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Estate planning for special needs · The Legal Exchange

0:01
Speaker 1: This is the Legal Exchange with Todd Lutsky from the
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Speaker 1: law firm of Cushing and Dolan and Susan Powers of
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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,
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Speaker 1: and protecting your money from a nursing home. If you
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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
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Speaker 1: eight six six eight four eight five six ninety nine
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Speaker 1: to make an appointment. That's eight sixty six eight four
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Speaker 1: eight five six ninety nine. Operators are standing by. Now
0:31
Speaker 1: Here are your hosts, Todd Lutsky and Susan Powers.
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Speaker 2: Welcome into Legal Exchange with Todd Lutsky. I'm Susan Powers,
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Speaker 2: a financial advisor with the Armstrong Advisory Group, and I'm
0:44
Speaker 2: joined by Todd Lutsky, a partner with the law firm
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Speaker 2: of Cushing and Dolan with a Masters in taxation. Welcome Todd.
0:51
Speaker 2: How are you today?
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Speaker 3: I'm never better and you I'm great? Thank you.
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Speaker 2: What do you have for this week?
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Speaker 3: Got a couple We're actually going to go to Virginia.
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Speaker 3: It's a federal fourths circuit case, and we're going to
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Speaker 3: talk about Norman Rockwell drawings. I know, you wouldn't think
1:06
Speaker 3: that it's all centers around the fact that there were
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Speaker 3: four rock Well illustrations of people visiting and waiting in
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Speaker 3: the West Wing for an audience with FDR, and then
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Speaker 3: those were gifted away and then where do they end
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Speaker 3: up years and years later Because people don't do their planning,
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Speaker 3: You wouldn't think about these things. But we're going to
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Speaker 3: talk about this.
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Speaker 2: A lot of people ask about the stuff, and.
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Speaker 3: We're going to talk about how planning is yet very important,
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Speaker 3: not just for stuff, but for everything. And then we're
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Speaker 3: going to head over to Maryland. We got a Pellet
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Speaker 3: court case there. We're dealing really strictly with special needs children,
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Speaker 3: and you know the importance of having a special needs
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Speaker 3: child and the need to do estate planning with special
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Speaker 3: needs children and the type of planning you might do,
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Speaker 3: how to ensure they keep their governmental benefits, and more importantly,
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Speaker 3: how you don't need to make them treated and differently
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Speaker 3: than the non special needs children when the language we
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Speaker 3: use can accommodate the same thing for all kids, but
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Speaker 3: for different reasons. So I think there's a lot to
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Speaker 3: think about when you have special needs children and planning,
2:14
Speaker 3: and speaking of planning in general, you know the kind
2:18
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Speaker 3: nine or Legal Exchange Show dot com and download it
3:12
Speaker 3: right there. Let's head over to Virginia Federal Fourth Circuit.
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Speaker 3: So in this case we had four rockwell illustrations again
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Speaker 3: of people waiting in the West Wing for an audience
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Speaker 3: with FDR. Well in nineteen forty three. These Rockwell paintings
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Speaker 3: were then gifted to the Press Secretary Stephen Early. Okay,
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Speaker 3: Stephen then died in nineteen fifty one without a will,
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Speaker 3: not even an didn't even do any estate planning at all,
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Speaker 3: and in the estate accounting which we talked about, this
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Speaker 3: is what goes on in the probate world, right, There's
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Speaker 3: lots going on here. There was no mention in the
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Speaker 3: inventory about these paintings. Then Stephen's wife, Helen had possession
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Speaker 3: of them, and she had possession of them till nineteen sixty,
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Speaker 3: which is probably where they would have gone under the
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Speaker 3: Interstate six. But we'll talk about that. But during that
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Speaker 3: time the family began to disagree about who really had
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Speaker 3: possession of these illustrations. Well Helen's daughter of course, to
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Speaker 3: make it complicated, Helen. Helen's daughter, Helen Elam, received the
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Speaker 3: illustrations at some point and then loaned them to the
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Speaker 3: White House in nineteen seventy eight. The Lone Agreement obligated
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Speaker 3: the return of these photo or these illustrations to Helen
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Speaker 3: Elam's son, William the Third, upon request Well in two
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Speaker 3: thousand and nine, Helen Early, which is the wife of Stephen,
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Speaker 3: who actually got it. Helen Early, which is the mother
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Speaker 3: of Helen Elam, died and actually devised these illustrations via
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Speaker 3: her will to her daughter Drew and son William the third,
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Speaker 3: but Drew disclaimed her interest. She didn't want them. We'll
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Speaker 3: talk about disclaimers. In twenty twenty one, relatives claimed ownership
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Speaker 3: over these assets. Well, Bill the third said, wait a minute,
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Speaker 3: these are really mine. That the will said that they
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Speaker 3: come to me, and so he files a declaratory judgment
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Speaker 3: and so does the family, basically to quiet title. Well,
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Speaker 3: the Superior Court grants William's motion based on the presumption
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Speaker 3: of ownership based on Helen had having possession. Plus Helen
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Speaker 3: was really the only one that actually mentioned the illustrations
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Speaker 3: in her estate plan, so that kind of makes sense.
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Speaker 3: They weren't happy, so, as you might imagine, the family
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Speaker 3: appealed and the Appellate Court affirmed, saying that there was
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Speaker 3: no need to confirm the validity of the gift of
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Speaker 3: the Rockwell paintings to Stephen. We don't We can start there,
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Speaker 3: but we don't have to. We know that gift took place.
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Speaker 3: And then Therefore, the presumption of ownership or possession really
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Speaker 3: stood with the wife who actually devised these assets or
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Speaker 3: these illustrations, and there was no counter evidence to the
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Speaker 3: contrary of that presumption of ownership. So looks like William
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Speaker 3: the Third has these Norman Walkwell paintings, which kind of cool. Actually,
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Speaker 3: I'd like to see them.
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Speaker 4: Uh.
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Speaker 3: And so what do we what do we really learned
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Speaker 3: from this? Obviously, folks, it's not it's not so much
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Speaker 3: about the Rockwell paintings as it is the first thing
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Speaker 3: that comes to my mind is, wonderful gift tax return
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Speaker 3: was filed by Stephen when he when he gifted these two.
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Speaker 2: Uh, well, he would have given in to his wife, right.
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Speaker 3: No, not not Stephen. I'm sorry when when the uh
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Speaker 3: when they were gifted to Stephen. Oh so the Press secretary,
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Speaker 3: wonderful gift tax return was filed. I'm not really sure
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Speaker 3: that happens.
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Speaker 2: Let's pull the files on that.
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Speaker 3: So that was interesting. But really, when you think about it,
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Speaker 3: what are some of the key ingredients that's going on
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Speaker 3: here that we want to avoid? What is intestate?
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Speaker 4: Right?
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Speaker 3: You die without a will, that means, you know, there's
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Speaker 3: a full probate and the statute is going to leave
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Speaker 3: the assets. And likely I don't know what the Virginia
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Speaker 3: statute is, but likely if it's a first marriage and
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Speaker 3: there's no and whether there's kids or there's no kids,
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Speaker 3: if it's a first marriage, likely it would all go
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Speaker 3: to the spouse. So I could see how Stephen, dying
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Speaker 3: without a will, these items listed or not in the
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Speaker 3: inventory end up with Helen. Now remember here there was
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Speaker 3: also no accounting. Remember when you die without a will,
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Speaker 3: you don't direct where assets go. So not a good idea. Well,
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Speaker 3: inside the probate process is this accounting. You got to
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Speaker 3: put assets, You got to do an inventory, you got
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Speaker 3: to list assets, right, and and the fact that they
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Speaker 3: didn't list these assets that wasn't helpful.
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Speaker 2: I wonder how valuable they were.
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Speaker 3: Yeah, I mean back then maybe you know it probably
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Speaker 3: gained value over time. I don't know if those were
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Speaker 3: valuable at the time, who knows. But in any event,
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Speaker 3: you know, you basically have to list all assets when
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Speaker 3: you die with a probate asset in your name, no
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Speaker 3: designated beneficiary, And the lack of detail here in that
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Speaker 3: accounting wasn't helpful. So you, again, as much as you
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Speaker 3: want to avoid probate. If you're in it, do it right,
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Speaker 3: you know, hire someone to get it done. What's the
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Speaker 3: disclaimer all about?
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Speaker 5: Right?
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Speaker 3: And people can do this?
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Speaker 2: Her daughter said no, thanks.
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Speaker 3: Yeah, I mean what happens there? So I mean Helen
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Speaker 3: died at least she had a will that directed where
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Speaker 3: these assets go, and that was the estate planning that
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Speaker 3: although basic saved the drawings. So do your estate plan
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Speaker 3: direct where your assets go, folks, and you're going to
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Speaker 3: be in much better shape. And so here the daughter.
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Speaker 3: You know, if she disclaimed it, you'd have to look
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Speaker 3: to the will to see where her portion would go. Now,
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Speaker 3: in all fairness, when you disclaim, you can't direct where
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Speaker 3: it goes. You just basically say I don't want it.
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Speaker 3: Therefore treat me as if I died first. Okay, Well
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Speaker 3: you have to look if the will said equally to
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Speaker 3: the kids, if living otherwise to their kids, and Drew
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Speaker 3: had kids, and they would go to her kids, then
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Speaker 3: that piece would go to Drew's kids. If there were
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Speaker 3: no kids, but there were siblings, then it would go
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Speaker 3: to the other siblings. Then the question is is there're
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Speaker 3: more siblings than just build the third But this is
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Speaker 3: just an example for you folks to understand how the
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Speaker 3: intestate succession works.
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Speaker 2: And get very messy.
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Speaker 3: Yeah, but really you've got to be clear here, right.
9:39
Speaker 3: Make sure you put together your trust. Put the items
9:42
Speaker 3: you want to protect items like this, You want to
9:44
Speaker 3: put them in a trust. You want to direct where
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Speaker 3: they go. You want to stay out of probate. You
9:48
Speaker 3: don't want to be I mean something as little as
9:50
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Speaker 2: You've been listening to Todd Lutsky, a partner with the
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Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
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Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
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Speaker 2: more to come when we return to the Legal Exchange
10:33
Speaker 2: with Todd Lutski.
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Speaker 1: advisory services. You're listening to the Legal Exchange with Todd Lunsky,
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Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
13:55
Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
13:59
Speaker 2: and I'm I'm joined by Todd Letsky, a partner with
14:01
Speaker 2: a law firm of Cushing and Dolan, with a master's
14:04
Speaker 2: in taxation. Special Needs Trust, Special Needs Trust.
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Speaker 3: And let's let's run through this and talk about a
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Speaker 3: Maryland appellate case. So Bill, the parents were appointed guardian
14:19
Speaker 3: for him in two thousand and six. So then comes
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Speaker 3: twenty twenty three and the parents decided to file to
14:27
Speaker 3: modify the guardianship. I don't know if the child got
14:30
Speaker 3: better or you know, what have you, but to modify
14:34
Speaker 3: the guardianship to allow Bill the child the right to vote.
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Speaker 3: Apparently might not have known this, but the rule in
14:42
Speaker 3: Maryland is that folks under a guardianship retain the right
14:47
Speaker 3: to vote unless the court finds under clear and convincing
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Speaker 3: evidence that the individual cannot communicate with or without accommodations
15:00
Speaker 3: desire to participate in the voting process, unless they can't
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Speaker 3: communicate a desire to participate in the voting process. So
15:09
Speaker 3: that's the rule. So the court, upon asking for this modification,
15:17
Speaker 3: asked Bill, So, Bill, can you name for me a
15:21
Speaker 3: Republican and a Democratic candidate? So the attorney for Bill
15:27
Speaker 3: rephrased the question and then Bill said, I want to
15:33
Speaker 3: participate to vote? Which is the standard. The court denied
15:41
Speaker 3: the child the parents request to allow Bill to vote.
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Speaker 3: Said no, no, you need to have a basic level
15:50
Speaker 3: of understanding of the political process. I got to tell you,
15:55
Speaker 3: I'm not sure I understand the politics.
15:58
Speaker 2: Have a basic understanding the political process.
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Speaker 3: So not to get political here, No, just in general.
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Speaker 3: Just in general, and said okay. So they appealed. The
16:10
Speaker 3: appellate court reversed, which I think they should have. Yeah,
16:14
Speaker 3: they reversed, stating that they added this additional requirement of
16:18
Speaker 3: a basic understanding of the political process erroneously and that
16:22
Speaker 3: that standard is not required clearly, and therefore, yeah, clearly
16:27
Speaker 3: it's not that standard is definitely not required. And so
16:32
Speaker 3: apparently he's he's going to be allowed allowed to vote,
16:36
Speaker 3: which you know, good for him. So again, I you know,
16:42
Speaker 3: I don't know that anyone really has a complete understanding
16:45
Speaker 3: of our political process. But at the end of the day,
16:48
Speaker 3: we're going to talk a little bit about what you
16:50
Speaker 3: what we learned from this. This this case is obviously
16:53
Speaker 3: I didn't present this to talk about, you know, whether
16:56
Speaker 3: or not we have the right to vote. There's all
16:58
Speaker 3: about the guardianship, what jumped off the page here for me,
17:02
Speaker 3: all about the special needs child, and all about how
17:05
Speaker 3: we can educate people to plan for their special needs children.
17:09
Speaker 3: So we're going to do that. But first I just
17:11
Speaker 3: want to remind you about the guide this month, the
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Speaker 3: power of unlocking irrevocable Medicaid trusts. And by the way,
17:17
Speaker 3: when you're doing special needs planning for children, the kind
17:21
Speaker 3: of trust you might want to have is an irrevocable trust,
17:25
Speaker 3: especially if you want to protect these assets so they're
17:29
Speaker 3: there for that child when you die. So keep that
17:32
Speaker 3: in mind when you're requesting the guide. If you want to,
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Speaker 3: it's a thirty years of most frequently asked question answer
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Speaker 3: get the guide, say six eight four eight five six
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Speaker 3: nine nine or Legal Exchange Show dot com again eight
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Speaker 3: six six eight four eight five six nine nine or
18:10
Speaker 3: Legal Exchange Show dot com. And so let's go to
18:15
Speaker 3: understanding about preparing things for special needs children. Right, when
18:24
Speaker 3: you have special needs children, the goal is to you know,
18:28
Speaker 3: it's extra important for you to do your estate planning.
18:31
Speaker 2: You can just give them the assets directly. They can
18:34
Speaker 2: lose their benefits, right.
18:35
Speaker 4: That's right.
18:36
Speaker 3: And you don't have to disinherit.
18:38
Speaker 2: Which is a lot of people think they do.
18:40
Speaker 4: Right.
18:41
Speaker 3: Yeah, and so that's really you know the thing, it's
18:43
Speaker 3: a combination of what you said you don't. It's that balance, right,
18:47
Speaker 3: don't disinherit, but don't give it to them do something either.
18:51
Speaker 3: So folks think about that, but we we don't need
18:54
Speaker 3: to do that. So the way the way to sort
18:56
Speaker 3: of take care of this is to put together a trust.
19:00
Speaker 3: In the trust, you'll want to make sure that the
19:02
Speaker 3: assets are protected. The kind of trust you would do
19:05
Speaker 3: right if you're thinking about this planning, but I think
19:07
Speaker 3: would probably be an irrevocable trust depending on your net worth,
19:11
Speaker 3: right for sure, But I would think if if you know,
19:14
Speaker 3: if you're four million in under and a couple of
19:17
Speaker 3: that is a house you know, or houses, you want
19:20
Speaker 3: to make sure the assets are available for the special
19:24
Speaker 3: needs child.
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Speaker 2: And just to clarify, Toddy, are you talking about creating
19:27
Speaker 2: an irrevocable trust, an irrevocable special needs trust before you
19:31
Speaker 2: pass away?
19:32
Speaker 3: Good question. The answer is no, we're going to be talking.
19:35
Speaker 3: We're going to come to that in a minute. This
19:36
Speaker 3: is going to be one I'm thinking of that would
19:38
Speaker 3: be built in to your trust. So your own estate plan,
19:42
Speaker 3: got it, Like, if you had a trust, you would
19:44
Speaker 3: do an estate plan for you and your family in
19:46
Speaker 3: that trust.
19:47
Speaker 2: With language to accommodate for the creation of that one
19:50
Speaker 2: I die.
19:50
Speaker 3: For that child, correct, And so remember these trusts are as,
19:54
Speaker 3: as Susan just said, they're designed for you know, the
19:57
Speaker 3: mom and dads of the world, and they're going to
20:00
Speaker 3: tech from the nursing home, reduced taxes, avoid probate, and
20:03
Speaker 3: make sure as many of these assets are available as
20:05
Speaker 3: possible for the family, especially a special needs child. Exactly
20:09
Speaker 3: right now, Susan, You're right to say, well, what kind
20:13
Speaker 3: of special needs share? This is a share established inside
20:17
Speaker 3: the trust, so it's known as a third party special
20:21
Speaker 3: needs trust, which allows the assets to be available for
20:26
Speaker 3: the benefit of the special needs child, but not be
20:30
Speaker 3: owned by the special needs child, therefore preserving the governmental
20:35
Speaker 3: benefits that the child might be receiving currently or even
20:39
Speaker 3: in the future. Now, remember the important thing here is
20:44
Speaker 3: because it's a third party trust, when that child dies,
20:50
Speaker 3: there's no payback to the state, which is really critical. Right,
20:56
Speaker 3: and I'm going to talk about self settled trusts in
20:58
Speaker 3: a minute, but understand why I'm doing this.
21:02
Speaker 4: Right.
21:04
Speaker 3: You can set this up so that you don't have
21:08
Speaker 3: to treat children differently. Some people say, well, geez, you know,
21:13
Speaker 3: I got three kids, and I have one special needs
21:15
Speaker 3: child and two non special needs children. I just want
21:19
Speaker 3: my special needs child to be protected, So I'm going
21:22
Speaker 3: to put together language, but I don't want to make
21:24
Speaker 3: my special needs child feel treated differently. So you can
21:30
Speaker 3: use the same language for all your kids. They're just
21:34
Speaker 3: accomplishing different things. So example, the language you might want
21:38
Speaker 3: to use, or if you're trying to figure this out
21:41
Speaker 3: for your family, is language that is sole discretionary distribution. Language.
21:46
Speaker 3: Put together three buckets, dump the assets in there after
21:50
Speaker 3: you're dead, and the language will say the trustee can
21:53
Speaker 3: make distributions in the disinterested trustee sole discretion to the
21:59
Speaker 3: child or that child's children. Mm hmm, and on it goes.
22:05
Speaker 3: Leave it in there for the whole life. So that
22:07
Speaker 3: language works great to protect assets for the special needs child.
22:13
Speaker 3: Child doesn't own it, child can still enjoy it. It's
22:17
Speaker 3: not going to cause governmental problems or loss of benefits.
22:21
Speaker 3: I could put that same language in for the other
22:23
Speaker 3: two children in my example that are non special needs,
22:26
Speaker 3: exactly the same language. Why am I doing that well
22:29
Speaker 3: in this case? Not because they're special needs, but because
22:32
Speaker 3: if there's a future divorce or a credit or chance
22:34
Speaker 3: they can't get it. Why because they don't own it,
22:38
Speaker 3: but they can enjoy it.
22:40
Speaker 2: So same language covers a big umbrella of real yeah.
22:44
Speaker 3: And makes everybody feel like they're treated equally, but for
22:46
Speaker 3: different reasons. And in all of these cases it also
22:50
Speaker 3: helps to provide a generational skipping tax benefit. So have
22:55
Speaker 3: the assets in these trusts not actually subject to a
22:58
Speaker 3: state tax when that child dies.
23:01
Speaker 2: We love that it can get to the next generation.
23:04
Speaker 3: Yeah, and just quickly. The difference is a self settled
23:07
Speaker 3: trust if you have to set it up the kid
23:09
Speaker 3: sets it up. Like you have an accident, you become disabled,
23:12
Speaker 3: and you get a judgment. Well that's the kid's money.
23:15
Speaker 3: That's a self settled trust. They put it in a
23:17
Speaker 3: D four A trust. That trust will have a payback provision.
23:21
Speaker 3: So a little different there, folks. But learn about trust
23:24
Speaker 3: in this case, the irrevocable Medicaid trust. Learn how they work.
23:28
Speaker 3: Soup to nuts eight six six eight four eight five
23:32
Speaker 3: six nine nine or Legal Exchange show dot com.
23:36
Speaker 2: You've been listening to Todd Lutsky, a partner with the
23:38
Speaker 2: law firm of Cushing and Dolan. I'm Susan Power as
23:41
Speaker 2: a financial advisor with the Armstrong Advisory Group, and Todd
23:45
Speaker 2: will be answering your listener questions when we return to
23:48
Speaker 2: the Legal Exchange with Todd Lutski.
23:51
Speaker 1: Elder life planning can be overwhelming, so be sure you're
23:55
Speaker 1: prepared or you could make costly mistakes. That affect your
23:58
Speaker 1: overall plan. Cushing and Dolan art experts in elder lawn taxation,
24:02
Speaker 1: and they can devise a plan that covers you in
24:03
Speaker 1: every area where issues can rise. Irrevocable trust so the
24:07
Speaker 1: most common type of trust that folks use for financial protection,
24:10
Speaker 1: and while they can be complicated to create, they help
24:13
Speaker 1: keep your assets safe because they contain specific protections that
24:16
Speaker 1: many of us need, like the possibility of eliminating your
24:19
Speaker 1: estate taxes. Their new guide is called Unlocking the Power
24:22
Speaker 1: of Irrevocable Medicaid Trusts. Learn more about how these trusts
24:25
Speaker 1: can benefit you and your family by calling eight six
24:28
Speaker 1: six eight four eight five six ninety nine right now
24:31
Speaker 1: and asking for your free guide today. That's eight six
24:34
Speaker 1: six eight four eight five six nine nine, or you
24:36
Speaker 1: can request the guide right now by visiting legal.
24:39
Speaker 4: Exchangshow dot com.
24:40
Speaker 1: The proceeding was paid for and the views expressed are
24:42
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan ind
24:44
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
24:48
Speaker 1: Cushing and Dolan in Armstrong Advisory do not endorse each
24:50
Speaker 1: other and are not affiliated.
24:52
Speaker 7: Planning for retirement is much like cramming for a final exam,
24:56
Speaker 7: and no stone should be left unturned before you're ready
24:58
Speaker 7: to take that step. Hi, this is Chuckzada from the
25:00
Speaker 7: Armstrong Advisory Group and we help folks just like you
25:03
Speaker 7: plan for retirement every day. Our new guide is called
25:06
Speaker 7: your Retirement Planning Checklist, and in it will remind you
25:09
Speaker 7: of the various issues that may be most important to
25:11
Speaker 7: your planning process. Let's start with the date you choose
25:13
Speaker 7: to retire. That'll depend on a variety of factors, including
25:16
Speaker 7: your income and your health. You may also want to
25:19
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25:22
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25:24
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25:27
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25:29
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25:30
Speaker 4: Call us today at eight.
25:31
Speaker 7: Hundred three nine three four zero zero one. That's eight
25:34
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25:37
Speaker 7: online at Armstrong Advisory dot com.
25:39
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
25:42
Speaker 1: registered investment advisor. Nothing in the ad or any Armstrong
25:44
Speaker 1: guide is specific financial, legal or tax advice. Consult your
25:47
Speaker 1: own financial, tax intestate planning advisors before making any investment decisions.
25:50
Speaker 1: Armstrong may contact you to offer investment advisory services. Summer
25:54
Speaker 1: in New England is nearly upon us. The kids are
25:56
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25:59
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26:03
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26:56
Speaker 1: it's time for Ask Todd, the segment where Todd will
27:00
Speaker 1: answer your questions about anything and everything that's included in
27:03
Speaker 1: the estate planning process. Once again, here's Todd Lutsky and
27:07
Speaker 1: Susan Powers.
27:10
Speaker 2: Welcome back, Todd. We have a few questions from listeners.
27:13
Speaker 2: First question comes from Jeff in Biddeford, Maine, and Jeff writes,
27:17
Speaker 2: I am sixty two and have been with my partner
27:19
Speaker 2: for about twenty seven years. We own two properties together
27:23
Speaker 2: and I own a two unit apartment building. We would
27:26
Speaker 2: like to do a trust for the properties. Do all
27:29
Speaker 2: the properties need to be in both of our names?
27:32
Speaker 3: So I have to ask the question that is being screamed.
27:36
Speaker 4: At me here.
27:37
Speaker 2: Not married partner, Yeah, not married, they've been together for
27:41
Speaker 2: twenty seven years.
27:42
Speaker 3: I just want to check, yeah, that that wasn't any
27:44
Speaker 3: kind of a typo that we need to know that
27:46
Speaker 3: they're married or not married, because that makes a big
27:48
Speaker 3: difference in what I'm about to say. So they said,
27:52
Speaker 3: you know, do all the properties need to be in
27:53
Speaker 3: both our names. Well, you gotta be careful right now.
27:56
Speaker 3: So first and foremost, if you're not married, and you're
27:58
Speaker 3: going to say to me, well, it says I own
28:01
Speaker 3: a two unit.
28:02
Speaker 2: So they own two properties together. And then he also
28:05
Speaker 2: owns two unit apartment building.
28:08
Speaker 3: Jeff owns that two unit, two unit apartment building. So Jeff,
28:13
Speaker 3: if you wanted to put it in both names, I
28:16
Speaker 3: want to address that. First. You first have to understand
28:19
Speaker 3: you'd be making a taxable gift for half the value
28:24
Speaker 3: to your partner. It may not be a problem. I mean,
28:28
Speaker 3: you have a thirteen point nine million dollar gift tax
28:31
Speaker 3: exemption and Maine doesn't have a gift tax as far
28:33
Speaker 3: as I know, so you could do it. It'll be
28:37
Speaker 3: a carryover basis, so that whatever gain is built into
28:41
Speaker 3: that property will remain built in for your partner. So
28:43
Speaker 3: if it sells, you know there's a capital gain there.
28:48
Speaker 3: Is it doable? Yes, but be careful because you're not married.
28:52
Speaker 3: So if she walks away, she walks away and there
28:59
Speaker 3: goes that half of that building. You don't own it anymore,
29:03
Speaker 3: and so there's no so that would be a concern.
29:06
Speaker 3: Maybe it's not for you guys, you've been together twenty
29:08
Speaker 3: seven years, who.
29:08
Speaker 2: Knows, But you don't have to do just one trust
29:11
Speaker 2: for the two of them? Are would you not do
29:13
Speaker 2: one trust for the two of them if they're not married?
29:15
Speaker 3: Yeah, because then it says would you like to do
29:17
Speaker 3: a trust for the property? So I definitely would probably
29:20
Speaker 3: stay away from one trust. I would say you should
29:23
Speaker 3: each do your own estate plan, after all, you're not married.
29:25
Speaker 3: If you were married and the assets are under ten
29:28
Speaker 3: million dollars, I'd be back with that joint trust idea
29:31
Speaker 3: that we talk a lot about, the joint revocable trust,
29:33
Speaker 3: perhaps depending on their age sixty two I mean. And
29:37
Speaker 3: then then you got to think about what kind of trust. Well,
29:40
Speaker 3: let's assume we stick with the idea of two trustsah,
29:44
Speaker 3: which I think is right, one for Jeff and one
29:46
Speaker 3: for the partner. Then the kind of trust, Well, if
29:49
Speaker 3: we're both sixty two ish, you know, are we concerned
29:52
Speaker 3: about protecting these assets for each other in case one
29:55
Speaker 3: goes into a nursing home, because again, not being married,
29:59
Speaker 3: you have no protection if one gets sick. Whatever that
30:02
Speaker 3: one owns, those are at risk. And if it's a
30:06
Speaker 3: house that the partner's living in that that could be
30:09
Speaker 3: a problem for the partner.
30:10
Speaker 4: So you have to think.
30:13
Speaker 3: You have to now think about probate. You have to
30:16
Speaker 3: think about taxes, you have to think about not being married.
30:19
Speaker 3: You have to think about Medicaid, nursing home protection, so
30:22
Speaker 3: lots to think about. So I would say two trusts.
30:25
Speaker 3: Once you decide if nursing home protection is important, then
30:28
Speaker 3: we know they're going to be irrevocable, and I would
30:32
Speaker 3: probably suggest that the apartment building. Again, I don't know
30:35
Speaker 3: that you want to give it away, but if it's
30:37
Speaker 3: a rental, I'd suggest throwing it into an LLC, even
30:40
Speaker 3: a single member LLC, and just have the shares owned
30:44
Speaker 3: by Jeff's trust, whichever kind of trust we create, And
30:49
Speaker 3: that way, at least you don't have to file an
30:51
Speaker 3: income tax return for that entity, Jeff. But if there's
30:55
Speaker 3: a lawsuit from the tenant, they're not suing you personally,
30:59
Speaker 3: and of course, since you're not married and you've got
31:01
Speaker 3: two separate trusts, the lawsuit would be against the LLC
31:04
Speaker 3: and the partner would never have to worry.
31:06
Speaker 2: And they could take care of each other if they
31:08
Speaker 2: had rentals and they wanted the other to get the
31:10
Speaker 2: income in the meantime, or stay in the house that
31:13
Speaker 2: they owned together.
31:14
Speaker 3: And draft the trust to live on after you die
31:16
Speaker 3: and take care of each other. Yes, but lots to
31:18
Speaker 3: think about here, Jeff. I think you both need to
31:21
Speaker 3: go in and sit down with an estate planning attorney
31:24
Speaker 3: and try to figure this one out. But there's a
31:26
Speaker 3: lot of issues, but certainly helpful. Speaking of issues, the
31:30
Speaker 3: kind of trust we were talking about in this particular
31:32
Speaker 3: case might have been an irrevocable medicaid trust, which is
31:35
Speaker 3: exactly what the guide is. It's really one of my
31:37
Speaker 3: favorite because it does explain everything from question to answer,
31:42
Speaker 3: question to answer as to how these trusts work, from
31:46
Speaker 3: putting houses into selling to living there, to paying income
31:50
Speaker 3: taxes to access you name it. If you ever wondered
31:54
Speaker 3: how they work, get the Guide You'll know eight six
31:57
Speaker 3: six eight four eight five six nine or Legal Exchange
32:02
Speaker 3: Show dot com again eight sixty six eight four eight
32:06
Speaker 3: five six nine nine or Legal Exchange Show dot com.
32:10
Speaker 2: Our last question comes from Michael and Marymack, New Hampshire,
32:13
Speaker 2: and Michael writes, I want to avoid losing my assets
32:17
Speaker 2: to a nursing home. My New Hampshire attorney is recommending
32:21
Speaker 2: a revocable trust because they said that my primary residence
32:24
Speaker 2: mortgage will be called up if we go the irrevocable route.
32:29
Speaker 2: Is this true?
32:31
Speaker 3: Yes and no. It really depends. It doesn't depend folks.
32:36
Speaker 3: Let me tell you if you know the answer right.
32:39
Speaker 3: So he's right to warn them that if you just
32:45
Speaker 3: put it into an irrevocable trust, directly outright transfer the
32:50
Speaker 3: whole property into the irrevocable trust, that if the financial
32:56
Speaker 3: institution that loaned the money ever checked the registry. Again,
33:03
Speaker 3: not sure that happens a lot, but if it did,
33:06
Speaker 3: they would have, you know, the potential right to say
33:09
Speaker 3: I want to call the note. It's called a duon
33:12
Speaker 3: sale or a duon transfer clause that many uh many loans,
33:18
Speaker 3: almost every loan has in it, Like if you die,
33:21
Speaker 3: they're going to call the note. Sure, okay, it's that
33:24
Speaker 3: duon transfer cost. I believe this Garn Saint Germain Act
33:28
Speaker 3: when it I know it deals with protecting it when
33:32
Speaker 3: you transfer it to a grant or revocable trust. It's
33:35
Speaker 3: not clear on the irrevocable trust, so I think it
33:38
Speaker 3: still applies. What mean the answer is no, they're not
33:41
Speaker 3: going to call it because of the Garn Saint Germain Act,
33:44
Speaker 3: which is a banking law that deals with mortgages, and
33:48
Speaker 3: that is.
33:49
Speaker 2: Just talking specifically about an outright.
33:53
Speaker 3: Exactly outright. So what what I tell people is in
33:57
Speaker 3: there's a I don't have the section, it's a USC,
33:59
Speaker 3: it's forty two USC something, I forget the exact section
34:05
Speaker 3: of the code that says, well, a way to not
34:09
Speaker 3: play this guessing game in a way to still be
34:12
Speaker 3: able to do irrevocable trusts even though your house is
34:16
Speaker 3: mortgaged if it's your primary residence. Here, yes, primary residence
34:21
Speaker 3: is that you can do this planning. Just don't need
34:25
Speaker 3: the entire property into the trust. Explain what you mean
34:29
Speaker 3: by that deed the remainder interest to the trust, and
34:33
Speaker 3: reserve a life estate.
34:34
Speaker 2: Got it.
34:35
Speaker 3: So as much as we've done these programs, Susan and
34:38
Speaker 3: talk about how much I don't.
34:40
Speaker 2: Like estate as a planning solution as.
34:45
Speaker 3: A planning tool, it's not my favorite. I've all and
34:48
Speaker 3: we've talked about the pros and cons of them. I
34:51
Speaker 3: did and do always mention the three times that I
34:55
Speaker 3: do reserve a life estate and how I do it,
34:58
Speaker 3: and this would be one of them.
35:00
Speaker 2: If someone has a mortgage or any debt on the property.
35:02
Speaker 3: Yeah, if you got a mortgage on the property of
35:04
Speaker 3: any kind. It could be a first mortgage, it could
35:06
Speaker 3: be a second mortgage, it could be a helock, a
35:08
Speaker 3: home equity line of credit if you have one and
35:11
Speaker 3: it's on your primary residence. I would then suggest deeding
35:15
Speaker 3: the property to the trust, not to the kids. Right,
35:19
Speaker 3: that's the bad way. This is way less bad. Deed
35:22
Speaker 3: it to the irrevocable trust, and in the deed say
35:25
Speaker 3: I hereby reserve a legal life estate. That's all.
35:28
Speaker 2: And what's the downside of that?
35:30
Speaker 3: First of all, the upside is it will prevent the
35:33
Speaker 3: mortgage from being called. Yeah, why because you didn't give
35:38
Speaker 3: it away. You are considered the current owner on the property.
35:44
Speaker 3: You are considered the current owner, So no triggering. That
35:48
Speaker 3: is there really a downside? I guess if you ever
35:50
Speaker 3: go to sell it, depending on how old you are,
35:52
Speaker 3: a little piece based on your age and the IRS
35:55
Speaker 3: table will tell you how much of the proceeds from
35:58
Speaker 3: that sale actually go to the lifetime tenance pocket and
36:01
Speaker 3: how much go to the irrevocable trust.
36:04
Speaker 2: Okay, so you protect everything, but that little little.
36:06
Speaker 3: Piece would be at risk again if you were to
36:09
Speaker 3: sell it. You're right, so that piece would hit their pocket,
36:12
Speaker 3: but usually it goes down. The amount that you get
36:14
Speaker 3: goes down as the value of the property goes.
36:16
Speaker 2: Up, so and you age.
36:17
Speaker 3: Yeah, so, folks, that's the answer, reserve the life estate.
36:21
Speaker 3: But again that's in the guide understanding how these irrevocable
36:25
Speaker 3: trusts work from soup to nuts. Call and get the
36:29
Speaker 3: guide and you'll learn whether it's right for you or not.
36:32
Speaker 3: Eight six six eight four eight five six nine to
36:36
Speaker 3: nine or Legal Exchange Show dot com.
36:39
Speaker 2: If you have a question you would like to ask Todd,
36:41
Speaker 2: visit his website Legal Exchange Show dot com and click
36:45
Speaker 2: on the ass Tod tab. Maybe I'll be able to
36:48
Speaker 2: read your question on the air, and hopefully his answer
36:50
Speaker 2: will stop you from becoming one of his next real
36:53
Speaker 2: life stories. You've been listening to Todd Lutsky, a partner
36:56
Speaker 2: with the law firm of Cushing and Dolan. I'm Susan
37:00
Speaker 2: Powers of financial Advisor with the Armstrong Advisory Group, and
37:03
Speaker 2: we'll be back with more after this quick break on
37:06
Speaker 2: the Legal Exchange with Todd Lutsky.
37:10
Speaker 1: Elder life planning can be overwhelming, so be sure you're
37:13
Speaker 1: prepared or you could make costly mistakes that affect your
37:16
Speaker 1: overall plan. Cushing and Dolan are experts in elder lawn taxation,
37:20
Speaker 1: and they can devise a plan that covers you in
37:22
Speaker 1: every area where issues can rise. Irrevocable trust so the
37:25
Speaker 1: most common type of trust that folks use for financial protection,
37:28
Speaker 1: and while they can be complicated to create, they help
37:31
Speaker 1: keep your assets safe because they contain specific protections that
37:34
Speaker 1: many of us need, like the possibility of eliminating your
37:37
Speaker 1: estate taxes. Their new guide is called Unlocking the Power
37:40
Speaker 1: of Irrevocable Medicaid Trusts. Learn more about how these trusts
37:44
Speaker 1: can benefit you and your family by calling eight six
37:46
Speaker 1: six eight four eight five six ninety nine right now
37:49
Speaker 1: and asking for.
37:50
Speaker 4: Your free guide today.
37:51
Speaker 1: That's eight sixty six eight four eight five six nine nine,
37:54
Speaker 1: or you can request the guide right now by visiting legal.
37:57
Speaker 4: Exchange show dot com.
37:58
Speaker 1: The proceeding was paid for if youse expressed our solely
38:01
Speaker 1: those of Cushing and Dolan. Cushing and Dolan into or
38:03
Speaker 1: Armstrong Advisory may contact you're offering legal or investment services.
38:06
Speaker 1: Cushing and Dolan in Armstrong Advisory do not endorse each
38:08
Speaker 1: other and are not affiliated.
38:10
Speaker 5: This is Michael Valila, adjudent of the Disabled American Veterans
38:13
Speaker 5: Department of Massachusetts. We focus on the people returning from service,
38:17
Speaker 5: not their specific illness or injury.
38:20
Speaker 4: Our number one goal is.
38:21
Speaker 5: To make sure our veterans have the necessary services they need,
38:25
Speaker 5: be it physical, emotional, or financial, so that their transition
38:29
Speaker 5: can be seamless. You can help our great American heroes
38:32
Speaker 5: as well by making a donation today by visiting dav
38:35
Speaker 5: five k dot Boston. That's dav five k dot Boston.
38:40
Speaker 1: Summer in New England is nearly upon us. The kids
38:43
Speaker 1: are home from school, the sun doesn't set until after eight.
38:46
Speaker 1: It's likely time for you to relax.
38:48
Speaker 4: Well.
38:49
Speaker 1: While you're relaxing, take a few minutes to check out
38:51
Speaker 1: visit USVII dot com and research your next vacation in
38:54
Speaker 1: the United States Virgin Islands. The USVII has something for everyone,
38:59
Speaker 1: be it the richestory of Saint Croix, the spectacular beaches
39:02
Speaker 1: of Saint Thomas, or the tranquil quiet of Saint John.
39:05
Speaker 1: Visit one island or all three and enjoy the vacation
39:08
Speaker 1: of a lifetime. From the moment you arrive, you'll fall
39:11
Speaker 1: naturally in rhythm with the heartbeat of the Islands. There's
39:14
Speaker 1: no money to exchange, and travel from New England could
39:16
Speaker 1: not be easier. Whether you're looking for a romantic getaway
39:20
Speaker 1: or a family vacation, the US Virgin Islands is the
39:23
Speaker 1: perfect place for your next adventure. Go to visit USVII
39:26
Speaker 1: dot com right now for more information and to book
39:29
Speaker 1: your trip. The USVII is America's Caribbean paradise.
39:33
Speaker 4: Go to visit.
39:34
Speaker 1: USVII dot com to make your reservation today. That's visit
39:38
Speaker 1: USVII dot com.
39:41
Speaker 6: There are many different elements to a complete retirement plan,
39:44
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39:46
Speaker 6: your bases. Hi, this is Mike Armstrong from the Armstrong
39:48
Speaker 6: Advisory Group. Our new guide is called your Retirement Preparation Checklist,
39:52
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39:54
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39:57
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40:00
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40:03
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40:17
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40:20
Speaker 6: or you can request it online at Armstrong Advisory dot com.
40:23
Speaker 6: That's Armstrong Advisory dot com.
40:25
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
40:28
Speaker 1: registered investment advisor. Nothing in the ad or in any
40:30
Speaker 1: Armstrong Guide a specific financial, legal or tax advice. Consult
40:33
Speaker 1: your own financial tax into state planning advisors before making
40:36
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
40:39
Speaker 1: advisory services. Your tune to the Legal Exchange with Todd Lutsky.
40:45
Speaker 1: If you are a loved one needs a nursing homestay,
40:47
Speaker 1: call Todd right now at eight sixty six eight four
40:50
Speaker 1: eight five six ninet nine and let him make sure
40:52
Speaker 1: your assets are protected. That's eight six six eight four
40:55
Speaker 1: eight five six nine nine, or visit him online at
40:58
Speaker 1: Legal Exchange Show dot com.
41:01
Speaker 2: Welcome back into the Legal Exchange with Todd Lutsky. I'm
41:04
Speaker 2: Susan Powers, a financial advisor of the Armstrong Advisory Group,
41:08
Speaker 2: and I'm joined of course by Todd Lutsky, a partner
41:11
Speaker 2: with the law firm of Cushing and Dolan with a
41:13
Speaker 2: master's in taxation. So tod we were talking in our
41:17
Speaker 2: last segment. Someone had a question about the mortgage and
41:20
Speaker 2: if you sell your house and what happens to the
41:24
Speaker 2: life estate money. So I want to talk about selling
41:27
Speaker 2: your house because for a lot of people, that's the
41:30
Speaker 2: only asset they'll end up putting into their trust, and
41:33
Speaker 2: their life sure doesn't change when it's just a house
41:36
Speaker 2: in there.
41:36
Speaker 3: That's right.
41:37
Speaker 2: They don't even have to file a tax return if
41:39
Speaker 2: that's just their primary residence. Correct.
41:41
Speaker 3: I like to tell them before I start my lengthy
41:44
Speaker 3: explanation of how the trust works. I say, if we've
41:48
Speaker 3: decided to only put your home and or let's say
41:52
Speaker 3: a non rental vacation home in the trust, let me
41:57
Speaker 3: begin by telling you the set it and forget it.
41:59
Speaker 3: Ida there will be absolutely nothing you need to do
42:04
Speaker 3: unless or until you sell. With that said, then I'll
42:09
Speaker 3: go do the explanation and prove it out right. And
42:12
Speaker 3: it's that easy, that clear, that's the forest for the trees.
42:15
Speaker 2: So I want to talk about that process because a
42:17
Speaker 2: lot of people do end up selling their house when
42:20
Speaker 2: they are older. They might want to downsize, they want
42:22
Speaker 2: to relocate for whatever reason. So, if you have your
42:26
Speaker 2: home in an irrevocable trust, what's the process you have
42:31
Speaker 2: to go through to sell that home because you don't
42:34
Speaker 2: technically own it.
42:35
Speaker 3: No, you don't. And so I think when people say
42:38
Speaker 3: the process, my quick answer is always, if you were
42:43
Speaker 3: to sell your house today and it's not at and
42:46
Speaker 3: it's not in a trust, what's the process. And they
42:50
Speaker 3: would tell me, oh, you got to list the house
42:52
Speaker 3: on the market, you got to get an offer, you
42:54
Speaker 3: got to sign a purchase and sale agreement, you got
42:57
Speaker 3: to prepare a deed transfer the property. And then I say,
43:01
Speaker 3: that's exactly the process when it's in an irrevocable trust.
43:06
Speaker 3: No additional paperwork, no additional legal fees, same same.
43:11
Speaker 2: Same, same, So except if you're not I mean likely
43:15
Speaker 2: you're not your own trustee, right, So.
43:17
Speaker 3: So the one difference is you have to tell the
43:23
Speaker 3: trustee you're right, that's the one difference. Okay, you have
43:27
Speaker 3: to tell the trustee that you want to sell the property.
43:31
Speaker 3: You're directing the show.
43:32
Speaker 2: So they're going to sign the listing paperwork, the trustee, correct,
43:37
Speaker 2: They're going to sign the p and s, they're going
43:39
Speaker 2: to sign the closing documents. Your people will take care
43:42
Speaker 2: of these.
43:43
Speaker 3: Things, absolutely, right, that's exactly what you tell them.
43:46
Speaker 2: What if they say no, What if it's a I
43:47
Speaker 2: want to sell the vacation home and your trustee child says, yeah,
43:52
Speaker 2: I really like.
43:53
Speaker 3: That house, so I know I I don't want to right, I.
43:56
Speaker 2: Don't want to sell that. I want to inherit that
43:58
Speaker 2: if they say no.
43:59
Speaker 3: And I think that's the other difference. Right, when you
44:03
Speaker 3: don't have it in a trust, you don't need anyone's permission.
44:06
Speaker 3: You can just sell it. Well, when it's in a trust,
44:09
Speaker 3: people think that's a difference because you do have to
44:11
Speaker 3: ask the trustee. But we also arm the donor or
44:16
Speaker 3: the moms and dads of the world that create these
44:18
Speaker 3: trusts with the power of removal, the power to remove
44:25
Speaker 3: and replace the trustee any time for no reason, just
44:32
Speaker 3: not with themselves. You.
44:34
Speaker 2: So my son says, no, I'm not signing this because
44:38
Speaker 2: I want to keep this house. I want to inherit it.
44:39
Speaker 2: And I go, yeah, that's nice, you're fired.
44:42
Speaker 3: But don't you have a twin point? I do I have.
44:44
Speaker 2: That's why I had to have a backup for he's
44:47
Speaker 2: one of them. For the leg or something so then
44:50
Speaker 2: I remove my current trust son one, and I go
44:55
Speaker 2: to plan B, and now my other child to the trustee.
45:00
Speaker 2: He gets all the inheritance because the other one disobeyed me.
45:02
Speaker 3: Well, that that's a whole another.
45:04
Speaker 2: Right, you really do keep the power.
45:06
Speaker 3: Yeah, you have two powers. You have the power to
45:08
Speaker 3: remove and replace, and then you have the power to punish.
45:10
Speaker 2: And I do have two powers. Two powers.
45:12
Speaker 3: Boys, that's a really good point. Yes you do, Yes
45:14
Speaker 3: you do. And so, uh, that is exactly how it works.
45:18
Speaker 3: So really, what we've just learned from this, folks, is
45:21
Speaker 3: one of the questions about how these trusts operate in
45:24
Speaker 3: this guide is that their trusts are not really that
45:27
Speaker 3: restrictive and not really that cumbersome, if that's the right word. So, folks,
45:32
Speaker 3: get the guide Power to Unlock irrevocable Medicaid trusts. How
45:37
Speaker 3: they work, question and answer, just like this one with examples.
45:41
Speaker 3: You get to know what you can put in, how
45:43
Speaker 3: you can put it in. You know, living there, selling houses,
45:46
Speaker 3: buying houses, renting houses, investing your money, paying income taxes,
45:52
Speaker 3: you name it. You're going to learn how these trusts
45:55
Speaker 3: work from the inside out. Get the guide eight six
45:59
Speaker 3: six eight for eight five six nine nine or Legal
46:03
Speaker 3: Exchange Show dot com. The Power of Irrevocable Medicaid Trusts
46:07
Speaker 3: eight six six eight for eight five six nine nine
46:12
Speaker 3: or legal Exchange show dot com.
46:14
Speaker 2: Okay, so someone decides to comply, decides he wants to
46:20
Speaker 2: have an inheritance someday from me, So he signs the paperwork.
46:23
Speaker 2: So out goes the house. Yes, what happens to the money?
46:26
Speaker 3: It would all be written to the trustee of the trust.
46:28
Speaker 3: And then you would open a bank account in the
46:30
Speaker 3: name of the trust under an ID number for the trust. Okay,
46:33
Speaker 3: all of which we help get for our clients. And
46:36
Speaker 3: you deposit the check.
46:38
Speaker 2: And then if I want to buy another house.
46:40
Speaker 3: So then you got to go find another house like
46:43
Speaker 3: you normally would no say a difference if it was
46:46
Speaker 3: not in there. Once you do, the trustee then like
46:50
Speaker 3: selling the house, is taking all the steps to buy
46:55
Speaker 3: the house.
46:56
Speaker 2: So in the name of the trust.
46:57
Speaker 3: Offer P and sded doesn't sign the d but then
47:01
Speaker 3: the deed just gets written. He writes a check out
47:05
Speaker 3: to the seller, the seller's attorney prepares a deed transferring
47:09
Speaker 3: it in to the irrevocable trust.
47:13
Speaker 2: So we've changed houses here, So does that do anything
47:16
Speaker 2: to your five year clock.
47:17
Speaker 3: You know it does not. And it's a great question
47:20
Speaker 3: because I always tell clients that, you know, look, we
47:23
Speaker 3: didn't put anything new in, and they're like, oh, yes,
47:25
Speaker 3: we did, right, We just put a new house in,
47:28
Speaker 3: didn't we Like, yeah, but you really didn't put a
47:31
Speaker 3: new house in. What you did is you just changed
47:33
Speaker 3: investments that were already inside.
47:36
Speaker 2: The trust from one house still owned by the trust
47:39
Speaker 2: to a new house.
47:40
Speaker 3: You basically went from real estate investment to cash investment,
47:44
Speaker 3: and then from cash investment to another house investment.
47:48
Speaker 2: And it never went to your procket personally.
47:50
Speaker 3: Never. And that is the key, Susan. That is the
47:53
Speaker 3: absolute key to preventing the clock from resetting. Which is
47:58
Speaker 3: why I tell people, please call us when you're selling
48:03
Speaker 3: your house if you've used us, or call your estate
48:05
Speaker 3: planning attorney who set it up. The realtor's going to
48:09
Speaker 3: tell you, I've got my real estate attorney, guy, let's
48:13
Speaker 3: use him. I get it, but they don't always understand
48:17
Speaker 3: these medicaid rules. No offense to them, they just don't
48:20
Speaker 3: understand the medicaid rules. So use your estate planning attorney
48:24
Speaker 3: to prevent that. And I make one last example, it's
48:27
Speaker 3: like if you had an investment portfolio in the trust
48:30
Speaker 3: and they talked to you, Susan, and you decide to
48:33
Speaker 3: liquidate ten stocks and buy ten new stocks. Yes, did
48:37
Speaker 3: we put anything new in?
48:38
Speaker 2: Nope, we just changed investments.
48:40
Speaker 3: Exactly the same analysis that helps people understand the difference.
48:45
Speaker 2: So what about if I sell my house personally, I
48:48
Speaker 2: get that primary residence capital gains tax exclusion. What happens
48:53
Speaker 2: to that if my primary residence is in the trust?
48:56
Speaker 3: And that's a fair question. So this is where under
49:00
Speaker 3: standing the grand or trust rules are so important. So
49:03
Speaker 3: when you get your your irrevocable trust drafted, that you
49:07
Speaker 3: explain to them and your accountant that these are taxable
49:14
Speaker 3: to that you are the owner for income tax purposes.
49:17
Speaker 3: So in English, that means if you get a five
49:21
Speaker 3: hundred thousand dollars capital gains exclusion when you sell your
49:24
Speaker 3: house not in a trust, you get that same capital
49:27
Speaker 3: gains exclusion when you sell the house if it's in
49:30
Speaker 3: the trust because of its grant or status, which means
49:34
Speaker 3: the gain, even though it doesn't come out of the trust,
49:38
Speaker 3: will be picked up on your personal return less the
49:42
Speaker 3: five hundred thousand dollars exclusion if you're married, two fifty
49:46
Speaker 3: if you're single.
49:48
Speaker 2: Got it and then the same process. I'm assuming if
49:51
Speaker 2: it were a rental property and not your primary right.
49:54
Speaker 3: So if it's a rental property, there is no capital
49:58
Speaker 3: gains exclusion. Right, You're gonna have to pay the capital
50:02
Speaker 3: gains tack, but.
50:02
Speaker 2: The taxes would be the same whether I owned it
50:05
Speaker 2: myself personally or get where in my trust.
50:07
Speaker 3: That's right, exactly right. You'll calculate the capital gains tax
50:11
Speaker 3: the same way, the same basis will be used, and
50:14
Speaker 3: then the capital gain will be reported on your ten
50:16
Speaker 3: forty at the same rate it would have been. Folks,
50:20
Speaker 3: these are some questions about selling living paying taxes. You
50:24
Speaker 3: will learn all the ins and outs of medicaid, irrevocable
50:28
Speaker 3: trust and frequently ask question answer format. Call and get
50:32
Speaker 3: the guide and learn if it's right for you eight
50:35
Speaker 3: six six eight four eight five six nine nine or
50:39
Speaker 3: Legal Exchange show dot com and you can download it
50:42
Speaker 3: right there.
50:43
Speaker 2: Todd Lutsky from the law firm of Cushing and Dolan,
50:46
Speaker 2: thank you so much.
50:47
Speaker 3: Thank you, Susan. It's always a pleasure.
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 Lutske.
51:00
Speaker 1: Elder life planning can be overwhelming, so be sure you're
51:03
Speaker 1: prepared or you could make costly mistakes that affect your
51:06
Speaker 1: overall plan. Cushing and Dolan are experts in elder lawn
51:09
Speaker 1: taxation and they can devise a plan that covers you
51:12
Speaker 1: in every area where issues can arise. Irrevocable trusts so
51:15
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51:17
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51:21
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51:23
Speaker 1: protections that many of us need, like the possibility of
51:26
Speaker 1: eliminating your estate taxes. Their new guide is called Unlocking
51:30
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51:33
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51:36
Speaker 1: eight six six eight four eight five six ninety nine
51:39
Speaker 1: right now and asking for your free guide today. That's
51:42
Speaker 1: eight six six eight four eight five six nine nine,
51:44
Speaker 1: or you can request the guide right now by visiting Legal.
51:47
Speaker 4: Exchange show dot com.
51:49
Speaker 1: The proceeding was paid for and the views expressed are
51:50
Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan INDO
51:53
Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
51:56
Speaker 1: Cushing and Dolan in Armstrong Advisory do not endorse each
51:58
Speaker 1: other and are not affiliated.
52:00
Speaker 7: Planning for retirement is much like cramming for a final exam,
52:03
Speaker 7: and no stone should be left unturned before you're ready
52:06
Speaker 7: to take that step. Hi, this is Chuck Zauta from
52:08
Speaker 7: the Armstrong Advisory Group and we help folks just like
52:10
Speaker 7: you plan for retirement every day. Our new guide is
52:13
Speaker 7: called your Retirement Planning Checklist, and in it will remind
52:16
Speaker 7: you of the various issues that may be most important
52:18
Speaker 7: to your planning process. Let's start with the date you
52:20
Speaker 7: choose to retire. That'll depend on a variety of factors,
52:23
Speaker 7: including your income and your health. You may also want
52:26
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52:29
Speaker 7: the wealth you've already earned, and you'll also want to
52:31
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52:35
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52:36
Speaker 7: cover that cost. Call us today at eight hundred three
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Speaker 7: nine three four zero zero one. That's eight hundred three
52:42
Speaker 7: nine three four zero zero one are requested online at
52:45
Speaker 7: Armstrong Advisory dot com.
52:47
Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
52:49
Speaker 1: registered investment advisor. Nothing in the ad or any Armstrong
52:52
Speaker 1: guide is specific financial, legal or tax advice. Consult your
52:54
Speaker 1: own financial, tax and to state planning advisors before making
52:56
Speaker 1: any investment decisions. Armstrong may contact you to offer investment
52:59
Speaker 1: advisories services. Summer in New England is nearly upon us.
53:02
Speaker 1: The kids are home from school, the sun doesn't set
53:05
Speaker 1: until after eight. It's likely time for you to relax.
53:08
Speaker 4: Well.
53:08
Speaker 1: While you're relaxing, take a few minutes to check out
53:11
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53:14
Speaker 1: the United States Virgin Islands. The USVII has something for everyone,
53:18
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53:21
Speaker 1: beaches of Saint Thomas, or the tranquil quiet of Saint John.
53:24
Speaker 1: Visit one island or all three and enjoy the vacation
53:27
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53:30
Speaker 1: naturally in rhythm with the heartbeat of the islands. There's
53:33
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53:36
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53:39
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53:42
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53:46
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53:49
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53:57
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