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Ask Todd: The beauty of revocable trusts · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Lutsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with estate and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As promised, We've got Todd Lutsky live in studio here
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  Speaker 2: to answer your estate planning questions. Phone lines wide open
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  Speaker 2: right now at eight eight eight to zero five two
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  Speaker 2: two six three. That is the number to call to
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  Speaker 2: ask Todd your estate planning questions live on air again.
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  Speaker 2: It is eight eight eight two zero five two two
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  Speaker 2: six three. Remember we can usually get to about two
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  Speaker 2: or three of your calls, so make sure you get
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  Speaker 2: in line early so that you can ask Todd your
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  Speaker 2: estate planning questions again. That number is eight eight eight
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  Speaker 2: two zero five two two six three. Mister Lutsky, how
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  Speaker 2: are you doing today?
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  Speaker 3: I am never better? How are you? I'm good?
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  Speaker 2: Did you see that these scientists. They tried to cross
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  Speaker 2: a cheetah with a crab.
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  Speaker 3: A cheetah and a crab. Yeah, that doesn't seem like
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  Speaker 3: a good mix.
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  Speaker 2: No, it went sideways real fast. Yeah, not great, Todd.
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  Speaker 2: Let's talk a little bit about revocable trust to day
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  Speaker 2: everyone likes to talk about like the big brother, irrevocable,
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  Speaker 2: like irrevocable trust, revocable trusts. Yes, what can they accomplish?
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  Speaker 3: So they can accomplish certainly, you know estate tax planning.
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  Speaker 3: They can accomplish avoiding probate, and they can accomplish you know,
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  Speaker 3: dynasty trust planning. They can They can allow you to
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  Speaker 3: continue to control the asset after you die for a
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  Speaker 3: very long time. Some states have no rule against perpetuities,
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  Speaker 3: means it can go on forever. Not Massachusetts, of course
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  Speaker 3: it allows you to do it, but only up for
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  Speaker 3: about yeah, one hundred years give or take is the
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  Speaker 3: rule about how long it can last. But it can
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  Speaker 3: also help you skip generations, meaning you can do generations
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  Speaker 3: skipping tax planning where you can take care of the family,
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  Speaker 3: protect from creditors and divorces, and still make it go
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  Speaker 3: to another generation without paying any estate tax at each generation.
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  Speaker 3: So to me generational building wealth is phenomenal. And I
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  Speaker 3: think also it's important when we talk about you know,
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  Speaker 3: we always talk about irrevocable a lot, but with revocable,
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  Speaker 3: Like with irrevocable, there are many kinds of trusts. There
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  Speaker 3: are many kinds of irrevocable trusts. Even with the revocable world.
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  Speaker 3: Now there's you know, the idea of two trusts versus
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  Speaker 3: one trust, So we got to think about that as well.
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  Speaker 2: Talk with Todd Lutsky from Cushing and Dolan. Again, phone
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  Speaker 2: lines are open for you to ask Todd your is
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  Speaker 2: date planning questions. The phone number is eight eight eight
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  Speaker 2: to zero five two two six three. Again that is
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  Speaker 2: eight eight eight two zero five two two six three.
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  Speaker 2: Still have a little bit of space there for you
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  Speaker 2: to ask Todd your questions. Again, it's eight eight eight
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  Speaker 2: to zero five two two six three. Todd, these revocable
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  Speaker 2: trusts on a daily basis, What are changes that people
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  Speaker 2: would notice from how their finances worked before and what
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  Speaker 2: stays the same?
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  Speaker 3: Yeah, And I think that's part of the beauty of
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  Speaker 3: revocable trusts is that they are really simple. You know,
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  Speaker 3: you don't you don't have any separate income tax returns
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  Speaker 3: to file. So let's like you say, with your finances,
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  Speaker 3: Let's say I put my investment portfolio inside the trust.
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  Speaker 3: Let's say I put my bank account inside the trust.
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  Speaker 3: What's gonna happen. Am I going to not have access
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  Speaker 3: to my money? Absolutely not. So the difference is the name.
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  Speaker 3: Let's say, the name on my on my investment account,
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  Speaker 3: if it was in my trust, would be called you know,
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  Speaker 3: maybe if I'm doing a joint trust, it might be
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  Speaker 3: the Lutsky Family Trust. Okay, that's all that you're gonna see.
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  Speaker 3: The difference is you're gonna see that on your statements
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  Speaker 3: that you get from your your you know, investment advisor,
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  Speaker 3: and your access is exactly the same. Your investments are
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  Speaker 3: exactly the same. And since that account might have the
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  Speaker 3: Lutsky Family Trust as the name, it don't have my
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  Speaker 3: Social Security on it. So there's no income tax returns
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  Speaker 3: need to be filed. Just keep filing your own ten
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  Speaker 3: forty just like you always do. So really becomes, you know,
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  Speaker 3: just simple and uneventful for you, which is what we
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  Speaker 3: want when we do our planning.
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  Speaker 2: Talking with Tod Lutsky from the law firm of Cushing
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  Speaker 2: and Dolan, if you've got a question for Todd. Eight
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  Speaker 2: eight eight two zero five two two sixty three is
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  Speaker 2: the number to call to ask him your question live
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  Speaker 2: on air. Right now, we're going to take a quick
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  Speaker 2: break and when we come back we'll get to your
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  Speaker 2: questions with Todd. That phone number is eight eight eight
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  Speaker 2: to zero five two two six three. Again it is
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  Speaker 2: eight eight eight to zero five two two sixty three.
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  Speaker 1: only here on the Financial Exchange Radio Network. Todd Letsky
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  Speaker 1: answers your questions about a state and elder life planning
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  Speaker 1: every Wednesday at ten thirty right here on the Financial
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  Speaker 1: Exchange Radio Network.
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  Speaker 2: Talking with Todd Lutsky. You got a question for Todd.
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  Speaker 2: The number to call is eight eight eight to zero
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  Speaker 2: five two two sixty three to get your estate planning
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  Speaker 2: question answered. Again, that is eight eight eight to zero
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  Speaker 2: five two two six three. Let's go to Mark in Danvers. Mark,
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  Speaker 2: you are on with Todd Lutsky.
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  Speaker 4: Good morning, that's great show. Thank you.
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  Speaker 1: Question.
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  Speaker 4: You are talking about the vocable truck and you would
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  Speaker 4: mentioned that the trust has no Social Security number assigned
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  Speaker 4: to it. Does that mean you do not have to
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  Speaker 4: pay capital gains on the trust if you put investments
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  Speaker 4: in there.
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  Speaker 3: Well, I'm sure there's a miscommunication on how we did that.
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  Speaker 3: By the way, I love your creativity so awesome. I'd
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  Speaker 3: love to figure out ways not to pay tax. Unfortunately,
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  Speaker 3: what I said was that the revocable trust does not
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  Speaker 3: have its own tax ID number, So you're correct about that. Instead,
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  Speaker 3: like if it was the Lutzky family trust, it would
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  Speaker 3: have my Social Security number on it. Okay. So the
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  Speaker 3: beauty of the of the trust is that when you
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  Speaker 3: put your investment portfolio in and your bank accounts in,
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  Speaker 3: and I don't care if it's a rental property, et cetera,
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  Speaker 3: that the trust itself is not going to have to
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  Speaker 3: file an income tax return. So many people think that
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  Speaker 3: you know when you put assets in a trust that
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  Speaker 3: you pay higher taxes, not no taxes. They say, oh,
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  Speaker 3: I heard that you put assets in a trust, you
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  Speaker 3: have a much higher tax rate. So let me explain
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  Speaker 3: what that means. First of all, with revocable trust that's
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  Speaker 3: not the issue at all. With irrevocable trusts, it can
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  Speaker 3: be if it's not a grand tour trust for income
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  Speaker 3: tax purposes. So if you put it in an irrevocable trust,
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  Speaker 3: and it's not a grand tour trust. When I say
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  Speaker 3: they have higher tax rates if you make more than
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  Speaker 3: and this number changes a lot, I think it's somewhere
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  Speaker 3: around fourteen thousand, maybe a little higher if the trust
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  Speaker 3: earns a little more than that in income, interest, dividends,
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  Speaker 3: capital gains. It's at the top tax rate whatever, that
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  Speaker 3: thirty nine percent thirty seven percent tax rate federally, whereas
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  Speaker 3: with human beings our tax rate, we don't get into
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  Speaker 3: that tax level until we're in the hundreds of thousands
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  Speaker 3: of dollars, depending on whether you're married or so. That's
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  Speaker 3: what I mean when I say trusts can have higher
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  Speaker 3: tax rates and be compressed as they are. But in
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  Speaker 3: the revocable trust situation, the beauty is we don't have
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  Speaker 3: to worry about that at all. You don't have to
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  Speaker 3: file a tax return. But it's not that good, unfortunately, Mark,
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  Speaker 3: I wish I could make it as good as you
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  Speaker 3: like it. The trust doesn't pay the gain or the
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  Speaker 3: tax I do. The grant tour does. The person who
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  Speaker 3: creates the trust does. So it just continues to be
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  Speaker 3: taxed in my Social Security number, at my rates on
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  Speaker 3: my tax return on my ten forty and I don't
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  Speaker 3: have to file a tax return. So to me, that
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  Speaker 3: helps it to be what I like to call simple
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  Speaker 3: and uneventful in my life, not disrupting my life. And folks,
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  Speaker 3: that's important because that really leads me into a brand
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  Speaker 3: new guide that we've never given away before. It's one
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  Speaker 3: that the BBBA passed, as we all know, and it
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  Speaker 3: really just drives home something that we've been doing at
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  Speaker 3: Cushing and Dolan for a long time, joint revocable trusts,
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  Speaker 3: and it's catching on now. People are realizing that it
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  Speaker 3: is important. And for a lot of people with you know,
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  Speaker 3: what's a moderate estate these days under like fifteen million dollars,
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  Speaker 3: the exemption federally is going to go up because of
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  Speaker 3: the passage of the New Act, and it's going to
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  Speaker 3: be fifteen million January one. Well, for a lot of people,
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  Speaker 3: I don't have to give away stuff anymore. I can
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  Speaker 3: keep stuff, avoid a forty percent estate tax, and get
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  Speaker 3: a step up in basis when I die, eliminating the
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  Speaker 3: built in gain that like Mark was talking about, eliminating
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  Speaker 3: the built in gain and winning on the twenty eight
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  Speaker 3: point eight percent front. Wow, even if I got to
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  Speaker 3: give mass ten percent. I don't care. And these joint
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  Speaker 3: revocable trusts are so simple. You don't have to divide
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  Speaker 3: assets between husband and wife. You just fund them simply,
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  Speaker 3: all with all your assets at one time, and you
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  Speaker 3: can cram down way more assets than you could if
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  Speaker 3: you had two trusts. And they're really wonderful if you
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  Speaker 3: have large iras. Folks learn about joint revocable trusts, how
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  Speaker 3: they work, the tax savings, it might be the way
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  Speaker 3: to go for you. Eight six six eight four eight
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  Speaker 3: five six nine nine or Legal Exchange Show dot com
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  Speaker 3: again brand new guide eight six six eight four eight
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  Speaker 3: five six nine nine or Legal Exchange Show dot com.
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  Speaker 2: Todd, we got another one for you here. Let's go
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  Speaker 2: to Martin in Springfield. Martin, what is your question for Todd?
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  Speaker 5: Okay, my question is I filled out a will. I'm
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  Speaker 5: seventy nine years old. Uh, and uh, my concern is
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  Speaker 5: about probates. I'm from northern Vermont that came down here
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  Speaker 5: to a senior community and so, uh, the that will
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  Speaker 5: is done, but my concerns are probates and do I
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  Speaker 5: need to get a trust? How much does a trust cost?
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  Speaker 5: And uh, you're talking about revocable trust and irrevocable trust.
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  Speaker 5: I have an irrevocable trust for my cremation. Uh, and so.
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  Speaker 3: So let me let me try to interject you so
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  Speaker 3: I can get your question answered. The irrevocable trust for
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  Speaker 3: your cremation, I'm sure has nothing. I don't think that's
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  Speaker 3: an estate planning trust, correct, I don't. I don't know
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  Speaker 3: what you did there, right, that's just something.
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  Speaker 5: So I don't know anything. So so you only have
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  Speaker 5: a will?
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  Speaker 3: Correct that that's the extent of your estate plan. Okay,
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  Speaker 3: so let's see your will. Yes. So one last question
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  Speaker 3: that might be helpful is you said you came down
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  Speaker 3: here to a senior community from Vermont?
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  Speaker 2: Did did?
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  Speaker 3: Do you own real estate in Vermont?
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  Speaker 4: Still?
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  Speaker 5: No? Okay, sold the house and from there I understand
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  Speaker 5: that it was it was a real property because I
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  Speaker 5: owned the land and the house here. I own the
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  Speaker 5: house I lived in completely, but it's in the in
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  Speaker 5: your community, and they told me that the land is
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  Speaker 5: owned by somebody else.
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  Speaker 3: Right, I got it, I understand. So basically, in these
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  Speaker 3: senior communities you get to you kind of get a
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  Speaker 3: place to live, but you don't own the property. I
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  Speaker 3: totally get it. So that may not be an issue then,
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  Speaker 3: so you may not own any real estate in Massachusetts,
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  Speaker 3: which can be helpful, I guess from an avoiding probate standpoint.
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  Speaker 3: So from your point of view and your question, let
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  Speaker 3: me help others that are listening to if he owned
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  Speaker 3: real estate in Vermont and in mass his question is
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  Speaker 3: doubly important. I want to avoid probate because when you
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  Speaker 3: own real estate in multiple states, you got to go
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  Speaker 3: to probate in multiple states, even though you're not a
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  Speaker 3: resident of the state in which you own real estate.
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  Speaker 3: So that's important. Sounds like for you, Martin, however, there's
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  Speaker 3: no Vermont real estates. I don't have to worry there,
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  Speaker 3: And it sounds like there's probably no Massachusetts real estate
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  Speaker 3: because you own it in this senior community and you
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  Speaker 3: just have an interest in the house. Basically you just
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  Speaker 3: have that house. Now, other assets you might own we
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  Speaker 3: have to think about, which would be investments, stocks, bonds,
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  Speaker 3: mutual funds, iras. So to the extent, all you want
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  Speaker 3: to do is avoid probate, and you're not concerned about
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  Speaker 3: estate tax planning or nursing home planning and protecting assets.
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  Speaker 3: You can kind of do that if you have no
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  Speaker 3: real estate by simply making sure these accounts all have
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  Speaker 3: designated beneficiaries on them. If they do, they will pass
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  Speaker 3: to those designated beneficiaries outside of probate, still subject to
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  Speaker 3: a state tax. But if you're under two million dollars
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  Speaker 3: here in mass you're not going to have any estate
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  Speaker 3: tax to worry about, and that would successfully help you
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  Speaker 3: avoid probate. Again, assuming no real estate. But a lot
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  Speaker 3: of times and I heard you mentioned that maybe it's
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  Speaker 3: an irrevocable Well, if you want to protect assets from
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  Speaker 3: a nursing home, then you kind of need to think
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  Speaker 3: about an irrevocable trust and putting some of these items
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  Speaker 3: into the irrevocable trust so that they will be protected
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  Speaker 3: from the cost of long term care. And by putting
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  Speaker 3: them in there, yes, it takes five years, but it's
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  Speaker 3: immediately protected from immediately avoids probate when you pass right.
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  Speaker 3: So what I like to tell folks a lot when
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  Speaker 3: they just have a will, a will is really a won't.
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  Speaker 3: It's better than nothing. It certainly will direct where your
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  Speaker 3: assets go, but it goes to probate and it will
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  Speaker 3: not help you reduce the state taxes. So if you're married,
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  Speaker 3: you're not going to shelter a state taxes, and it
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  Speaker 3: will not protect assets from a nursing home, so it
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  Speaker 3: won't avoid probate, won't reduce the state taxes, and won't
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  Speaker 3: protect an asset from a nursing home. But it will
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  Speaker 3: say where they go. So if that's all you want,
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  Speaker 3: that works. And if you want to also, then just
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  Speaker 3: throw in the avoidance of probate at least in your case, Martin,
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  Speaker 3: I think naming the designated beneficiaries on these investment accounts
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  Speaker 3: and brokerage accounts and bank accounts will get you there.
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  Speaker 3: Hope that helps a little.
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  Speaker 2: Mister Lutsky, thank you so much for the time. We
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  Speaker 2: appreciate you joining us today.
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  Speaker 3: It is always my pleasure.
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  Speaker 1: This has been Aske Todd on the Financial Exchange Radio Network.
• 15:05
  Speaker 1: Aske Todd with Todd Lutsky has been presented by Cushing
• 15:07
  Speaker 1: and Dolan, serving Massachusetts and New England for more than
• 15:10
  Speaker 1: thirty years, helping families with the state and tax planning,
• 15:13
  Speaker 1: Medicaid planning, and probate law. Call eight hundred three nine
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  Speaker 1: three four thousand and one or visit Cushingdolan dot com.
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  Speaker 1: The views expressed in this segment are solely those of
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  Speaker 1: Cushing and Dolan. Armstrong Advisory does not provide any legal
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  Speaker 1: or tax advice. Please consult with your illegal or tax
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  Speaker 1: advisor on such matters. Cushing and Armstrong do not endorse
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  Speaker 1: each other and are not affiliated.