Latest / The Legal Exchange / Life Estates Gone Wrong: Divorce Drama, Deeds & Costly Mistakes

Transcript

Life Estates Gone Wrong: Divorce Drama, Deeds & Costly Mistakes · The Legal Exchange

0:01
Speaker 1: This is the Legal Exchange with Todd Lutsky from the
0:04
Speaker 1: law firm of Cushing and Dolan and Susan Powers of
0:07
Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
0:10
Speaker 1: discuss many topics, including estate planning, how to avoid probate,
0:13
Speaker 1: and protecting your money from a nursing home. If you
0:16
Speaker 1: need assistance in any of these areas, or have a
0:18
Speaker 1: question about another issue that may affect your future, call
0:21
Speaker 1: eight six six eight four eight five six ninety nine
0:24
Speaker 1: to make an appointment. That's eight sixty six eight four
0:27
Speaker 1: eight five six ninety nine. Operators are standing by. Now
0:31
Speaker 1: Here are your hosts, Todd Lutzky and Susan Powers.
0:37
Speaker 2: Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
0:41
Speaker 2: a financial advisor the Armstrong Advisory Group. I'm joined by
0:44
Speaker 2: Todd Lutsky, a partner with the law firm of Cushing
0:47
Speaker 2: and Dolan with a master's in taxation. Welcome, Todd. How
0:51
Speaker 2: are you today?
0:52
Speaker 3: I'm never better in you not so good? I can't
0:55
Speaker 3: say so good.
0:56
Speaker 2: You might have to do a little more of the
0:58
Speaker 2: talking today. I know that's going to be a.
1:00
Speaker 3: Strugal challenge for me, I'll try to cover for you. Excellent,
1:03
Speaker 3: but thanks for playing. So a couple of things today,
1:08
Speaker 3: we have an Alabama Supreme Court case, basically an interesting
1:13
Speaker 3: situation where a house is given to a daughter in
1:18
Speaker 3: exchange for her providing care the rest of her life,
1:21
Speaker 3: which she ultimately didn't complete the care providing part. But
1:27
Speaker 3: interestingly enough, the house was signed over individually when it
1:30
Speaker 3: was really owned by a trust, so did it even
1:32
Speaker 3: convey the deed to begin with? I mean, there's just
1:34
Speaker 3: so many things to think about here, but again, I
1:37
Speaker 3: think a better plan could have easily been done here,
1:40
Speaker 3: So stay tuned to learn how that plays out. And
1:44
Speaker 3: then we head over to Georgia where we have an
1:46
Speaker 3: appellate court case. This one I like the title. So
1:49
Speaker 3: who is really the second spouse?
1:53
Speaker 2: Well that sounds spicy.
1:55
Speaker 3: Yeah, So this couple gets married, then they try to
1:58
Speaker 3: get divorced, but they're not sure they're actually divorced, and
2:02
Speaker 3: they move apart, and then the husband does actually get remarried.
2:07
Speaker 3: So are you remarried? And can you get remarried if
2:09
Speaker 3: you're not officially divorced? And of course there's no will,
2:13
Speaker 3: and so when he dies, what happens with everything. I mean, folks,
2:16
Speaker 3: just think about the ramifications of being married and being
2:20
Speaker 3: divorced and what you really need to do. And I
2:23
Speaker 3: always tell clients when I meet him and I first
2:25
Speaker 3: talk and they tell me this is their second marriage.
2:27
Speaker 3: I went, well, so much for this being an easiest
2:29
Speaker 3: state planning meeting. Now we have a lot more questions
2:32
Speaker 3: to ask when it's a second marriage. That's okay, we
2:36
Speaker 3: can do it. But folks, put together your plan. But
2:40
Speaker 3: sometimes people take shortcuts and do simply something called a
2:44
Speaker 3: life estate. You might have heard what it is. It's
2:46
Speaker 3: your deed conveying the property either to your children or
2:50
Speaker 3: to a trust, and reserving a life estate. Those are
2:53
Speaker 3: the two ways to create it. What do you have
2:56
Speaker 3: the right to live there? What did you give up?
2:59
Speaker 3: You know from a troll standpoint, where there any gift
3:01
Speaker 3: tax ramifications? What if your child gets divorced? Can you
3:05
Speaker 3: sell it? What are the capital gains tax consequences because
3:09
Speaker 3: of the way you now own it? Can you buy
3:11
Speaker 3: a new one? Folks, there's so much to think about.
3:14
Speaker 3: I think there might be more downsides than upsides with
3:16
Speaker 3: a life estate, but there are pros and cons. Get
3:19
Speaker 3: the guide Learn how a life estate works. If you've
3:22
Speaker 3: already done it, learn what you've got, and if you
3:25
Speaker 3: haven't done it, learn about how they work before you
3:29
Speaker 3: decide to get one. And also learn the three times
3:32
Speaker 3: that I recommend a life estate. Get the guide eight
3:36
Speaker 3: six six eight four eight five six nine nine or
3:39
Speaker 3: Legal Exchange Show dot com. I stress it because today
3:43
Speaker 3: it's the end of the month, folks. It's going away,
3:45
Speaker 3: so please call and get it eight six six eight
3:48
Speaker 3: four eight five six nine nine or Legal Exchange Show
3:52
Speaker 3: dot com. And for more information go to our Instagram
3:56
Speaker 3: page Cushing Dolan PC. Ready, we're going back to Alabama.
4:03
Speaker 3: So Alton and Patsy lived in there, lived in Alabama
4:07
Speaker 3: and their son, Alton Junior, lived with them until about
4:10
Speaker 3: July of twenty twenty, when they both came down with COVID.
4:15
Speaker 3: Remember that, Remember COVID seems like a lifetime ago. Holly,
4:19
Speaker 3: the daughter, who's a bankruptcy attorney, left Memphis, Tennessee, and
4:23
Speaker 3: traveled back to Alabama to take care of the parents
4:26
Speaker 3: till they were discharged from the hospital and for a
4:29
Speaker 3: little while after they were home, but then late August
4:32
Speaker 3: twenty twenty, Holly had to return home, but the parents
4:35
Speaker 3: begged her to stay, please don't go, and they offered
4:38
Speaker 3: to transfer their condo to her in exchange for her
4:42
Speaker 3: relocating and ongoing assistance.
4:45
Speaker 2: We bribery.
4:46
Speaker 3: Yeah, Well, in October twenty twenty, the parents prepared a
4:50
Speaker 3: deed adding Holly to the property, so either a fifty
4:55
Speaker 3: percent owner or a one third owner, I don't know which,
5:00
Speaker 3: and they signed the property individually over to Holly will.
5:04
Speaker 3: Unbeknownst to Holly, it was actually owned by a revocable trust,
5:07
Speaker 3: and so arguably the property that they conveyed might have
5:12
Speaker 3: been nothing since it was owned by the trust and
5:16
Speaker 3: they didn't convey it from the trust. Well, Holly then
5:20
Speaker 3: began providing care, and she did so until July of
5:23
Speaker 3: twenty twenty two, when she learned her a strange brother,
5:27
Speaker 3: Alton Junior, was moving back home. Well, the parents then
5:33
Speaker 3: tried to annul the deed, saying that because they signed
5:37
Speaker 3: it individually, it really conveyed her nothing, which they're probably
5:41
Speaker 3: right about that, but they went on to say also
5:45
Speaker 3: the consideration failed because she never actually provided care for
5:51
Speaker 3: the whole life. Well, the trial court actually concluded that
5:58
Speaker 3: the deed was in fact invalid and Holly had no
6:02
Speaker 3: interest which legally is probably the right answer.
6:06
Speaker 2: Right.
6:08
Speaker 3: Well, as you might imagine, Holly wasn't thrilled with that,
6:11
Speaker 3: so Holly went to the Supreme Court. The Supreme Court
6:15
Speaker 3: actually affirmed Again. I think it's because legally nothing was transferred.
6:22
Speaker 2: They didn't wear it signing as their trustee had right.
6:25
Speaker 3: If they were to signed it as the trustee of
6:27
Speaker 3: the trust conveying it, then there might be a different story.
6:31
Speaker 3: And they said, but they also said that you can
6:33
Speaker 3: annul a deed because the consideration was not complete. I'm
6:38
Speaker 3: not sure that consideration was the biggest piece of this,
6:40
Speaker 3: but nevertheless, end of story, Holly seems to be seems
6:46
Speaker 3: to be out. And again, she only provided care for
6:49
Speaker 3: two years, so there's some argument to the consideration piece.
6:53
Speaker 2: What perfect names for Alabama? Alton, Patsy Patsy, Yeah, perfect names. Okay,
7:00
Speaker 2: So what are some of the tips and lessons we
7:02
Speaker 2: get from this? Well, first, you know you're thinking about
7:05
Speaker 2: wanting to give away they wanted the parents did want
7:08
Speaker 2: to give the house to Holly, or they at least
7:10
Speaker 2: gave her something because they added her name to the deed.
7:13
Speaker 2: Let's think about what that means and why what we
7:16
Speaker 2: say all the time, Susan is nothing good ever comes
7:21
Speaker 2: from giving away your home, no period. And I'm going
7:24
Speaker 2: to stand by that the result of this case is irrelevant.
7:27
Speaker 2: I'm standing by that as sort of our lesson learned.
7:30
Speaker 2: Let's think about what the effects are other than what
7:33
Speaker 2: actually happened here. The effect is, that's a completed gift
7:36
Speaker 2: in this case of at least one third. But I
7:38
Speaker 2: suspect it was probably one half. I suspect mom and
7:41
Speaker 2: dad owned it together fifty percent and they gave fifty
7:44
Speaker 2: percent away. All right, well, mom and dad technically have
7:48
Speaker 2: to pay a taxable gift. Secondly, basis, Oh yeah, we
7:53
Speaker 2: have a carryover of at least let's go with our
7:55
Speaker 2: one half analysis, a carryover basis of one half the property.
7:59
Speaker 3: So now one half of the built in gain exists
8:04
Speaker 3: for the daughter. So that's not good for the recipient
8:08
Speaker 3: because now they sell it, they have to pay capital
8:10
Speaker 3: gains tax. Again, they could sell it, let's go to
8:14
Speaker 3: let's go to control. Well, now, if it was done
8:17
Speaker 3: right and they actually were able to convey the deed
8:21
Speaker 3: to the kids or to Holly, then that's a one
8:24
Speaker 3: one half ownership. Right then if she stopped performing services,
8:29
Speaker 3: they would have to go back and try to force
8:31
Speaker 3: her to sign the deed back over, which certainly is
8:35
Speaker 3: not an easy thing to do by any stretch, So
8:39
Speaker 3: be careful of that, and remember when you lost control.
8:42
Speaker 3: If you want to sell it, you only need their permission,
8:45
Speaker 3: but you also have a You also have a capital
8:49
Speaker 3: gains tax problem because some of the money would have
8:52
Speaker 3: went to Holly, and then you got to hope Holly
8:54
Speaker 3: gives the money back In case mom and Dad wanted
8:56
Speaker 3: to buy another house.
8:57
Speaker 2: Which doesn't sound like she would.
8:58
Speaker 3: Nooks vocable trust certainly the way to go here. It
9:02
Speaker 3: would be an incomplete gift for gift tax purposes. Parents
9:05
Speaker 3: keep control over the house. They could have it set
9:08
Speaker 3: up to say I leave everything to Holly, but when
9:11
Speaker 3: Holly stops performing, they would have a limited power of
9:13
Speaker 3: appointment built in to the irvocable trust, and they can say, okay, well, Holly,
9:18
Speaker 3: the house isn't going to you anymore. You're gonna change
9:20
Speaker 3: your mind now, I'm going to either leave it equally
9:22
Speaker 3: to all my kids depending on how I feel, or
9:25
Speaker 3: maybe I cut you out altogether. But they retain control
9:28
Speaker 3: over it incomplete gift. They retain control over who gets it.
9:32
Speaker 3: And then when the kids inherit it. Ultimately, whoever does
9:36
Speaker 3: get it, they get it with a full step up
9:38
Speaker 3: in basis, eliminating all the built in gain. Folks, the
9:42
Speaker 3: irrevocable trust would have been wonderful. Here, better for mom
9:45
Speaker 3: and dad, more control, better taxes for the kids. I mean,
9:49
Speaker 3: just follow do what you need to do. Protects it
9:51
Speaker 3: from the nursing home. It avoids probate, keeps the parents
9:55
Speaker 3: in control. Folks, trust planning way better than giving it away.
10:00
Speaker 3: And folks, it's the end of the month. Get this
10:02
Speaker 3: guide calculating the consequences of a life estate, because, believe
10:05
Speaker 3: it or not, when you create a life estate and
10:09
Speaker 3: you put the house in the kids' names, you made
10:11
Speaker 3: a completed gift. A lot of these same problems exist.
10:15
Speaker 3: Eight six six eight four eight five six nine nine
10:19
Speaker 3: or Legal Exchange show dot com.
10:21
Speaker 2: You've been listening to Todd Lutski, a partner with the
10:24
Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
10:27
Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
10:31
Speaker 2: more to come when we return to the Legal Exchange
10:34
Speaker 2: with Todd Lutsky.
10:36
Speaker 1: Life estates are sometimes used to protect your home as
10:38
Speaker 1: part of your future, but it's important to understand how
10:41
Speaker 1: they really work before making any changes to your state plan.
10:44
Speaker 1: Cushing and Dolan are experts and elder law and taxation.
10:47
Speaker 1: Their new guide, called Calculating the Consequences of Life Estates,
10:50
Speaker 1: explains the pros and cons and why careful planning is
10:53
Speaker 1: so critical. A life estate can allow you to remain
10:56
Speaker 1: in your home while transferring future ownership, but decisions like
10:59
Speaker 1: putting the pro property in your children's names versus using
11:02
Speaker 1: a trust can have very different consequences when it comes
11:04
Speaker 1: to taxes, control, and protection from creditors. Before you sign
11:08
Speaker 1: any deed or a transfer property, be sure you understand
11:11
Speaker 1: your options. Call Cushing and Dolan at eight six six
11:14
Speaker 1: eight four eight five six ninety nine and ask for
11:17
Speaker 1: your free guide today. That's eight six six eight four
11:19
Speaker 1: eight five six nine nine, or you can request the
11:22
Speaker 1: guide online by visiting Legal exchange show dot com. The
11:25
Speaker 1: proceeding was paid for in The views expressed are solely
11:27
Speaker 1: those of Cushing and Dolan. Cushing and Dolan and or
11:29
Speaker 1: Armstrong Advisory may contact you offering legal or investment services.
11:32
Speaker 1: Cushing and Dolan in Armstrong Advisory do not endorse each
11:34
Speaker 1: other and are not affiliated.
11:36
Speaker 4: When going through a divorce, understanding the rules around your
11:39
Speaker 4: finances can make a real difference. This is Chuck Zada
11:42
Speaker 4: from the Armstrong Advisory Group. State law plays a major
11:45
Speaker 4: role in how assets are divided, whether that means a
11:47
Speaker 4: strict split or a distribution based on what the court
11:50
Speaker 4: considers fair. Health insurance and social security benefits are other
11:53
Speaker 4: considerations that you'll need to prepare for. You may have
11:56
Speaker 4: been covered under a spouse's plan and now need to
11:58
Speaker 4: find one of your own, and so security may offer
12:01
Speaker 4: benefits based on your former spouse's record. Our new guide,
12:04
Speaker 4: Divorce in your Financial Plan will walk you through these
12:07
Speaker 4: issues and more to help you make informed decisions that
12:10
Speaker 4: may affect your future. Call eight hundred three nine three
12:12
Speaker 4: for zero zero one to request your free copy. That's
12:15
Speaker 4: eight hundred three nine three for zero zero one A
12:18
Speaker 4: request the guide online at Armstrong Advisory dot com.
12:22
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
12:24
Speaker 1: registered investment advisor. Nothing in the ad or in any
12:27
Speaker 1: Armstrong guide is specific financial, legal or tax advice. Consult
12:30
Speaker 1: your own financial, tax into state planning advisors before making
12:32
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
12:35
Speaker 1: advisory services. Protecting your home with the life estate can
12:38
Speaker 1: be problematic if you don't understand the rules. Cushing and
12:41
Speaker 1: Dolan's new guide called Calculating the Consequences of Life Estates
12:44
Speaker 1: can help you learn about how this strategy works and
12:46
Speaker 1: what to consider. Call Cushing and Dolan at eight six
12:49
Speaker 1: six eight four eight five six ninet nine and get
12:51
Speaker 1: your guide today or request it online at legal exchange
12:55
Speaker 1: show dot com. The proceeding was paid for and the
12:57
Speaker 1: views expressed are solely those of Cushing and Dolan. Cushing
12:59
Speaker 1: and Dolin in Armstrong Advisory may contact you offering legal
13:02
Speaker 1: or investment services. Christian Dolan and Armstrong Advisory do not
13:05
Speaker 1: endorse each other and are not affiliated.
13:07
Speaker 3: Hi.
13:07
Speaker 5: I'm Michael Valila, adjudent of the Disabled American Veterans Department
13:10
Speaker 5: of Massachusetts. The DAV of Massachusetts provides thousands of hours
13:14
Speaker 5: of voluntary services at our VA medical centers and soldiers homes,
13:18
Speaker 5: and is the only DAV department in the country to
13:20
Speaker 5: lead a veterans housing initiative for both single veterans and
13:23
Speaker 5: those with families. These programs are critical to serving our
13:27
Speaker 5: veterans and their time and need. You can help our
13:29
Speaker 5: great American heroes by making a donation today. Please visit
13:32
Speaker 5: Dav fivek dot Boston. That's dav fivek dot Boston.
13:38
Speaker 1: You're listening to the Legal Exchange with Todd Lunsky, an
13:41
Speaker 1: expert in elder life planning and taxation. Need help with
13:44
Speaker 1: your estate plan? Call Todd right now and make an appointment.
13:47
Speaker 1: Eight six six eight four eight five six ninety nine.
13:49
Speaker 1: That's eight six six eight four eight five six ninety nine.
13:54
Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
13:57
Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
14:01
Speaker 2: and I'm joined by Todd Lutsky, a partner with the
14:03
Speaker 2: law firm of Cushing and Dolan with a master's in taxation.
14:07
Speaker 2: Where are we headed now, Todd.
14:09
Speaker 3: We're going to head over to Georgia. We've got an
14:11
Speaker 3: appellate court case there basically, so, who really is the
14:15
Speaker 3: second wife?
14:16
Speaker 2: Oh, the spicy case.
14:18
Speaker 3: That's interesting, it's spicy, it's just weird. So George and
14:24
Speaker 3: Dolores were married in nineteen sixty three. They had two kids. Well,
14:30
Speaker 3: in nineteen sixty nine, Dolores moves to Boston with the
14:34
Speaker 3: two kids. In nineteen seventy she petitions for divorce in Connecticut,
14:43
Speaker 3: which is weird. Now, there was no evidence that showed
14:46
Speaker 3: this ever really went anywhere. It wasn't pursued, Okay, so
14:50
Speaker 3: be it. Fast forward to nineteen seventy three. Dolores then
14:54
Speaker 3: files for separation and custody and petitions for divorce in Massachusetts. Okay,
15:01
Speaker 3: So it sounds like nothing happened on the first one,
15:03
Speaker 3: and now we're gonna maybe get this thing going. Well,
15:06
Speaker 3: there's some conflicting evidence as they go through this divorce
15:10
Speaker 3: to show even if they ever actually resulted in a
15:13
Speaker 3: complete divorce decree. Okay, that started in nineteen seventy three.
15:20
Speaker 3: In nineteen seventy two, George began dating his second wife, Rosemary,
15:25
Speaker 3: and ultimately they did get married in Tennessee in two
15:29
Speaker 3: thousand and three. Okay. Well, in twenty twenty one, George
15:35
Speaker 3: died and then it says George and Dolores, George and
15:41
Speaker 3: Dolores's son Devon. So I think it's I'm not sure
15:46
Speaker 3: who this Georges might have been another kid because George died, right,
15:51
Speaker 3: So and Devin petitioned the court to probate the estate
15:54
Speaker 3: of George, in which they identified Rosemary's second wife George's spouse.
16:02
Speaker 3: Oh but then later they amended the petition and they said,
16:04
Speaker 3: oh wait, we were wrong. Dolores is really George's spouse.
16:09
Speaker 3: That was the first wife. Yep, okay. So that went on,
16:13
Speaker 3: and then there was some more conflicting evidence that was
16:16
Speaker 3: presented regarding the divorce or whether or not they actually
16:20
Speaker 3: were divorced, George and Dolores, and the court ultimately concluded
16:24
Speaker 3: that George and Dolores marriage George and Dolores's marriage was
16:30
Speaker 3: dissolved by divorce. So that's ultimately what the trial court decided. Okay, well, Devin,
16:37
Speaker 3: remember he's the son. Well it says George and Dolores's son, Devon. Yeah,
16:42
Speaker 3: so that's what it is. George and Dolores's son. Devin
16:44
Speaker 3: petitioned the court. So just Devon is the one doing this.
16:49
Speaker 3: Devin appealed because obviously he's the son, and he has
16:52
Speaker 3: a reason to appeal because this is gonna matter.
16:55
Speaker 2: Right because he's got George hat a spouse.
16:58
Speaker 3: That's right, and it's gonna matter. And so the appellate
17:01
Speaker 3: court actually affirmed the trial court and the evidence showed
17:05
Speaker 3: that George and Dolores were in fact divorce and George
17:08
Speaker 3: and Rose Murray were in fact married, which included, you know,
17:13
Speaker 3: a certificate of marriage, which also demonstrates that George had
17:17
Speaker 3: capacity to marry because he got a certificate of marriage.
17:20
Speaker 3: So at the end of the day, the decision is
17:24
Speaker 3: George remarried Rosemary. Rosemary is the spouse. George and Dolores
17:31
Speaker 3: are divorced, and guess what, there's no will. What does
17:37
Speaker 3: this mean for Devon who is a son of a
17:41
Speaker 3: father who died but married to a stepmother. Yep, Well
17:45
Speaker 3: that's what we're going to find out, So stay tuned.
17:48
Speaker 3: That's the tips and lessons that we can learn. And folks,
17:52
Speaker 3: you know, obviously when there's a second marriage involved, please plan,
17:55
Speaker 3: but a lot of times people do shortcuts and they
17:57
Speaker 3: might just throw their house in a life estate. That's
18:00
Speaker 3: why we spend so much time on it this month
18:02
Speaker 3: Life Estates. Folks. What do you have? What have you
18:06
Speaker 3: given up? What are the tax consequences, What if you
18:09
Speaker 3: want to resell? What if a child gets divorced in
18:11
Speaker 3: your through it in their name? What if you want
18:13
Speaker 3: to rebuy? You know, how much control did you keep?
18:17
Speaker 3: What did you give up? How do they work? Folks?
18:20
Speaker 3: And I'll even tell you in this guide the three
18:22
Speaker 3: times I think it's a good idea to actually use these.
18:25
Speaker 3: I said three because there's not many, so pros and cons.
18:29
Speaker 3: Understand what you have. Folks. It's the end of the month,
18:31
Speaker 3: call and get the guide Calculating the Consequences of a
18:35
Speaker 3: life Estate eight six six eight four eight five six
18:39
Speaker 3: nine nine or Legal Exchange Show dot com again end
18:43
Speaker 3: of the month eight six six eight four eight five
18:46
Speaker 3: six nine nine or Legal Exchange Show dot com. And
18:50
Speaker 3: for more information go to our Instagram page Cushing Dolan PC. Okay,
18:57
Speaker 3: what have we got here, folks? Second marriages? All I
19:00
Speaker 3: can take away from this clearly, even if you're not
19:04
Speaker 3: sure you're divorced, he knew he remarried, So George, if
19:09
Speaker 3: you remarried, if anyone remarried, you should always always change
19:14
Speaker 3: the plan. Make sure you step back up to the
19:17
Speaker 3: plate and do an estate plan. Like I said earlier,
19:20
Speaker 3: When I meet clients and the first thing I ask
19:23
Speaker 3: you know, are you married? And they always volunteer. I go,
19:26
Speaker 3: do you have kids? Oh? Yeah, I have kids from
19:29
Speaker 3: a prior marriage. And as soon as that happens. I
19:32
Speaker 3: have a whole series of additional questions that have to
19:37
Speaker 3: be asked, some seemingly hard, but you have to ask
19:41
Speaker 3: him in order to, you know, better, draft the plan
19:46
Speaker 3: to take care of everybody. But my message right now
19:49
Speaker 3: to you is, please just step up to the plate
19:53
Speaker 3: and do some planning so that you can plan for
19:55
Speaker 3: the new spouse, which I assume you'd want to if
19:58
Speaker 3: that's who you now love, and possibly your kids, maybe
20:02
Speaker 3: from your old marriage, and maybe even if you want
20:05
Speaker 3: to take care of the new kids from a new marriage.
20:07
Speaker 3: Why it's so important in this case is never mind, yes,
20:10
Speaker 3: please plan. In this case, there's no plan. We have
20:12
Speaker 3: an intestate succession situation. So what happens to Devin, Well,
20:16
Speaker 3: in this case it matters. Marriage matters, right, So if
20:20
Speaker 3: for some reason George George's was not divorced and therefore
20:27
Speaker 3: he could not have remarried, well, then his assets will
20:31
Speaker 3: likely go to Dolores the first wife, right because she's
20:36
Speaker 3: not dead, so likely the first wife or depending on
20:40
Speaker 3: the state, everything depends on the intestine state succession statute
20:45
Speaker 3: of that state, maybe to Dolores the first wife, and
20:49
Speaker 3: some percent to the kids, possibly but if it's a
20:52
Speaker 3: first marriage, the kids might be out and might all
20:54
Speaker 3: go to Dolores. Well, so Rosemary would be out altogether.
21:00
Speaker 3: But if they were married, which seems to be the
21:02
Speaker 3: case here, well, then a portion with no will, a
21:07
Speaker 3: portion's likely to go to Rosemarie, who's the wife. But
21:11
Speaker 3: yet when there's a second marriage and kids from a
21:14
Speaker 3: second marriage, they oftentimes, depending on the state, might get
21:19
Speaker 3: a portion of that money as well. So Devon might
21:22
Speaker 3: now be in but sharing if they're married, but sharing
21:27
Speaker 3: with this spouse. So it's really going to depend And
21:30
Speaker 3: I don't know the intestate succession statute of Georgia, but
21:37
Speaker 3: that's really what's going on here. Who gets what? And
21:40
Speaker 3: remember you know kids in this case stand a chance
21:44
Speaker 3: to lose out altogether, and that's Devin yep. So that's
21:49
Speaker 3: really why you need to think about this, because that
21:52
Speaker 3: intestate succession statute is going to control ultimately who gets this,
21:56
Speaker 3: and the marriage matters.
21:57
Speaker 2: And he may not want have left things to Rosemary
22:00
Speaker 2: and just demn you have to have a plan.
22:02
Speaker 3: So in this case, if you stepped up and we
22:04
Speaker 3: did a trust susan, now you could do whatever you wanted, right,
22:07
Speaker 3: you could create the trust, you can provide for the spouse.
22:11
Speaker 3: If that's Rosemary, let it be Rosemary. And you can
22:14
Speaker 3: provide for that spouse from your current marriage, while still
22:17
Speaker 3: protecting the assets for the kids from your prior marriage,
22:21
Speaker 3: so that when your spouse dies in this case, Rosemary,
22:25
Speaker 3: there'll be something left for your children yep. Later, So
22:28
Speaker 3: you can control that. You can control who the trustee is,
22:32
Speaker 3: you can control the access that you give to your
22:35
Speaker 3: spouse inside that trust. Right and in this case, even
22:41
Speaker 3: if you're not married but you're divorced, you want to
22:44
Speaker 3: redo your plan and may figure out a way to
22:46
Speaker 3: provide for your kids. Right. You want to avoid probate.
22:51
Speaker 3: You want to make sure that they get it in
22:53
Speaker 3: a certain way. You might want to protect if you've
22:56
Speaker 3: gone through divorce, you know how ugly it is. You
22:58
Speaker 3: might want to say, well, in case you can kids
23:00
Speaker 3: ever get divorced, I want to make sure that these
23:02
Speaker 3: assets are available for you and not your spouse. All
23:07
Speaker 3: these things can be designed through the trust. No worry
23:11
Speaker 3: about intests, a succession statute, and even some less worry
23:15
Speaker 3: about marriage. Folks do your planning. Sometimes we don't. Sometimes
23:21
Speaker 3: we just do life estates call and get the guide
23:23
Speaker 3: if you've done one, or if you haven't, learn how
23:26
Speaker 3: they work and what you give up and what you
23:29
Speaker 3: don't eight six six eight four eight five six nine nine,
23:34
Speaker 3: or go to our website Legal Exchange Show dot com
23:36
Speaker 3: and download it.
23:37
Speaker 1: There.
23:37
Speaker 2: You've been listening to Todd Lutsky, a partner with the
23:40
Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
23:43
Speaker 2: financial advisor with the Armstrong Advisory Group, and Todd will
23:47
Speaker 2: be answering your listener questions when we return to the
23:50
Speaker 2: Legal Exchange with Todd Lutsky.
23:53
Speaker 1: Life estates are sometimes used to protect your home as
23:55
Speaker 1: part of your future, but it's important to understand how
23:58
Speaker 1: they really work before making any change just to your
24:00
Speaker 1: state plan. Cushing and Dolan are experts and elder lawn taxation.
24:04
Speaker 1: Their new guide, called Calculating the Consequences of Life Estates,
24:07
Speaker 1: explains the pros and cons and why careful planning is
24:10
Speaker 1: so critical. A life estate can allow you to remain
24:13
Speaker 1: in your home while transferring future ownership, but decisions like
24:16
Speaker 1: putting the property in your children's names versus using a
24:19
Speaker 1: trust can have very different consequences when it comes to taxes, control,
24:23
Speaker 1: and protection. From creditors. Before you sign any deed or
24:26
Speaker 1: transfer property, be sure you understand your options. Call Cushing
24:30
Speaker 1: and Dolan at eight sixty six eight four eight five
24:32
Speaker 1: six ninety nine and ask for your free guide today
24:35
Speaker 1: that's eight six six eight four eight five six nine nine,
24:38
Speaker 1: or you can request the guide online by visiting Legal
24:40
Speaker 1: exchange show dot com. The proceeding was paid for in
24:43
Speaker 1: the views expressed are solely those of Cushing and Dolan.
24:45
Speaker 1: Cushing and Dolin and Armstrong Advisory may contact you offering
24:48
Speaker 1: legal or investment services. Cushing and Dolan in Armstrong Advisory
24:51
Speaker 1: do not endorse each other and are not affiliated. Protecting
24:53
Speaker 1: your home with the Life Estate can be problematic if
24:55
Speaker 1: you don't understand the rules. Cushing and Dolan's new guide
24:58
Speaker 1: called Calculating the Consequences of Life the States, can help
25:00
Speaker 1: you learn about how this strategy works and what to consider.
25:03
Speaker 1: Call Cushing and Dolan at eight six six eight four
25:05
Speaker 1: eight five six ninet nine and get your guide today
25:08
Speaker 1: or requested online at Legal exchange show dot com. The
25:12
Speaker 1: proceeding was paid for and the views expressed are sole
25:14
Speaker 1: lead those of Cushing and Dolan. Cushing and Dolan and
25:16
Speaker 1: Armstrong Advisory may contact you offering legal or investment services.
25:19
Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
25:21
Speaker 1: other and are not affiliated. Hi.
25:23
Speaker 5: I'm Michael Valila, adjudent of the Disabled American Veterans Department
25:26
Speaker 5: of Massachusetts. The DAV of Massachusetts provides thousands of hours
25:30
Speaker 5: of voluntary services at our VA medical centers and soldiers homes,
25:34
Speaker 5: and is the only DAV department in the country to
25:36
Speaker 5: lead a veterans housing initiative for both single veterans and
25:39
Speaker 5: those with families. These programs are critical to serving our
25:43
Speaker 5: veterans and their time and need. You can help our
25:45
Speaker 5: great American heroes by making a donation today. Please visit
25:48
Speaker 5: DAV fivek dot Boston. That's DAV fivek dot Boston.
25:53
Speaker 6: As you navigate life after divorce, planning for your family's
25:56
Speaker 6: future becomes even more important. Hi, this is Mike Armstrong
25:59
Speaker 6: from the arms Strong Advisory Group. From everyday expenses to
26:02
Speaker 6: thinking about how college will be funded, it's important to
26:05
Speaker 6: have a clear plan for how all of your upcoming
26:07
Speaker 6: costs will be handled over time. Divorce also means adjusting
26:11
Speaker 6: to a new financial reality where one household becomes two
26:14
Speaker 6: and your budget saving strategy and long term goals may
26:17
Speaker 6: need to be reevaluated. Our new guide is called Divorce
26:20
Speaker 6: in Your Financial Plan, and it discusses ways to build
26:23
Speaker 6: a financial strategy that supports your family's next chapter. You
26:26
Speaker 6: can get your free guide today by calling eight hundred
26:29
Speaker 6: three nine three four zero zero one. That's eight hundred
26:32
Speaker 6: three nine three four zero zero one, or you can
26:35
Speaker 6: request the guide online at Armstrong Advisory dot com.
26:38
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
26:40
Speaker 1: registered investment advisor. Nothing in the ad or in any
26:43
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
26:46
Speaker 1: your own financial tax into state planning advisors before making
26:49
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
26:52
Speaker 1: advisory services.
26:53
Speaker 5: This is Michael Valila, adjudent of the Disabled American Veterans
26:56
Speaker 5: Department of Massachusetts. The DAVIA, Massachusetts help me and countless
27:01
Speaker 5: others adjust to civilian life through a variety of incredible programs.
27:05
Speaker 5: Through our Local Veterans Assistance Program, we provide necessary services
27:09
Speaker 5: to veterans in their communities, such as food, shopping, landscaping,
27:13
Speaker 5: and companionship. But we need your support. You can help
27:16
Speaker 5: by making a donation today, please visit davfivek dot Boston.
27:21
Speaker 5: That's dav fivek dot Boston.
27:24
Speaker 1: You're listening to the Legal Exchange, and it's time for
27:27
Speaker 1: Ask Todd, the segment where Todd will answer your questions
27:31
Speaker 1: about anything and everything that's included in the estate planning process.
27:35
Speaker 1: Once again, here's Todd, Lutsky and Susan Powers.
27:40
Speaker 2: Welcome back Todd with a few questions from listeners. First
27:43
Speaker 2: question comes from Fred and Mendon Mass and Fred asks,
27:47
Speaker 2: I'd like to lend one of my children some money
27:49
Speaker 2: to purchase a house. Can I do this with money
27:52
Speaker 2: that's in my irrevocable trust? Well, the fact that he
27:55
Speaker 2: is the trustee complicate matters. What will happen if I
27:58
Speaker 2: pass away before he finishes paying me back?
28:01
Speaker 3: Well, there's a lot to unpack in this actually. So
28:05
Speaker 3: the first question is can and irrevocable trust lend money
28:10
Speaker 3: to beneficiaries? The answer is yes. Okay, you can't lend
28:16
Speaker 3: to the donor or to the donor spouse.
28:19
Speaker 2: Yeah, but you.
28:21
Speaker 3: Can lend to beneficiaries and it has language in the
28:25
Speaker 3: trustee power section you know, secured or unsecured. You can
28:29
Speaker 3: put an you know, interest rate on the note. I
28:31
Speaker 3: mean it's it's basically, remember, the trustee of the trust
28:35
Speaker 3: has an obligation to invest as a prudent investor would invest.
28:40
Speaker 3: And if the trustee feels that, you know, I can
28:43
Speaker 3: get six percent interest on this loan and it seems
28:49
Speaker 3: like it's a reliable situation, then they can make that
28:53
Speaker 3: decision instead of buying something for six percent sure in
28:57
Speaker 3: the market. Okay, So I think the answer is yes,
29:02
Speaker 3: you can go ahead and do that. Again, I haven't
29:04
Speaker 3: read this trust, so it's always caveats. Okay, So now
29:11
Speaker 3: we're allowed to do it. The question is, you know,
29:15
Speaker 3: I don't think him being trustee complicates matters as long
29:18
Speaker 3: as he's acting as a fiduciary and does it that way.
29:22
Speaker 3: But then I think the bigger question is what will happen,
29:25
Speaker 3: you know, if the don oor passes away before the
29:28
Speaker 3: note is paid back. Well, I think when you you know,
29:32
Speaker 3: when you have when you make this decision, you're going
29:35
Speaker 3: to need to go back and modify the trust now,
29:39
Speaker 3: even though it's irrevocable. Again, if it was our trust
29:41
Speaker 3: at Cushing and Dolan, we can have language in there
29:45
Speaker 3: called a limited power of appointment that allows you in
29:49
Speaker 3: a limited way to change the beneficiaries of the trust,
29:55
Speaker 3: but only among children. Granted, I don't know whatever the
29:58
Speaker 3: class is that was defined at the time we created
30:03
Speaker 3: the document. Could be niece's, nephew's siblings. So yes, you
30:08
Speaker 3: could go back and now say everything is equal. But
30:12
Speaker 3: if this promissory note that you now identify out has
30:17
Speaker 3: an outstanding balance, that outstanding balance, and because you know
30:21
Speaker 3: you figure he's probably not going to pay it off
30:25
Speaker 3: once he dies, you can provide that you know that
30:28
Speaker 3: it must continue on as an asset and the child
30:32
Speaker 3: must continue to make monthly payments. Or maybe the better
30:35
Speaker 3: way is to simply treat the outstanding balance as an
30:41
Speaker 3: advancement to the child.
30:42
Speaker 2: So if there were two kids and he owed one
30:44
Speaker 2: hundred grand, how would that be treated with So.
30:47
Speaker 3: Let's say there's a million dollars of assets in the trust.
30:50
Speaker 3: That would be five hundred each. But before you divide
30:53
Speaker 3: it to five hundred each, you'd reach into the million dollars,
30:56
Speaker 3: take the amount of the outstanding balance, say one hundred
30:59
Speaker 3: thousand in your case, on the note, and allocate one
31:02
Speaker 3: hundred thousand to the kid who doesn't have the note.
31:05
Speaker 3: And so now there's only nine hundred thousand left in
31:08
Speaker 3: the bucket, and then the nine hundred thousand in the
31:10
Speaker 3: bucket gets divided equally fifty to fifty. But we equalized
31:16
Speaker 3: this situation with the note, so great question, positive answer,
31:21
Speaker 3: and folks telling you more and more about how flexible
31:26
Speaker 3: these irrevocable medicaid trust can actually be so very important.
31:32
Speaker 3: Great question, But I can tell you, folks that it's
31:36
Speaker 3: way more know you worry about irrevocable and inflexible. It's
31:39
Speaker 3: way more flexible than giving away a life estate to
31:42
Speaker 3: your kids. And that's something a lot of people do.
31:45
Speaker 3: They take the house, give it to the kid, reserve
31:47
Speaker 3: a life estate. Stop, get the guide. Listen to what
31:50
Speaker 3: you've done. How much control have I given up? Can
31:53
Speaker 3: I change my mind? Can I give it to another
31:55
Speaker 3: kid after I've done this? Can I sell it? What
31:58
Speaker 3: are the capital gains tax consequences if I sell it?
32:01
Speaker 3: If I sell it, who gets most of the money?
32:03
Speaker 1: You know?
32:04
Speaker 3: If the kid gets a divorce? What happens? I mean, folks,
32:06
Speaker 3: there's so much to think about when you create these
32:09
Speaker 3: life estates. Yes, there's positives, and there's three times I
32:13
Speaker 3: recommend to use them. That's also in the guide. Call
32:16
Speaker 3: and get it. It's the end of the month, folks,
32:18
Speaker 3: last chance to get it eight six six eight four
32:21
Speaker 3: eight five six nine nine or Legal Exchange show dot
32:26
Speaker 3: com again eight six six eight four eight five six
32:30
Speaker 3: nine nine or Legal Exchange show dot com. You can
32:33
Speaker 3: download it there and for much more information go to
32:37
Speaker 3: our Instagram page Cushing Dolan PC.
32:40
Speaker 2: Our last question comes from Ken in Burlington, mass and
32:43
Speaker 2: Ken writes, I'm the executor of my mother's estate. My
32:47
Speaker 2: brother passed away before my mother, but she did not
32:50
Speaker 2: update any of her beneficiaries. She had beneficiaries in the
32:54
Speaker 2: name of her three children. Now that she has passed,
32:57
Speaker 2: would my brother's share go to his children or would
33:00
Speaker 2: it go back to be divided between the remaining two siblings.
33:04
Speaker 3: All right, so this this needs some clarification for sure.
33:07
Speaker 3: Are you saying maybe I missed it? Are these just
33:10
Speaker 3: bank accounts?
33:11
Speaker 2: That sounds like it's just accounts. It does not sound
33:13
Speaker 2: like there's a trust.
33:14
Speaker 3: So no trust. These are just accounts that were in
33:16
Speaker 3: mom's name, and perhaps those accounts had designated beneficiary, so
33:22
Speaker 3: they weren't jointly owned.
33:23
Speaker 2: No, doesn't sound like that just beneficiary.
33:26
Speaker 3: They had designated beneficiary, so Now the hard part about
33:30
Speaker 3: answering that is that that you know, did the designated
33:35
Speaker 3: beneficiary lines on the form say per sturpees afterwards, per
33:41
Speaker 3: capita afterwards, something to indicate what happens when one of
33:46
Speaker 3: them is not there?
33:48
Speaker 2: And what does that mean per sturpees and per capita.
33:50
Speaker 3: So if it was per capita and you had three kids,
33:53
Speaker 3: which I think was the case, and one died, then
33:57
Speaker 3: the assets would go. If it was per capita two ways,
34:03
Speaker 3: and the one who died is just out, and if
34:06
Speaker 3: that child had any kids, they're out. They're just out
34:10
Speaker 3: on a designated beneficiary situation. I mean, good news is
34:13
Speaker 3: it still avoids probate. Doesn't do much from an estate
34:17
Speaker 3: tax standpoint, and doesn't do much really from a nursing
34:20
Speaker 3: home protection standpoint, but at least it avoided probate and
34:24
Speaker 3: went to those two. Now, I'm not sure what you
34:28
Speaker 3: can and cannot put on these designated beneficiary forms. I'm sure,
34:32
Speaker 3: Susan you see them. They're probably case by case, financial
34:36
Speaker 3: institution by financial institution. So the bigger issue is if
34:44
Speaker 3: it said if you could say prosturpies, then you know,
34:48
Speaker 3: then it would say, okay, well, one child died. Let's
34:51
Speaker 3: look down to see if that child left any children.
34:55
Speaker 3: If so, then it would still be divided one third
34:58
Speaker 3: each and drop down to the to the step or
35:02
Speaker 3: to the grandchildren in that case. But hard to say
35:07
Speaker 3: in this case what would actually happen?
35:09
Speaker 2: So can you and you you can decide how you
35:12
Speaker 2: want that to happen. Right, So if you if you
35:15
Speaker 2: wanted to go to the kids or the grandkids, Yeah, like,
35:18
Speaker 2: how do you treat that in your trusts? In your
35:20
Speaker 2: trust documents?
35:21
Speaker 3: So what I was thinking is that that you were thinking.
35:25
Speaker 3: So I got two questions. I'm going to take another
35:27
Speaker 3: question away from that. I'll answer the trust question for sure.
35:29
Speaker 3: But where I was going with this is I thought
35:31
Speaker 3: you were going to say, oh, well, could the two
35:34
Speaker 3: surviving kids take care of their nieces and nephews if
35:36
Speaker 3: they wanted to? Meaning sure, even if the thing said
35:39
Speaker 3: per capita todd and so you know, the one hundred
35:42
Speaker 3: thousand dollars account went fifty to fifty instead of one
35:45
Speaker 3: third one third one third, But they knew that mom
35:49
Speaker 3: or dad would wanted the grandkids to be taken care of.
35:52
Speaker 3: Can they fix it? Well, yes, yep, But could be
35:58
Speaker 3: a taxable gift to them, so they would have to
36:01
Speaker 3: then whatever money they actually gave to their nieces and
36:04
Speaker 3: nephews would be a taxable gift and they might have
36:07
Speaker 3: to pay a gift tax. But it's fixable. Yep. But
36:10
Speaker 3: to your point, Susan, where you were headed is what
36:12
Speaker 3: if we've got a trust in place, you know, does
36:15
Speaker 3: that make it make a difference. Well, sure, because in
36:18
Speaker 3: ours I would say ninety nine point nine times out
36:21
Speaker 3: of one hundred, it's going to say where it goes
36:23
Speaker 3: if a child dies, meaning yeah, it's going to go
36:26
Speaker 3: down to the grand children, if any even held in
36:29
Speaker 3: trust for them, controlled till they reach a certain age,
36:31
Speaker 3: all kinds of things to protect younger people. And then
36:35
Speaker 3: it says, well then if there's nobody, then it would
36:37
Speaker 3: go back to the other two siblings. This as possible.
36:40
Speaker 3: You could die with no kids, so then it would
36:42
Speaker 3: go back to the other siblings. So all doable stuff
36:45
Speaker 3: when you have a trust, folks. Not as much flexibility
36:49
Speaker 3: exists when you give away a life estate and reserve
36:52
Speaker 3: the or just give away the property and reserve the
36:54
Speaker 3: right to live there. Learn what you've given up and
36:57
Speaker 3: what you've kept. When you've got a life Estate in
36:59
Speaker 3: Place eight six six eight four eight five six nine
37:03
Speaker 3: nine or Legal Exchange Show dot com and you can
37:06
Speaker 3: download the guide right there.
37:09
Speaker 2: If you have a question you'd like to ask Todd,
37:11
Speaker 2: visit his website Legal Exchange Show dot com and click
37:14
Speaker 2: on the ass Tod tab. Maybe I'll be able to
37:17
Speaker 2: read your question on the air, and hopefully his answer
37:19
Speaker 2: will stop you from becoming one of his next real
37:22
Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
37:26
Speaker 2: with the law firm of Cushing and Dolan. I'm Susan Powers,
37:30
Speaker 2: a financial advisor with the Armstrong Advisory Group. We'll be
37:33
Speaker 2: back with more after this quick break on the Legal
37:36
Speaker 2: Exchange with Todd Lutsky.
37:38
Speaker 1: Life estates are sometimes used to protect your home as
37:41
Speaker 1: part of your future, but it's important to understand how
37:43
Speaker 1: they really work before making any changes to your state plan.
37:46
Speaker 1: Cushing and Dolan are experts and nailed your lawn and taxation.
37:49
Speaker 1: Their new guide, called Calculating the Consequences of Life Estates,
37:52
Speaker 1: explains the pros and cons and why careful planning is
37:55
Speaker 1: so critical. A life estate can allow you to remain
37:58
Speaker 1: in your home while transfer during future ownership, but decisions
38:02
Speaker 1: like putting the property in your children's names versus using
38:04
Speaker 1: a trust can have very different consequences when it comes
38:07
Speaker 1: to taxes, control, and protection from creditors. Before you sign
38:11
Speaker 1: any deed or a transfer property, be sure you understand
38:14
Speaker 1: your options. Call Cushing and Dolan at eight sixty six
38:17
Speaker 1: eight four eight five six ninet nine and ask for
38:19
Speaker 1: your free guide today. That's eight six six eight four
38:22
Speaker 1: eight five six nine nine, or you can request the
38:24
Speaker 1: guide online by visiting Legal exchange show dot com. The
38:28
Speaker 1: proceeding was paid for in The views expressed are solely
38:29
Speaker 1: those of Cushing and Dolan. Cushing and Dolan and Armstrong
38:32
Speaker 1: Advisory may contact you offering legal or investment services. Cushing
38:35
Speaker 1: and Dolan and Armstrong Advisory do not endorse each other
38:37
Speaker 1: and are not affiliated.
38:39
Speaker 4: When going through a divorce, understanding the rules around your
38:42
Speaker 4: finances can make a real difference. This is Chuck Zada
38:44
Speaker 4: from the Armstrong Advisory Group. State law plays a major
38:47
Speaker 4: role in how assets are divided, whether that means a
38:50
Speaker 4: strict split or a distribution based on what the court
38:53
Speaker 4: considers fair. Health insurance and social security benefits are other
38:56
Speaker 4: considerations that you'll need to prepare for You may have
38:59
Speaker 4: been covered under a sp bhouse's plan and now need
39:01
Speaker 4: to find one of your own, and Social Security may
39:03
Speaker 4: offer benefits based on your former spouse's record. Our new guide,
39:07
Speaker 4: Divorce in your Financial Plan will walk you through these
39:09
Speaker 4: issues and more to help you make informed decisions that
39:12
Speaker 4: may affect your future. Call eight hundred three nine three
39:15
Speaker 4: for zero zero one to request your free copy. That's
39:18
Speaker 4: eight hundred three nine three for zero zero one A
39:21
Speaker 4: request the guide online at Armstrong Advisory dot com.
39:25
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
39:27
Speaker 1: registered investment advisor. Nothing in the ad or in any
39:29
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
39:32
Speaker 1: your own financial tax into state planning advisors before making
39:35
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
39:38
Speaker 1: advisory services. Protecting your home at the life estate can
39:41
Speaker 1: be problematic if you don't understand the rules. Cushing and
39:43
Speaker 1: Dolan's new guide called Calculating the Consequences of Life Estates
39:46
Speaker 1: can help you learn about how this strategy works and
39:49
Speaker 1: what to consider. Call Cushing and Dolan at eight six
39:51
Speaker 1: six eight four eight five six ninet nine and get
39:53
Speaker 1: your guide today or request an online at Legal Exchange
39:57
Speaker 1: show dot com. The proceeding was paid for in the
39:59
Speaker 1: music's rest are sole lead those of Cushing and Dolan.
40:01
Speaker 1: Cushingan Dolan in Armstrong Advisory may contact you offering legal
40:04
Speaker 1: or investment services. Cushiingan Dolan and Armstrong Advisory do not
40:07
Speaker 1: endorse each other and are not affiliated. Hi.
40:09
Speaker 5: I'm Michael Valila, adjudent of the Disabled American Veterans Department
40:13
Speaker 5: in Massachusetts. The DAV of Massachusetts provides thousands of hours
40:17
Speaker 5: of voluntary services at our VA medical centers and soldiers homes,
40:20
Speaker 5: and is the only DAV apartment in the country to
40:23
Speaker 5: lead a veterans housing initiative for both single veterans and
40:26
Speaker 5: those with families. These programs are critical to serving our
40:29
Speaker 5: veterans and their time and need. You can help our
40:31
Speaker 5: great American heroes by making a donation today. Please visit
40:35
Speaker 5: DAV fivek dot Boston. That's DAV FIVEK dot Boston.
40:40
Speaker 1: Your tune to the Legal Exchange with Todd Lutsky. If
40:43
Speaker 1: you are a loved one needs a nursing homestay, call
40:45
Speaker 1: Todd right now at eight six six eight four eight
40:48
Speaker 1: five six ninety nine and let him make sure your
40:50
Speaker 1: assets are protected. That's eight six six eight for eight
40:53
Speaker 1: five six nine nine or visit him online at Legal
40:56
Speaker 1: Exchange show dot com.
40:59
Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
41:02
Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
41:06
Speaker 2: and I'm joined, of course by Todd Lutsky, a partner
41:09
Speaker 2: with the law firm of Cushing and Dolan with a
41:11
Speaker 2: master's in taxation. So it's the last chance to get
41:15
Speaker 2: your guide on life estates, Todd. So, yeah, I thought
41:17
Speaker 2: we'd do a nice solid review of what they are,
41:21
Speaker 2: how to create it and so forth. So just re
41:24
Speaker 2: explain for the listeners.
41:25
Speaker 3: It's the fastest three minutes in football. We're gonna bullet
41:28
Speaker 3: this out.
41:28
Speaker 2: We're not going to go that fast. We've got ten okay, good.
41:31
Speaker 2: So what is a life estate?
41:34
Speaker 3: So a life estate is simply the right to live.
41:39
Speaker 3: It's the current right. You are the current owner of
41:42
Speaker 3: the property and you have a right to live there.
41:45
Speaker 3: No one can kick you out. You have a right
41:48
Speaker 3: to collect all the income if you choose to rent it.
41:51
Speaker 1: M hm.
41:52
Speaker 3: And that's about it.
41:54
Speaker 2: Okay. So you have the current right to live there.
41:57
Speaker 2: How do you actually create one, like how do you
41:59
Speaker 2: operate recientally create a life estate?
42:02
Speaker 3: So two ways, the right way and the wrong way,
42:06
Speaker 3: or the less bad way in the bad way, at
42:11
Speaker 3: least those are in my eyes.
42:12
Speaker 2: Folks.
42:12
Speaker 3: Obviously you read the guide and you can figure it
42:14
Speaker 3: out for yourself. But one way would be to take
42:18
Speaker 3: that deed to your property. And you know, if you've
42:20
Speaker 3: done this, take a look at your deed, it would
42:23
Speaker 3: be like you know, you know, Todd and Susan grant
42:28
Speaker 3: to kids, put kids' names there hereby reserving a joint
42:36
Speaker 3: and legal life estate. You just see that right in
42:39
Speaker 3: the deed. That's the verbal the deed itself, just like
42:43
Speaker 3: I said. And now the kids own a piece right
42:50
Speaker 3: away gift, and you own your present right to live there.
42:55
Speaker 3: The kids have a future right to the property, although
42:59
Speaker 3: they have a tested interest in it already. It's a
43:02
Speaker 3: vested interest in the future.
43:04
Speaker 2: So they just basically can't evict you.
43:07
Speaker 3: Correct, that's basically right. The other way is you Todd
43:13
Speaker 3: and Susan take the property and convey it to an
43:17
Speaker 3: irrevocable trust and reserve the right to live there. Joints
43:22
Speaker 3: legal life estate, same verbiage. The difference is the kids'
43:28
Speaker 3: names are not on the deed, right, And that's a
43:31
Speaker 3: really big difference, huge difference, because this is even a
43:35
Speaker 3: completed gift. This is an incomplete gift to a trust
43:38
Speaker 3: if you design it right, So it's an incomplete gift
43:41
Speaker 3: to the trust. So wow, huge difference. Those are the
43:45
Speaker 3: two ways. And obviously I feel that if you give
43:49
Speaker 3: it to the trust you have way more control. And
43:52
Speaker 3: if you give it to the kids, yeah, go ahead.
43:54
Speaker 2: So who actually would want to use this thing? Why
43:58
Speaker 2: would you use this? Why would you do life estate? Well?
44:01
Speaker 2: For me, the right way? Why would you want to
44:04
Speaker 2: consider it the right way to me?
44:05
Speaker 3: Mostly it's it's not used. So even though there is
44:10
Speaker 3: a right way in the wrong way or a less
44:12
Speaker 3: bad way as you want to call it, to me,
44:14
Speaker 3: it's really something that I would do very rarely. Okay, why?
44:20
Speaker 3: Well not?
44:21
Speaker 2: Why? What?
44:22
Speaker 3: What are the three times I would do?
44:23
Speaker 2: It?
44:24
Speaker 3: Is probably more important? Well, if I have a house
44:30
Speaker 3: that is a two family okay, but it's one deed
44:34
Speaker 3: and I'm conveying the property to the irrevocable trust, I
44:38
Speaker 3: would reserve a life estate if I'm renting one unit, Okay,
44:43
Speaker 3: why because as a life tenant. Remember the one of
44:45
Speaker 3: the things I said is that you reserve not only
44:47
Speaker 3: the right to live there, but the right to collect income. Well,
44:52
Speaker 3: if that's the case, I then can have the check,
44:55
Speaker 3: the tenant right to check directly to me. Still sale
45:00
Speaker 3: not in the trust. Don't have to get the trustee involved,
45:02
Speaker 3: don't think get the trust involved at all. Don't have
45:05
Speaker 3: to file a tax return for the trust. No headache.
45:09
Speaker 3: I collect a check. I put it on my ten
45:11
Speaker 3: forty end of story, just like I've never done anything right.
45:15
Speaker 3: Very easy. The other two times I would do it
45:19
Speaker 3: is if I had a mortgage, you got to reserve
45:21
Speaker 3: a life estate so that that prevents the bank from
45:25
Speaker 3: triggering the do on sale clause and calling your mortgage.
45:29
Speaker 3: You can keep your mortgage, might not be able to
45:31
Speaker 3: get a new one, but you can keep the one
45:33
Speaker 3: you have. Very important. And lastly I would do it.
45:38
Speaker 3: And folks, you have to tell your state planning attorney this.
45:43
Speaker 3: Do you live in one of those towns that give
45:45
Speaker 3: you a real estate tax abatement? Because you're a veteran,
45:50
Speaker 3: because you're an owner occupant, because you're over sixty five.
45:53
Speaker 3: There are these different reasons that you can get this
45:58
Speaker 3: abatement on your tax. If you live in one of
46:01
Speaker 3: those towns, then it's very important that we reserve a
46:03
Speaker 3: life estate so that you don't lose that abatement by
46:07
Speaker 3: giving the house to the irrevocable trust. So those are
46:11
Speaker 3: the three times that I would use it. And folks,
46:15
Speaker 3: so much more information than this guide about what you have,
46:17
Speaker 3: what you don't have, what you give up, what you retain.
46:21
Speaker 3: When you get calculating the consequences of a life estate,
46:24
Speaker 3: it's the end of the month. Please get it. It'll
46:26
Speaker 3: show you your tax ramifications, how to sell it? Can
46:30
Speaker 3: you sell it? What are the capital gains, taxes? Creditor issues?
46:35
Speaker 3: Can I undo it? Can I change my mind? Folks,
46:38
Speaker 3: there's so much to think about when you are dealing
46:41
Speaker 3: with your home and a life estate. Call and get
46:44
Speaker 3: the guide eight six six eight four eight five six
46:48
Speaker 3: nine nine or Legal Exchange Show dot com. Can download
46:52
Speaker 3: it there again the end of the month eight six
46:54
Speaker 3: six eight four eight five six nine to nine or
46:58
Speaker 3: Legal Exchange Show dot com.
47:00
Speaker 2: So Todd, what happens if you have this life estate
47:03
Speaker 2: arrangement for whatever reason, and you decide you want to
47:07
Speaker 2: sell your home? How does that get? How does that
47:09
Speaker 2: get done.
47:10
Speaker 3: So way more complicated, right, especially depending on which way
47:16
Speaker 3: you created the life estate, the good way or the
47:19
Speaker 3: bad way. Let's go with the bad way because it's
47:22
Speaker 3: more fun that way.
47:23
Speaker 2: Yeah.
47:23
Speaker 3: So, if you've transferred the property to your children again
47:28
Speaker 3: a vested, completed gift of the future interest of this property,
47:35
Speaker 3: you retain a nugget the right to live there the
47:38
Speaker 3: rest of your life. But when you go to sell it,
47:41
Speaker 3: you're going to start off by saying I need more
47:45
Speaker 3: than one signature. I need all my kids to sign
47:48
Speaker 3: the deed, and my husband and I need to sign
47:51
Speaker 3: the deed.
47:51
Speaker 2: So you need their permission.
47:53
Speaker 3: Well you kind of do, yeah, I would say, yes,
47:56
Speaker 3: not kind of, you really do, really do. And so
47:58
Speaker 3: let's say we get the permission because they're great kids.
48:01
Speaker 3: But that's a big hurdle. Now what Well, now that
48:06
Speaker 3: when you go to close on the sale, the buyer's
48:09
Speaker 3: attorney's going to have to cut multiple checks. How much
48:13
Speaker 3: and who gets what? Well, that's all based on a
48:16
Speaker 3: life estate table that the IRS puts out. It is
48:20
Speaker 3: tied to the interest rate and effect on the month
48:24
Speaker 3: of sale and your age as a life tenant. So
48:29
Speaker 3: you go to this table less they call it, and
48:32
Speaker 3: you find your age based on the interest rate, and
48:35
Speaker 3: then you go across and you find what percentage of
48:38
Speaker 3: the proceeds and or gain belong to you life tenant.
48:43
Speaker 2: So can you give us an example like percentage wise
48:46
Speaker 2: at a different age.
48:47
Speaker 3: Yeah, I can. Let's say you're at eighty eighty years old. Okay,
48:51
Speaker 3: I'm gonna guess I don't have the table in front
48:53
Speaker 3: of me, nor the interest rate. Maybe twenty percent, wow,
48:58
Speaker 3: twenty five percent, not a lot twenty five twenty five percent,
49:02
Speaker 3: So you get a small check, they get seventy five
49:04
Speaker 3: percent of your money. Well that's not helpful because now
49:07
Speaker 3: I don't have the money I need to buy my
49:10
Speaker 3: new home. Well, maybe the kids will give me back
49:14
Speaker 3: the money that they got. Well again, you're asking kids
49:17
Speaker 3: for permission, which is not where I want to put
49:20
Speaker 3: my clients in any kind of a position like that ever. Okay,
49:25
Speaker 3: well forget the fact that I may or may not
49:27
Speaker 3: get the property back. But if they do give me
49:29
Speaker 3: the money back, then they might be faced with a
49:31
Speaker 3: gift tax. But that's just one of the taxes we
49:34
Speaker 3: got to deal with.
49:36
Speaker 1: What about the.
49:36
Speaker 3: Capital gains tax? So when you sell this that allocation
49:42
Speaker 3: seventy five twenty five that I hypothecated was the case. Well,
49:47
Speaker 3: seventy five percent of the gain goes to the kids
49:50
Speaker 3: as well. Yeah, and twenty five percent of the gain
49:53
Speaker 3: goes to mom and dad. Mom and dad get a
49:56
Speaker 3: capital gains exclusion because it's their primary residence of five thousand,
50:01
Speaker 3: assuming the kids don't live there. The kids don't get
50:05
Speaker 3: that exclusion, so they're going to have to pay the
50:07
Speaker 3: full brunt of the capital gains tax. Folks, this is
50:11
Speaker 3: just one example of the problems that you run into
50:15
Speaker 3: with a life estate. Not that there's some good points
50:17
Speaker 3: as well, but call and get the guide. It's the
50:20
Speaker 3: end of the month. Learn what those good and bad
50:22
Speaker 3: points are. You can call and get it at eight
50:24
Speaker 3: six six eight four eight five six nine nine or
50:29
Speaker 3: legal exchange show dot com. You can download it there
50:32
Speaker 3: again if you think you've had one, learn what you have,
50:36
Speaker 3: Learn what you have before you get one, and you
50:39
Speaker 3: can and you can just call and get the guide,
50:42
Speaker 3: find out what to do. Find out what to do.
50:44
Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan,
50:46
Speaker 2: thank you.
50:47
Speaker 3: So much, always a pleasure. Thank you, Susan.
50:49
Speaker 2: I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
50:53
Speaker 2: We thank you for joining us today and we'll be
50:55
Speaker 2: back again next week on the Legal Exchange with Todd Lutsky.
51:00
Speaker 1: Life estates are sometimes used to protect your home as
51:02
Speaker 1: part of your future, but it's important to understand how
51:05
Speaker 1: they really work before making any changes to your state plan.
51:08
Speaker 1: Cushing and Dolan are experts and elder law and taxation.
51:11
Speaker 1: Their new guide, called Calculating the Consequences of Life Estates
51:14
Speaker 1: explains the pros and cons and why careful planning is
51:17
Speaker 1: so critical. A life estate can allow you to remain
51:20
Speaker 1: in your home while transferring future ownership, but decisions like
51:23
Speaker 1: putting the property in your children's names versus using a
51:26
Speaker 1: trust can have very different consequences when it comes to taxes, control,
51:30
Speaker 1: and protection from creditors. Before you sign any deed or
51:33
Speaker 1: transfer property, be sure you understand your options. Call Cushing
51:37
Speaker 1: and Dolan at eight sixty six eight four eight five
51:39
Speaker 1: six ninet nine and ask for your free guide today.
51:42
Speaker 1: That's eight six six eight four eight five six nine nine,
51:45
Speaker 1: or you can request the guide online by visiting Legal
51:47
Speaker 1: Exchange show dot com. The proceeding was paid for in
51:50
Speaker 1: The views expressed are solely those of Cushing and Dolan.
51:52
Speaker 1: Cushing in Dolin and Armstrong Advisory may contact you offering
51:55
Speaker 1: legal or investment services. Cushing and Dolan and Armstrong Advisory
51:58
Speaker 1: do not endorse each other and are not affiliated.
52:00
Speaker 6: As you navigate life after divorce, planning for your family's
52:03
Speaker 6: future becomes even more important.
52:05
Speaker 4: HI.
52:05
Speaker 6: This is Mike Armstrong from the Armstrong Advisory Group. From
52:08
Speaker 6: everyday expenses to thinking about how college will be funded,
52:11
Speaker 6: it's important to have a clear plan for how all
52:13
Speaker 6: of your upcoming costs will be handled over time. Divorce
52:16
Speaker 6: also means adjusting to a new financial reality where one
52:20
Speaker 6: household becomes two, and your budget saving strategy and long
52:23
Speaker 6: term goals may need to be reevaluated. Our new guide
52:26
Speaker 6: is called Divorce in your Financial Plan, and it discusses
52:29
Speaker 6: ways to build a financial strategy that supports your family's
52:33
Speaker 6: next chapter. You can get your free guide today by
52:35
Speaker 6: calling eight hundred three nine three four zero zero one.
52:38
Speaker 6: That's eight hundred three nine three four zero zero one,
52:41
Speaker 6: or you can request the guide online at Armstrong Advisory
52:44
Speaker 6: dot com.
52:45
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
52:47
Speaker 1: registered investment Advisor. Nothing in the ad or in any
52:50
Speaker 1: Armstrong guide a specific financial, legal, or tax advice. Consult
52:53
Speaker 1: your own financial, tax into state planning advisors before making
52:56
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
52:59
Speaker 1: advisory services. Protecting your home with the life estate can
53:01
Speaker 1: be problematic if you don't understand the rules. Cushing and
53:04
Speaker 1: Dolan's new guide called Calculating the Consequences of Life Estates
53:07
Speaker 1: can help you learn about how this strategy works and
53:09
Speaker 1: what to consider. Call Cushing and Dolan at eight six
53:12
Speaker 1: six eight four eight five six ninet nine and get
53:14
Speaker 1: your guide today or requested online at Legal exchange show
53:18
Speaker 1: dot com. The proceeding was paid for and the views
53:20
Speaker 1: expressed are sole lead those of Cushing and Dolan. Cushing
53:22
Speaker 1: and Dolan and Armstrong Advisory may contact you offering legal
53:25
Speaker 1: investment services. Cushing and Dolan and Armstrong Advisory do not
53:28
Speaker 1: endorse each other and are not affiliated.
53:30
Speaker 2: Hi.
53:30
Speaker 5: I'm Michael Valila, adjudent of the Disabled American Veterans Department
53:33
Speaker 5: of Massachusetts. The dav of Massachusetts provides thousands of hours
53:37
Speaker 5: of voluntary services at our VA medical centers and soldiers
53:40
Speaker 5: homes and is the only DAV department in the country
53:43
Speaker 5: to lead a veterans housing initiative for both single veterans
53:46
Speaker 5: and those with families. These programs are critical to serving
53:49
Speaker 5: our veterans and their time and need. You can help
53:51
Speaker 5: our great American heroes by making a donation today. Please
53:55
Speaker 5: visit DAV fivek dot Boston. That's DAV fivek dot Boston.