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Why Higher Gas Prices Are Starting to Change Behavior · The Financial Exchange Show

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1:02
Speaker 1: This is the Financial Exchange with Chuck Zada and Paul Lane.
1:09
Speaker 2: And it is Chuck, Paul, and Tucker with you today
1:13
Speaker 2: and top stories. We kick things off early this morning,
1:17
Speaker 2: around six twenty am.
1:20
Speaker 3: I had been awake for a couple of hours at
1:22
Speaker 3: this point, and.
1:25
Speaker 2: I woke up at four forty today. Actually, I woke
1:28
Speaker 2: up at four forty this morning, sties, and was just
1:32
Speaker 2: you know, processing my day, you know, sworting through. Okay,
1:35
Speaker 2: what's gonna happen, what's gonna go on? You know, how
1:38
Speaker 2: are the ducks outside? Is gonna rain later? And all
1:42
Speaker 2: of a sudden, I'm looking at my screen and I
1:45
Speaker 2: see the price of crude oil start taking a little dipperoni,
1:49
Speaker 2: and I say, okay, like this is interesting, what's going
1:52
Speaker 2: on here? And I keep watching and the price of
1:56
Speaker 2: crude oil keeps dipping, and it keeps dipping, and it
2:00
Speaker 2: keeps dipping, and finally it stops around fifteen or twenty
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Speaker 2: minutes later. And what we saw was again like these
2:12
Speaker 2: moves are just kind of nuts right now. What we
2:15
Speaker 2: saw was Brent crude fell from about one hundred and
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Speaker 2: nine dollars a barrel down to about ninety seven a
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Speaker 2: twelve dollars move in a span of I don't know,
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Speaker 2: you know, a thirty forty minute period, and I'm sitting
2:33
Speaker 2: there and as this is going on, like halfway through,
2:35
Speaker 2: I'm like, okay, there's got to be a headline. And
2:37
Speaker 2: sure enough, Axios reported that in an exclusive that the
2:42
Speaker 2: US and Iran are closing in on a one page
2:46
Speaker 2: memorandum of understanding to end the war and set conditions
2:51
Speaker 2: for further negotiations on other items. The US is reportedly
2:56
Speaker 2: expecting Iranian responses in the next four eight hours, so
3:01
Speaker 2: if you do the math, that's okay, sometime Friday they're
3:04
Speaker 2: expecting and I'll quote here from Axios. Among other provisions
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Speaker 2: of the deal would have involved Iran committing to a
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Speaker 2: moratorium on nuclear enrichment, in the US agreeing to lift
3:13
Speaker 2: its sanctions and really these billions and frozen Iranian funds,
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Speaker 2: and both sides lifting restrictions around transit through the straight
3:19
Speaker 2: of horror moves. Many of the terms laid out would
3:21
Speaker 2: be contingent on a final agreement being reached, leaving the
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Speaker 2: possibility of renewed war or an extended limbo in which
3:26
Speaker 2: the hot war has stopped but nothing is truly resolved,
3:28
Speaker 2: which is basically where we are right now. And again
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Speaker 2: it's something where look. Shortly after, the Iranian side, or
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Speaker 2: at least parts of the Iranian side, said no, this
3:43
Speaker 2: isn't accurate. We've seen this story from the US before,
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Speaker 2: and we're not sure about this, And so Brent crude
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Speaker 2: went from ninety seven back up to one hundred and four,
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Speaker 2: retracing about fifty five percent of its slide. So you're
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Speaker 2: seeing just these these huge moves in the short period
3:59
Speaker 2: of time. And when you see big moves in a
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Speaker 2: short period of time, whether it's in commodity markets, whether
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Speaker 2: it's in equity markets, in bond markets, it's generally indicative
4:09
Speaker 2: of the fact that nobody knows anything, because if they did,
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Speaker 2: the price wouldn't really be moving because people would say, okay,
4:15
Speaker 2: like yes, we understand, and this is already priced in.
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Speaker 2: So I don't really know if this goes anywhere.
4:21
Speaker 3: It might it might not.
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Speaker 2: As I've said from the beginning, paid very little attention
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Speaker 2: to what is being said and more attention to what
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Speaker 2: is actually happening. That's what will ultimately drive the economy
4:33
Speaker 2: and the impact on the economy, and so we'll see
4:36
Speaker 2: how this goes. But as of right now, you still
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Speaker 2: don't have any uptick in ships moving through the strait
4:41
Speaker 2: of hor moves and until that resolves. The outlook for
4:47
Speaker 2: energy prices over the course of the summer can be
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Speaker 2: best described using a short two letter word known as up.
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Speaker 4: Yes, very well the case this is always a hard
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Speaker 4: intro when we go into these US I ran negotiats
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Speaker 4: for me to add even more color to what you
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Speaker 4: kind of laid out here. It's a situation where it
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Speaker 4: is just continue to wait and see. We've just seen this, Chuck,
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Speaker 4: I don't know how many times like.
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Speaker 2: Okay, no, you can't make this up. Actually, The New
5:16
Speaker 2: York Post has an update from Wow. Post is covering
5:21
Speaker 2: a lot of subjects the post is, but to be fair,
5:23
Speaker 2: it's a Trump interview exclusive. Okay from about half an
5:26
Speaker 2: hour ago. Did you see this, Tucker? I did, Okay,
5:29
Speaker 2: I this just came across my my screen, so I'm
5:32
Speaker 2: just seeing it right now. The President Trump was talking
5:36
Speaker 2: to the Post earlier this morning, and I'll quote them,
5:41
Speaker 2: asked whether the Post you prepared to send a reporter
5:43
Speaker 2: back to Pakistan for a new round of negotiations after
5:46
Speaker 2: Islamabad sources revealed a tenet of peace deal was closed.
5:49
Speaker 2: The President responded, I don't think so I think we'll
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Speaker 2: do it. It's too far, No, it's too much. So
5:57
Speaker 2: it's it's just kind of all right. We'll see what
6:00
Speaker 2: we actually end up getting out of this. But again,
6:06
Speaker 2: I don't know if there's any meat to this bone.
6:09
Speaker 2: I'm hopeful there is, because I would love to see
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Speaker 2: a resolution that puts some of the worst case economic
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Speaker 2: scenarios to bed.
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Speaker 3: But I just don't know. I just don't know what
6:21
Speaker 3: is going on here.
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Speaker 4: Yeah, like you said, gas prices still have been ticking
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Speaker 4: up recently. We're sitting at four point fifty four a
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Speaker 4: gallon as the national average according to Triple A. That's
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Speaker 4: about a fifty three percent jump since the war began,
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Speaker 4: and diesel is sitting at about five dollars and sixty
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Speaker 4: seven cents a gallon. That's up about fifty one percent
6:41
Speaker 4: as well. We know the terms on both sides in
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Speaker 4: terms of what each side wants to see. The moratorium
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Speaker 4: of nuclear enrichment is the biggest sticking point for the
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Speaker 4: United States. On the Iranian side of things, the economic
6:53
Speaker 4: sanctions and the frozen funds of Iranian dollars, those are
6:57
Speaker 4: the two biggest concerns. And then lastly, probably most concerning
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Speaker 4: from an economic standpoint is the opening of the straight.
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Speaker 3: That's the the table stakes, and we will continue to.
7:07
Speaker 4: See how things progress here. I really can't even add
7:12
Speaker 4: much more to right.
7:13
Speaker 3: Yeah, same old. I don't know what's gonna happen.
7:15
Speaker 2: Yeah, you know, you're Maine hopeful that there's some progress
7:17
Speaker 2: that can be made. But to this point, the strait
7:20
Speaker 2: has been closed for you know, two months and about
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Speaker 2: a week or so, and as we've talked about on
7:27
Speaker 2: the show for the last week now, we're at the
7:28
Speaker 2: point where even if it were to open today, the
7:32
Speaker 2: impact is still going to be felt through rising gasoline
7:35
Speaker 2: prices later in the summer, even if oil prices come
7:39
Speaker 2: down in the short term here. And so really what
7:42
Speaker 2: you're hoping is that you have a very short peak
7:45
Speaker 2: in the summer where you know, those higher prices are present.
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Speaker 3: But every day that you go on is.
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Speaker 2: One in which you are running closer to that problem
7:55
Speaker 2: becoming longer, broader and more damaging to the US and
7:59
Speaker 2: world economies. And so we'll just see how things go.
8:03
Speaker 3: Again.
8:03
Speaker 2: I'm hopeful that maybe there's there's something here, but I
8:07
Speaker 2: can tell you I've been hopeful before the vance trip
8:09
Speaker 2: to Pakistan. I gotta tell you, like that, that whole
8:12
Speaker 2: run up to that, in that weekend, I was like, okay,
8:14
Speaker 2: like this is gonna be it. Like you don't send
8:17
Speaker 2: Jadvance to Pakistan if you're not close to getting somewhere.
8:21
Speaker 2: And maybe they thought they were close and they just
8:23
Speaker 2: couldn't get over the hump. But that was three three
8:27
Speaker 2: weeks ago now, I believe, and we still haven't really
8:30
Speaker 2: seen anything in terms of progress on the Horror Moves
8:34
Speaker 2: issue since then, So we'll see where things go again.
8:37
Speaker 2: I recommend everyone keep an open mind on this. It
8:40
Speaker 2: could be resolved shortly, it could take a while longer,
8:44
Speaker 2: and we don't really know. We'll see.
8:48
Speaker 3: I'm not involved in the negotiations. Oh man, I.
8:51
Speaker 4: Know they missed your arbitrary deadline of Sinka Demayoyes today.
8:58
Speaker 3: Fortunate they did.
8:59
Speaker 2: I save my negotiating for the cable companies and the
9:05
Speaker 2: cell phone plans. Those are the ones where I go out,
9:09
Speaker 2: I drive a hard bargain, you know. I know I'm
9:12
Speaker 2: in the catbird seat on those, and so that's where
9:16
Speaker 2: my expertise.
9:16
Speaker 3: Lie play with linear cable.
9:18
Speaker 2: Yeah, you got a lot of leverage there, you know,
9:20
Speaker 2: I really struggle to negotiate the opening of waterways.
9:25
Speaker 3: Not in my skill set. Let's take a quick break here.
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Speaker 2: When we come back, let's talk a little bit about
9:31
Speaker 2: what we are seeing in terms of the impact of
9:33
Speaker 2: higher gas prices.
9:34
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10:14
Speaker 2: Really interesting piece here from the Wall Street Journal, not surprising.
10:20
Speaker 2: It's titled how gas prices recavoc on America's army of supercommuters.
10:24
Speaker 2: Not supercomputers, but super commuters. And the interesting thing I've
10:29
Speaker 2: seen a couple different pieces on this. Actually, the fascinating
10:32
Speaker 2: thing is in America's fastest growing cities, which tend to
10:36
Speaker 2: be in the southeast, you are seeing the biggest impact
10:40
Speaker 2: because of gas prices. Because where that growth is typically
10:43
Speaker 2: happening is through these massive suburban developments that are spread
10:47
Speaker 2: out from the city, making it longer commutes for a
10:50
Speaker 2: lot of people and so you're seeing the biggest impacts
10:54
Speaker 2: in a lot of those areas. But ultimately this is
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Speaker 2: one where hey, with gas prices up, you know, about
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Speaker 2: fifty percent on average throughout the United States in the
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Speaker 2: last couple months, basically everyone who owns a car is
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Speaker 2: feeling this in some way, shape or form.
11:10
Speaker 4: Yeah, so a supercommuter is someone who travels more than
11:14
Speaker 4: seventy five miles each way every weekday, and that with
11:18
Speaker 4: the recent gas price spikes that we've seen, would equate
11:21
Speaker 4: to about spending five hundred bucks a month to keep
11:23
Speaker 4: their tanks filled at today's prices if they continue to
11:26
Speaker 4: stay as elevated as they are. And interesting data that
11:31
Speaker 4: came from this Wall Street Journal piece. The specific data
11:34
Speaker 4: that I'm going to reference here is from researchers from
11:37
Speaker 4: from Stanford University, where they've seen an uptick in people
11:41
Speaker 4: working from home, perhaps in conjunction with some of these
11:45
Speaker 4: higher gas prices, where about twenty five percent of the
11:48
Speaker 4: American workforce was working from home according to the Stanford
11:52
Speaker 4: University data in the month of February. That's up to
11:54
Speaker 4: about twenty seven percent in the month of March. What
11:57
Speaker 4: that means from a numbers perspective. Think about if there's
12:01
Speaker 4: one hundred and fifty million Americans that are working on
12:03
Speaker 4: a given day, what they saw from February to March
12:06
Speaker 4: was three million more of those one hundred and fifty
12:09
Speaker 4: million workers working remotely from home seventy five miles each way.
12:14
Speaker 4: I just as an aside in terms of commute, I
12:17
Speaker 4: do one a couple of days a week, sometimes do
12:20
Speaker 4: what's it ninety plus each way, and that just takes
12:25
Speaker 4: a lot out of you. So I have ultimate sympathy
12:28
Speaker 4: for anybody who does it every day because mine's sporadic
12:30
Speaker 4: of tune that much. It's it's a grind, So it's
12:32
Speaker 4: quite about a time in the car, it's quite a bit.
12:35
Speaker 2: I wanted to move now to talk a little bit
12:38
Speaker 2: about AMD's earnings from yesterday. Paul, what do we see
12:43
Speaker 2: when they reported?
12:43
Speaker 1: Who?
12:44
Speaker 4: Those were fantastic numbers? Chuck in and just in general,
12:47
Speaker 4: you know, first we'll hit AMD, but just caps what's
12:50
Speaker 4: been a really good earnings quarter for Q one for
12:53
Speaker 4: the S and P five hunder which we can dive
12:55
Speaker 4: into a second. But specific to your questions on am D,
12:58
Speaker 4: the stock was up I think close to twenty percent
13:00
Speaker 4: when I had last looked at it earlier this morning.
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Speaker 4: On the backs of these numbers, what they.
13:04
Speaker 3: Saw twenty percent year to date? No today? Oh you
13:08
Speaker 3: mean today?
13:08
Speaker 5: Ye?
13:09
Speaker 3: No, you did? I know? Yeah, fourteen Oh it cooled
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Speaker 3: off a bit fourteen percent. But now I was just
13:13
Speaker 3: playing up how much the move today was.
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Speaker 4: They were up sixty five percent year to date I
13:18
Speaker 4: think going into today.
13:20
Speaker 3: But regardless, just you know, crushing it. In terms of
13:23
Speaker 3: their numbers.
13:23
Speaker 4: They saw ten point twenty five billion of revenue for
13:27
Speaker 4: Q one, That was up thirty eight percent from a
13:29
Speaker 4: year ago and above analysts expectations.
13:31
Speaker 3: Of nine point nine.
13:33
Speaker 4: Not only that for this quarter, the second quarter that
13:35
Speaker 4: they're in the middle of, they raised their guidance where
13:38
Speaker 4: they're gonna come in around eleven point two billion. That
13:41
Speaker 4: was up from analysts expectations of ten point five to two.
13:44
Speaker 4: And regardless of the big numbers that I'm throwing out there,
13:46
Speaker 4: the bottom line is we've talked about on this show
13:49
Speaker 4: so frequently over the course of the last three or
13:51
Speaker 4: four years, the darling of the stock market has been
13:53
Speaker 4: in video. And the reason for that is building out
13:55
Speaker 4: all these large language models. Whether you mess around with
13:58
Speaker 4: chat chipet or Claude, any of these other ones, the
14:01
Speaker 4: type of chips that Nvidia designs the best ones in
14:04
Speaker 4: class where they have a huge market share. On GPUs,
14:07
Speaker 4: we're just flying off the shelves, and they continue to
14:09
Speaker 4: fly off the shelves. They're seeing great revenue growth. But
14:12
Speaker 4: when now is happening and the reason you're seeing companies
14:15
Speaker 4: like AMD, like Intel do so well as they produce
14:18
Speaker 4: these what we're thought as with the GPUs as older, stodgier,
14:22
Speaker 4: sort of not as versatile technology CPUs. But as a
14:27
Speaker 4: result of the shift from just training these models to
14:29
Speaker 4: actually trying to run these agentic tasks that you hear
14:33
Speaker 4: about more frequently, the CPUs that AMD produces a lot of,
14:39
Speaker 4: and Intel is a big part of two, they're becoming
14:43
Speaker 4: just robust demand for it. In fact, AMD had mentioned
14:47
Speaker 4: that they anticipate the CPU market that I'm referencing here
14:50
Speaker 4: is going to grow as big as I think it
14:52
Speaker 4: was upwards of one hundred and twenty billion. They expected
14:55
Speaker 4: to reach by twenty thirty thirty five percent annual growth
14:59
Speaker 4: on it. Just you continue to see chuck here. These
15:01
Speaker 4: semiconductor companies are just ripping. They are absolutely just flying.
15:06
Speaker 2: I want to now move. Sorry, we're moving rapid fire
15:10
Speaker 2: through this. But it's because there's a lot that we
15:11
Speaker 2: have to get. Like it's it's a great news day today,
15:14
Speaker 2: Like there's just a lot of good stuff here. And
15:16
Speaker 2: I commend Tucker for putting together an excellent stack, if
15:19
Speaker 2: I may say so myself. Piece from CNBC data suggests
15:23
Speaker 2: the hiring recession maybe behind us, but iron war poses
15:27
Speaker 2: job market risks. So here's the deal. I don't really
15:31
Speaker 2: like looking at you know what this this piece is
15:34
Speaker 2: actually looking at, which is like, hey, like the Jolts
15:36
Speaker 2: report from Tuesdays says that things are good. No, like
15:39
Speaker 2: that's that's that's dumb. One report from one day doesn't
15:43
Speaker 2: say that things are good. What I think you can
15:45
Speaker 2: say is that in the aggregate the jobs data for
15:49
Speaker 2: the last four months, starting at the beginning of the
15:51
Speaker 2: year January February, what comes next March and then April,
15:56
Speaker 2: you will get the jobs data that we've had there
15:58
Speaker 2: and the second half of last year we were concerned
16:01
Speaker 2: with a slowdown in the labor market. That slowdown has abated.
16:06
Speaker 2: I don't think you have enough yet to conclusively say
16:09
Speaker 2: that the job market is improving. It on an upward trajectory.
16:14
Speaker 2: But I think you can say, at least in the
16:15
Speaker 2: short term, there's no more worsening there. And this is
16:18
Speaker 2: true whether you look at job openings and hiring and
16:23
Speaker 2: quits rates.
16:24
Speaker 3: It's true.
16:24
Speaker 2: If you look at what we are seeing for initial
16:28
Speaker 2: and continuing unemployment claims, it's the same. If you look
16:32
Speaker 2: at what we're seeing on payroll, tax withholding and things
16:37
Speaker 2: like that. You can look across the board, and the
16:41
Speaker 2: message from the first four months of the year really three,
16:43
Speaker 2: because we haven't gotten any three months of the year.
16:46
Speaker 2: We haven't gotten any April data yet. But the message
16:49
Speaker 2: for the first three months is, Hey, the hiring picture,
16:53
Speaker 2: it's still sluggish, but it's not worsening anymore like it
16:57
Speaker 2: was in the second half of last year. And remember,
17:02
Speaker 2: you've got to go from you gotta walk before he
17:04
Speaker 2: can run, So you don't just go from hey, hiring,
17:08
Speaker 2: you know, slowing down and falling off to well that
17:10
Speaker 2: the things gangbusters. You go through these transition periods. Can
17:14
Speaker 2: that transition hold up to a stronger job market? Given
17:19
Speaker 2: the uncertainties about the world economy and higher energy prices
17:22
Speaker 2: and other commodity costs, we're gonna have to see. I
17:25
Speaker 2: don't know, but if you've missed the fact that, hey,
17:31
Speaker 2: you know, the labor market may be turning for the
17:34
Speaker 2: better in the last few months, I understand because if
17:37
Speaker 2: you're in a job search like you don't necessarily feel
17:39
Speaker 2: it at a micro level, and it's not like things
17:40
Speaker 2: have gotten like meaningfully better yet, but it is something
17:44
Speaker 2: where you can point to a bunch of different areas
17:46
Speaker 2: and say, yeah, we've got some green shoots here, and
17:49
Speaker 2: hopefully they can run in the next few months, and
17:52
Speaker 2: hopefully the conflict in the Middle East doesn't derail what
17:55
Speaker 2: might be a nascent improvement in the labor market.
18:00
Speaker 3: Yeah, we'll get the April data on Friday.
18:02
Speaker 4: The consensus is that sixty thousand jobs will be added
18:06
Speaker 4: in the month of April. We had a big blowout February.
18:09
Speaker 4: Some of that could be attributable to some summer visions
18:13
Speaker 4: and there was some kind of one off nuances with
18:15
Speaker 4: that February data. But we are hoping for, in terms
18:19
Speaker 4: of estimates, about sixty k for Friday, and then about
18:22
Speaker 4: four point three percent is where the unemployment is anticipated
18:25
Speaker 4: to sit when that report comes out on Friday morning.
18:28
Speaker 6: Here.
18:28
Speaker 2: Yeah, that'll be an interesting one. To see, just because
18:31
Speaker 2: it's gonna be the really the first jobs report from
18:34
Speaker 2: a full month after the war began. I know that
18:37
Speaker 2: the war technically began on like February twenty seventh, but
18:40
Speaker 2: it's not like that war. It didn't influence hiring decisions
18:44
Speaker 2: immediately at the beginning of March, you know, broadly. So
18:48
Speaker 2: I think this one will be interesting. But we're gonna
18:50
Speaker 2: have to see just what the Q two data shows.
18:54
Speaker 2: I can tell you my personal expectations are kind of low,
18:57
Speaker 2: just because you're going to have the inflation piece eat
19:02
Speaker 2: through a lot of the nominal GDP growth that's out there,
19:05
Speaker 2: So don't be surprised if you end up seeing, you know,
19:08
Speaker 2: a fairly weak Q two GDP number. The question is, hey,
19:11
Speaker 2: does that bleed into you know, later months if inflation
19:14
Speaker 2: remains high, or do you see improvement in the inflation picture,
19:18
Speaker 2: you know, because the war winds down in horror moves reopens.
19:21
Speaker 2: That's the good possibility for the second half of the year.
19:25
Speaker 3: Let's take a quick break.
19:26
Speaker 2: When we come back, Wall Street watch and then Todd
19:29
Speaker 2: Lutsky joins us. Get your estate planning questions ready. Next.
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Speaker 1: TFE show. Breaking business news is always first right here
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Speaker 1: on the Financial Exchange Radio Network till now for Wall
19:52
Speaker 1: Street Watch trecking the stocks, the data, and the headlines
19:55
Speaker 1: driving markets so far today right here on the Financial
19:58
Speaker 1: Exchange Radio.
19:59
Speaker 5: Netw Market sentiment higher this morning following report from Axios
20:03
Speaker 5: that the US and around are closing in on a
20:05
Speaker 5: one page memo to end the war, sending oil prices plunging.
20:09
Speaker 5: Traders are also encouraged by more strong tech earnings. Right now,
20:13
Speaker 5: the Dow is up over one percent, or five hundred
20:15
Speaker 5: and seventy three points, SMP five hundred up one percent,
20:19
Speaker 5: NASDAC up about one hundred quarter percent or three hundred
20:22
Speaker 5: and five points. RUSS two thousand is up about a
20:24
Speaker 5: half a percent. Ten year treasure reel down five basis
20:27
Speaker 5: points at four point three six four percent, in oil
20:31
Speaker 5: plunging seven percent, trading right around ninety five dollars a barrel.
20:35
Speaker 5: AMD shares rallying fourteen percent after the chip maker posted
20:39
Speaker 5: strong first quarter sales and profit while also issuing strong guidance.
20:43
Speaker 5: Another chip maker, and super Microcomputer, also posted a stronger
20:46
Speaker 5: than expected quarterly guidance despite a revenue miss sending shares
20:51
Speaker 5: up by fifteen percent. Meanwhile, Disney saw its revenue climb
20:54
Speaker 5: seven percent from a year ago, while it's earnings beat
20:57
Speaker 5: expectations due to growing streaming Marginan's new CEO, Josh de Mero,
21:01
Speaker 5: revealed his long term vision of the company, focusing on
21:04
Speaker 5: technology to reach customers elsewhere. In Nvidia and Corning announced
21:09
Speaker 5: a partnership to expand manufacturing of fiber optics for AI
21:13
Speaker 5: infrastructure and video. Stock up by three percent, while Corning
21:16
Speaker 5: shares are jumping by nine percent. In Uber climbing nearly
21:20
Speaker 5: nine percent high after the riot hailing company posted a
21:23
Speaker 5: rise in revenue and bookings for the previous quarter. I'm
21:29
Speaker 5: Tucker Silva and that is Wall Street Watch.
21:33
Speaker 1: This is Ask Todd on the Financial Exchange Radio Network.
21:37
Speaker 1: If you have an existing estate plan or in the
21:39
Speaker 1: market for one, Todd Lutsky is here to answer your
21:42
Speaker 1: questions and help you plan for later life. Ask Todd
21:45
Speaker 1: is presented by Cushing and Dolan, serving Massachusetts and New
21:48
Speaker 1: England for more than thirty five years, helping families with
21:51
Speaker 1: a state and tax planning, Medicaid planning, and probate law.
21:54
Speaker 1: Visit Cushingdolan dot com now here's Todd Lutsky.
22:01
Speaker 2: As promised, We're now joined by the one and only
22:05
Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan,
22:11
Speaker 2: and we call the segment asked Todd because it's your
22:14
Speaker 2: chance to ask Todd your estate planning questions live on
22:19
Speaker 2: air right now. We got the phone lines open at
22:22
Speaker 2: eight eight eight to zero five two two six three
22:27
Speaker 2: again eight eight eight two zero five two two sixty three.
22:31
Speaker 2: That is the number to call, so Todd can answer
22:34
Speaker 2: your estate planning questions live on air right now again
22:40
Speaker 2: eight eight eight to zero five two two six three.
22:43
Speaker 2: We can usually get through two to three questions, so
22:45
Speaker 2: get calling early and often to make sure you get
22:47
Speaker 2: a chance to ask Todd your estate planning question. Eight
22:51
Speaker 2: eight eight to zero five two two six three. Mister Lutsky,
22:56
Speaker 2: how uh how you doing today?
23:00
Speaker 6: Feeling pretty good? Pretty good today?
23:01
Speaker 3: It's good you uh great.
23:03
Speaker 2: I had a little minor surgical procedure yesterday.
23:07
Speaker 6: Minor surgery.
23:08
Speaker 2: I asked the surgeons if I could do my own
23:11
Speaker 2: anesthesia though. Yeah, so yeah, knock yourself out.
23:14
Speaker 6: That's that's good.
23:15
Speaker 3: Yeah, it was great. Great, Todd.
23:18
Speaker 2: Let's talk a little bit about when estate planning goes awry.
23:24
Speaker 3: What are the biggest or most.
23:27
Speaker 2: Common estate planning mistakes that you tend to see when
23:33
Speaker 2: people are coming in.
23:34
Speaker 1: To see you.
23:34
Speaker 7: Yeah, so the top estate planning mistake is not funding
23:39
Speaker 7: your trust.
23:39
Speaker 6: That's a huge pothole.
23:40
Speaker 2: So you spend a bunch of money out of trust. Yeah,
23:42
Speaker 2: some some larrior drafts it. H and then you didn't
23:46
Speaker 2: realize that you need to put something in it.
23:48
Speaker 7: See, and this is that this is the problem, right,
23:51
Speaker 7: It's it's one of these situations where they'll come in
23:54
Speaker 7: and if they already have their estate planning place, my
23:56
Speaker 7: you know, my first comment to these people is normally, look,
23:59
Speaker 7: you know, maybe go back to your existing estate planning
24:02
Speaker 7: attorney rather than me try to you know, update your plan.
24:04
Speaker 7: It might be you know, cheaper for you to go
24:07
Speaker 7: back there. So I always offer, you know that first,
24:10
Speaker 7: and then they tell me why they don't want to
24:12
Speaker 7: erstand and say, okay, well the estate plan still might
24:14
Speaker 7: be good. It still might be doing what you want
24:16
Speaker 7: it to do. And so then I proceed to learn
24:19
Speaker 7: about their assets and then learn about their objectives so
24:22
Speaker 7: that I can then look at the trust with their
24:25
Speaker 7: objectives in mind. Their current objectives and member popes objectives change.
24:30
Speaker 7: So I said, these are your current objectives. Then I
24:33
Speaker 7: can look at the estate planning trust that they have
24:36
Speaker 7: in place and compare it to their current objectives, and
24:39
Speaker 7: if possible, I'll just tell them, you know, hey, it
24:43
Speaker 7: still works. I don't need to recreate the will. And
24:45
Speaker 7: you're off and running. But to your point, and I
24:48
Speaker 7: know you're wondering where I'm going with this, To your point,
24:50
Speaker 7: when I'm gathering the information about their assets to learn
24:54
Speaker 7: whether or not this plan still works for them, as
24:58
Speaker 7: I'm doing it right. You have a home, yes, how's
25:01
Speaker 7: it owned jointly?
25:02
Speaker 6: Oh? You have a vacation home? How's it owned? Yeah? Jointly?
25:05
Speaker 7: Oh okay, and then give me the values right? What
25:08
Speaker 7: about your brokerage account? What about your bank accounts?
25:10
Speaker 1: Oh?
25:10
Speaker 7: Yeah, we own everything jointly. That's just how we are.
25:13
Speaker 7: That's a married couple. That's normal, folks. You all know
25:15
Speaker 7: you're listening. You know you say, that's me, that's how
25:18
Speaker 7: we do it. Well, when I get done with that,
25:21
Speaker 7: I say, I haven't looked at your trust yet, but
25:25
Speaker 7: I can already tell you all your assets, according to
25:29
Speaker 7: what you just told me, are not in the trust.
25:33
Speaker 7: They're all joint Well yeah, is that a problem? Well, yeah,
25:37
Speaker 7: that's a problem because you've spent all this money to
25:39
Speaker 7: do an estate plan and when you die, if you've
25:43
Speaker 7: not done anything else, all these joint accounts are going
25:46
Speaker 7: to automatically go to the surviving joint owner pass under
25:49
Speaker 7: the marital deduction, and you will have you will avoid probate.
25:53
Speaker 7: That's great, sure, but you will have wasted your estate
25:58
Speaker 7: tax exemptions. You will have weight did the ability to
26:01
Speaker 7: shelter any assets for estate tax purposes. This is horrible planning,
26:06
Speaker 7: and you spent all this money on your trust. So
26:09
Speaker 7: I would say that's a pretty big problem.
26:12
Speaker 2: Talking with Todd Lutsky from the law firm of Cushing
26:15
Speaker 2: and Dolan, we do still have room on the phone
26:17
Speaker 2: lines at eight eight eight to zero five two two
26:20
Speaker 2: sixty three. That's the number to call to ask Todd
26:23
Speaker 2: your estate planning questions live on air right now again.
26:28
Speaker 2: Eight eight eight to zero five two two sixty three
26:32
Speaker 2: is the number, and Todd is again here to answer
26:35
Speaker 2: your estate planning questions. We're gonna take a quick break here,
26:39
Speaker 2: but when we come back, we're gonna get to those
26:42
Speaker 2: questions again. That phone number is eight eight eight to
26:46
Speaker 2: zero five two two sixty three.
26:50
Speaker 1: Ask Todd with Todd lets Key every Wednesday at ten
26:53
Speaker 1: thirty only here on the Financial Exchange Radio Network. You're
26:59
Speaker 1: listening to Ask Todd with Todd Lensky on the Financial
27:02
Speaker 1: Exchange Radio.
27:03
Speaker 2: Network, talking with Todd Lutsky from the law firm of
27:18
Speaker 2: Cushing and Dolan. We do still have room on the
27:20
Speaker 2: phone lines at eight eight eight to zero five two
27:24
Speaker 2: two six three, So get your questions in for Todd again.
27:28
Speaker 2: Eight eight eight two zero five two two six three
27:30
Speaker 2: is the number to call to ask Todd your estate
27:32
Speaker 2: plan questions live on air right now, and right now
27:37
Speaker 2: we're gonna go to greg In Lowell for his question
27:40
Speaker 2: for Todd.
27:40
Speaker 3: Greg what's on your mind?
27:44
Speaker 8: Yes, Todd, I have a house in a trust in Massachusetts.
27:49
Speaker 8: I'm contemplating buying a condo down in Florida. Is there
27:54
Speaker 8: a danger in putting it into that trust in Massachusetts?
27:57
Speaker 8: Or should I form a separate trust in to hold
28:03
Speaker 8: the Florida property.
28:05
Speaker 7: So I've always a fan of Florida. I'm down there
28:09
Speaker 7: as well. And what part are you thinking I got
28:11
Speaker 7: going to.
28:14
Speaker 6: Tampa Bay nice?
28:15
Speaker 7: So the trust you have up here. Is it a
28:21
Speaker 7: revocable trust or irrevocable.
28:24
Speaker 8: Revocable revocable?
28:26
Speaker 6: Great?
28:26
Speaker 8: Are you married, kids, widowed and one one child?
28:33
Speaker 7: Okay, So the long and the short of it is,
28:36
Speaker 7: it makes no difference. So you do not need a
28:41
Speaker 7: separate trust in Florida to put the condo that you
28:46
Speaker 7: buy into. It can be deeded directly into this trust
28:51
Speaker 7: since it's revocable, no worries. Are you planning on making
28:56
Speaker 7: Florida a primary residence at some point?
29:01
Speaker 8: Yes, I am so.
29:03
Speaker 7: Again, the reason I asked that is because in Florida
29:05
Speaker 7: there's something called a homestead exemption that you get to
29:08
Speaker 7: help reduce your real estate taxes if you're a resident
29:14
Speaker 7: of Florida. So because it's revocable, you'll get that homestead
29:20
Speaker 7: exemption no matter what. It wouldn't matter if it was irrevocable.
29:23
Speaker 7: I was going to tell you about some special language
29:25
Speaker 7: that you needed to put in it if it was
29:27
Speaker 7: going to be irrevocable, to ensure that when it does
29:30
Speaker 7: become your primary residence in Florida, you get that homestead.
29:34
Speaker 7: But for now, buy the condo, transfer it right into
29:37
Speaker 7: the revocable trust along with your house up here, and
29:40
Speaker 7: you have absolutely no issues whatsoever, but a good idea
29:45
Speaker 7: to do it because it's going to avoid probate in Florida,
29:48
Speaker 7: and you need to make sure you don't go to
29:49
Speaker 7: probate in any state. That trust will do that. Folks,
29:53
Speaker 7: that's a great question. And that's a little pothole really
29:56
Speaker 7: there that he just picked up on and we don't
29:58
Speaker 7: have to have it. This guide has many potholes to
30:00
Speaker 7: avoid in the estate planning world. Call and get it.
30:03
Speaker 7: This is great for you. If you've done your planning,
30:06
Speaker 7: look at these things. If you haven't done it before,
30:09
Speaker 7: you get it done, look at this guide and learn
30:11
Speaker 7: what they are. When I say that, it's like you
30:13
Speaker 7: might say, I got a will, I don't need to
30:15
Speaker 7: do anything else. So I got jointly owned assets. I'm fine.
30:18
Speaker 7: I don't need a trust because I don't have enough money.
30:21
Speaker 7: You know what if I got a second marriage?
30:23
Speaker 6: Right? Does this all sound like you? Guys? You hear this?
30:26
Speaker 6: What if I'm moving here?
30:27
Speaker 7: We might have greg who might move If I change
30:29
Speaker 7: my residency, how do I affect my estate plan? If
30:32
Speaker 7: I lose a spouse, how do I affect my estate plan? So, folks,
30:37
Speaker 7: very important, lots of things to think about when you're
30:39
Speaker 7: doing your planning and potholes to avoid for those who
30:43
Speaker 7: haven't gotten started and for those who already have it
30:47
Speaker 7: but might have a reason to look at it eight
30:50
Speaker 7: six six eight four eight five six nine nine or
30:54
Speaker 7: Legal Exchange Show dot com again eight six six eight
30:58
Speaker 7: four eight five six nine nine or Legal Exchange Show
31:03
Speaker 7: dot com. You can download it there and always go
31:05
Speaker 7: to our Instagram page Cushing Dolan PC for more information.
31:11
Speaker 7: Tod talking about, you know, potholes to to fix. I'm
31:16
Speaker 7: assuming that the if if someone figures out, hey, there's
31:19
Speaker 7: a problem with my state plan, it's it's never too
31:23
Speaker 7: late to try to remedy that. Or there's some situations
31:27
Speaker 7: where no, like there's there's nothing you can really do
31:29
Speaker 7: at this point. So that's all gonna depend on who's
31:34
Speaker 7: alive and who's not. Okay, So if we'll take an
31:38
Speaker 7: example where obviously if you're both alive, then the answer is, yeah,
31:43
Speaker 7: likely there's things you can do. You can you know,
31:47
Speaker 7: if it's revocable trust, you can change the you know,
31:50
Speaker 7: the language of a trust. Anyway you want six ways
31:52
Speaker 7: to Sunday, don't accommodate whatever issues you want. But I
31:56
Speaker 7: think the bigger issue is Oh, and by the way,
31:58
Speaker 7: even if it's irrevocable, you can you know, there's ways
32:02
Speaker 7: to change irrevocable trust. But there was a real life
32:06
Speaker 7: example not too long ago where you know, what if
32:10
Speaker 7: one spouse died and like we just did this example
32:14
Speaker 7: that you asked me earlier about not funding a trust.
32:17
Speaker 7: Sure they had trusts in place, but they were unfunded, okay,
32:24
Speaker 7: and everything was owned jointly, and one spouse died.
32:28
Speaker 6: Is it too late? And I think that's really the
32:29
Speaker 6: question that you're asking.
32:32
Speaker 7: Not always And again, remember folks, one of the things
32:35
Speaker 7: you have to do when someone dies is call a
32:39
Speaker 7: lawyer and say what do I do? I don't care
32:40
Speaker 7: if you've done no planning or if you've done planning
32:45
Speaker 7: and trusts are in place, you still need to know
32:47
Speaker 7: what to do with that trust now that the donor
32:51
Speaker 7: of that trust has died, Okay, So always call a lawyer.
32:54
Speaker 6: So in this case, I'm thinking.
32:56
Speaker 1: What could you do?
32:57
Speaker 7: Everything's owned jointly. Let's say husban and died, wife's alive,
33:02
Speaker 7: are they you know, you know, out of luck? No,
33:06
Speaker 7: There's something called a disclaimer, So what the heck is that?
33:12
Speaker 7: A disclaimer is something that can be filed by the
33:14
Speaker 7: surviving spouse wife in this case, that says, in the
33:20
Speaker 7: legal world, treat me as if I'm already dead. Treat
33:25
Speaker 7: me as if I died before my husband.
33:28
Speaker 6: In this case. Okay, now, when you make.
33:31
Speaker 7: This, this is a qualified disclaimer, which has to be
33:35
Speaker 7: done within nine months of the date of death in
33:40
Speaker 7: this case of husband.
33:41
Speaker 6: So it's qualified.
33:42
Speaker 7: And the other thing that you can't do as a
33:45
Speaker 7: disclaim or is direct where the assets.
33:49
Speaker 6: That you're disclaiming goes. You can't can't do that.
33:52
Speaker 3: It just goes to the next person in line.
33:54
Speaker 7: Well that's where we're headed, right. So now the good
33:56
Speaker 7: news here, Chuck, is at least in this example we're
33:59
Speaker 7: talking about, well, there was planning.
34:02
Speaker 6: Done, They did have trusts, They.
34:04
Speaker 7: Did have something called a poor over will that is
34:08
Speaker 7: connected to the trust. Right, So a poor over will says,
34:12
Speaker 7: whatever I die leaving, whatever I die owning in my
34:15
Speaker 7: own name, goes to my trust.
34:19
Speaker 6: It's a safety net.
34:20
Speaker 7: Okay, all right, So we've got all this in place,
34:23
Speaker 7: so I would tell the surviving spouse why not disclaim? Okay,
34:30
Speaker 7: so all these joint accounts you already own half, but
34:35
Speaker 7: what you're disclaiming is the half that you're gonna get
34:40
Speaker 7: because your husband died. Right, that's what joint means. You
34:43
Speaker 7: get the survivor, you get the decedents half. Sure, but
34:46
Speaker 7: by filing the disclaimer, you're saying I don't want that half.
34:51
Speaker 7: This could be a lot of money. It could be
34:52
Speaker 7: millions of dollars in you know, investment accounts. Sure, I
34:55
Speaker 7: don't want that half. Okay, Well, you can't direct where
34:58
Speaker 7: it goes. So where's it going to go? Well, if
35:00
Speaker 7: you're saying it really wasn't joint or you're disclaiming it,
35:03
Speaker 7: then it's going to go back into the estate. So
35:05
Speaker 7: now it's going to hit the probate of the estate.
35:08
Speaker 7: I'm okay, that's that's fine. Right Now it goes through
35:12
Speaker 7: probate and it gets addressed by your will. Oh okay,
35:17
Speaker 7: read husband's will. Husband will says, I leave everything to
35:20
Speaker 7: my spouse if living, Okay, But remember the disclaimer tells
35:27
Speaker 7: the world that she's not living, she predeceased him. That's
35:32
Speaker 7: what disclaimer means. Oh okay, So all to my spouse
35:37
Speaker 7: if living, well, she's not living okay.
35:40
Speaker 6: Otherwise to my family. Trust.
35:44
Speaker 7: Ah, you see where this is going We're connecting the dots. Okay,
35:48
Speaker 7: So now all this money and by the way, half
35:52
Speaker 7: of the real estate. Right, if the real estate was
35:56
Speaker 7: owned jointly, same issue, right, So all of this value
36:02
Speaker 7: can now find its way through probate into the will.
36:06
Speaker 7: From the will, we retitle it to the family trust,
36:10
Speaker 7: which is where it should have been when the trust
36:15
Speaker 7: was set up. But because it wasn't funded, it wasn't
36:20
Speaker 7: in there, and so it didn't avoid probate. But it's
36:24
Speaker 7: not going to result in a complete failure to shelter
36:29
Speaker 7: estate taxes for tax purposes, which is what we wanted
36:33
Speaker 7: it to do to begin with. So now you're going
36:35
Speaker 7: to be able to shelter these assets for the state
36:38
Speaker 7: tax planning purposes, and more likely than not, not only
36:42
Speaker 7: is it taking care of the surviving spouse, but when
36:45
Speaker 7: the spouse dies, remember now both buckets are going to
36:48
Speaker 7: be designed to provide the bloodline plan distribution to the
36:52
Speaker 7: children in the manner that you wanted it done. So
36:57
Speaker 7: sometimes post mortem planning for folks can save the day.
37:02
Speaker 7: But don't do that fund your trust. That's a pothole
37:05
Speaker 7: to avoid. Mister Lutsky.
37:06
Speaker 6: Thanks for joining us. Always a pleasure.
37:09
Speaker 1: This has been asked Todd on the Financial Exchange Radio network.
37:12
Speaker 1: Ask Tod with Todd. Lutsky has been presented by Cushing
37:15
Speaker 1: and Dolan, serving Massachusetts and New England for more than
37:18
Speaker 1: thirty years, helping families with the state and tax planning,
37:21
Speaker 1: Medicaid planning, and probate law. Call eight hundred and three
37:23
Speaker 1: ninety three, four thousand and one or visit Cushingdolan dot com.
37:27
Speaker 1: The views expressed in this segment are solely those of
37:29
Speaker 1: Cushing and Dolan. Armstrong Advisory does not provide any legal
37:32
Speaker 1: or tax advice. Please consult with your illegal or tax
37:34
Speaker 1: advisor on such matters. Cushing and Armstrong do not endorse
37:36
Speaker 1: each other and are not affiliated.