  Speaker 3: something for everybody, folks. End of the month. Get the
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  Speaker 3: guide eight six six eight four eight five six nine
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  Speaker 3: nine or Legal Exchange Show dot com again eight six
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  Speaker 3: six eight eight five six nine nine or Legal Exchange
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  Speaker 3: Show dot Com. End of the month, end of the year,
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  Speaker 3: last chance to get at folks. Let's head back to
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  Speaker 3: New Hampshire, shall we. So we just talked about right
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  Speaker 3: the guide and taxes and probate, but you know what, folks,
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  Speaker 3: this is case is more about how to draft for
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  Speaker 3: your family after you're gone, so the trust lives on
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  Speaker 3: after you. In this case, Mark did a will in
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  Speaker 3: nineteen ninety seven. I know no trust. He did a will. Well,
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  Speaker 3: we'll see why. He didn't have any kids. He gave
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  Speaker 3: all his probate assets to his dad if his dad
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  Speaker 3: survived him, otherwise to his uncle. Now note there was
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  Speaker 3: no survivorship language requirement for the uncle. Very important. Drafting
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  Speaker 3: is very important. So also he had language in there
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  Speaker 3: intentionally disinheriting all heirs except as provided in his will.
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  Speaker 3: So if you weren't provided for, you're out right. Okay. Well, again,
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  Speaker 3: drafting very important. Well, it turns out that both the
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  Speaker 3: father and the uncle predeceased Mark, which is not you know,
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  Speaker 3: things happen, right, So then a petition got filed in
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  Speaker 3: the court to admit the estate file. In the petition
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  Speaker 3: in twenty twenty two, it listed the uncle's three kids
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  Speaker 3: as children of a decedent who was not required to survive,
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  Speaker 3: and it listed Linda his sibling, only sibling who was
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  Speaker 3: not named in the will. Where do we go, Well,
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  Speaker 3: you can imagine Linda right off the bat, says she
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  Speaker 3: files a petition to say, well, look under the new
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  Speaker 3: Hampshire anti lap statute meaning I shouldn't be lapsed out right,
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  Speaker 3: anti lap statute, she should inherit Mark's entire estate as
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  Speaker 3: her sole heir.
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  Speaker 2: So his sister wants it rather than his kids.
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  Speaker 3: No, not his kids, his uncle's kids.
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  Speaker 2: Right right.
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  Speaker 3: My uncle's kids.
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  Speaker 2: Is his uncle's sister or no, no.
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  Speaker 3: That's that's Mark's sister. So Mark died, Mark had a sister,
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  Speaker 3: got it. She wants to be the sole heir, but
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  Speaker 3: the uncle was the other person listed in the will
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  Speaker 3: and his The uncle has three kids, so these would
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  Speaker 3: be nieces and nephews so well, so now Linda wants
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  Speaker 3: to be the sole heir. Well, the trial court didn't
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  Speaker 3: really like that, denied her motion because the bequest to
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  Speaker 3: the father lapsed as he was required to live in
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  Speaker 3: order to take, so it never went to him, so
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  Speaker 3: how could it go to his kid? Yes, right, Mark's sister,
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  Speaker 3: Mark's sister, so that lapsed because he didn't survive him.
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  Speaker 3: But the uncle, the uncle didn't have to survive to take,
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  Speaker 3: so the trial court said, too bad for you, sister. Yep,
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  Speaker 3: she didn't like that, as you might imagine, so she appealed,
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  Speaker 3: and the appellate court agreed. Give me an answer today
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  Speaker 3: with the sister. The appellate court agreed with the trial court, saying, sister,
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  Speaker 3: you're out.
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  Speaker 2: Good. I think that was the right call.
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  Speaker 3: Well, I'm glad you are happy, because I'm happy when
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  Speaker 3: you're happy, well as you should be.
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  Speaker 2: It's the holidays.
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  Speaker 3: So but let's explain why. Right, So, the uncle's kids take,
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  Speaker 3: as Mark expressed the intent to have the anti lap
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  Speaker 3: statue not apply to his father. Remember, by putting that
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  Speaker 3: survivorship language in there, he wanted the anti lap statue
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  Speaker 3: not to apply. Plus he put language in there disinheriting
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  Speaker 3: everyone else, including your sister because she wasn't listed in
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  Speaker 3: the will. So the uncle's kids take, wow, I hope
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  Speaker 3: you have a pie chart to follow that one.
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  Speaker 2: I'm going to need an org chart. But if he
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  Speaker 2: he wanted his dad or his uncle before his sister,
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  Speaker 2: so right, I think they made the right call.
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  Speaker 3: I think they did. I think. But drafting is what
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  Speaker 3: I'm talking about here, folks, the tips and lessons we
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  Speaker 3: can learn from this, right, It's really about drafting. Now,
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  Speaker 3: remember general language. It works like this. You know, you
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  Speaker 3: normally say equally to your kids if living, I know
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  Speaker 3: he didn't have kids, but equally to the kids if living,
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  Speaker 3: otherwise to the grandkids. We say this all the time.
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  Speaker 3: We take it for granted, but what does that mean.
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  Speaker 3: So if you had three kids and they all share,
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  Speaker 3: but if one child died, that one third still exists
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  Speaker 3: and it must pass to that person's kids. With that language,
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  Speaker 3: so so many people call me and say, you know, Todd,
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  Speaker 3: I got to change my will because you know I
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  Speaker 3: lost my I lost a child. Well you know, well, no,
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  Speaker 3: you don't have to. If you want to, you can,
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  Speaker 3: you know, but you don't. You don't have to. It's
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  Speaker 3: designed to take advantage of you know, that situation or
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  Speaker 3: even after born grandchildren. Right, and so you know that
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  Speaker 3: would be another thing to think about. So so in
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  Speaker 3: this case, that one third still exists. It passes now here,
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  Speaker 3: it said the uncle who needed to survive, so that
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  Speaker 3: share should still exist. Right, that that uncle did not
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  Speaker 3: need to without the need to survive, So that share
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  Speaker 3: still exists. Even though the will did not say that
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  Speaker 3: it passes to his kids. The anti lap statute kicks in, right,
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  Speaker 3: so his estate would technically direct where those assets would go,
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  Speaker 3: which would be to his kids. He didn't want the
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  Speaker 3: anti lap statue to apply there. Just keep these things
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  Speaker 3: in mind, folks. Your trust can be designed to get
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  Speaker 3: afterborn grandchildren included. You don't have to change if you
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  Speaker 3: want to dis inherit somebody be very clear about it.
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  Speaker 3: I think he was in this case. What that language.
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  Speaker 3: I think another thing he could have done was added
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  Speaker 3: a no contest clause. I mean, whenever you start picking
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  Speaker 3: and choosing, please put the no contest clause in just
• 9:15
  Speaker 3: to make things better. Right, think about situations when you're drafting.
• 9:19
  Speaker 3: If you're a second marriage situation, yep. Right, be careful
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  Speaker 3: to define all children how you want them to find.
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  Speaker 3: You can define all children regardless of parentage. That means
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  Speaker 3: each other's children are children of each other, even though
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  Speaker 3: you're they're not natural children.
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  Speaker 1: Yep.
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  Speaker 3: You can design it to divide assets, you know, fifty
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  Speaker 3: to fifty to each side of the family if you want,
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  Speaker 3: or based on who contributed, when they how much did
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  Speaker 3: they bring to the marriage, and split it up on
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  Speaker 3: each side. Remember kids also, step kids are automatically out
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  Speaker 3: unless you put them in, so be very careful about that.
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  Speaker 3: And finally, adopted children are generally at least in our
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  Speaker 3: estate in the way we draft them, and you have
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  Speaker 3: to add actually exclude them their children. Folks, please think
• 10:03
  Speaker 3: about how to leave things after you're gone, when you're
• 10:06
  Speaker 3: drafting your documents, and get the guide. It's the end
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  Speaker 3: of the month to learn how to do the probate
• 10:11
  Speaker 3: the taxes for both federal and state and protect assets
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  Speaker 3: from the nursing home eight six six eight four eight
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  Speaker 2: You've been listening to Todd Lotski, a partner with the
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  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
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  Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
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  Speaker 4: federal estate tax and gifting limits. Call us right now
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  Speaker 2: Welcome back into the Legal Exchange with Todd Lane I'm
• 14:00
  Speaker 2: Susan Powers of financial advice with the Armstrong Advisory Group,
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  Speaker 2: and I'm joined by Todd Lutsky, a partner with the
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  Speaker 2: law firm of Cushing and Dolan with a master's in taxation.
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  Speaker 2: Where we headed now, Todd.
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  Speaker 3: We're really not headed anywhere other than back to school.
• 14:15
  Speaker 2: Back to school. It's Christmas vacation coming.
• 14:18
  Speaker 3: Well, we're gonna help. Well, how about before we kick
• 14:20
  Speaker 3: out of school, I'm going to give you one last lesson. Fine,
• 14:23
  Speaker 3: this is the lesson.
• 14:24
  Speaker 2: I'm tired. It's been a long year.
• 14:26
  Speaker 3: Let's think about gifting taxes step up in basis income tax.
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  Speaker 3: Lots to think about. So in this case, remember the
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  Speaker 3: government makes you feel like it and makes it attractive.
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  Speaker 3: It looks so easy and attractive to say, you know what,
• 14:41
  Speaker 3: I can simply make gifts, thinking that that will reduce
• 14:44
  Speaker 3: my estate tax. So why not just give everything away?
• 14:47
  Speaker 3: When I say that, I mean currently, folks, we can
• 14:50
  Speaker 3: give away thirteen point six million dollars and in twenty
• 14:54
  Speaker 3: twenty five thirteen point nine million. You won't pay zero
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  Speaker 3: gift tax. And remember there's no state except Connecticut that
• 15:03
  Speaker 3: has a gift tax, so you really don't have to
• 15:04
  Speaker 3: worry about state gift tax. That's not even on your head.
• 15:08
  Speaker 3: And I can just give away these dollars and I
• 15:11
  Speaker 3: won't have to pay any gift tax, which means if
• 15:13
  Speaker 3: I don't have the asset, I probably won't have to
• 15:15
  Speaker 3: pay any estate tax. Wow, this really sounds attractive.
• 15:19
  Speaker 2: Does the recipient pay any taxes?
• 15:20
  Speaker 3: No? No, And this seems really easy.
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  Speaker 2: They make it very easy.
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  Speaker 3: Yeah, it's attractive. Friendship, it's easy, it's fast, yep. But
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  Speaker 3: does that make it right? Probably not so. Before federal
• 15:34
  Speaker 3: before you start gifting, you got to remember, start to
• 15:37
  Speaker 3: understand estate taxes, both federal and state. Then consider if
• 15:44
  Speaker 3: you're gonna gift, right, is it even needed? Now? Remember
• 15:47
  Speaker 3: the federal level is that forty percent? Oh okay, Well,
• 15:52
  Speaker 3: if I can avoid forty percent of state tax, might
• 15:55
  Speaker 3: be I might think about considering gifting. Right. However, if
• 15:59
  Speaker 3: I'm gifting just to save, and I'm going to pick
• 16:01
  Speaker 3: on Mass, but please look to your state estate tax
• 16:04
  Speaker 3: late rates. If I'm gifting just to avoid mass tax, right, well,
• 16:10
  Speaker 3: mass tax is only at ten percent approximately, It's it's
• 16:15
  Speaker 3: a sliding scale. Well that's that might not be enough
• 16:20
  Speaker 3: reason to make a gift. I really got to less.
• 16:23
  Speaker 2: Through federal but higher than the state.
• 16:25
  Speaker 3: Right, Yeah, that's right. So so let's let's go through this. Now.
• 16:29
  Speaker 3: Remember the first thing I would think about is trusts. Right,
• 16:32
  Speaker 3: Remember with trust today, the remainder share, the marital share,
• 16:36
  Speaker 3: we talk about all that. It's in the guide this month.
• 16:39
  Speaker 3: You can shelter twenty seven point two million today, twenty
• 16:43
  Speaker 3: seven point eight million in twenty twenty five. So and
• 16:48
  Speaker 3: assuming Congress doesn't act, right, then you're going to only
• 16:53
  Speaker 3: be able to shelter approximately seven million. That's an index
• 16:57
  Speaker 3: number for inflation. It's five million, four ninety ind to
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  Speaker 3: seven million for a married couple. So if I'm a
• 17:03
  Speaker 3: married couple, I'm thinking fourteen million. With the use of
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  Speaker 3: a trust in marital shares and remainder shares, can I
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  Speaker 3: can shelter without making any gifts?
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  Speaker 2: And for the vast majority of people that covers.
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  Speaker 3: Them, that's a big deal. Right, Why am I running
• 17:18
  Speaker 3: around making gifts? Why are you know, trying to get
• 17:21
  Speaker 3: you know, sort of pulled into that to that seemingly
• 17:24
  Speaker 3: safety net when it's not really the way to go
• 17:27
  Speaker 3: for fourteen million or less. Well, mass tax that's a
• 17:31
  Speaker 3: little different, right, for mass tax, we can only shelter
• 17:35
  Speaker 3: two million or four million if you're a married couple,
• 17:39
  Speaker 3: So we have to think about that. But before I
• 17:41
  Speaker 3: do that, folks, I'm going to go through the rest
• 17:42
  Speaker 3: of this example. I want you to know that that's
• 17:44
  Speaker 3: kind of what this guide does. We are at the
• 17:47
  Speaker 3: end of the month, end of the year. It's the
• 17:48
  Speaker 3: last chance to get it. It's a tale of two objectives,
• 17:52
  Speaker 3: how to reduce your estate tax. It talks about a
• 17:55
  Speaker 3: revocable trust, portability marital shares and remainder shares, just like
• 18:00
  Speaker 3: I talked about there, and you can put in your
• 18:02
  Speaker 3: own formula, run the numbers and see how you can
• 18:05
  Speaker 3: save state taxes, both federal and the new Massachusetts state taxes.
• 18:10
  Speaker 3: In there, it also allows people that are concerned about
• 18:14
  Speaker 3: protecting assets from the nursing home. It shifts gears and
• 18:17
  Speaker 3: explains how the maritals share and the remainder share work
• 18:21
  Speaker 3: for an irrevocable trust, so you can still save the
• 18:24
  Speaker 3: estate tax, and if you happen to end up in
• 18:26
  Speaker 3: a nursing home, it will protect the assets from the
• 18:29
  Speaker 3: cost of long term care. It's a tale of two objectives.
• 18:32
  Speaker 3: Learn how to do both. Get the guide eight six
• 18:35
  Speaker 3: six eight four eight five six nine nine or Legal
• 18:40
  Speaker 3: Exchange Show dot com. Last Chance End of the Month
• 18:43
  Speaker 3: eight six six eight four eight five six nine nine
• 18:47
  Speaker 3: or Legal Exchange Show dot com. So let's dive back
• 18:52
  Speaker 3: in here and talk about the mass estate tax. All right, Well, now,
• 18:55
  Speaker 3: let's say, you know, we talked a lot about married couples.
• 18:59
  Speaker 3: What if you're single, right at this point, you're single,
• 19:01
  Speaker 3: you're divorced, your widowed who knows, and you're worth four
• 19:04
  Speaker 3: million dollars and you think in your head, well, there's
• 19:07
  Speaker 3: no federal estate tax. So what I'm going to do
• 19:09
  Speaker 3: is I'm just going to go ahead and if I
• 19:11
  Speaker 3: died with two million dollars four million dollars, I'm going
• 19:14
  Speaker 3: to owe about two hundred thousand mass in death tax. Okay,
• 19:19
  Speaker 3: well I don't really like that. Well, I know what
• 19:21
  Speaker 3: if I gave away two million dollars before I died? Now, folks,
• 19:25
  Speaker 3: my example is going to be two million of cash.
• 19:28
  Speaker 3: Let's say you've got a bunch of CDs sitting around
• 19:31
  Speaker 3: and you just want to give those away cash is okay,
• 19:35
  Speaker 3: here's how cash can help you. Right, Because this old
• 19:38
  Speaker 3: Cliff rule that I talked about, Remember the Cliff rule
• 19:40
  Speaker 3: in Massachusetts. Everybody worried about that. You go over, you
• 19:43
  Speaker 3: pay tax on everything, and you look back to dollars,
• 19:45
  Speaker 3: you go back to dollar number one. Well, folks, the
• 19:48
  Speaker 3: new estate tax, which is in the guide, the new
• 19:50
  Speaker 3: Massachusetts estate tax, kind of got rid of that. Maybe
• 19:54
  Speaker 3: they did it by accident, but here's how it works.
• 19:58
  Speaker 3: So the example is four million minus two million leaves
• 20:02
  Speaker 3: you two million, and your taxed on the two million,
• 20:04
  Speaker 3: it's about ninety nine six is the tax on two million,
• 20:07
  Speaker 3: So I say about one hundred grand. The Cliff rule says,
• 20:12
  Speaker 3: if the calculation would be when you give away the
• 20:14
  Speaker 3: two million, right, you have to reduce your Massachusetts filing
• 20:20
  Speaker 3: threshold of two million by the taxable gift. Oh well,
• 20:25
  Speaker 3: the taxable gift was two million, so I have to
• 20:28
  Speaker 3: now reduce my filing threshold by that two million. So remember,
• 20:34
  Speaker 3: if you die with two million or less, you don't
• 20:37
  Speaker 3: even have to file. Now in Massachusetts, you don't have
• 20:41
  Speaker 3: to file, but if you are over that filing threshold,
• 20:46
  Speaker 3: you have to file.
• 20:48
  Speaker 2: Okay.
• 20:48
  Speaker 3: Now, in Massachusetts they do not add back the gifts.
• 20:53
  Speaker 3: So because I gave away two million, they don't add
• 20:55
  Speaker 3: it back like they do federally Federally, they add back
• 20:59
  Speaker 3: the gifts, not the appreciation on the gift, just the gift.
• 21:04
  Speaker 3: But they also replenished the exemption. But in Massachusetts there's
• 21:08
  Speaker 3: no ad back. Oh this is starting to sound good.
• 21:11
  Speaker 3: So if I had four million and I give away
• 21:13
  Speaker 3: two million, my Massachusetts gross estate is two million because
• 21:19
  Speaker 3: they didn't add back the gift. Okay, but my filing
• 21:26
  Speaker 3: threshold went from two million to zero because I had
• 21:30
  Speaker 3: to reduce my two million dollar exemption by the taxable gift.
• 21:36
  Speaker 3: So now although I have a two million dollar estate,
• 21:39
  Speaker 3: I have a zero filing threshold. So I'm over the
• 21:42
  Speaker 3: filing threshold. So I have to file. Even though I
• 21:46
  Speaker 3: only have an estate of two million, I have to file.
• 21:49
  Speaker 3: So now I file, and I calculate the tax on
• 21:53
  Speaker 3: two million, not on four on two The tax on
• 21:59
  Speaker 3: two million in is ninety nine six. It's an actual calculation,
• 22:04
  Speaker 3: and ninety nine thousand, six hundred dollars. Now we have
• 22:07
  Speaker 3: a credit for ninety nine thousand, six hundred dollars. That's
• 22:12
  Speaker 3: the new mass estate tax law. They bumped up the
• 22:15
  Speaker 3: exemption and they give you a credit equal to ninety
• 22:19
  Speaker 3: nine six. Okay, So I calculate my tax I have
• 22:24
  Speaker 3: tax due of ninety nine six, I get my credit
• 22:27
  Speaker 3: of ninety nine six. I have zero tax due.
• 22:30
  Speaker 2: So even though you have to file.
• 22:31
  Speaker 3: You don't have to pay.
• 22:32
  Speaker 2: You don't have to pay.
• 22:33
  Speaker 3: You make it so much easier.
• 22:35
  Speaker 2: I like to translate from legal lawyers speak into English
• 22:39
  Speaker 2: for relisis.
• 22:40
  Speaker 3: But people need to understand that's what's going on in
• 22:42
  Speaker 3: the statute because they were so afraid before. Right, that
• 22:44
  Speaker 3: wouldn't work. In the old days, that wouldn't work. You
• 22:48
  Speaker 3: still would have owed money in mass on the two
• 22:51
  Speaker 3: million because there was no credit. So now it can
• 22:54
  Speaker 3: make sense to gift.
• 22:56
  Speaker 2: But folks, you need some guidance to do it for sure.
• 22:59
  Speaker 3: And my point there is I gave away cash. Can
• 23:02
  Speaker 3: you imagine if you gave away two million dollars with
• 23:04
  Speaker 3: zero basis? The built in gain on the two million
• 23:08
  Speaker 3: dollars is five hundred and seventy six thousand in tax.
• 23:11
  Speaker 3: I'd rather pay the two hundred right, don't give it away.
• 23:15
  Speaker 3: You get a step up in basis. If you don't,
• 23:16
  Speaker 3: you need to balance the two folks. Call and get
• 23:20
  Speaker 3: the guide. Learn how estate taxes work both at the
• 23:24
  Speaker 3: federal and the state level, and learn how to protect
• 23:27
  Speaker 3: assets from the cost of long term care at the
• 23:30
  Speaker 3: same time. If you wish eight six six eight four
• 23:34
  Speaker 3: eight five six nine nine or Legal Exchange show dot com,
• 23:38
  Speaker 3: it's the end of the month.
• 23:40
  Speaker 2: You've been listening to Todd Lutsky, a partner with the
• 23:43
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Power as
• 23:46
  Speaker 2: a financial advisor with the Armstrong Advisory Group, and Todd
• 23:49
  Speaker 2: will be answering your listener questions when we return to
• 23:53
  Speaker 2: the Legal Exchange with Todd Lutsky.
• 23:56
  Speaker 1: If you're retired or nearing retirement, then haven't done your
• 23:59
  Speaker 1: planning yet. You could be missing out on opportunities that
• 24:02
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• 24:41
  Speaker 1: Legal exchange show dot com. That's Legal exchange show dot com.
• 24:46
  Speaker 1: The proceeding was paid for in The views expressed are
• 24:47
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• 24:50
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• 24:53
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  Speaker 5: Financial planning is a year round job, and with twenty
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  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
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• 27:25
  Speaker 1: You're listening to the legal exchange, and it's time for
• 27:28
  Speaker 1: Ask Todd, the segment where Tod will answer your questions
• 27:31
  Speaker 1: about anything and everything that's included in the estate planning process.
• 27:35
  Speaker 1: Once again, here's Todd Lutsky and Susan Powers.
• 27:40
  Speaker 2: Welcome back, Todd. We have a few questions from listeners.
• 27:43
  Speaker 2: First question comes from Bob and Hyanna's Mass and Bob Wrights.
• 27:47
  Speaker 2: Can I buy my mother's house from her at a discount?
• 27:50
  Speaker 2: She's having a hard time keeping up with the mortgage payments,
• 27:53
  Speaker 2: and I'm in a position to help her out. The
• 27:56
  Speaker 2: sale would leave her with around one hundred thousand in
• 27:59
  Speaker 2: proceeds after she pays off the mortgage if she ends
• 28:02
  Speaker 2: up going into a nursing home. Would this be an
• 28:04
  Speaker 2: issue with Medicaid if she sells it to me at
• 28:07
  Speaker 2: a discount, even if it is in exchange for living
• 28:10
  Speaker 2: rent free going forward?
• 28:12
  Speaker 3: Hmm, this is interesting, all right, so.
• 28:16
  Speaker 2: We might have to make up some numbers around this.
• 28:18
  Speaker 3: Yes, right, So if you're going to take the house
• 28:21
  Speaker 3: and sell it to.
• 28:23
  Speaker 2: Mom, right, Nope, Mom, mom owns that home.
• 28:25
  Speaker 3: I'm sorry, she's buying it from mom. Mom's selling it.
• 28:28
  Speaker 2: Mom's selling it to her son.
• 28:29
  Speaker 3: Bob, but at a discount, right, So I'm going to
• 28:32
  Speaker 3: say that you have a what they call, at least
• 28:34
  Speaker 3: from a tax perspective, a part sale, part gift. Okay, okay,
• 28:40
  Speaker 3: So it's a part sale, part gift. And so is
• 28:46
  Speaker 3: that going to be treated for So for income taxes, yes,
• 28:51
  Speaker 3: they'll it'll be a taxable event, but she'll probably have
• 28:57
  Speaker 3: her exemption for primary residence and whatnot, so she might
• 29:01
  Speaker 3: not have a big income tax issue mm hmm. And
• 29:05
  Speaker 3: a gift but again, she won't have a gift tax
• 29:07
  Speaker 3: because she's giving some of it away. But she has this,
• 29:09
  Speaker 3: as we just talked about, a thirteen point six million
• 29:12
  Speaker 3: dollar gift tax exemption, so she's probably not going to
• 29:15
  Speaker 3: have a gift tax problem.
• 29:16
  Speaker 2: So let's say she discounts it by one hundred grand.
• 29:19
  Speaker 3: So if she discounts it by one hundred grand.
• 29:21
  Speaker 2: So that's one hundred thousand dollars gift essentially, right.
• 29:23
  Speaker 3: Right, And so for income taxes and gift taxes, I
• 29:26
  Speaker 3: think we're probably okay, okay, it's not going to cause
• 29:29
  Speaker 3: her that big of a of a headache. But from
• 29:31
  Speaker 3: a medicaid perspective, it will. So from a medicaid perspective.
• 29:36
  Speaker 3: They're going to say that you made a hundred thousand
• 29:38
  Speaker 3: dollars gift.
• 29:39
  Speaker 2: So they can't like tick away at that or for
• 29:42
  Speaker 2: like monthly rent as they go forward something like that.
• 29:45
  Speaker 3: No, I don't. I don't think it matters.
• 29:47
  Speaker 2: You mean, so like, let's consider this hundred thousand as
• 29:52
  Speaker 2: my month some payment to live because she's going to
• 29:56
  Speaker 2: stay in her house. He's just going to own it
• 29:58
  Speaker 2: the sun. I'm on for a loophole here.
• 30:01
  Speaker 3: Yeah, I'm not seeing it. I'm I'm thinking they're gonna say,
• 30:05
  Speaker 3: you know, you gave away something and got something less
• 30:08
  Speaker 3: in exchange, or you're gonna say, well, no, what I
• 30:10
  Speaker 3: got in exchange is you know, rent free living? Yeah, somehow,
• 30:16
  Speaker 3: I mean I could. I think it'd be a stretch.
• 30:20
  Speaker 3: I wouldn't. I wouldn't jump up and down about that.
• 30:22
  Speaker 3: I would. I would be thinking that there's probably going
• 30:25
  Speaker 3: to be this idea that you know, you don't own
• 30:29
  Speaker 3: you gave away something and got something less than fair
• 30:32
  Speaker 3: market value in return, because you can't double count it, right,
• 30:37
  Speaker 3: you know, if you gave away the whole thing and
• 30:40
  Speaker 3: started paying rent, well, then well again, if you gave
• 30:43
  Speaker 3: it away, you'd be in trouble. So but if you
• 30:45
  Speaker 3: sold it and took back money, well then that would
• 30:48
  Speaker 3: not be a gift, and then you could pay rent
• 30:50
  Speaker 3: and that would be fine. But yeah, I'm I'm a
• 30:52
  Speaker 3: little concerned about this one. I don't see how you're
• 30:55
  Speaker 3: going to get away with that not being something that
• 30:58
  Speaker 3: you gave away and receive something less than fair market
• 31:01
  Speaker 3: value in return, which is the definition of a Medicaid
• 31:06
  Speaker 3: disqualifying transfer.
• 31:08
  Speaker 2: So if he has the house, so her son has
• 31:10
  Speaker 2: the house, she's still living there, if she goes into
• 31:12
  Speaker 2: a nursing home, could he then because he's paying off
• 31:17
  Speaker 2: the mortgage, is no doubt on it, so he owns it. Clear,
• 31:20
  Speaker 2: So could he take one hundred grand out in equity
• 31:23
  Speaker 2: and then to give that to her if she goes
• 31:25
  Speaker 2: in the nursing home to cure it?
• 31:27
  Speaker 3: Yes, I would say that would that would certainly cure it.
• 31:31
  Speaker 3: I mean, there's some argument to be said that the
• 31:34
  Speaker 3: house itself wouldn't be countable because if she's still living there,
• 31:40
  Speaker 3: she doesn't own it though she wouldn't own it, so
• 31:43
  Speaker 3: she couldn't but she could claim that she's still living there.
• 31:45
  Speaker 3: But but you're right, there would be there'd be a
• 31:47
  Speaker 3: concern that he's going to have to come up with
• 31:50
  Speaker 3: one hundred grand, not because he has to worry that
• 31:53
  Speaker 3: they're going to take his house, because they won't go
• 31:56
  Speaker 3: after the person who received the gift. We'll just simply
• 32:00
  Speaker 3: deny the giver medicaid. So now he's faced with this
• 32:03
  Speaker 3: situation of well, check mom. Yeah, I got to get mom.
• 32:08
  Speaker 3: Either I either got to start paying the nursing home
• 32:10
  Speaker 3: monthly or I got to get the check back to
• 32:12
  Speaker 3: mom and then find an elder law lawyer and figure
• 32:14
  Speaker 3: out what we can do last minute. And there are
• 32:16
  Speaker 3: things to get her eligible for medicaid right now to
• 32:21
  Speaker 3: slow the bleeding on that money rather than pay privately,
• 32:25
  Speaker 3: which is a lot.
• 32:26
  Speaker 2: So yeah, why we need to do our planning in
• 32:28
  Speaker 2: advance immally. Then you don't have to worry about any
• 32:30
  Speaker 2: of this stuff.
• 32:31
  Speaker 3: I couldn't agree more. And I think that's perfectly what
• 32:34
  Speaker 3: this leads you into. This guide, folks, this guy deals
• 32:37
  Speaker 3: with the irrevocable trust and how to protect the asset
• 32:42
  Speaker 3: from the nursing home, while it's also showing you how
• 32:45
  Speaker 3: to use that irrevocable trust to shelter assets from the
• 32:49
  Speaker 3: cost of long term care. I'm sorry to shelter assets
• 32:53
  Speaker 3: from estate taxes. Right, so it's got the marital share
• 32:56
  Speaker 3: and the remainder share built in. And then contrast that
• 32:59
  Speaker 3: with all of you folks out there who are saying,
• 33:01
  Speaker 3: I'm not worried about nursing home planning, but I am
• 33:04
  Speaker 3: worried about the darn taxes. This guide deals with a
• 33:07
  Speaker 3: revocable trust and explains the remainder share and the marital
• 33:11
  Speaker 3: share and allows you to understand both federal and state
• 33:15
  Speaker 3: estate taxes and how to shelter them. Call and get
• 33:18
  Speaker 3: the guided is the end of the month, end of
• 33:20
  Speaker 3: the year eight six six eight four eight five six
• 33:24
  Speaker 3: nine nine or Legal Exchange Show dot com again eight
• 33:28
  Speaker 3: six six eight four eight five six ninety nine or
• 33:32
  Speaker 3: Legal Exchange Show dot com.
• 33:34
  Speaker 2: Our last question comes from Rick in Rochester, mass and
• 33:37
  Speaker 2: Rick writes, my grandfather's health has been failing and there
• 33:41
  Speaker 2: wasn't anyone else to take care of him, so I
• 33:43
  Speaker 2: moved in with him three years ago. I'm concerned that
• 33:46
  Speaker 2: if he goes into a nursing home, I won't have
• 33:48
  Speaker 2: anywhere to live. Is there anything we can do to
• 33:51
  Speaker 2: save his house? He doesn't have a mortgage on it,
• 33:53
  Speaker 2: and I am his only beneficiary because my father already
• 33:57
  Speaker 2: passed away. This is a grand SiGe taking care of grandpa.
• 34:01
  Speaker 3: Yeah, so in this part, there's there's always these exceptions
• 34:06
  Speaker 3: to you know, irrevocable trust planning. There's exceptions. And you
• 34:12
  Speaker 3: were trying to talk about the five year rule on
• 34:14
  Speaker 3: the last one. There's exceptions to that when you're when
• 34:19
  Speaker 3: you're doing nursing home planning. And the one exception that
• 34:23
  Speaker 3: I think a lot of people are listening for here is,
• 34:26
  Speaker 3: you know, this is my grandfather, so I'm the you know,
• 34:31
  Speaker 3: the grandson moving in and taking care of him. Well,
• 34:35
  Speaker 3: there's something we all know called the caretaker child exception
• 34:39
  Speaker 3: where if a child moves in and tries to protect
• 34:43
  Speaker 3: that tries to take care of a parent, and and
• 34:47
  Speaker 3: the and the rule is you actually have to live
• 34:49
  Speaker 3: there for two years and then also provide nursing home
• 34:55
  Speaker 3: level care for two years. And if you can satisfy
• 34:59
  Speaker 3: that and not just any care, nursing home level care
• 35:03
  Speaker 3: like daily living needs, you know, things like cooking, bathing, toileting, transferring, feeding,
• 35:12
  Speaker 3: I mean, these are the kinds of things that you
• 35:14
  Speaker 3: need to be doing. And if you are and you
• 35:16
  Speaker 3: do that for two years, prior to that person entering
• 35:19
  Speaker 3: a nursing home. Then you could transfer the asset, the asset,
• 35:24
  Speaker 3: the house, which is what we're talking about here, to
• 35:27
  Speaker 3: that child and then that child. That would not be
• 35:32
  Speaker 3: a disqualifying transfer. You would not be stuck with a
• 35:36
  Speaker 3: five year waiting period for that particular transfer. And so
• 35:42
  Speaker 3: that would work, but not if you're a grandchild. It
• 35:46
  Speaker 3: sounds like it's a great thing because I moved in
• 35:48
  Speaker 3: and taking care of it, but it would not work
• 35:52
  Speaker 3: for a grandchild. I mean, you'd have to go through
• 35:54
  Speaker 3: some major adoption and say I'm adopting him as my kid.
• 35:57
  Speaker 3: I guess that would work, but you're never gonna get there.
• 36:00
  Speaker 3: That's just a lot of work.
• 36:01
  Speaker 2: So if grandpa does go into the nursing home, he essentially,
• 36:07
  Speaker 2: if that was really his only asset to speak of,
• 36:10
  Speaker 2: he could qualify for Medicaid. Right, they wouldn't. They wouldn't
• 36:13
  Speaker 2: kick the grandsign out while the grandfather's in the nursing home, right,
• 36:16
  Speaker 2: while he's still living. I would correct, that's correct.
• 36:21
  Speaker 3: I don't think that. I've never seen it. I think
• 36:23
  Speaker 3: they could, but I've never seen it. I think what
• 36:26
  Speaker 3: would ultimately happen here is provided the value of the
• 36:30
  Speaker 3: home is less than I'm going to say about a million,
• 36:33
  Speaker 3: ninety seven thousand dollars. It bumps up every year as
• 36:37
  Speaker 3: long as it's less than that value, and he would
• 36:42
  Speaker 3: check a box that I intend to return home. When
• 36:44
  Speaker 3: you apply for medicaid application, I would say, they would
• 36:48
  Speaker 3: not take it, they would lean it, and so there'd
• 36:51
  Speaker 3: be a lean placed on it when he dies. But
• 36:54
  Speaker 3: at least he you know.
• 36:55
  Speaker 2: Then he gets it.
• 36:56
  Speaker 3: Yeah, then he has to deal with it then, folks,
• 36:58
  Speaker 3: not the most ideal way to go. Get the guide
• 37:01
  Speaker 3: and learn how to do both nursing home planning and
• 37:05
  Speaker 3: protection from the cost of long term care and estate
• 37:07
  Speaker 3: taxes eight six six eight four eight five six nine
• 37:11
  Speaker 3: to nine.
• 37:12
  Speaker 2: If you have a question you would like to ask Todd,
• 37:14
  Speaker 2: visit his website Legal Exchange Show dot com and click
• 37:18
  Speaker 2: on the ass Tod tab. Maybe I'll be able to
• 37:20
  Speaker 2: read your question on the air, and hopefully his answer
• 37:23
  Speaker 2: will stop you from becoming one of his next real
• 37:26
  Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
• 37:29
  Speaker 2: with the law firm of Cushing and Dolan. I'm Susan Powers,
• 37:33
  Speaker 2: a financial advisor with the Armstrong Advisory Group. We'll be
• 37:36
  Speaker 2: right back on the Legal Exchange with Todd Lutsky.
• 37:40
  Speaker 1: If you're retired or nearing retirement and haven't done your
• 37:43
  Speaker 1: planning yet, you could be missing out on opportunities that
• 37:46
  Speaker 1: can save you thousands of dollars. Cushing and Dolan are
• 37:49
  Speaker 1: experts and elder law and taxation, and they have a
• 37:51
  Speaker 1: new guide out this month called Balancing Asset Protection and
• 37:54
  Speaker 1: Avoiding Estate Taxes. Early estate planning can have many benefits,
• 37:58
  Speaker 1: especially if you want to protect the AA sets, but
• 38:00
  Speaker 1: there's another big advantage. Doing your planning the right way
• 38:03
  Speaker 1: might also help you eliminate your estate taxes. Learn how
• 38:06
  Speaker 1: to keep your assets in your family and avoid probate.
• 38:09
  Speaker 1: Get Cushing and Dolan's brand new guide called Balancing Asset
• 38:12
  Speaker 1: Protection into Avoiding Estate Taxes. Call right now eight sixty
• 38:16
  Speaker 1: six eight four eight five six ninety nine. That number
• 38:18
  Speaker 1: again is eight sixty six eight four eight five six
• 38:21
  Speaker 1: ninety nine, or you can request your guide online from
• 38:24
  Speaker 1: our website Legal Exchange Show dot com. That's a Legal
• 38:28
  Speaker 1: Exchange show dot com. The proceeding was paid for in
• 38:30
  Speaker 1: The views expressed are solely those of Cushing and Dolan.
• 38:33
  Speaker 1: Cushing and Dolan and or Armstrong Advisory may contact you
• 38:35
  Speaker 1: offering legal or investment services. Cushing and Dolan and Armstrong
• 38:38
  Speaker 1: Advisory do not endorse each other and are not affiliated HI.
• 38:41
  Speaker 4: This is Chucks outa from the Armstrong Advisory Group. Your
• 38:44
  Speaker 4: lifelong financial plan should always be top of mind, and
• 38:47
  Speaker 4: as another new year approaches, now is the time to
• 38:49
  Speaker 4: review some key numbers that may affect your strategy going forward.
• 38:53
  Speaker 4: Our guide walks you through several important numbers that you'll
• 38:55
  Speaker 4: need to be familiar with for twenty twenty five, especially
• 38:58
  Speaker 4: from a tax standpoint. It's called called Key Numbers for
• 39:00
  Speaker 4: twenty twenty five, and in it will explain marginal tax
• 39:03
  Speaker 4: brackets for both married couples and single filers, as well
• 39:07
  Speaker 4: as information about the standard deduction that'll be pivotal for
• 39:10
  Speaker 4: your financial planning strategy. We'll also explore other areas like
• 39:13
  Speaker 4: the federal estate tax and gifting limits. Call us right
• 39:17
  Speaker 4: now at eight hundred thirty nine three for zero zero
• 39:20
  Speaker 4: one and ask for your free guide today. That's eight
• 39:22
  Speaker 4: hundred three nine three for zero zero one.
• 39:25
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 39:28
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 39:30
  Speaker 1: Armstrong guide a specific financial, legal or tax advice. Consult
• 39:34
  Speaker 1: your own financial, tax and estate planning advisors before making
• 39:36
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 39:39
  Speaker 1: advisory services. The US Virgin Islands are Saint Croix, Saint Thomas,
• 39:46
  Speaker 1: and Saint John. Visit one or all three and enjoy
• 39:49
  Speaker 1: the vacation of a lifetime. Each island is special in
• 39:53
  Speaker 1: its own unique way, so whether you want the heritage
• 39:55
  Speaker 1: of Saint Croix, the pristine beaches of Saint Thomas, or
• 39:58
  Speaker 1: the common relaxation of s John, the US Virgin Islands
• 40:02
  Speaker 1: is one of the top vacation spots to visit in
• 40:04
  Speaker 1: the Caribbean. You can expect perfect temperatures, a wide variety
• 40:07
  Speaker 1: of water sports, world class cuisine, and a vibrant nightlife.
• 40:11
  Speaker 1: From the moment you arrive, you'll fall naturally in rhythm
• 40:14
  Speaker 1: with the heartbeat of the islands. There's no money to exchange,
• 40:17
  Speaker 1: and travel from New England could not be easier. Make
• 40:20
  Speaker 1: your plans now by going to visit USVII dot com.
• 40:23
  Speaker 1: Learn about all three islands and plan the ideal vacation
• 40:26
  Speaker 1: for you and your family. America's Caribbean paradise is waiting
• 40:30
  Speaker 1: for you, so head to visit USVII dot com for
• 40:33
  Speaker 1: more information and to reserve your trip today. That's visit
• 40:36
  Speaker 1: USVII dot com. Your tune to the Legal Exchange with
• 40:43
  Speaker 1: Todd Lutsky. If you are a loved one needs a
• 40:46
  Speaker 1: nursing homestay, call Todd right now at eight six six
• 40:49
  Speaker 1: eight four eight five six ninet nine and let him
• 40:51
  Speaker 1: make sure your assets are protected. That's eight six six
• 40:54
  Speaker 1: eight for eight five six nine nine, or visit him
• 40:56
  Speaker 1: online at Legal Exchange show dot com.
• 41:01
  Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
• 41:04
  Speaker 2: Susan Parris, a financial advisor with the Armstrong Advisory Group,
• 41:08
  Speaker 2: and I'm joined, of course by Todd Lutsky, a partner
• 41:11
  Speaker 2: with a law firm of Cushing and Dolan with a
• 41:13
  Speaker 2: master's in taxation. So Todd, we have a mutual client.
• 41:18
  Speaker 2: Husband and wife was he was seventy eight. He recently
• 41:23
  Speaker 2: passed away, and his wife is in her I think
• 41:26
  Speaker 2: she's about seventy six or so. She has Alzheimer's and
• 41:30
  Speaker 2: they were living together in their home. So now her
• 41:33
  Speaker 2: son is stepping in to really take care of mom.
• 41:39
  Speaker 2: I'm not sure, if she'll be able to stay at home.
• 41:42
  Speaker 2: I think he's going to move in with her for
• 41:44
  Speaker 2: a while. But they did trust planning with you. They
• 41:49
  Speaker 2: have two irrevocable trusts that they funded with their home
• 41:52
  Speaker 2: and a good amount of assets. They've put two million
• 41:55
  Speaker 2: combined in their trust accounts, and then they also have
• 42:00
  Speaker 2: an IRA for her it's about three hundred thousand, and
• 42:05
  Speaker 2: he has a roth IRA worth about four hundred thousand.
• 42:12
  Speaker 2: I think this is a very typical situation where a
• 42:16
  Speaker 2: child now needs to step in and husband passed away
• 42:21
  Speaker 2: recently with that roth, with that wroth.
• 42:24
  Speaker 3: Yeah, who do you think the designated beneficiary was?
• 42:26
  Speaker 2: Okay, yep, life is yep, Nope, that's good. What does
• 42:31
  Speaker 2: he need to do now, because he's going to be
• 42:33
  Speaker 2: facilitating her care? What she needs? What needs to happen
• 42:38
  Speaker 2: with the trust, you know, basic documents, updates, things like that.
• 42:44
  Speaker 2: What does he have to do at this point?
• 42:45
  Speaker 3: Well, what she have to do?
• 42:48
  Speaker 2: Well, yes, but he has to do it on her
• 42:50
  Speaker 2: bealf because she has Alzheimer's.
• 42:52
  Speaker 3: Oh the son you mean yeh? Because the husband the.
• 42:54
  Speaker 2: Need to do What does the son need to do exactly?
• 42:56
  Speaker 3: Yeah, So the son should certainly call the lawyer and
• 43:02
  Speaker 3: clean up things right from an estate and this is
• 43:05
  Speaker 3: your client planning standpoint. Yeah, so then they should call us. Yes,
• 43:09
  Speaker 3: I mean it makes sense. We're not tell them they
• 43:11
  Speaker 3: have to. They don't. They can call any estate but
• 43:13
  Speaker 3: it just makes sense, and I should tell that to everybody.
• 43:15
  Speaker 3: It's like the goal here is to you know, you
• 43:17
  Speaker 3: should go to who did your estate planning because they've
• 43:20
  Speaker 3: drafted it. They don't have to read it, they don't
• 43:22
  Speaker 3: have to become familiar with the file, they know you
• 43:25
  Speaker 3: and the family. It saves time and money. So now
• 43:31
  Speaker 3: let's say he calls me, I would then instruct him
• 43:34
  Speaker 3: on what we call the estate administration matters. Estate administration
• 43:41
  Speaker 3: matters are taking the estate plan that we had in
• 43:46
  Speaker 3: place and moving it along, like taking it across the
• 43:50
  Speaker 3: goal line to do what it's designed to do. So,
• 43:53
  Speaker 3: I mean, you've got a two million dollar investment portfolio,
• 43:56
  Speaker 3: probably I don't know one in each trust, and a
• 43:59
  Speaker 3: home it's got be worth a million, so we've probably
• 44:02
  Speaker 3: got it.
• 44:02
  Speaker 2: It's about five hundred thousand the home.
• 44:04
  Speaker 3: Okay, So let's say that there's two million and five hundred,
• 44:07
  Speaker 3: so two point five in each trust, give or take
• 44:09
  Speaker 3: or is it one point five.
• 44:11
  Speaker 2: It's one million in each trust plus the house.
• 44:13
  Speaker 3: Oh, so so call it let's just call it one
• 44:14
  Speaker 3: point five in each trust. So you got about one
• 44:17
  Speaker 3: point five million in each trust. It's very important now
• 44:22
  Speaker 3: that the trust, while it was irrevocable when the spouse
• 44:27
  Speaker 3: when they were both living, it's still irrevocable, but it's
• 44:32
  Speaker 3: changed from what we call a grand tour trust to
• 44:34
  Speaker 3: a non grand tour trust because the donor is deceased.
• 44:39
  Speaker 3: So we got to get a new tax ID number
• 44:42
  Speaker 3: for the trust. And all those assets are going to
• 44:45
  Speaker 3: avoid probate, which is great, but we still file the will,
• 44:49
  Speaker 3: and we still create buckets inside this trust, the marital
• 44:54
  Speaker 3: share and the remainder share, to take, in this case,
• 44:57
  Speaker 3: the whole one point five million and put it the
• 45:00
  Speaker 3: remainder share, as the marital share will remain empty simply
• 45:04
  Speaker 3: because we have less than two million dollars, which is
• 45:08
  Speaker 3: the Massachusetts estate tax exemption. So the whole one point
• 45:12
  Speaker 3: five goes in the remainder share, and that will cause
• 45:17
  Speaker 3: it to be sheltered from the cost of I'm sheltered
• 45:21
  Speaker 3: from estate taxes when the survivor dies, tax now, but
• 45:26
  Speaker 3: not taxed later.
• 45:28
  Speaker 2: So do you always need to get a new tax
• 45:30
  Speaker 2: ID number when someone passes away.
• 45:33
  Speaker 3: If the trust has income producing assets, Yes, okay, you
• 45:37
  Speaker 3: do because it needs to file. So in this case,
• 45:40
  Speaker 3: that's all sheltered from future taxes, even though you got
• 45:44
  Speaker 3: to subject it to tax. Now, remember there's a two
• 45:47
  Speaker 3: million dollar exemption, so one point five is less.
• 45:50
  Speaker 2: Than the two See file, but you don't have to pay.
• 45:51
  Speaker 3: File. But in this case you won't even have to file.
• 45:53
  Speaker 3: If that was the total estate, you'd be under the threshold.
• 45:56
  Speaker 3: You won't even have to file. But it needs to
• 45:58
  Speaker 3: be tucked away. So you need to do these things
• 46:00
  Speaker 3: to make it happen, folks. That's what this guide is
• 46:04
  Speaker 3: all about. It explains that marital share, that remainder share.
• 46:08
  Speaker 3: It explains how it works to shelter both federal and
• 46:11
  Speaker 3: state estate taxes. It runs through the new Massachusetts of
• 46:16
  Speaker 3: State tax calculation. It does it for revocable trusts, and
• 46:21
  Speaker 3: it does it for irrevocable trusts, so that in case
• 46:24
  Speaker 3: you're concerned about also protecting assets from the nursing home,
• 46:27
  Speaker 3: this guide will explain both for you something for everyone.
• 46:30
  Speaker 3: It's the end of the year, end of the month,
• 46:33
  Speaker 3: last chance to get it a tale of two objectives,
• 46:35
  Speaker 3: reducing estate taxes and protecting assets from the nursing home
• 46:39
  Speaker 3: eight six six eight four eight five six ninety nine
• 46:44
  Speaker 3: or Legal Exchange Show dot com again eight six six
• 46:48
  Speaker 3: eight four eight five six nine nine or Legal Exchange
• 46:52
  Speaker 3: Show dot Com.
• 46:53
  Speaker 2: So now they go through the state administration process, they
• 46:57
  Speaker 2: file if they have to file a tax return, and
• 46:59
  Speaker 2: they fund that new trust. Yes, what about I know
• 47:05
  Speaker 2: that you've said when a spouse passes away, you got
• 47:08
  Speaker 2: to relook at your basic documents, like your power of
• 47:10
  Speaker 2: attorney and your healthcare proxy. Yes, if you have someone
• 47:14
  Speaker 2: who doesn't have Alzheimer's, what would you recommend that they
• 47:19
  Speaker 2: do at that time?
• 47:20
  Speaker 3: And remember, folks, that Susan's bringing up really a good
• 47:23
  Speaker 3: point and looking at both sides of the equation. Since
• 47:26
  Speaker 3: she doesn't have I mean, since she does have Alzheimer's,
• 47:31
  Speaker 3: she if she's deemed incapacitated or not competent, then you're right.
• 47:36
  Speaker 3: We cannot update the will, the health care proxy, the
• 47:40
  Speaker 3: power of attorney, basic documents. But the good news is,
• 47:44
  Speaker 3: and this is why we draft it like this, there's
• 47:47
  Speaker 3: always an alternate YEP. So now that her husband is
• 47:51
  Speaker 3: no longer serving in that role. The alternate, perhaps the Sun.
• 47:56
  Speaker 2: Or I mean it is that son that's the alternate.
• 47:58
  Speaker 3: Would kick in and serve in those roles as potentially
• 48:03
  Speaker 3: the executor of the will, or the alternate health care proxy,
• 48:07
  Speaker 3: or the alternate power of attorney that may be there.
• 48:10
  Speaker 3: Now that's great, but remember it works. But if you
• 48:16
  Speaker 3: are competent and you are healthy enough to do new ones,
• 48:20
  Speaker 3: you should Why it's good to have a new alternate, right,
• 48:26
  Speaker 3: something could happen, right, so so this way you would
• 48:28
  Speaker 3: always take, you probably would end up taking the old
• 48:32
  Speaker 3: alternate and likely making that person the primary.
• 48:36
  Speaker 2: So in this case, her son would become the primary.
• 48:39
  Speaker 3: And then she would pick an alternate in case something
• 48:42
  Speaker 3: happens to the Sun. I mean, at this point, she's
• 48:45
  Speaker 3: just gonna have to roll the dice and hope nothing
• 48:47
  Speaker 3: happens to the Sun. That's okay, though, So.
• 48:50
  Speaker 2: If she is faced with going into the nursing home,
• 48:54
  Speaker 2: you know, she's got three hundred thousand iras and she's
• 48:58
  Speaker 2: in traditional iras. Now she's going to have another four
• 49:02
  Speaker 2: hundred thousand in the wroth. What do they do? Is
• 49:06
  Speaker 2: it just they have to private pay and spend down
• 49:08
  Speaker 2: that whole seven hundred.
• 49:10
  Speaker 3: You know, the only thing you might look at here
• 49:12
  Speaker 3: if they you know, if that's what they're faced with.
• 49:15
  Speaker 3: And again I don't know how much you know, but
• 49:17
  Speaker 3: don't forget in her trust there's another million five correct,
• 49:22
  Speaker 3: So folks, there's three million dollars sheltered. So we don't
• 49:26
  Speaker 3: lose sight of what actually has been done. Yes, right,
• 49:30
  Speaker 3: And we've sheltered the assets from taxes. We've got to
• 49:33
  Speaker 3: step up in bases for income taxes we provided for
• 49:35
  Speaker 3: the family. I mean, this is a home run plan.
• 49:39
  Speaker 3: These pieces are hard to deal with. Now she does
• 49:42
  Speaker 3: have Alzheimer's, and that's the problem. I don't know if
• 49:44
  Speaker 3: it's something we can keep her home for a while.
• 49:46
  Speaker 2: I think that they probably could. I think they would
• 49:49
  Speaker 2: like to keep her home as long as possible.
• 49:51
  Speaker 3: Right, And so then let's let's try to pay for it. Yeah,
• 49:54
  Speaker 3: But by the same token, let's take the wroth. There's
• 49:58
  Speaker 3: probably got plenty of tax free already. We've enjoyed all that, sure, Yeah,
• 50:02
  Speaker 3: so maybe go ahead and transfer some of that now
• 50:05
  Speaker 3: into the irrevocable trust, okay, and get a five year
• 50:08
  Speaker 3: waiting period started for her leave the IRA money outside
• 50:13
  Speaker 3: the trust, so that we can use that to pay
• 50:14
  Speaker 3: for her care, which also might get a tax deduction
• 50:17
  Speaker 3: if it goes for medical expenses. Folks, always something to do.
• 50:21
  Speaker 3: Last minute and get your plan and get your plan
• 50:24
  Speaker 3: in order, and finally get the guide to learn how
• 50:28
  Speaker 3: to reduce your taxes and protect assets from the nursing
• 50:31
  Speaker 3: home at the same time. End of the year, end
• 50:35
  Speaker 3: of the month. Get the guide eight six six eight
• 50:39
  Speaker 3: four eight five six nine nine or Legal Exchange show
• 50:44
  Speaker 3: dot com.
• 50:45
  Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan,
• 50:48
  Speaker 2: thank you so much.
• 50:49
  Speaker 3: Thank you, Susan. Always a pleasure.
• 50:51
  Speaker 2: We thank you for joining us today and we'll be
• 50:53
  Speaker 2: back again next week on the Legal Exchange with Todd Lutsky.
• 50:59
  Speaker 1: If you were to tell or nearing retirement and haven't
• 51:01
  Speaker 1: done your planning yet, you could be missing out on
• 51:04
  Speaker 1: opportunities that can save you thousands of dollars. Cushing and
• 51:07
  Speaker 1: Dolan are experts in elder law and taxation, and they
• 51:10
  Speaker 1: have a new guide out this month called Balancing Asset
• 51:12
  Speaker 1: Protection and Avoiding Estate Taxes. Early estate planning can have
• 51:16
  Speaker 1: many benefits, especially if you want to protect the assets,
• 51:19
  Speaker 1: but there's another big advantage. Doing your Planning the right
• 51:22
  Speaker 1: way might also help you eliminate your estate taxes. Learn
• 51:25
  Speaker 1: how to keep your assets in your family and avoid probate.
• 51:28
  Speaker 1: Get Cushing and Dolan's brand new guide called Balancing, Asset
• 51:31
  Speaker 1: Protection and Avoiding Estate Taxes. Call right now eight sixty
• 51:35
  Speaker 1: six eight four eight five six niney nine. That number
• 51:37
  Speaker 1: again is eight six six eight four eight five six
• 51:40
  Speaker 1: nine nine, Or you can request your guide online from
• 51:43
  Speaker 1: our website Legal exchange show dot com. That's Legal exchange
• 51:47
  Speaker 1: show dot com. The proceeding was paid for in The
• 51:49
  Speaker 1: views expressed are solely those of Cushing and Dolan. Cushing
• 51:52
  Speaker 1: and Dolan and or Armstrong Advisory may contact you offering
• 51:54
  Speaker 1: legal or investment services. Cushing and Dolan and Armstrong Advisory
• 51:57
  Speaker 1: do not endorse each other and are not affiliated. The
• 52:01
  Speaker 1: US Virgin Islands are Saint Croix, Saint Thomas, and Saint John.
• 52:05
  Speaker 1: Visit one or all three and enjoy the vacation of
• 52:08
  Speaker 1: a lifetime. Each island is special in its own unique way,
• 52:12
  Speaker 1: So whether you want the heritage of Saint Croix, the
• 52:14
  Speaker 1: pristine beaches of Saint Thomas, or the common relaxation of
• 52:17
  Speaker 1: Saint John, the US Virgin Islands is one of the
• 52:20
  Speaker 1: top vacation spots to visit in the Caribbean. You can
• 52:23
  Speaker 1: expect perfect temperatures, a wide variety of water sports, world
• 52:26
  Speaker 1: class cuisine, and a vibrant nightlife. From the moment you arrive,
• 52:30
  Speaker 1: you'll fall naturally in rhythm with the heartbeat of the islands.
• 52:33
  Speaker 1: There's no money to exchange, and travel from New England
• 52:36
  Speaker 1: could not be easier. Make your plans now by going
• 52:39
  Speaker 1: to visit USVII dot com. Learn about all three islands
• 52:43
  Speaker 1: and plan the ideal vacation for you and your family.
• 52:46
  Speaker 1: America's Caribbean paradise is waiting for you, so head to
• 52:49
  Speaker 1: visit USVII dot com for more information and to reserve
• 52:52
  Speaker 1: your trip today. That's visit USVII dot com.
• 53:00
  Speaker 5: Financial planning is a year round job, and with twenty
• 53:02
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• 53:04
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• 53:07
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• 53:09
  Speaker 5: this is Mike Armstrong from the Armstrong Advisory Group, and
• 53:12
  Speaker 5: our new guide may help you understand some key numbers
• 53:14
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• 53:16
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  Speaker 5: eight hundred three nine three four zero zero one. That
• 53:43
  Speaker 5: number again is eight hundred three nine three four zero
• 53:46
  Speaker 5: zero one.
• 53:46
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 53:49
  Speaker 1: registered investment advisor. Nothing in the ad or any Armstrong
• 53:51
  Speaker 1: Guide a specific financial, legal, or tax advice. Consult your
• 53:54
  Speaker 1: own financial tax into state planning advisors before making any
• 53:56
  Speaker 1: investment decisions. Armstrong may contact you to offer investment advisory services.