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Why did the market sell-off yesterday? · The Financial Exchange Show

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Corporation faces the Financial Exchange with Chuck Zada and Mark Vandetti.
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Speaker 2: Chuck, Mark and Chucker with you here today, and as
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we kick things off, we're kind of trying to recover
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from what was a tough start to September and a
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tough start to the week in markets yesterday, with all
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three major indices down at least one and a half percent,
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the S and P down more than two the NASDACK
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down more than three percent, and the headline on the
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Wall Street Journal this morning, or rather late yesterday when
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it was published, was fears of economic slowdown spark stock
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market selloff. This you know, I guess if you want
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to try to point to, you know, some proximate causes. Again,
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no one knows exactly why anything happens in markets, but
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yesterday morning we did receive some negative manufacturing data from
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the Institute of Supply Management as well as from S
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and P. Both of them conduct surveys of purchasing managers
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and both of them had those surveys come in in
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pretty downbeat territory. And so what started off is maybe
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about a half a percent to two thirds of a
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percent sell off in the morning grew over the course
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of the day into a much larger selloff of a
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couple percentage points, and so we opened today a couple
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points down or a couple percent down from all time
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highs at this point. Mark your take on kind of
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what we're seeing so far.
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Speaker 3: I guess it's pretty universally agreed on and hard to
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deny that. The data that we get in between our
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quarterly GDP, which is the big one we all wait
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for GDP, though it's a little bit backward looking a
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little bit stale by the time we get the data.
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The data since the most recent GDP report, and GDP
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was healthy in the second quarter. It's worth remembering that
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two point eight percent on an annualized reel that is
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after inflation basis, that's way above what most researchers think
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is the economies speed limit.
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Speaker 4: So it was.
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Speaker 3: Healthy, then has it deteriorated a lot since then? Some
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of the employment data we've gotten, Chuck is as you know,
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as we've talked about in the couple months or so
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since that last GDP reading, has suggested that the labor
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market is easy. Good news for inflation. Is it bad
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news for the economy? Possibly, But those employment decisions were
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made in the second quarter when we know GDP growth
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was growing at two point eight percent real annualized. So
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I'm not going to buck the consensus. I'm not a
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macroeconomist that updates is forecasts every day. I'll leave that
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to the professionals, including those of the Atlanta FED, who
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do helpfully do GDP. Now for us that you talk
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about a lot which suggests ongoing solid economic growth. So
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I don't know, as you could probably tell, I'm contradicting
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myself a lot here. I'm a little bit confused. We
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seem to be at somewhat of a potential turning point,
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but then again, arguably we always are.
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Speaker 2: And this is something where the data for the last
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month is kind of coming a couple different waves. At
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the start of August, we received some again rather beat
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economic data, kind of in late July as well, suggesting
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the economy was slowing.
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Speaker 4: Markets sold off.
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Speaker 2: The second half of August, we got better economic data
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and so market's rallied in response to that, and now
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kicking off the week at least a few different data
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points suggesting some slowing again. And again I don't profess
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to have any knowledge as to whether this is specifically
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going to lead to recession or not.
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Speaker 4: I've said all along that I.
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Speaker 2: Think will really you know, have a much clearer picture
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by early October, you know, so we're we're within four
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weeks I think of having you know, a pretty good
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picture of what the trends are showing us.
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Speaker 4: But as I've said for.
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Speaker 2: You know, the last month or two, look, the soft
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landing is not something that is linear in nature. There
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are some days where a soft landing is going to
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look like the economy is reaccelerating. There other days where
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it's going to look like you're heading into recession. And
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that's the very nature sure of the soft landing is
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you kind of have to navigate the path between those.
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But it's not like every data point just perfectly lines
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up there you're like, oh, good, like the soft landing
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is here. Like No, there's some days where you're gonna
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say this is bad, and there's some days where you're
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gonna say, Okay, this is fine.
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Speaker 3: I know the phrase soft landing is in common use,
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but I'll make a kind of philosophical point. We've talked
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about this too. The economy never lands. It's constantly being
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buffeted by outside forces. This is why you have people
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who call themselves macro economists, with their big, elaborate models
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that can only be run on modern computers that are
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constantly getting updated. I'll refer anyone who's interested again to
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GDP now yesterday GDP now, which is a snapshot at
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a point in time. It's not a forecast, but as
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of yesterday or the day before yesterday, the data suggested
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that GDP was running at about a two point five
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percent pace this quarter. As of this morning, with yesterday's
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aforementioned by Chuck data, that figure is now two percent.
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So the economies and constant flux buffeted by forces positive
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and negative, some of them from outside the US, some
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of them from within, some of them just inherent to
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the business cycle, which is why it's called a cycle.
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It never really lands. I think what we mean by
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soft landing is inflation, something we no longer have to
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worry about, and the evidence is increasingly pointing in that direction.
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Speaker 2: When we look at the economic data. The other piece
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that I think we always have to remember on this
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is that, in addition to the economy always being in flux,
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it's not like any of this is actually like the
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data and what I mean by that is these are
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all surveys and estimates, and so taking any one data
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point at face value as oh, this is what it is,
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and this is what it isn't it doesn't really do
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you any favors. There are two things that I think
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that you need to do in order to try to
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make sense of what's going on. The first is to
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look at trends, and you know, generally not just like
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trend from like one month to the next, Like two
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data points is not enough for a trend. You want
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to be looking at kind of like three four data points,
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like hey, is there something that's continued for a couple
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months here in the data. And beyond that, you want
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to be looking at different sets of data because any
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one of them can be skewed just by how things
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are collected. As an example, if you just did a
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survey of real estate professionals inside the one twenty eight
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loop in Boston, they'd be telling you, oh, there's no inventory.
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Speaker 4: It's still crazy, like people are still.
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Speaker 2: You know, spending whatever they can, blah blah blah. If
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you just surveyed real estate professionals in the Austin, Texas
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area where you currently have inventories that are above you know,
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twenty nineteen levels, they'd be telling you, yeah, like there's
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just too much inventory. The market's really slow, people are
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having to cut prices. And then if you ask, well,
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which one's right, the correct answer is well, both of them,
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because they're measuring different things in different ways in different places.
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So to look at, you know, any one measure of
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the labor market from you know, in one month doesn't
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necessarily tell you what's actually going on with the labor market.
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You want to look at trends in multiple data series,
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because none of these are the right number. And so
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the way to try to get more accuracy is find,
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you know, a few data sets that you know, have
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decent methodology and decent ways of you know, tabulating the data,
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and then look at them over time to see how
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they evolve and how they change together. And that's how
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you can kind of build a picture of what's going on,
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because ultimately, like we don't actually know how many people
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have jobs in the United States. We don't actually know
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how many you know, purchasing managers increase their orders last month.
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We don't actually know how many homes were sold. You know,
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this core like these are estimates, like we we get
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as close as we can, but they're estimates, and so
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you have to kind of, you know, take a step
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back and say, Okay, what do we think we're seeing
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here and what does it mean? And also, hey, when
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companies are given their earnings reports and their conference calls,
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listen to what they're saying because they have stories that
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they're telling as well, and you need to be able
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to distinguish between hey, what's fact you know that they're
9:20
telling us and what is a story that they're trying
9:23
to spin for their investors to you know, make things
9:26
look as rosy as possible. So it's it's all you know,
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you're you're kind of like a bat, right mark.
9:33
Speaker 4: You got this like echo location.
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Speaker 2: That you're trying to send out to figure out where
9:38
the walls of the cave are that you're flying out of,
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and you're pretty sure you know where they are, but
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things bounce a little differently and you just kind of
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have to piece the picture together the best you can.
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Speaker 3: I can't really relate to that, but my impression is
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that bats are they reckon pretty well, Like they can
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hit a mosquito from you know, thirty feet away if
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we only had that kind of precision. But as you say,
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the the data that we use, they are called statistics
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for a reason. We don't know the true value. They
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come with youge errors, and oftentimes we use them for
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things they weren't meant to be used for.
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Speaker 4: Let's take a little break here. When we come back.
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Speaker 2: We did get some additional economic data this morning that
10:14
Jolts report the job openings in labor Turnover Survey. We'll
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talk to you about what that showed this morning right
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after this.
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Speaker 2: Mark This morning, we got data from the Job Openings
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and Labor Turnover Survey Report, also known as the Jolts Report,
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and just taking a look through it as as it's
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come out.
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Speaker 4: Some takeaways.
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Speaker 2: First, the number of job openings declined to seven point
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seven million. Previously was reported to eight point one that
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was revised down to seven point nine million for the
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prior month. That number that we came in at was
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below all numbers surveyed by Bloomberg, So a big miss
11:47
to the downside in terms of the number of job openings. There,
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the hire's rate ticked up a little bit, the quits
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rate ticked up a little bit, the layoffs rate ticked
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up a little bit, So all, you know, kind of
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showing a little bit of modestly higher activity, but nothing
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meaningful there. And so again when we look at this
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in the context of, hey, this is a survey survey,
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response rates aren't great, but let's see if we can,
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you know, kind of figure out what's going on here.
12:13
The trend over the last you know, six to twelve
12:15
months is unmistakable now of a job market that has
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cooled significantly and in some respects is probably closer to
12:24
like the twenty seventeen twenty eighteen job market in terms
12:28
of where we stand today, rather than the very hot
12:31
job market that we saw from twenty twenty one through
12:34
twenty twenty three.
12:36
Speaker 4: Yeah.
12:36
Speaker 3: I think that's the unavoidable conclusion from this and other
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bits of information from reports public and private sector reports
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that we've been getting over the past couple of months.
12:47
One question for me is, was the labor market so abnormally,
12:50
so unnaturally if you like, hot, that even today, notwithstanding
12:56
the recent easing of the extreme pressure that was prevailing
13:01
over the past say, couple of years through roughly six
13:05
months ago, is the labor market still hot enough to
13:08
keep upward pressure on inflation, or at least keep inflation
13:13
from falling to the Fed's target of two percent. I know,
13:16
in the last segment I said, increasingly people are seemingly
13:20
not worried about inflation. It's receding into the background as
13:23
a concern, as it should be. But we're not a
13:27
two percent in point of fact, even if unless you
13:29
annualize very recent reads, which could be distorted by special factors.
13:35
Just taking year over year, which isn't the best measure,
13:37
it's so backward looking, but we're not quite a two
13:39
percent yet. Is the labor market slowed enough to get
13:41
us to two percent while not dragging us into recession?
13:45
This is the balance the Fed is trying to strike,
13:48
and we won't know that they've done that successfully for
13:51
some time probably well.
13:53
Speaker 4: And look, we've talked about this before.
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Speaker 2: The two percent target is kind of a dumb target
13:59
for a number of reason, since one of which is
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that inflation is never averaged two percent. You know, you
14:05
will get decades as a whole, and you can't find
14:09
one in the post war period where inflation averaged two percent.
14:13
The closest we got, I think was two point four
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maybe it was two point six percent in the two
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thousands or twenty tens, uh, but we've never actually gotten there.
14:24
We're basically kind of at the post war average, especially
14:27
if you exclude like the seventies, which you know got
14:30
very hot. Most decades aside from the seventies, inflation was
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anywhere between two and a half and three percent on average,
14:36
and that was kind of the norm what we are
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seeing here, And Mark, I know that you like to
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take a look at this occasionally what's known as the
14:44
beverage curve or the beverage curve. Basically, you take the
14:48
job openings rate and the unemployment rate and you plot
14:51
those on a chart. And what we are unmistakably seeing
14:55
right now is as the job openings rate has been
14:58
coming down, you we are seeing the unemployment rates starting
15:02
to move up, just as it has in other business
15:06
cycles where we have this data for Again, we don't
15:09
have the data going back too far, unfortunately, because the
15:11
JILT report only started in two thousands, so we've got
15:15
about twenty four almost twenty five years of data now.
15:18
But this does match what we saw in other business cycles,
15:23
where hey, as that job opening rate comes down, unemployment
15:26
has gone up. And that is something that I think
15:29
that we would likely point to as likely muting the
15:32
possibility of inflation being a problem at this point in
15:37
the business cycle.
15:38
Speaker 4: Here.
15:38
Speaker 3: I guess I'm not sure the inflation that we experienced,
15:42
the extreme inflation we experienced, say two years ago when
15:44
it was peaking, was a result of labor market pressure.
15:47
It wasn't wages. It was we now know, special factors
15:50
or supply shocks coupled with an excess of demand driven
15:54
by stimulus. So I don't know that the labor market
15:57
was ever the immediate cause or the problem, although the
16:01
traditional relationship is, as economists like to think about it,
16:05
between unemployment and inflation, or some proxy for unemployment, some
16:09
proxy for output. It could be. It could be the
16:13
Jolts number we're talking about this morning. It could be vacancies.
16:16
It could be the extent to which GDP exceeds potential GDP,
16:19
which researchers try to ballpark. So it's we are back
16:24
to worrying. The FED is back to warring, and so
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should we be about whether the risks have shifted from
16:30
warrying about unemployment to worrying about inflation excuse me, to unemployment.
16:35
It seems weird that they're talking about cutting. I know
16:38
I'm backing up here and veering a little bit off
16:40
the immediate topic, but I'm trying to get to a point.
16:43
I guess Fed's back fed. FED is now more concerned
16:46
about the risks of a slowing economy than the risks
16:49
of increasing or upward pressure on prices. And that's just
16:54
kind of where this feels a lot more. This, this framework,
16:57
this construct, the way we're thinking about this feels a
16:59
lot more traditional to me. Frankly, it's a relief because
17:02
nobody knew what the heck was going on two years ago,
17:05
how long high inflation was going to persist, how much
17:08
pain would be required to squash it. We seem to
17:13
have lucked out in many ways. I don't necessarily attribute
17:16
it to FED skill.
17:18
Speaker 2: And the real question is is not does the FED
17:22
cut fifty basis points in September or twenty five because
17:25
one meeting ultimately is not what matters here.
17:28
Speaker 4: What's going to matter is over.
17:30
Speaker 2: The next six to twelve months, what is the path
17:34
that the FED needs to follow as far as the
17:39
number of rate cuts necessary and the eventual depth that
17:44
they get to, as far as how much they need
17:46
to cut. So if you're sitting here today and you say, okay,
17:49
FED funds is between five and a quarter and five
17:51
and a half, it's hey, when we're twelve months out
17:55
from here, are we getting down to three and a
17:58
half on the FED funds?
17:59
Speaker 4: Rate. Are we getting down to four and a half?
18:01
Are we getting down to two and a half? Like that?
18:03
Speaker 2: That's the number that really that matters. And to a
18:07
certain extent, also, Okay, is it gonna be something where
18:11
the FED does that cutting, you know, in a four
18:15
or five meeting period where they're basically done by March
18:19
or May of next year, and Fed funds is you know,
18:22
at three and a half or two and a half
18:24
at that point, or is it something where hey, the
18:26
economy you know, finds its footing a little bit and
18:29
maybe the FED just does a quarter percent per meeting
18:31
for the next you know, eight or nine meetings and
18:34
finds itself in that three and a half percent range
18:37
by the end of twenty twenty five. These are the
18:39
questions that matter not so much, Hey are they gonna
18:42
cut twenty five basis points or fifty at the next
18:44
meeting unless you're actually taking an active bet on that,
18:48
you know, through any of the millions of ways that
18:51
you can do that in securities markets these days. But
18:55
I think the more interesting question to me is, Hey,
18:58
what's the path over the next six to twelve month
19:00
how low do rates have to get? And that's going
19:02
to be determined by how good or bad the economy is,
19:05
which we still don't quite know, if we're being honest. Here,
19:10
let's take a quick break as we head towards the
19:14
bottom of the hour. When we come back, we got
19:17
a couple things to do. First, we got Wall Street
19:19
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Ask Todd All that is coming up right after this.
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Speaker 5: After yesterday's sell off where the Nasdaq sank over three
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percent and the SMP five hundred was down over two percent,
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markets today are edging higher in positive territory. Right now,
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the Dow is up by a quarter percent, or ninety
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seven points, SMP five hundred is up by eight points,
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Nasdak also up by eight points. Whilster two thousand is
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flat ten. Your Treasure reeled down by five basis points
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at three points seven to eight percent, and crude oiled
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down one percent, trading just below seventy dollars a barrel
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after it's near ten percent plunge yesterday. And video shares
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are down one percent today after Bloomberg reported the chip
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maker had been subpoenaed by the Justice Department as it
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seeks evidence on antitrust violations. Meanwhile, in an interview with
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The Wall Street Journal, US Steel CEO David Burrett so
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the company would close steel mills and likely move its
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headquarters out of Pittsburgh if it's planned four fourteen billion
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dollars sale to Japan's Nippon Steel collapses. US Steel shares
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are up by three percent. Elsewhere, shares in Dick Sporting
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Goods down by seven percent after the retailer beats second
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quarter earnings expectations, where it's comparable sales climbed four and
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a half percent above forecasts of three point six percent.
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While Dix raised its full yure outlook, the forecast appeared
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muted compared with expectations. Sticking with the retail space, where
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Dollartree shares tumbling nineteen percent after the discount retailer missed
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second quarter earnings expectations and also cut its outlook in
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Hormale Foods, the parent company to food brands including Spam,
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underwhelmed on its quarterly results. The company also lowered its forecast,
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sending that stock down by eight percent so far. Today,
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I'm Tucker Silva and that's Wall Street Watch.
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you as they come in again eight eight eight to
22:57
zero five two two six three to be able to
22:59
ask Todd Lutsky your estate planning questions.
23:02
Speaker 4: Mister Lutsky, how are you today?
23:04
Speaker 6: I am doing well in yourself.
23:07
Speaker 4: A little tough, A little tough this week. What happened?
23:10
Speaker 2: Well, open my uh paycheck on last Friday and all
23:14
there wasn't There was a big thing of parsley.
23:16
Speaker 4: Yeah, wagers are being garnished.
23:18
Speaker 6: Yeah, you got to watch that.
23:20
Speaker 2: Yeah, it's a real issue, Todd. I want to talk
23:22
to you about some different kinds of trust today, just
23:25
just to kind of clear my head on the whole topic.
23:28
I want to start first with nominy realty trusts.
23:33
Speaker 4: What are they? What do they actually do?
23:35
Speaker 6: So this is one of the unfortunately most commonly used
23:41
trust because lots of times, you know, real estate lawyers
23:44
will will set them up for people just because they
23:47
bought a piece of property. And they'll throw them in there,
23:49
and and they're used just so frequently, but they're so misunderstood.
23:54
What I mean by that is there, I know it
23:56
sounds strange, but they're not really a trust at all.
23:59
I mean, it's got the word trust in it, which
24:01
just adds to the confusion. But a nominee realty trust,
24:06
the word nominee means that it's more of a principal
24:09
agency employer employee relationships. So what I mean by that is,
24:16
and when you put assets in these trusts, these nominee
24:19
realty trusts, you got to look to the schedule of
24:22
beneficiaries because it's a complete flow through. So the schedule
24:27
of beneficiaries is actually the owners and here's the power
24:33
they have. There'll be language in the trust itself that
24:36
says the trustee of the trust shall have no power
24:42
to deal with the trust property unless directed by the beneficiaries. Well,
24:49
that means that the beneficiaries really control this and they
24:52
are really the owners of the property. So why this
24:55
is so problematic? You say, well, that doesn't sound so
24:58
much of a problem. Well, it generally is because people
25:03
put this property, let's say they put their piece of
25:05
property in the trust and then they list the schedule
25:09
of beneficiaries as their kids, and they didn't mean to
25:12
give their kids the property, but they did just that
25:16
because they're the ones listed as the schedule beneficiaries, so
25:19
they're really the current owners. And why that's a problem
25:22
is what happens if one of the kids get a divorce, Well,
25:27
mom and dad are living, they might not even realize
25:31
they own it until the divorce comes, and I can
25:34
assure you the divorcing parties will discover that this property
25:40
is really theirs and now part of the marriage. And
25:43
you could have parents, you know, having to buy out
25:47
their own home not realizing they gave it away, And
25:51
that to me is a big issue.
25:53
Speaker 4: So lots of.
25:54
Speaker 6: Other problems can come with it. But that's just a trust.
25:57
Look at your schedule of beneficiaries and determine whether or
26:00
not you've got the right people listed, and maybe how
26:02
to undo it. And they are fixable, by the way,
26:07
So at the end of the day, folks, that is
26:09
something that you should consider. Now, let's let's look at
26:12
one other thing in this case. If what if you
26:17
put rental property in one of these nominee realty trusts.
26:21
If you put rental property into the Nominee Realty Trust
26:25
and the rent is going to you, Mom and dad.
26:29
You put the rent property and you're getting the rent. Well,
26:32
then you're not entitled to the rent because you don't
26:36
own the property, and the IRS doesn't tend to like
26:40
that too much. The IRS says, well, wait a minute,
26:43
the rent might be tax at a higher rate if
26:46
it went to the kids, and they're the ones really
26:49
entitled to that rent. So at the end of the day,
26:53
that could be an income tax problem on top of that.
26:57
So lots to think about what these non many realty trusts.
27:03
Speaker 2: Talking with Todd Lutsky from the law firm of Kushinggan Dolan.
27:06
If you've got a question that you'd like to ask
27:08
Todd about your estate plan, studio line here is eight
27:12
eight eight to zero five two two six three. Again
27:16
that is eight eight eight to zero five two two
27:20
six three to get your question right over to mister
27:23
Todd Lutsky there. We're going to take a quick break here,
27:27
but when we come back it is going to be
27:29
right to your questions with Todd. Again, we got room
27:31
on the phone lines for you at eight eight eight
27:34
to zero five two two six three quick break, then
27:38
your questions when we return.
27:41
Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
27:45
only here on the Financial Exchange Radio Network. You're listening
27:51
to Ask Todd with Todd Lutsky on the Financial Exchange
27:54
Radio Network.
28:02
Speaker 2: Still got a little bit more room on the phone
28:04
lines at eight eight eight two zero five two two
28:06
six three if you've got a question for Todd, But
28:09
let's go first to Kenny and Twksbury.
28:11
Speaker 4: Kenny, what's your question for Todd Lutsky.
28:14
Speaker 7: Yes, I've got a piece of property. It's coming out
28:17
of an irrevocable trust. It was May twenty years ago.
28:20
Speaker 4: Huh.
28:20
Speaker 7: There's five siblings and one sibling would like to buy out.
28:24
The rest is their capital game.
28:28
Speaker 6: Okay, So that's a it's a question that I can
28:31
give you an answer to. But understand, not having read
28:34
the trust, it's it's complicated for me to know. But
28:37
here's what you need to look for. I'm assuming that
28:42
your parents maybe put the property in the trust.
28:45
Speaker 4: Is that correct?
28:47
Speaker 7: Yes?
28:47
Speaker 6: And when did they die?
28:50
Speaker 7: Uh, there's one my mother is still living, James. I'm
28:56
talking about in the future, I mean, oh, very old.
29:00
Speaker 6: Okay, So so they it hasn't come out yet, and
29:04
it's not coming out till she dies, correct, Yes, okay,
29:08
so upon her death you'll have to determine whether or
29:12
not the assets in that trust are included in her
29:17
estate for state tax purposes. What I mean by that
29:20
is irrevocable trusts are not always completed gifts. So when
29:25
I take when we prepare an irrevocable trust at Cushing
29:29
and Dolan for medicaid nursing home purposes, assuming that's what
29:32
this was prepared for. Was it designed to protect the
29:35
house from the nursing home.
29:37
Speaker 7: Yes, with a living estate.
29:39
Speaker 6: Oh so you're saying she kept a life estate in
29:43
the deed, the right to live there. Yes, okay, so
29:46
they put the remainder interest into the trust and retained
29:50
a life interest. Yes, okay, that's entirely different. So now
29:55
I don't need to read the trust. I don't need
29:57
to know what the trust says, because when you retain
30:02
the right to live in a property, the government says, yes,
30:05
you gave away the remainder interest, but you retained the
30:10
right to enjoy what it is that you gave away,
30:14
and therefore the government says you didn't cut the string.
30:17
You didn't make a completed gift, and the asset is
30:21
going to be included or pulled back into the estate
30:24
for state tax purposes, not for probate purposes, but for
30:30
gross estate tax purposes, So the full value of that
30:33
property will be included. I don't know if she's if
30:35
that's going to push her over the two million dollar
30:37
Massachusetts limit or not, but if it does, then there'll
30:41
be a massive state tax. But the good news for
30:43
you is there will be no probate or there will
30:47
be a full step up in basis. So when the
30:50
property comes out, if it's worth a million, it'll be
30:53
as if the kids paid a million. They can sell
30:56
it the next day for a million in their gain
30:58
would be zero zero, So there'll be no capital gains
31:02
tax when this property is sold. If it's sold shortly
31:05
after the death of the decedent, I say shortly, you know,
31:09
within six months, nine months, something like that. So hopefully
31:12
that's helpful, and that's good news, folks. It's very important
31:14
to understand these trusts. That's exactly what the new guide
31:17
is all about this month, demystifying the seven top estate
31:23
planning trust that I run into. And these trusts are
31:26
all different. They all have different issues when it comes
31:29
to taxation, whether it's a gift tax and income tax,
31:32
a step up in basis issue like this, whether they're
31:36
designed to protect assets from the nursing home or special
31:39
needs children.
31:40
Speaker 4: So this folks learn.
31:42
Speaker 6: About how these trusts work, from taxation to operations to
31:48
control while you're living. We're talking about irrevocable life insurance trusts,
31:52
revocable trusts, irrevocable medicaid trusts, you name it. The top
31:58
seven estate plan trusts are in this guide and they
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will help you better design your own estate plan and
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determine which ones are right for you. So please get
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the guide brand new for the month eight six six
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eight four eight five six nine nine or Legal Exchange
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Show dot com again eight six six eight four eight
32:20
five six nine nine or Legal Exchange Show dot com.
32:25
Speaker 2: Todd, I've got another caller for you here. Let's go
32:28
to Hillary in Maryland. Hillary, what's your question for Tom Lutsky.
32:34
Speaker 8: Yes, I have a living revocable trust and I was
32:38
just going to put my property in that, but I
32:43
also was thinking of putting it in a I guess
32:46
it's a nominee land trust, but it would the land
32:48
trust just for privacy purposes, and then have that trust,
32:53
my living trust be the beneficiary of that, and then
32:59
just you know, and then upon my death, you know
33:02
my beneficiaries. I suppose with you know, I don't know
33:05
if it's hard to unravel once you know, if you
33:07
have a trust and a trust. But I was wondering
33:11
if that's maybe what you're talking about when you're talking
33:13
about this nominee land trust being a problem.
33:15
Speaker 6: Well, I can tell you in Maryland. It's probably hard
33:19
for me to speak too, because I'm not licensed in Maryland,
33:22
but I can tell you if it's a nominee realty trust. Yeah,
33:26
it's that flow through vehicle. And that's the way you
33:28
could do it. You could use a nominee realty trust,
33:30
make the beneficiary is a family revocable trust that you're
33:35
speaking of, and that'd be okay because then it would
33:37
be in the revocable trust. But you know, I don't
33:41
think you need it. I don't think you need that
33:43
intermediate step, is my point.
33:46
Speaker 4: Right.
33:46
Speaker 6: You can simply just need the property directly into the
33:50
revocable trust. Now in Massachusetts we do this. We need
33:53
it directly into the revocable trust and we do not
33:56
put the revocable trust on record. That's got all your wishes,
34:00
your you know, family wishes, where things are going to
34:03
go when you die, and how they get there, and
34:05
when they get there and why they get there.
34:07
Speaker 4: That doesn't go on record.
34:09
Speaker 6: A simple trustee certificate goes on record indicating that this trust,
34:14
this revocable trust exists, so that you don't have to,
34:19
you know, reveal any of that other information. So I
34:23
would say, my only question to you would be the
34:25
revocable trust would be enough, not the nominee realty trust.
34:29
Speaker 4: But but how how old are you?
34:33
Speaker 3: Fifties?
34:34
Speaker 6: I'm sorry you beeped out.
34:35
Speaker 4: How old?
34:36
Speaker 8: Late fifties?
34:37
Speaker 6: Yeah, so so you know, I don't know if you're
34:40
starting to think about protecting assets from the cost of
34:43
long term care. If you are, then you know, I
34:47
bring it up when I meet clients, you know, sixty, sixty,
34:51
sixty and over, sixty five and over. So you know,
34:54
if you're like fifty eight or fifty nine and you're
34:56
approaching sixty that quickly you might say, well, why would
34:59
I want to set up something now that I might
35:02
just have to, you know, redo in three years, five
35:06
years if I want to protect them from a nursing home.
35:09
And so if that's a concern of yours at all,
35:12
then think about an irrevocable trust. And if it's not,
35:17
then even with the revocable trust, I'm gonna mention, don't
35:21
just stop with putting your house in. So with the
35:23
revocable trust, I'd put in your bank accounts, your investment portfolio,
35:29
you know, retitle it to the trust so it too
35:32
will avoid probate and get to your family in exactly
35:36
the manner that you want all those assets to go. Caution, though,
35:39
one thing you don't put in a revocable trust or
35:43
a medicaid irrevocable trust would be the IRA type assets
35:48
of the world, your retirement accounts. That would be the problem.
35:51
So don't put those in because those would then create
35:56
a taxable event on the moment you transfer to the trust.
35:59
So just some things to think about, folks, different kinds
36:03
of trusts for different objectives that you want to accomplish
36:06
in your estate plan.
36:09
Speaker 4: Mister Watski, thank you so much for joining us today.
36:11
Always a pleasure.
36:12
Speaker 6: Thank you.
36:13
Speaker 1: This has been asked Odd on the Financial Exchange Radio network.
36:17
Ask Todd with Todd Lutsky has been presented by Cushing
36:20
and Dolan, serving Massachusetts and New England for more than
36:22
thirty years, helping families with the state and tax planning,
36:25
Medicaid planning, and probate law. Call eight hundred three nine
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three four thousand and one or visit Cushingdolan dot com.
36:32
The views expressed in this segment are solely those of
36:34
Cushing and Dolan. Armstrong Advisory does not provide any legal
36:36
or tax advice. Please consult with your legal or tax
36:38
advisor on such matters. Cushing and Armstrong do not endorse
36:41
each other and are not affiliated. Cushing and Dolan are
36:43
experts in elder life planning and taxation. They know that
36:46
every family is unique and that every estate plan must
36:49
be different. Early planning is crucial if you want to
36:51
stress free your retirement and trusts are oftentimes the document
36:55
of choice to help protect your assets, but with so
36:57
many kinds of trusts, you need to learn about which
37:00
which one is right for your plan. Revocable and irrevocable
37:03
trusts are most common, but there are several differences as
37:06
well as numerous tax implications with each. If you are
37:08
ready to start your planning or need to a fresh
37:10
and existing plan. Call Cushing and Dolan and ask for
37:13
their new guide called Dmistifying the Top seven Estate Planning Trusts.
37:17
Learn how to protect your assets and potentially eliminate your
37:20
estate taxes. Call eight sixty six eight four eight five
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37:26
That's eight sixty six eight four eight five six ninety nine,
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37:32
The proceeding was State four and the views expressed are
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37:36
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