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Ask Todd: Current state of estate tax exemptions · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Letsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with a state and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: And we do have Todd Lotsky from Cushing and Dolan
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  Speaker 2: with us right now for Ask Todd. As always, it's
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  Speaker 2: your chance to ask Todd your estate planning questions. I'm
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  Speaker 2: sure some of them came up over the Thanksgiving dinner table.
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  Speaker 2: So the studio lines are open at eight eight eight
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  Speaker 2: to zero five two two six three. We do have
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  Speaker 2: limited space on those phone lines, so do make sure
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  Speaker 2: that you call early to make sure that you can
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  Speaker 2: get your question answered by Todd. That number again is
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  Speaker 2: eight eight eight two zero five two, and we've got
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  Speaker 2: those lines open one more time at eight eight eight
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  Speaker 2: two zero five two two sixty three. Mister Lutsky, how
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  Speaker 2: are you today?
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  Speaker 3: I am great, and you uh doing well?
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  Speaker 2: But did you happen to see that Rudolph the Red
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  Speaker 2: Nose Reindeer just got his latest grades for the semester grades? Yeah, no,
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  Speaker 2: went down in history, that's true, he does. Yeah, Yeah,
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  Speaker 2: wasn't good. Let's talk a little bit about the estate
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  Speaker 2: tax todd in terms of the federal estate tax thresholds
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  Speaker 2: right now, where do they currently stand and how many
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  Speaker 2: families are typically impacted by the federal estate tax in
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  Speaker 2: a given year.
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  Speaker 3: So it's a great question for now because there was
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  Speaker 3: an election that is going to impact the answer to
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  Speaker 3: that question, we believe. So currently the estate tax exemption
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  Speaker 3: is thirteen point six million federally, So this is for
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  Speaker 3: everybody listening right federally, doesn't matter what state you're in.
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  Speaker 3: But we're gonna have to address that separately. So thirteen
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  Speaker 3: point six million. That means if you die and you
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  Speaker 3: leave assets more than thirteen point six million to someone
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  Speaker 3: other than a spouse, then you have a tax problem.
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  Speaker 3: Now to a spouse, Remember, folks, it's unlimited, which is
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  Speaker 3: the trap for the unwary. Right. Those are the people
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  Speaker 3: who say, oh, I just leave everything to my spouse
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  Speaker 3: and that's great, except it would cause the spouse to
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  Speaker 3: be poised to maybe pay more taxes when the spouse dies. Uh,
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  Speaker 3: because you didn't shelter any on the first death and
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  Speaker 3: wasted this thirteen point six million. Now you said where
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  Speaker 3: they headed. Well, next year twenty twenty five, right around
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  Speaker 3: the corner, it's gonna be thirteen point nine million. Call
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  Speaker 3: it thirteen nine ten called thirteen point nine million each
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  Speaker 3: per person? Oh good, heading in the right direction. Even more,
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  Speaker 3: we can leave without paying a federal death tax. Now,
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  Speaker 3: the concern in the election, I think that needs to
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  Speaker 3: be factored into our decisions now going forward is you know,
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  Speaker 3: we're not entirely sure like we were before that that exemption.
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  Speaker 3: Come twenty twenty six, January one, sure is going to
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  Speaker 3: drop down to five million, four ninety huge drop right
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  Speaker 3: index for inflation, which we peg at about seven million,
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  Speaker 3: that's still out there. That means that is going to
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  Speaker 3: happen unless the government can act to stop it from happening. Okay,
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  Speaker 3: that's still a big if. I mean, it did seem
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  Speaker 3: more like a mandate before, because you know, I thought
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  Speaker 3: that's what it was. But it looks like the majority
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  Speaker 3: in the House is going to be you know, Razor
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  Speaker 3: thin sure, and we're looking at like one vote, so
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  Speaker 3: is it going to happen? And we don't know. I
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  Speaker 3: think we have to keep an eye on it, but
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  Speaker 3: you have to know that unless they actually get together
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  Speaker 3: and act, and the government over the past eight years
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  Speaker 3: has not been good at acting, so I'm not sure
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  Speaker 3: it will or will not happen. But I think with
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  Speaker 3: the election you have a better shot at that not
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  Speaker 3: coming down to seven than you did before, So keep
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  Speaker 3: that in mind. However, as a separate matter, some of
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  Speaker 3: you listeners, not all, have to be more concerned with
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  Speaker 3: the state estate tax. Right. We have it in Maine,
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  Speaker 3: we have it in Connecticut, we have it in New York,
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  Speaker 3: we have it in Massachusetts. We don't have it in
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  Speaker 3: New Hampshire, so flock. There no estate tax at the
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  Speaker 3: state level, but otherwise the state estate tax exemptions are low,
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  Speaker 3: and here in Massachusetts it's only two million dollars per person,
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  Speaker 3: and there could be in a state tax. So I
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  Speaker 3: think you need to know that those are kind of
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  Speaker 3: like they're not going anywhere anytime soon. There's nothing on
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  Speaker 3: the horizon for this state levels, at least here or
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  Speaker 3: around New England, so bear that in mind depending on
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  Speaker 3: where you live.
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  Speaker 2: Talking with Todd Lutsky from the law firm of Cushing
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  Speaker 2: and Dolan. If you've got a question to ask Todd,
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  Speaker 2: this is your chance to do so live on air
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  Speaker 2: right now. Studio lines still have some room on them
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  Speaker 2: at eight eight eight to zero five two two six three.
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  Speaker 2: That number is eight eight eight to zero five two
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  Speaker 2: two six three. Remember it's first come, first serve. We're
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  Speaker 2: gonna take a quick break here, but when we come back,
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  Speaker 2: it's right to your questions with Todd. Eight eight eight
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  Speaker 2: 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 3: Again, we've got Todd Lotsky here.
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  Speaker 2: If you've got a question for him, you can call
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  Speaker 2: the studio at eight eight eight two zero five two
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  Speaker 2: two six three. Todd, we got one for you here.
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  Speaker 2: Hector and Taunton. You are on with Todd Letsky. What's
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  Speaker 2: your question for him?
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  Speaker 4: Yeah, my mom has a three family and she's in
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  Speaker 4: the nursing home. She's been there for five years, six years,
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  Speaker 4: and we did the she's on mass health.
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  Speaker 3: Okay, we did.
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  Speaker 4: We did the mass health application this year, and they're
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  Speaker 4: saying that we can't that we she can't deduct the
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  Speaker 4: property taxes, the insurance and the water bill uh from
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  Speaker 4: her portion of the mass health payment. So my question
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  Speaker 4: is who's I mean, who's responsible to make those payments? Well,
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  Speaker 4: on her on her house?
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  Speaker 3: Yeah, I think first and foremost is the house still
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  Speaker 3: in her name?
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  Speaker 4: Well? Yeah, life estate. Yeah, the house, she's got the
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  Speaker 4: house and the life of state, and then my brother
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  Speaker 4: and I and have it and remained her after she passed.
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  Speaker 3: Oh so it's in a life estate arrangement. So what
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  Speaker 3: that means for everybody is that she transferred this three
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  Speaker 3: family home of which she lived in one and so
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  Speaker 3: she reserved the right to live there. When you reserve
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  Speaker 3: this little life estate nugget, it's a nugget of ownership
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  Speaker 3: that gives you not only the right to live there,
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  Speaker 3: but also the right to pay all the bills and
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  Speaker 3: the right to collect all the income. Okay, so I
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  Speaker 3: assume as part of her patient pay amount, right, they're
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  Speaker 3: saying to you, you're on medicaid because the house is
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  Speaker 3: now non countable, one because it's your primary residence, and
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  Speaker 3: two maybe because you're renting it. But the rent belongs
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  Speaker 3: to her, and so that goes to the nursing home
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  Speaker 3: as her part of her patient pay amount. Now, the
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  Speaker 3: rule is that the net rent goes to her for
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  Speaker 3: her patient pay amount. She is entitled to use the
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  Speaker 3: rent to pay these bills on the house, at least
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  Speaker 3: as it relates to the rental portion. Okay, at least
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  Speaker 3: as it rent relates to the rental portion of the house,
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  Speaker 3: which would be two thirds of the house. So you
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  Speaker 3: should be able to argue that two thirds of those bills,
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  Speaker 3: at a bare minimum, are paid to offset the rent.
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  Speaker 3: And then whatever the net rent is goes to the
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  Speaker 3: nursing home as part of the patient pay amount, the
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  Speaker 3: arguably the portion that and she still is the owner,
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  Speaker 3: but arguably the portion that is her primary residence. They'll say, look, kids,
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  Speaker 3: you know technically the house is non countable, but you
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  Speaker 3: know you don't you don't have you're on medicaid, you
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  Speaker 3: don't really have a lot of spare money, so you
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  Speaker 3: kids may need to pay for the you know maintenance
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  Speaker 3: upkeep taxes bills for one third, but I think you
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  Speaker 3: could easily argue that two thirds offsets the rent and
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  Speaker 3: you have a lower net rent argument. But you're going
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  Speaker 3: to have to go to them and you're gonna have
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  Speaker 3: to explain this to them. And that's the stuff that
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  Speaker 3: you know that usually elder law lawyers help with when
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  Speaker 3: you're going through the Medicaid application process. But I get this.
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  Speaker 3: This is your renewal every year. So I'm surprised after
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  Speaker 3: six years that they're suddenly bringing this up. Why would
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  Speaker 3: it be any different than the last five years. I
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  Speaker 3: don't know, But I hope that helps a little folks
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  Speaker 3: this obviously, that's just one of the problems that exist
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  Speaker 3: out there when you're when you're doing planning. In this case,
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  Speaker 3: this was just life estate planning. The new guide for
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  Speaker 3: the month that I want to have you pay attention
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  Speaker 3: to is a tale of two objectives, reducing estate taxes
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  Speaker 3: and like Hector situation, protecting these assets from the nursing home.
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  Speaker 3: So some folks want to just learn about Hey, I
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  Speaker 3: don't care about the nurse homes. But this guide explains
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  Speaker 3: the revocable trust, It explains the maritals, share, the remainder share,
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  Speaker 3: and how they work to shelter taxes on the first
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  Speaker 3: death from both federal and a state perspective, and it
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  Speaker 3: explains the operation of the trust. So if you want
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  Speaker 3: to just learn how to reduce your taxes and avoid probate,
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  Speaker 3: the guides for you. If you want to add nursing
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  Speaker 3: home protection to that equation, well this guide's for you too,
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  Speaker 3: because there's a separate section that runs an example and
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  Speaker 3: it calculates the tax for you. You could put your own
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  Speaker 3: numbers in, and it shows you how to shelter assets
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  Speaker 3: from estate taxes with a marital share and a remainder
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  Speaker 3: share that are a little different than the revocable trust,
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  Speaker 3: so it reduces the estate tax and at the same
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  Speaker 3: time provides protection from the nursing home going forward. So
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  Speaker 3: either way, folks, this guide might be for you. It's
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  Speaker 3: new for the month eight six six eight four eight
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  Speaker 3: five six nine nine or Legal exc Changshow dot com
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  Speaker 3: again eight six six eight four eight five six nine
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  Speaker 3: nine or Legal Exchange Show dot Com.
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  Speaker 2: Todd, I've got another one for you here. Let's go
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  Speaker 2: to Catherine in Boston. Catherine, what is your question for Todd?
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  Speaker 5: Yes, I have a had a sister that passed away,
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  Speaker 5: and she had a realty trust and her and theyre
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  Speaker 5: vocable realty trust. I am the beneficiary on all of
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  Speaker 5: her retirement accounts and my question is can I put
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  Speaker 5: off doing the r m D on those accounts until
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  Speaker 5: next year because I I somebody said that the new
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  Speaker 5: Secure Act allows allows you to delay taking the r.
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  Speaker 3: M D, So that is a The Secure Act is
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  Speaker 3: a complicated animal, like anything dealing with designated dealing with iras.
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  Speaker 3: I can tell you what I do know about it
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  Speaker 3: is that you know you are allowed. You're actually as
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  Speaker 3: a sibling, you're one of the exceptions they call them.
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  Speaker 3: You know, you're you're a a a special designated beneficiary,
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  Speaker 3: not just a regular designated beneficiary for for lack of
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  Speaker 3: a better term, meaning you're one of the few people
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  Speaker 3: who are if you're within ten years of age of
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  Speaker 3: the participant, you're allowed to actually take out the asset
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  Speaker 3: over your life expectancy. And that's a benefit because if
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  Speaker 3: it was a regular designated beneficiary, right, a plain old
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  Speaker 3: designated beneficiary, then you have to like a child, let's say,
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  Speaker 3: then you would have to take it out over ten years,
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  Speaker 3: which could cause it to come out faster than it
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  Speaker 3: otherwise would. So for you, you get to take it
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  Speaker 3: out over your life expectancy. Now, how old are you?
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  Speaker 5: I'm the same age.
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  Speaker 3: Which I don't know how old that is, seventy seven. Yeah,
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  Speaker 3: so you get to take it out over a seventy
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  Speaker 3: seven year old life expectancy because again you're a special
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  Speaker 3: designated beneficiary. Now the question is do you have to
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  Speaker 3: take it out this year or next year? I think
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  Speaker 3: you have to look and see did she already make
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  Speaker 3: her required minimum distribution this year? I mean if she did,
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  Speaker 3: then there was a distribution this year and you must
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  Speaker 3: start taking Remember next year is only thirty days away,
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  Speaker 3: so next year is right around the corner. So you
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  Speaker 3: just need to find out for sure. And I don't
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  Speaker 3: know that I have that answer whether you have to
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  Speaker 3: take one this year or take it next year. For sure,
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  Speaker 3: you have to take it next year, Okay, I just
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  Speaker 3: don't know if you need to take it this year
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  Speaker 3: or not without actually going and reading that that's secure act.
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  Speaker 3: But you know, if you've got a financial advisor, they
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  Speaker 3: might know that, your your accountant might know. Just trying
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  Speaker 3: to give you some folks to to check with on that.
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  Speaker 3: My bigger question that you didn't ask was you're the
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  Speaker 3: designated beneficiary on that realty trust. You said, I'm not
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  Speaker 3: on the realty trust. You're not.
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  Speaker 5: I'm I'm on all of her.
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  Speaker 3: No, I'm asking about the realty trust. That not.
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  Speaker 5: Unfortunately she changed that as the last few weeks of
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  Speaker 5: her life and she gave me her home.
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  Speaker 3: Oh, wasn't the home in the realty trust.
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  Speaker 5: The home is in the realty trust, but I had
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  Speaker 5: not been in the realty trust to receive the home. Problem.
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  Speaker 3: Yeah, that's a big problem. So whoever's listed as the
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  Speaker 3: designated beneficiary on that account is going to be on
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  Speaker 3: that realty trust is really who's entitled to that home?
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  Speaker 3: So yeah, check into that and see if you can
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  Speaker 3: get that squared away. Lots going on in this case.
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  Speaker 3: Great question, Catherine, Thank you, and I think we'll wrap
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  Speaker 3: it up.
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  Speaker 2: Mister Lutsky, Thank you so much for your time today.
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  Speaker 3: Always a pleasure.
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  Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
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  Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
• 15:20
  Speaker 1: and Dolan, serving Massachusetts and New England for more than
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  Speaker 1: thirty years, helping families with the state and tax planning,
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  Speaker 1: Medicaid planning and Probate law Call eight hundred and 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 advisor. He does not provide any
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  Speaker 1: legal or tax advice. Please consult with your legal or
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  Speaker 1: tax advisor on such matters. Cushing and Armstrong do not
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