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Ask Todd: It's best to avoid probate if possible · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Letsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with a state and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: As promise, we're now joined by the one and only
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  Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan.
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  Speaker 2: We call the segment Ask Todd for one reason and
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  Speaker 2: one reason only. It's your chance to ask Todd your
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  Speaker 2: estate planning questions. Phone lines are open. Eight eight eight
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  Speaker 2: two zero five two two sixty three is the number
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  Speaker 2: to call. Remember we only usually get through two to
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  Speaker 2: maybe three questions, so get calling early and often in
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  Speaker 2: order to be able to ask Todd your estate planning questions.
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  Speaker 2: That number is eight eight eight two zero five two
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  Speaker 2: two six three. Again, it is eight eight eight to
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  Speaker 2: zero five two two six three to be able to
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  Speaker 2: ask mister Lutsky your estate planning questions, Todd, how are
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  Speaker 2: you doing today?
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  Speaker 3: I am never better in you. I'm good? Yeah.
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  Speaker 2: I uh So. You know how in some sports after
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  Speaker 2: a game you toss the ball out into the stands
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  Speaker 2: as kind of like a souvenir for a kid or
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  Speaker 2: something like that.
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  Speaker 3: Yeah, yeah, yeah, I've seen that.
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  Speaker 2: Apparently you're not supposed to do that in bowling.
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  Speaker 3: Yeah. No, definitely not earned that one the hard way.
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  Speaker 2: Yeah, Todd, I want to talk to you about wills,
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  Speaker 2: very basic estate planning document. What is the subset of
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  Speaker 2: the population that doesn't have any major issues using a
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  Speaker 2: will as their only estate plan, who can get away
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  Speaker 2: with not doing any more advanced planning?
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  Speaker 3: Wow?
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  Speaker 4: So I can tell you, in my thirty years plus
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  Speaker 4: of state planning that I don't I don't think I've
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  Speaker 4: ever done a will based plan. When I say a
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  Speaker 4: will based plan meaning no trust is involved with doing
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  Speaker 4: the will. I do wills all the time, sure, but
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  Speaker 4: they're usually part of a bigger estate plan that includes
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  Speaker 4: a trust. It's and so I guess what I'm driving
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  Speaker 4: at is it's it's it's very rare. But I suppose
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  Speaker 4: if if you're perhaps single and and maybe have no
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  Speaker 4: concerns about a state taxes, so you're you know, you're
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  Speaker 4: under the exemption, which is a lot for a lot
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  Speaker 4: of people. It's two million in mass and don't forget
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  Speaker 4: thirteen million federally, so that's not a big hurdle. And
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  Speaker 4: and you know, maybe the people you're leaving it to,
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  Speaker 4: I mean, it could be kids or no kids, but
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  Speaker 4: you know, maybe the people you're leaving it to you
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  Speaker 4: just wanted to have it outright. There's no reason to
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  Speaker 4: hold it back for any reason. And and you and
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  Speaker 4: you don't mind probate because will goes to probate, then
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  Speaker 4: I guess you could get away with it. I guess
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  Speaker 4: you could probably avoid probate if you say, you know
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  Speaker 4: what I'm going to have. I don't own any real estate,
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  Speaker 4: and I just have, you know, I rent, and I
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  Speaker 4: have a bunch of investments that I could put a
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  Speaker 4: designated beneficiary on, like kids or nieces or nephews, what
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  Speaker 4: have you. Or I have my IRA which also could
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  Speaker 4: have a designated beneficiary life insurance which could have a
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  Speaker 4: designated beneficiary. So as long as I own no real estate,
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  Speaker 4: and I don't mind if my beneficiaries, whoever they are,
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  Speaker 4: actually get the asset outright with no control, and I
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  Speaker 4: can put designated beneficiaries on everything to avoid probate. Then
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  Speaker 4: I guess you can have a will. I say you
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  Speaker 4: can have a will, but guess what. The will won't
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  Speaker 4: be doing anything. It really won't be addressing anything because
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  Speaker 4: you've addressed all your assets, sure with the designated beneficiary.
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  Speaker 3: But I guess you could get a way with a will.
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  Speaker 4: But if you've got a house and you and you
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  Speaker 4: want to avoid probate, then you're gonna go to probate
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  Speaker 4: because you're not gonna throw a kid's name on a house.
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  Speaker 4: So kind of hard to avoid probate on the house
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  Speaker 4: without a trust. So I guess I've answered it in
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  Speaker 4: a long winded way of saying, probably very few people.
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  Speaker 2: Talking with Todd Lotski from the law firm of Cushing
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  Speaker 2: and Dolan. If you've got a question that you want
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  Speaker 2: to ask about your estate plan, number to call is
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  Speaker 2: eight eight eight to zero five two two six three
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  Speaker 2: Again eight eight eight to zero five two two six three.
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  Speaker 2: We're gonna take a quick break right now, but when
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  Speaker 2: we come back, gonna get right to your questions with Todd.
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  Speaker 2: That phone number again is eight eight eight to zero
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  Speaker 2: five two two sixty three Quick Break. Your Questions with
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  Speaker 2: Todd are next Ask.
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  Speaker 1: Todd with Todd Letsky every Wednesday at ten thirty only
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  Speaker 1: here on the Financial Exchange Radio Network. You're listening to
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  Speaker 1: Ask Todd with Todd Lunsky on the Financial Exchange Radio Network.
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  Speaker 3: All right, Tod got a couple of calls lined up
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  Speaker 3: for you.
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  Speaker 2: Let's go first to Casey in and over Casey, you're
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  Speaker 2: on with Todd Lutsky.
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  Speaker 5: Hi, Tod, I have a question that I've been listening
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  Speaker 5: to for a long time. And I was talking to
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  Speaker 5: our kids about our trusts and they asked, and I'm like,
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  Speaker 5: I have no clue, So I'll go to the expert.
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  Speaker 5: We've set up a trust funded it. What does it
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  Speaker 5: mean to them to avoid probate? How do they avoid probit?
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  Speaker 5: Do they have to do anything? So?
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  Speaker 3: Is the trust revocable or irrevocable?
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  Speaker 5: Irrevocable? You can excuse me, it's revocable. Sorry, it's revocable, revocable.
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  Speaker 4: So here's what the basic question is. What does it
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  Speaker 4: mean to children? And why do parents like yourselves and
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  Speaker 4: so many others want to avoid it? Of course, you
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  Speaker 4: guys will be dead so it won't matter for you,
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  Speaker 4: but for the kids. Probate is really a long process, right,
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  Speaker 4: it's a year long process at a minimum.
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  Speaker 3: Number one.
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  Speaker 4: Number two, it's going to be costly, right, you got
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  Speaker 4: to hire a lawyer. You don't have to, but mostly
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  Speaker 4: you're gonna hire a lawyer. And it's not the probate
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  Speaker 4: fees that you care about, it's the legal fees to
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  Speaker 4: take you through this process. So you've got that. Everything
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  Speaker 4: is also exposed to creditors. Anything that you any creditor
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  Speaker 4: that you had when you died outstanding can file a
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  Speaker 4: claim against the estate, the probate estate to get those assets.
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  Speaker 4: So first, a probate asset is any asset that's in
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  Speaker 4: your own name when you die and has no designated beneficiary,
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  Speaker 4: So that's a probate asset. So obviously if it's in
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  Speaker 4: the trust, it avoids probate. All the trust assets just
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  Speaker 4: go according to the terms of the trust. So first
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  Speaker 4: you got to file the will.
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  Speaker 3: Number one.
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  Speaker 4: So I've got a bunch of bank accounts in your
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  Speaker 4: name and the kids want to go get that money
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  Speaker 4: from the bank. They can't do it, right. They walk
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  Speaker 4: into the bank to banks and say we can't talk
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  Speaker 4: to you. You got to get appointed. So first you've
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  Speaker 4: got to file the will. Then you've got to give
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  Speaker 4: a letter to all the heirrors at law to notify
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  Speaker 4: them that you're applying for to be executor or a
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  Speaker 4: personal representative of the estate.
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  Speaker 3: They have thirty days to object.
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  Speaker 4: If they don't object, then you wait for the court
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  Speaker 4: to return give you a return day. Then you go
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  Speaker 4: to the court. Well you don't the lawyer's doing all
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  Speaker 4: this for you. And then you go to the court
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  Speaker 4: and the court finally knight you with this personal representative appointment,
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  Speaker 4: and then they can take Finally, after sixty to ninety days,
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  Speaker 4: perhaps you can take that certificate of appointment and the
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  Speaker 4: death certificate and you can walk into the bank, financial institution, etc.
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  Speaker 4: Where the assets are, and then magically they will finally
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  Speaker 4: talk to you and tell you what's in the account,
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  Speaker 4: who you know, and you can access the account and
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  Speaker 4: move it. So that's just the beginning. Then they have
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  Speaker 4: to file an inventory. An inventory is every asset that
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  Speaker 4: you died in the probate world, listed with the value
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  Speaker 4: next to it, filed at the court. Guess what, anybody
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  Speaker 4: can walk down there and look at that anytime they
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  Speaker 4: want neighbors whatever. Then as time goes on, they have
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  Speaker 4: to open up an account in the name of the estate.
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  Speaker 4: They got to put all that money from the estate
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  Speaker 4: in there. Then you got to do an accounting at
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  Speaker 4: the you know, at the end of that, you got
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  Speaker 4: to do an accounting and then a final accounting as
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  Speaker 4: to what goes in what goes out of this bucket
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  Speaker 4: of money, so to speak, and so and of course
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  Speaker 4: all the creditors can file claims. I mean, it just
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  Speaker 4: goes on and on. I probably have said enough to say,
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  Speaker 4: you know what, I don't want that right, And that's
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  Speaker 4: just really the tip of the probate iceberg.
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  Speaker 3: So I would avoid it. You have a.
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  Speaker 4: Trust, make sure your trust is funded. If you're sets
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  Speaker 4: are in there, then you're not going to have any
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  Speaker 4: of that. They're going to come in, they're going to
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  Speaker 4: sit down, the lawyer's going to open a book and
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  Speaker 4: tell them right at their table, here's all your assets,
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  Speaker 4: and here's what we're going.
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  Speaker 3: To do with them.
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  Speaker 4: No filing, no waiting for the court, no appointment. Hopefully
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  Speaker 4: that's helpful, folks. The guide we're getting is really a
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  Speaker 4: guide for everybody this year. This month, potholes to avoid
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  Speaker 4: if you've not done your planning, it's going to tell
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  Speaker 4: you things like Chuck asked, don't rely on a will,
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  Speaker 4: don't think that I don't have enough assets to do
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  Speaker 4: a state planning. Oh I have no kids, I don't
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  Speaker 4: need to do planning. Oh I have everything in a
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  Speaker 4: Nominee realty trust. I'm all set, folks. Things like that
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  Speaker 4: are not true, right, Get the guide. Learn why you
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  Speaker 4: need an estate plan if you don't think you have one,
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  Speaker 4: or if you don't think you need one, And for
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  Speaker 4: folks who have it, you know what happens if I
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  Speaker 4: move on a relocate, What if my spouse dies? What
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  Speaker 4: if I haven't looked at my plan in fifteen years?
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  Speaker 4: What you know events that happen during life. There might
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  Speaker 4: be better ways to do your plan or look them
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  Speaker 4: over or tweak them. So for people who haven't done
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  Speaker 4: their planning, who have done their planning, there's something in
• 10:04
  Speaker 4: here for you as well.
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  Speaker 3: Call and get the guide.
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  Speaker 4: Potholes to avoid in the Estate Planning World eight six
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  Speaker 4: six eight four eight five six nine nine or Legal
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  Speaker 4: Exchange Show dot com again eight six six eight four
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  Speaker 4: eight five six nine nine or Legal Exchange Show dot com.
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  Speaker 2: Todd I get another one here for you. Let's go
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  Speaker 2: to Bill in woods Hole. Bill, what's your question for
• 10:27
  Speaker 2: Todd Lutsky.
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  Speaker 6: Calling on behalf of a cousin elderly person. Florida resident
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  Speaker 6: has property there, also has substantial property of business in Salmouth?
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  Speaker 6: Does she need multiple trusts different states? How does that work?
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  Speaker 4: So a couple of things. When you say property in Falmouth,
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  Speaker 4: do you mean real estate in Fallmouth?
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  Speaker 6: Yes?
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  Speaker 4: Okay, So again you'd have to add up the value
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  Speaker 4: if she's saying at this point, I don't think multiple
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  Speaker 4: trusts is definitely what I'd be worried about here.
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  Speaker 3: Again, I don't know what her overall value is.
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  Speaker 4: But that real question that's being begged here is that
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  Speaker 4: you know, we have a non resident of mass who
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  Speaker 4: is a who has property in Massachusetts but is a
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  Speaker 4: non resident, and so is Massachusetts going to even bother
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  Speaker 4: taxing her?
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  Speaker 3: Right?
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  Speaker 4: Again, the point of being a Florida resident is, Hey,
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  Speaker 4: they don't have any death tax in Florida, and so
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  Speaker 4: if they don't have any death tax in Florida, then
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  Speaker 4: I shouldn't have to worry. Well, doesn't quite work that way,
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  Speaker 4: So she can have one trust. I'm okay with that,
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  Speaker 4: But the real estate in Massachusetts.
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  Speaker 3: Massachusetts has the.
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  Speaker 4: Power to tax non residents on tangible property in Massachuset
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  Speaker 4: use its real estate. And the way they do it is,
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  Speaker 4: let's just say for fun that the property in Falmouth
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  Speaker 4: is two million, the property in Florida is two million,
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  Speaker 4: and the total estate is four million.
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  Speaker 3: What they would do is.
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  Speaker 4: They would actually take the two million dollar mass property
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  Speaker 4: as the numerator, divide by the four million dollar Mass
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  Speaker 4: and Florida property and get fifty percent as a ratio,
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  Speaker 4: and then they calculate the tax on the four million
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  Speaker 4: dollars in mass and they multiply it by fifty percent. Well,
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  Speaker 4: I don't want to do that. How can we avoid
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  Speaker 4: that problem? So establish your residency in Florida like she did,
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  Speaker 4: but then make sure the property in mass goes into
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  Speaker 4: an LLC. If it goes into an LLC, then you've
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  Speaker 4: converted the property from a real estate or a tangible
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  Speaker 4: asset to an intangible asset. And Massachusetts cannot tax non
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  Speaker 4: residents on intangible assets. And then she will completely avoid
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  Speaker 4: prop taxation in Massachusetts. And because she's a Florida resident,
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  Speaker 4: there's no state Florida death tax. And I'm assuming she's
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  Speaker 4: under thirteen point nine million, so we've got no federal
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  Speaker 4: tax and I think otherwise all these assets Florida and
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  Speaker 4: the stock in the LLC can be owned in one trust.
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  Speaker 4: So that's the answer, Todd.
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  Speaker 2: When it comes to in a state plan, we got
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  Speaker 2: about a minute or so left. How often should someone
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  Speaker 2: review that plan to see if it needs to be updated.
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  Speaker 3: Yeah, so that's a great question.
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  Speaker 4: And like we said, the guide is really about issues
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  Speaker 4: for people who have already done their plan as much
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  Speaker 4: as for people who have not done their plan. And
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  Speaker 4: so people who have done their plan, you know, I
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  Speaker 4: tell you it depends on the size of your estate,
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  Speaker 4: but you should look at your estate plan maybe at
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  Speaker 4: least for sure every ten to fifteen years at a minimum.
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  Speaker 4: But I would look at it, not just because of
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  Speaker 4: the time that gone by. Now, if you are a
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  Speaker 4: larger estate, let's say you're over ten million, right or fifteen.
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  Speaker 3: Million, you might want to look at it.
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  Speaker 4: You might want to just call your estate planning attorney
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  Speaker 4: even you know, once a year at the end of
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  Speaker 4: the year, just to say, you know, I'm checking in.
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  Speaker 4: Do I need you know, have the laws change? Do
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  Speaker 4: I need to make any gifting ideas, you know, just
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  Speaker 4: to say hello and check on it.
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  Speaker 3: So that might be a little more.
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  Speaker 4: Often when you're a state's larger, but when it's not
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  Speaker 4: as large, I think that's probably a good number.
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  Speaker 3: And there's also other reasons to do it, folks.
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  Speaker 4: You could have anything that could go wrong, You could
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  Speaker 4: have a divorce, you could change locations. Like this client
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  Speaker 4: that call, changing locations is a reason to look at
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  Speaker 4: your state plan. So for Bill when or for that
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  Speaker 4: cousin if you if you relocate, call your attorney and
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  Speaker 4: discuss your estate plan. If you've done it, that is
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  Speaker 4: a red flag. Mister Utsky, thank you so much for
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  Speaker 4: time today. We appreciate you joining us.
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  Speaker 3: Always a pleasure.
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  Speaker 1: This has been Asked Todd on the Financial Exchange Radio network.
• 15:07
  Speaker 1: Ask Todd with Todd. Lutsky has been presented by Cushing
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  Speaker 1: and Dolan, serving Massachusetts and New England for more than
• 15:12
  Speaker 1: thirty years, helping families with the state and tax planning,
• 15:15
  Speaker 1: medicaid planning, and probate law. Call eight hundred and three
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  Speaker 1: nine three four thousand and one or visit Cushingdolan dot com.
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  Speaker 1: The views expressed in this segment are solely those of
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  Speaker 1: Cushing and Dolan Armstrong advisor. He does not provide any
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  Speaker 1: legal or tax advice. Please consult with your legal or
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  Speaker 1: tax advisor on such matters. Cushing and Armstrong do not
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  Speaker 1: endorse each other and are not affiliated.