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Oil Shock, Recession Odds & Life Estate Pitfalls · The Financial Exchange Show

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Speaker 1: donation today. This is the Financial Exchange with Chuck Zada
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Speaker 1: and Paul.
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Speaker 2: Lane, Chuck, Paul and Tucker with you here, and we
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Speaker 2: kick things off with again all eyes continuing to be
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Speaker 2: on the Middle East and the status of things between
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Speaker 2: the United States and Iran.
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Speaker 3: And look, I take the UH, I take the most
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Speaker 3: boring approach to this, which again is the one that
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Speaker 3: allows me to maintain the most sanity, which is simply
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Speaker 3: to say, when it comes to anything diplomatic in this situation,
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Speaker 3: I have no idea what's going on, and I'm not
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Speaker 3: going to react to every single headline that comes out,
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Speaker 3: because there are reasons for different constituencies, both in the
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Speaker 3: United States and in Iran and throughout the world to
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Speaker 3: say completely different things.
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Speaker 4: UH.
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Speaker 3: If you listen to some media outlets and some media releases,
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Speaker 3: you get, hey, you know, we're gonna have boots on
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Speaker 3: the ground this weekend, and like this, you know, the
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Speaker 3: further escalation is guaranteed. If you listen to other you know,
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Speaker 3: media reports and things like that, the United States has
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Speaker 3: already won and like the you know, the the deal
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Speaker 3: is gonna be done in the next day or two. Okay,
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Speaker 3: it's possible. If you listen to what's coming out of
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Speaker 3: Varanian you know media We're never gonna have a ceasefire.
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Speaker 3: We're gonna escalate the conflict and continue to you know,
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Speaker 3: make it more and more painful for the United States.
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Speaker 3: You listen to you know, other Middle Eastern media, whether
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Speaker 3: it's you know, Al Jazeera and other you know, uh
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Speaker 3: outfits in that region, and you get completely different, you know,
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Speaker 3: views that are expressed. And it comes back to I
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Speaker 3: think it was, Tucker. Was it the last episode of
2:55
Speaker 3: season one of the Sopranos or second to last the
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Speaker 3: Nobody Knows Anything episode?
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Speaker 5: I look it up.
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Speaker 3: It's one of those. It's either episode ten or maybe eleven.
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Speaker 3: I can't remember how many episodes per season the Sopranos had,
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Speaker 3: but it was season one, episode eleven. Yeah, you're right there,
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Speaker 3: you go, Thank you very much. Nobody knows anything. Tony's
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Speaker 3: trying to figure out like what's going on within his crew,
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Speaker 3: and there's messages being passed back and forth and just oh,
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Speaker 3: has no idea what's actually going on. And that's where
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Speaker 3: we are right now, and it's okay to admit that.
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Speaker 3: And so my view is, look, it's not sticking your
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Speaker 3: head in the sand and not paying attention to anything
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Speaker 3: that's going on, but it's understanding that communication from any
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Speaker 3: group involved or around this conflict is going to be,
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Speaker 3: you know, skewed based on what they want to present.
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Speaker 3: And so rather than looking at what people are saying,
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Speaker 3: I say, it doesn't matter what they're saying, and I've
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Speaker 3: been I've been very consistent on this for a while.
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Speaker 3: Doesn't matter what anyone's saying. The only thing that matters
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Speaker 3: is what is actually excuse me, what is actually happening
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Speaker 3: and specifically, like what actions are being taken. And here's
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Speaker 3: where we stand right now as of this morning, in
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Speaker 3: my opinion, the straight upfom moves remains almost entirely closed.
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Speaker 3: We have seen a little bit of an uptick in
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Speaker 3: traffic going commercials in that we've gone from like zero
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Speaker 3: to three ships a day up to maybe like five
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Speaker 3: to seven. Pre conflict, we were running one hundred and
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Speaker 3: twenty tow one hundred and thirty a day. But it
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Speaker 3: does appear that Iran is saying, hey, we want to
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Speaker 3: you know, we're allowing additional transits through and you've got
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Speaker 3: to follow this certain path and we may or may
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Speaker 3: not take a toll from you each time, and so
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Speaker 3: on and so forth. So is that enough to represent
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Speaker 3: a material change. I don't know that it's enough yet
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Speaker 3: to say like that you're gonna resolve this, because you're
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Speaker 3: still like ninety five percent off in terms of transits.
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Speaker 3: But there's there's a slight tick in volume going through.
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Speaker 3: Not enough to actually matter though, and so who're moves
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Speaker 3: for all practical purposes remains closed. The other piece of
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Speaker 3: information that we know, the two sides continue to lob missiles, bombs,
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Speaker 3: and all kinds of other stuff back and forth to
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Speaker 3: each other drones. Israel remains very actively involved as well,
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Speaker 3: indicating that they struck Tehran with a number of different
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Speaker 3: waves of attacks this morning. We also have additional US
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Speaker 3: troops inbound to the region, both that have been tasked
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Speaker 3: via ship. The USS Tripoli is set to enter the
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Speaker 3: region on Friday. And you've also, yesterday, or maybe it
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Speaker 3: was the day before, had the reports of the eighty
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Speaker 3: second airborne being airlifted into the region over the last
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Speaker 3: couple of weeks as well, potentially in preparations for missions
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Speaker 3: into Iran. Again, you're not talking the scale of forces
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Speaker 3: necessary for a you know, large scale ground invasion or
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Speaker 3: anything like that, but potentially some smaller missions that could
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Speaker 3: be attempted, and so I think that in looking at
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Speaker 3: the totality of, you know, kind of what we have here,
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Speaker 3: it ultimately paints a picture where the disruptions to energy
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Speaker 3: and other commodity markets remain intense and growing every single day.
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Speaker 3: There is no clear sign that hostilities are abating, and
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Speaker 3: in fact, there is the potential for them to increase.
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Speaker 3: But I do think it's pretty clear that at least
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Speaker 3: through intermediaries, there are messages that are being shared between
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Speaker 3: the United States and Iran, and we can hope that
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Speaker 3: maybe those work out some kind of solution in the
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Speaker 3: near future, but I don't think that's assured either.
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Speaker 6: No, And the way market's reacting this morning, we've got
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Speaker 6: most of the major indices in positive territory, with the
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Speaker 6: S and P up aboutzer point six percent, in the
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Speaker 6: NASDAC up one percent. The headlines here and again, like
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Speaker 6: Chuck mentioned opening the show, Take Them with a grain
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Speaker 6: of Salt, was that markets are rallying on this idea
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Speaker 6: that at least the US seems to be telegraphing its
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Speaker 6: intention to try and resolve this war within the near term. Here,
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Speaker 6: that's how I'll sort of paint and oil markets we
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Speaker 6: do have West Texas Intermediate off about four percent, down
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Speaker 6: to eighty eight dollars a barrel, and Brent came down
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Speaker 6: four percent as well, to around one hundred dollars a barrel.
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Speaker 6: So those are what the market reactions are. Like you said,
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Speaker 6: I really don't have much more to add to the
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Speaker 6: ongoing situation. It's just something that we have to continue
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Speaker 6: to follow. But the longer this linger's on, and we've
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Speaker 6: mentioned this before, the more significant the impacts are. And
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Speaker 6: also I think it is important to note that even
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Speaker 6: if there were to be a deal struck within the
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Speaker 6: course of the next three to five days or a week,
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Speaker 6: it would still take several weeks and perhaps months to
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Speaker 6: kind of get everything flowing back through at that pace
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Speaker 6: that you were referring to before, And that can't be
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Speaker 6: discount here when you look at the economic impact.
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Speaker 3: Yeah, as it stands right now, we're looking at as
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Speaker 3: of today, you've got somewhere in the ballpark of three
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Speaker 3: hundred million barrels of oil that have been displaced. And
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Speaker 3: that's kind of the deficit that you're running as a
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Speaker 3: result of this conflict. For each day that it drags on,
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Speaker 3: you're talking about another ten million barrels and change could
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Speaker 3: be a little less, could be a little more, depending
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Speaker 3: on you know, exactly how things are moving. And that
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Speaker 3: means that again, each day that this goes on, that
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Speaker 3: actual supply situation is going to worsen. To this point,
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Speaker 3: it's been mitigated largely through supplies that are already on
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Speaker 3: the water where you had a little bit of a
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Speaker 3: glut heading into this, But it's not a situation where
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Speaker 3: you're sitting here saying that this can continue indefinitely. And
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Speaker 3: certainly if we start talking about situations where you know
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Speaker 3: this is still the status quo later into the spring
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Speaker 3: or into the summer, you get some pretty devastating responses,
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Speaker 3: and quite honestly, some of the stuff that's showing up
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Speaker 3: is getting pretty gnarly already. Just as an example, this
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Speaker 3: came out from Dow Chemical yesterday. This was yeah, this
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Speaker 3: was yesterday. It's a letter from Dow Specialty Plastics, which
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Speaker 3: is a subunit of Dow Chemical, dated March twenty fourth,
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Speaker 3: Dear valued customer, the Dow Chemical Company in Dow Chemical Canada,
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Speaker 3: ULC will modify the previously announced fifteen cent per pound
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Speaker 3: price increase to thirty cents per pound for all HDPE,
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Speaker 3: ll DPE, and LDPE resins sold in the United States
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Speaker 3: and Canada, So if you're not familiar with what that is,
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Speaker 3: you're not alone. Lots of us has to Google this yesterday,
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Speaker 3: and basically what this is these are different forms of polyethylene.
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Speaker 3: That's what the PE stands for near high density, low
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Speaker 3: density and so on these resins. If you're not sure
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Speaker 3: what polyethylene goes into, the answer is basically any kind
9:59
Speaker 3: of packaging that exists that is plastic has some form
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Speaker 3: of polyethylene, and there's all kinds of other uses for
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Speaker 3: it as well. Goes into some construction materials, medical supplies,
10:11
Speaker 3: things like that, so it goes everywhere. To put these
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Speaker 3: price hikes in perspective, you are talking about a sixty
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Speaker 3: to seventy percent price increase from the baseline that goes
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Speaker 3: into this and this is again doubt Chemical had previously
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Speaker 3: indicated earlier this week. Guys, we don't even know if
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Speaker 3: we can get half of what we need for our
10:32
Speaker 3: full polyethylene supply. So these are things that are starting
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Speaker 3: to seep in as well, and we'll see how this develops,
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Speaker 3: but the impacts are going to start to be felt
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Speaker 3: in the coming month or two on the inflationary side,
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Speaker 3: just because first thing that happens, suppliers raise prices, then
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Speaker 3: your middlemen raise prices, then your end buyers raise prices,
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Speaker 3: and then finally your users end up having to pay
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Speaker 3: the higher prices. And it takes time for that to
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Speaker 3: seep through the system, but ultimately, at least in the
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Speaker 3: short term, there's going to be an inflationary impulse that
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Speaker 3: comes of this. How long and how big that impulse
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Speaker 3: is going to be determined by how long the conflict
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Speaker 3: goes and how widespread it is, and then the magnitude
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Speaker 3: of damage within it. So we're still in the same
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Speaker 3: situation from where we were three weeks ago, which is
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Speaker 3: tell me how long the conflict's going to be, how
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Speaker 3: widespread it's going to be, and how devastating the damage is,
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Speaker 3: and then you can actually talk about, you know, the
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Speaker 3: full economic impact. We still don't know fully because it's
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Speaker 3: still ongoing, but we'll see if things improve and again
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Speaker 3: maybe there's some progress being made. I again, I don't know,
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Speaker 3: and we will continue to you know, watch things here.
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Speaker 3: Let's take a quick break when we come back, let's
11:43
Speaker 3: talk a little bit about Let's let's talk about this
11:48
Speaker 3: Wall Street trying to price in recession odds. Always love
11:51
Speaker 3: when they do that. We'll discuss that when we return.
11:55
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12:27
Speaker 3: Piece and CNBC here recession odds climb on Wall Street
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Speaker 3: is economy shows cracks beneath the surface.
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Speaker 4: Ah.
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Speaker 3: Yes. If there's anything that Wall Street is good at doing,
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Speaker 3: it is good. It's predicting recessions. Not I I'm sorry,
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Speaker 3: they're just they're not good at it and they do
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Speaker 3: all this stuff where they're like, again, here's the crap
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Speaker 3: that you have to like read through. Moody's Analytics model
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Speaker 3: has raised its recession outlook for the next twelve months
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Speaker 3: to forty eight point six percent. Tell me where the
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Speaker 3: point six percent comes from, Paul.
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Speaker 6: It's been a rough couple of weeks.
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Speaker 3: How can here's the thing, Paul, here's the thing. In
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Speaker 3: the United States, in the last one hundred years, there
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Speaker 3: have been maybe a dozen recessions. How can you from
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Speaker 3: there somehow have a model that is predictive to one
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Speaker 3: decimal point of accuracy, given that these things don't happen
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Speaker 3: frequently enough to be able to have anywhere near that
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Speaker 3: level of accuracy to begin with, I think, quite honestly,
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Speaker 3: the closest that I would feel comfortable in the only
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Speaker 3: place that I'd feel comfortable even like talking about this,
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Speaker 3: And quite honestly, I think it's a crappy prediction thing
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Speaker 3: to get into anyways. I think if you're not willing
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Speaker 3: to raise your recession odds by at least twenty five percent,
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Speaker 3: you're not being honest, Like, Okay, I've seen some of
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Speaker 3: this stuff where it's like, oh, so and so raise
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Speaker 3: their recession lodge from twenty five to thirty percent. That's
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Speaker 3: not a real shift. That's not actually telling you anything,
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Speaker 3: because these things don't happen frequently enough for that to
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Speaker 3: actually matter. If you're not willing to say, hey, the
14:16
Speaker 3: odds of recession have gone from like twenty percent to fifty,
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Speaker 3: you're not telling me anything. And even then I still
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Speaker 3: think you're not really telling me anything.
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Speaker 6: The three kind of economic predictions or indicators that you
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Speaker 6: get when you listen to all these analysts out there
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Speaker 6: from Moody's or Goldman or whatever you look at that
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Speaker 6: I just have learned over time to put really no
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Speaker 6: waiting in is one. Every year end, when they're asked
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Speaker 6: to pick their target for the S and P five
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Speaker 6: hundred for the next year, it's a total shot in
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Speaker 6: the dark. Second, with targets for individual stocks. Again, that
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Speaker 6: one can actually be a little bit more some validly
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Speaker 6: to it because they'll assign a multiple to earnings and
14:53
Speaker 6: things like that. But oftentimes you find them moving up
14:56
Speaker 6: as the stock goes up and moving down as the
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Speaker 6: stock to down. They're kind of constant readjusting their targets
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Speaker 6: based on what's going on, similar to what we're seeing
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Speaker 6: right here. The third one that you just hit on
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Speaker 6: is this odds of a recession. They're adjusting it as
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Speaker 6: things are going on gradually just to try and hope
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Speaker 6: to steer that they're in a closer to right direction.
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Speaker 6: But ultimately the big constant is that nobody knows whether
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Speaker 6: it's the target for the S and P five hundred,
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Speaker 6: what it's going to end this year, or the recession probabilities.
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Speaker 6: That all those those numbers and assigning percentages just is
15:31
Speaker 6: not the way to approach it. Now, it is still
15:33
Speaker 6: important to constantly measure the things that go into what
15:38
Speaker 6: can assess a recession, whether that's looking at inflationary pressure,
15:42
Speaker 6: the labor market, you know, everything that we're seeing from
15:46
Speaker 6: earnings on companies and AI all that kind of stuff.
15:49
Speaker 6: That's still a job of an economist or anyone who
15:52
Speaker 6: falls the market on a daily basis. But picking these probabilities,
15:56
Speaker 6: and maybe it's just something that there's a kind of
15:58
Speaker 6: proverbial gun to their head that they have to have
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Speaker 6: these things in place, it really doesn't do you a
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Speaker 6: lot of good.
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Speaker 3: Yeah, I just I'm almost willing to say, look, any
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Speaker 3: anyone who's trying to assess recession nods, there really should
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Speaker 3: only be three places that you land. There's a ten
16:15
Speaker 3: percent chance meaning you think it's really unlikely, there's a
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Speaker 3: fifty percent chance meaning I don't know what's going to happen,
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Speaker 3: And there's a ninety percent chance meaning you think it's
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Speaker 3: almost certain. Beyond that, like, what's the difference between like
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Speaker 3: a seventy five and eighty percent chance of recession or
16:32
Speaker 3: a twenty five and a thirty percent chance. What do
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Speaker 3: I actually do with that information? It's it's fundamentally useless.
16:41
Speaker 3: And I think, for the most part fear mongering. Because
16:45
Speaker 3: here's the other thing that I will say. Do we
16:47
Speaker 3: ever get pieces like when things are improving, do we
16:51
Speaker 3: ever get pieces that are published in any you know,
16:54
Speaker 3: financial media saying we are back, hey so and snow
16:57
Speaker 3: not we're back, but we do get Do we ever
17:02
Speaker 3: get the pieces published that say, like, hey, so and
17:07
Speaker 3: so cut their recession ods from thirty to twenty And
17:10
Speaker 3: I see those I've never seen that piece published. The
17:14
Speaker 3: ones that I get are recession nods. Climb is on
17:17
Speaker 3: Wall Street is economy shows cracks beneath the surface. Well,
17:20
Speaker 3: first of all, how can you show cracks beneath the surface?
17:23
Speaker 3: If they're beneath the surface, they're not showing exactly beyond that,
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Speaker 3: no one publishes the hey like, we've downgraded our odds
17:32
Speaker 3: of recession. Well, you don't get those pieces published because
17:37
Speaker 3: everyone needs to be scared of I can confirm.
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Speaker 6: I can confirm Tucker, who's had reps of sorting through
17:43
Speaker 6: millions of articles.
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Speaker 3: Tucker's read every Wall Street Journal article in the last
17:47
Speaker 3: ten years. Go down. Nope, never seen. It does not exist.
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Speaker 3: So this is the other thing is like, I'm not
17:55
Speaker 3: saying that recession will or will not happen eventually, there's
17:57
Speaker 3: always another one. What I'm saying is, don't let the
18:01
Speaker 3: man get you down.
18:02
Speaker 7: Man, do we even get pieces just generally speaking, that
18:07
Speaker 7: the economy is about to just roar and just go
18:10
Speaker 7: crazy early, Well, you do get these.
18:12
Speaker 3: I feel like.
18:13
Speaker 6: Though it's been such a long time that we got
18:16
Speaker 6: like we're always dealing with some concern.
18:18
Speaker 3: We get a ton of those. Like the two times
18:20
Speaker 3: that I can remember getting them, we got a bunch
18:22
Speaker 3: at the beginning at like right after the election in
18:24
Speaker 3: twenty That's true, we got a ton of those.
18:27
Speaker 8: Uh.
18:27
Speaker 3: And the other time that we got those was like
18:32
Speaker 3: early twenty one, uh like right as you were coming
18:36
Speaker 3: like the reopening, okay, post COVID, Yeah you had him.
18:39
Speaker 3: Like those times, I remember, Hey, there's all this money
18:41
Speaker 3: and pent up demand. So like I have seen a
18:44
Speaker 3: few of those in the last couple of years. But
18:48
Speaker 3: you never get like recession odds downgraded. It's just oh like,
18:53
Speaker 3: can they only keep going up then?
18:54
Speaker 8: Because no one's gonna click on that one.
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Speaker 3: Yep. I know, yeah, I know they're gonna see him
18:59
Speaker 3: go huh. Scroll they'll see it to go. You guys
19:03
Speaker 3: are wrong, man, Like, I'm still so scared. I can't
19:09
Speaker 3: read that right now. It's just a again. Sometimes you
19:14
Speaker 3: just gotta take a step back and be like, hey,
19:17
Speaker 3: I don't know if there's gonna be a recession, and
19:19
Speaker 3: what am I like? There's nothing I can do with
19:21
Speaker 3: that piece, And that's Fine's take a quick break here
19:24
Speaker 3: when we come back. We got Wall Street Watch, we
19:27
Speaker 3: got Todd Latski. That's all coming up after this.
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20:01
Speaker 5: Markets trading higher with cautious optimism that the US and
20:05
Speaker 5: Iran may be inching closer to a possible resolution after
20:08
Speaker 5: the US sent around a fifteen point plan to end
20:12
Speaker 5: the war. Right now, the Dow is up eight tens
20:14
Speaker 5: of a percent or three hundred and sixty nine points higher.
20:17
Speaker 5: SMP five hundred also up eight tens of a percent
20:20
Speaker 5: or fifty four points higher. Nasdaq up one point two
20:23
Speaker 5: eight percent or two hundred and seventy nine points. Russ
20:26
Speaker 5: A two thousand up nearly one and a half percent,
20:29
Speaker 5: Tenure Treasure Reel down six basis points at four point
20:33
Speaker 5: three three two percent, in oil pulling back over three
20:36
Speaker 5: and a half percent, trading right around eighty nine dollars
20:39
Speaker 5: a barrel. Home builder KB Home cut its fiscal year guide,
20:42
Speaker 5: inciting ongoing difficult housing market conditions. As for its previous quarter,
20:47
Speaker 5: the company missed earnings in revenue expectation, sending that stock
20:51
Speaker 5: down by five percent. Meanwhile, shares and chip maker Armholdings
20:54
Speaker 5: rallying nearly fifteen percent after the company unveiled its first
20:58
Speaker 5: in house chip, saying you will generate fifteen billion dollars
21:01
Speaker 5: in revenue by twenty thirty one. Elsewhere, at Chewy, stock
21:05
Speaker 5: surging fifteen percent after the PEP product in service company
21:08
Speaker 5: reported better than expected EBITA for the fourth quarter, but
21:11
Speaker 5: its revenue fell just short of estimates. MERC agreed to
21:15
Speaker 5: buy biopharma company Turns Pharmaceuticals for fifty three dollars per
21:19
Speaker 5: share in cash, valuing the company at six point seven
21:23
Speaker 5: billion dollars, and according to the information, SpaceX could file
21:27
Speaker 5: for an IPO as soon as this week, Echo Star
21:30
Speaker 5: shares arising nine percent on the news as the satellite
21:34
Speaker 5: communications provider has a near three percent stake in space X.
21:40
Speaker 3: I'm Tucker Silva and that is Wall Street Watch.
21:44
Speaker 1: This is Asked Todd on the Financial Exchange Radio network.
21:48
Speaker 1: If you have an existing estate plan or in the
21:50
Speaker 1: market for one, Todd Letsky is here to answer your
21:53
Speaker 1: questions and help you plan for a later life. Ask
21:55
Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
21:59
Speaker 1: New England for more than thirty five years, helping families
22:02
Speaker 1: with a state and tax planning, Medicaid planning, and probate law.
22:05
Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
22:11
Speaker 3: Todd Lutsky from the law firm of Kushigan Dolan now
22:15
Speaker 3: joins us here and he's here for Ask Todd. Which
22:18
Speaker 3: is your chance to ask Todd your estate planning questions
22:22
Speaker 3: and he'll answer them live on air. Actually, yes, that's right,
22:26
Speaker 3: he'll answer them live on air. Phone lines are wide
22:31
Speaker 3: open at eight eight eight to zero five two two
22:35
Speaker 3: sixty three. That's the number to call to ask Todd
22:37
Speaker 3: your estate planning questions Again eight eight eight to zero
22:42
Speaker 3: five two two six three. We can usually get through
22:44
Speaker 3: two or three of these puppies, So get on the
22:48
Speaker 3: horn and give us a call so that you can
22:50
Speaker 3: chat with Todd again. Eight eight eight to zero five
22:53
Speaker 3: two two six' three is the, number Mister. Lutsky how's
22:58
Speaker 3: it going?
22:59
Speaker 8: Today, know it's gone never? Better how are you?
23:01
Speaker 1: Doing?
23:02
Speaker 3: Good came across something interesting the other, day though you always.
23:05
Speaker 3: Do found a guy kayaking in my attic, yesterday.
23:09
Speaker 8: Kayaking in your.
23:10
Speaker 3: Addic, yeah it turns out he was a ceiling. Rafter oh,
23:13
Speaker 3: YEAH i guess SO i wasn't. Expecting, Now todd want
23:17
Speaker 3: to talk a little bit about irrevocable. TRUST i know
23:20
Speaker 3: we've talked a lot about life estates the last couple of,
23:22
Speaker 3: weeks and quite, honestly kind of tired of talking ABOUT
23:26
Speaker 3: i can't do life estates.
23:27
Speaker 8: Anymore, Okay but, Okay i'm gonna let you take this one.
23:31
Speaker 3: Away So i'm Gonna i'm gonna talk about kind of,
23:32
Speaker 3: that the other option that a lot of people consider
23:34
Speaker 3: instead of a life, estate irrevocable. Trust how much does
23:40
Speaker 3: the use of an irrevocable trust to protect an asset
23:45
Speaker 3: impact your day to day life versus a life. Estate
23:50
Speaker 3: SEE i brought it back to the life estate.
23:51
Speaker 8: You, did And i'm gonna connect the two for, you
23:53
Speaker 8: but thank you for. That so you, know one of
23:57
Speaker 8: the things we talk about in this guy is the
24:01
Speaker 8: right way and the wrong way to do a life.
24:03
Speaker 8: Estate but if you're going to do a life, Estate
24:06
Speaker 8: i'll i'll call it the less bad way would be
24:09
Speaker 8: to take the remainder interest of a life the remainder
24:13
Speaker 8: interest of a piece of property and give it to
24:16
Speaker 8: an irrevocable. Trust, okay connecting the two, here put it
24:20
Speaker 8: in an irvocal. Trust so if the there are like
24:23
Speaker 8: three times in my guide THAT i recommend when you
24:26
Speaker 8: should use a life, estate and when you're going to
24:29
Speaker 8: use any of those three times involve an irrevocable, trust and,
24:34
Speaker 8: folks AND i think the great analogy between and the
24:37
Speaker 8: question is is spot on in the sense that what's
24:39
Speaker 8: the difference between just throwing the whole darn thing into
24:42
Speaker 8: an irrevocable trust versus a life. Estate people think they
24:45
Speaker 8: give up control with a life, estate but think about
24:48
Speaker 8: how much control you give up with a with a life. Estate,
24:51
Speaker 8: Right so there's your compare and. Contrast when you put
24:54
Speaker 8: the hands of the. Property when you put the property
24:56
Speaker 8: in the hands of a, child you know you're gonna
24:58
Speaker 8: have trouble selling it with a their. Permission you're gonna
25:01
Speaker 8: have adverse capital gains tax consequences because the kids are
25:04
Speaker 8: going to get a big chunk of the money if
25:06
Speaker 8: they do agree to sell. It they don't get a
25:08
Speaker 8: capital gains exclusion when you go to sell the property
25:11
Speaker 8: because they don't live. There and again back to the
25:15
Speaker 8: hoping you get even get their permission to do, It
25:17
Speaker 8: and the biggest problem is you didn't get much of
25:20
Speaker 8: the money because there's an allocation based on your age
25:23
Speaker 8: that a large, portion depending on how old you, are
25:26
Speaker 8: goes to the. Kids so now you don't even have
25:28
Speaker 8: the money you need to buy another house if you
25:30
Speaker 8: sell your. House so to, me when you think about
25:34
Speaker 8: irrevocable trusts and the word, CONTROL i would say with
25:40
Speaker 8: a life, estate If i'm not using an irrevocable, Trust
25:43
Speaker 8: i've given up way more control THAN i would give
25:46
Speaker 8: up IF i used an irrevocable, trust because with an irrevocable,
25:50
Speaker 8: TRUST i put the remainder interest in their kid's name
25:53
Speaker 8: is not on the. Property there is no completed. GIFT
25:58
Speaker 8: i don't need anyone's permission to sell the. Property you
26:01
Speaker 8: still control the, trustee you still control the ability to sell.
26:06
Speaker 8: It you have no adverse capital gains tax when you
26:09
Speaker 8: go to sell. It when it's in a grant or irrevocable,
26:13
Speaker 8: trust you get your entire capital gains, exclusion offsetting the
26:17
Speaker 8: entire gain or a portion of the, gain depending on
26:20
Speaker 8: how large it. Is so there's no adverse tax. Consequences
26:25
Speaker 8: and maybe most, importantly all the money is available to
26:29
Speaker 8: buy another house because most of it is in the
26:31
Speaker 8: irrevocable trust and it doesn't even restart the five year waiting.
26:35
Speaker 8: Period and your kids don't have any there's no credit
26:39
Speaker 8: or issues with your kids getting divorced while you're. Alive
26:42
Speaker 8: so great, Question, chuck AND i THINK i hope you
26:46
Speaker 8: see the difference between life estates alone and irrevocable.
26:50
Speaker 3: Trust talking With Todd lutsky From cushing And, dolan Still
26:54
Speaker 3: room on the phone lines at eight eight eight two
26:57
Speaker 3: zero five two two sixty three is the number to
27:00
Speaker 3: call for your estate planning. Questions live With todd right
27:05
Speaker 3: now eight eight eight to zero five two two six.
27:09
Speaker 3: Three we're gonna take a quick break here but when
27:12
Speaker 3: we come, back we're gonna get to those questions For todd.
27:16
Speaker 3: Again that phone number is eight eight eight to zero
27:19
Speaker 3: five two two six, three and uh again only have
27:22
Speaker 3: space for a, couple so one more. Time that number
27:26
Speaker 3: is eight eight eight to zero five two two sixty.
27:30
Speaker 1: Three Ask todd With Todd letsky Every wednesday at ten
27:34
Speaker 1: thirty only here on The Financial Exchange Radio. Network Todd
27:40
Speaker 1: letsky answers your questions about a state and elder life
27:43
Speaker 1: planning Every wednesday at ten thirty right here on The
27:46
Speaker 1: Financial Exchange Radio, network.
27:54
Speaker 3: Talking With Todd lutsky from the law firm Of cushing And. Down,
27:58
Speaker 3: reminder if you've got Questions, todd this is your chance
28:01
Speaker 3: to ask them live on. Air eight eight eight two
28:05
Speaker 3: zero five two two six. Three we do still have
28:07
Speaker 3: a little bit of room on the phone lines, here
28:10
Speaker 3: so please get calling it eight eight eight two zero
28:14
Speaker 3: five two two sixty three to Ask todd your estate planning.
28:18
Speaker 3: Questions let's go first To sean In. Monson, sean what
28:21
Speaker 3: is your question For?
28:22
Speaker 9: Todd good Morning, todd and good. MORNING i very much
28:27
Speaker 9: Enjoy todd listening to your advice on this. Program my
28:32
Speaker 9: question for, you my question to you Is i've been
28:34
Speaker 9: advised at one point to get A medicare trust protect
28:40
Speaker 9: our property from the nursing.
28:42
Speaker 8: Home, Okay And i'm.
28:43
Speaker 10: WONDERING i hear you talk about irrevocable trusts very, frequently
28:48
Speaker 10: And i'm, wondering does the irrevocable cover in a medicare
28:52
Speaker 10: situation or can? It or are the two different? Things?
28:56
Speaker 8: No, so, yeah you're you're you're right about the fact
29:00
Speaker 8: that you're saying you're kind of saying A medicare trust
29:03
Speaker 8: when in, reality WHAT i think you're saying is and
29:06
Speaker 8: there's no such a term about medicaid is what you're thinking.
29:09
Speaker 8: ABOUT i know they use the term so. Closely medicaid
29:13
Speaker 8: is what you want to be able to apply for
29:15
Speaker 8: when you're in a nursing, home and when you're in
29:18
Speaker 8: a nursing home if the assets are in an irrevocable.
29:21
Speaker 8: Trust and, remember, folks there are many kinds of irrevocable,
29:25
Speaker 8: trusts and we do talk about different kinds of irrevocable,
29:30
Speaker 8: trust but we tend to spend a little more Time
29:33
Speaker 8: and you're right about this on Irrevocable medicaid, trusts and,
29:38
Speaker 8: yes they are absolutely designed to protect assets from the
29:42
Speaker 8: cost of long term. Care in other, words you would
29:46
Speaker 8: take your home and quite, frankly maybe some of your other,
29:49
Speaker 8: assets depending on you know what they are and whether
29:52
Speaker 8: it makes sense to put them in, there like money
29:54
Speaker 8: investment portfolios now now not qualified plan, money but other
29:59
Speaker 8: money into the. Trust and then you, know five years
30:04
Speaker 8: from the time that you do, this if you get
30:08
Speaker 8: sick after, that you or your spouse get sick after,
30:11
Speaker 8: that then these assets that you put in there are
30:14
Speaker 8: like you don't own. Them it looks to the nursing
30:16
Speaker 8: home like they're not, yours and then they would be you,
30:20
Speaker 8: know not. Available WHEN i say, PROTECTED i mean not
30:22
Speaker 8: available for the nursing, home not available to make you
30:26
Speaker 8: ineligible For medicaid benefits or ineligible for the state to
30:31
Speaker 8: help pay for the nursing home. Costs so you're spot.
30:35
Speaker 8: On these are the kinds of trusts that we talk
30:38
Speaker 8: about that will protect the asset from the cost of
30:42
Speaker 8: long term. Care and depending on the size of your,
30:44
Speaker 8: ESTATE i think it probably makes sense for you, to you,
30:46
Speaker 8: know sit down with an attorney and that does this
30:49
Speaker 8: and learn in more detail THAN i can give you
30:51
Speaker 8: on the, radio how in fact they work and how
30:53
Speaker 8: much control you can keep and how you REALLY i
30:56
Speaker 8: can just tell you that they won't really disrupt your,
30:59
Speaker 8: life you, know at, all and you'll still get this
31:03
Speaker 8: protection from the nursing home and avoidance of, probate and
31:06
Speaker 8: depending on the size of your, state even a reduction
31:09
Speaker 8: from Your massachusetts estate tax. Liability so hopefully that helps a.
31:14
Speaker 8: Little and thanks for the kind words, earlier. Folks this,
31:18
Speaker 8: approach this theoretical bull approach that we just talked, ABOUT
31:23
Speaker 8: i think might be better than the life, Estate but
31:26
Speaker 8: a lot of people have. Them they're not, horrible they do,
31:28
Speaker 8: work they do have. Benefits there are pros and cons
31:31
Speaker 8: to life, estates but a lot of people have. Them
31:34
Speaker 8: and that's why we did this guide calculating the consequences
31:37
Speaker 8: of a life. Estate why because people have them and
31:40
Speaker 8: it seems to be a quick, fix not always great,
31:43
Speaker 8: again pros and? Cons how much control DO i give?
31:45
Speaker 8: Up what CAN i do AFTER i have? It CAN
31:48
Speaker 8: i change my mind as to who gets? It CAN i?
31:50
Speaker 8: Sell CAN i buy another? House what are the you,
31:53
Speaker 8: know what are the capital? Gains tax? Consequences, folks if
31:57
Speaker 8: you've got one of these life, estates call and get
32:00
Speaker 8: the guide and learn what you actually. Have if you're
32:03
Speaker 8: thinking about getting, one call and get the guide so
32:06
Speaker 8: you can find out what they are before you decide
32:09
Speaker 8: to get, one and, finally how best to do them
32:12
Speaker 8: and when to do them eight six six eight four
32:15
Speaker 8: eight five six nine nine Or legal exchange show dot.
32:19
Speaker 8: Com you can download the guide right there again eight
32:22
Speaker 8: six six eight four eight five six nine nine Or
32:26
Speaker 8: legal exchange show dot com or and for more, information
32:29
Speaker 8: please go to Our instagram Page Cushing DOLEAN.
32:32
Speaker 3: Pc todd got another one for you. Here let's go
32:35
Speaker 3: To stacy In. Peabody, stacy what is your question for Toddm?
32:40
Speaker 4: HYA i have a. Question so a parent died with
32:44
Speaker 4: some property and a life estate only gave it to one,
32:47
Speaker 4: child so that child wants to sell it but share
32:51
Speaker 4: the proceeds with.
32:54
Speaker 1: Their.
32:54
Speaker 8: Sibling oh how nice is? That?
32:56
Speaker 4: Yeah so what are the consequences for like tax implications
33:02
Speaker 4: for maybe even gift taxes or capital?
33:04
Speaker 8: Gains so, great great. Question so let's explore this a
33:09
Speaker 8: little bit BECAUSE i think it's good for everybody else as, Well,
33:12
Speaker 8: stacey to learn what was done. Here so the parents
33:16
Speaker 8: actually were able to create this life of state arrangement
33:18
Speaker 8: where they took the property and they needed it to
33:22
Speaker 8: child number. One and let's say there's three, children deeded
33:26
Speaker 8: it to child number. One that's how they created and
33:28
Speaker 8: they reserve the right to live. There now we say
33:32
Speaker 8: there's a lot of negatives to, This, well in this,
33:33
Speaker 8: case it you, know if five years had gone, by
33:35
Speaker 8: it actually protected it from the nursing home as you
33:38
Speaker 8: folks may or may not have found out if your
33:40
Speaker 8: parent ever needed nursing home, Care so that would have been.
33:44
Speaker 8: Plus it is now going to avoid, probate so you
33:47
Speaker 8: should be finding that out right. Now so that's that's
33:50
Speaker 8: a plus on this. Side AND i think the last
33:54
Speaker 8: piece which goes to your, Point, stacy is it would
33:59
Speaker 8: have received a full step up in. Basis so even
34:02
Speaker 8: though they gave away the property to one child and
34:05
Speaker 8: reserved the right to live. There now the full value
34:08
Speaker 8: of that property is includable in the estate for state tax,
34:11
Speaker 8: purposes and provided the value of that property plus the
34:16
Speaker 8: other assets that they might have doesn't exceed two million,
34:20
Speaker 8: dollars now there's no estate tax, due at least not
34:23
Speaker 8: In mass and the child in this, case child number,
34:27
Speaker 8: one received the property with a full step up in cost.
34:32
Speaker 8: Basis and this is what goes to your. Point, well
34:36
Speaker 8: now the child wants to sell the, property so the
34:38
Speaker 8: child's automatically vested in one hundred percent of the property
34:42
Speaker 8: the moment the parent. Died that's another benefit of a life.
34:46
Speaker 8: Estate but you're right to the exclusion of the other.
34:50
Speaker 8: Children so not entirely sure why mom would have wanted
34:54
Speaker 8: to disinherit or dad would have wanted to disinherit the other.
34:57
Speaker 8: Kids but in effect that's what was. Done nice part right, here,
35:00
Speaker 8: though is we've got siblings who get along, always so
35:03
Speaker 8: nice to see. That so in this, case can the
35:07
Speaker 8: child sell the, property? Yes can the child then give
35:13
Speaker 8: money to her to the? Siblings? Yes, Again so what's the?
35:17
Speaker 8: Ramifications one child sells the property because of the full
35:23
Speaker 8: step up in basis zero capital gains tax provided it's,
35:28
Speaker 8: sold you, know within nine months or a year from
35:31
Speaker 8: the date of. Death there shouldn't be much growth from
35:34
Speaker 8: the time you die until the time it's. Sold so
35:37
Speaker 8: now all the money is, preserved we don't have, to you,
35:40
Speaker 8: know deplete any of the money by paying. Taxes now
35:45
Speaker 8: What now he's got all this. Money let's say it's
35:47
Speaker 8: a million dollars and we've got three, kids and we
35:49
Speaker 8: got to give you, know three hundred and thirty three
35:51
Speaker 8: thousand to the other two. Kids, well that's a six
35:53
Speaker 8: hundred and you know sixty six thousand dollars gift that
35:58
Speaker 8: this one child needs to make to the other two.
36:01
Speaker 8: Kids that is a taxable gift to who to the
36:05
Speaker 8: child making the gift because the parents didn't design this,
36:10
Speaker 8: plan you know better to prevent this from. Happening so,
36:15
Speaker 8: yes it's a taxable gift to the, giver not to, You,
36:19
Speaker 8: stacy not to your. Siblings you just simply get the
36:23
Speaker 8: dough tax, free income tax, free gift tax. Free, now
36:28
Speaker 8: will your sibling have to pay a gift, Tax, well
36:31
Speaker 8: they'll have to file a gift tax. Return but good
36:34
Speaker 8: news is they won't have to pay a gift. Tax
36:36
Speaker 8: there is no gift tax In. Master there's a federal gift,
36:39
Speaker 8: tax but you have a fifteen million dollar gift tax.
36:42
Speaker 8: Exemption but you got a file and eat into that
36:45
Speaker 8: exemption a little bit to use up some of that,
36:48
Speaker 8: exemption so at least you can do. It and in this,
36:51
Speaker 8: case we're kind of dodging some bullets and we're not
36:53
Speaker 8: going to end up being out of pocket. Anything but
36:55
Speaker 8: he is going to eat into his estate tax and
36:58
Speaker 8: gift tax.
36:59
Speaker 3: Exemption so thank, you Mister. Lutsky thank you so much
37:02
Speaker 3: for joining us. Today we really appreciate.
37:04
Speaker 8: It always a. Pleasure thank.
37:06
Speaker 1: You this has Been Asked odd on The Financial Exchange Radio.
37:10
Speaker 1: Network Ask todd With. Todd lutsky has been presented By
37:13
Speaker 1: cushing And, dolan Serving massachusetts And New england for more
37:15
Speaker 1: than thirty, years helping families with the state and tax,
37:18
Speaker 1: Planning medicaid, planning and probate. Law call eight hundred and
37:21
Speaker 1: three nine three four thousand and one or Visit Cushing
37:24
Speaker 1: doolan dot. Com the views expressed in this segment are
37:27
Speaker 1: solely those Of cushing And Dolan Armstrong. Advisor he does
37:29
Speaker 1: not provide any legal or tax. Advice please consult with
37:31
Speaker 1: your legal or tax advisor on such. Matters cushing And
37:33
Speaker 1: armstrong do not endorse each other and are not.
37:35
Speaker 3: Affiliated still quite a bit to get to as we
37:39
Speaker 3: head towards the second. Hour we'll talk a little bit
37:41
Speaker 3: about gas, prices also what's going on with the spring housing.
37:44
Speaker 3: Market we're also going to talk a little bit more
37:48
Speaker 3: about some of the latest developments around artificial intelligence and
37:53
Speaker 3: what is going on, there and we'll also one that's
37:58
Speaker 3: near and dear to my. Heart we'll talk a little
37:59
Speaker 3: bit about air, travel and they things aren't, exactly you,
38:04
Speaker 3: know great for air. Travelers right, now we'll ask the,
38:08
Speaker 3: question or rather we'll try to answer the one from
38:09
Speaker 3: The New York. Times can air travel get any? Worse
38:13
Speaker 3: we'll answer that an hour number two