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Ask Todd: How to leave assets to beneficiaries · The Financial Exchange Show

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  Speaker 1: This is Ask Todd on the Financial Exchange Radio network.
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  Speaker 1: If you have an existing estate plan or in the
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  Speaker 1: market for one, Todd Lutsky is here to answer your
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  Speaker 1: questions and help you plan for a later life. Ask
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  Speaker 1: Todd is presented by Cushing and Dolan, serving Massachusetts and
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  Speaker 1: New England for more than thirty five years, helping families
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  Speaker 1: with estate and tax planning, medicaid planning, and probate law.
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  Speaker 1: Visit Cushingdolan dot com. Now here's Todd Lutsky.
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  Speaker 2: And as promised for join now by Todd Lutsky from
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  Speaker 2: the law firm of Cushing and Dolan. The segment is
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  Speaker 2: asked Todd, It's your chance to ask Todd your estate
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  Speaker 2: planning questions. Last week, I think we had either four
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  Speaker 2: or five callers. We got through three of them, So
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  Speaker 2: there's some urgency to make sure you're at the front
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  Speaker 2: of the lines that we can get to. Your call.
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  Speaker 2: Phone line is open at eight eight eight to zero
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  Speaker 2: five two two sixty three. That is the studio number
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  Speaker 2: to speak to Todd Ltsky right now about your estate
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  Speaker 2: planning questions. Again, eight eight eight to zero five two
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  Speaker 2: two sixty three is the number to speak to Todd. We
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  Speaker 2: got the phone lines open and are waiting for you
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  Speaker 2: at eight eight eight to zero five two two six three.
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  Speaker 2: Mister Latsky, how are you today?
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  Speaker 3: I am never better? How are you? I?
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  Speaker 2: I'm okay, just okay, okay. Well, so I knew you
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  Speaker 2: were coming in today, So I was. I was talking
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  Speaker 2: to my wife about some estate planning stuff and was like, hey,
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  Speaker 2: I'd like to be cremated. Yeah, you know, it seems
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  Speaker 2: seemed reasonable. She made an appointment for Tuesday, a little
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  Speaker 2: earlier than I was earl But you know, it's this
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  Speaker 2: is this is what it is, Todd. I want to
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  Speaker 2: talk to you today about beneficiaries and basically the right
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  Speaker 2: and wrong ways to get assets to the people you
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  Speaker 2: want them to end up with. Let's say that I
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  Speaker 2: have a child who I want to inherit property and
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  Speaker 2: investment account, whatever it may be. What is the upside
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  Speaker 2: and downside of me just saying hey, I'm gonna put
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  Speaker 2: you as a joint owner on a piece of real
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  Speaker 2: estate or an investment account.
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  Speaker 3: Well, those are two very big important differences in the
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  Speaker 3: type of assets you're mentioning. So so real estate versus
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  Speaker 3: are not versus, but real estate and let's say a
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  Speaker 3: brokerage account. Well, let's start with the brokerage account, because
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  Speaker 3: that one's easier. So this is why we do planning, right, folks.
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  Speaker 3: We don't just throw people's names on our accounts, although
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  Speaker 3: we do, but we shouldn't. And the reason we don't
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  Speaker 3: do that is when you add a child's name as
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  Speaker 3: Chuck indicated to a brokerage account and let's say it's joint, well,
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  Speaker 3: you haven't quite completed the gift yet. That's true because
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  Speaker 3: either party can go into a joint account typically and
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  Speaker 3: take out the money. So until the gift is until
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  Speaker 3: the other party, the child, let's say, actually goes in
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  Speaker 3: and removes the money that would complete the gift. Until then,
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  Speaker 3: you haven't actually made a completed gift. But to me,
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  Speaker 3: I'm scared enough just by the fact that the child
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  Speaker 3: could go in and take the money. So one, that's
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  Speaker 3: a problem. Two, when you add a child's name to it,
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  Speaker 3: you've exposed that child's creditor. That child's creditors can now
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  Speaker 3: access half the account. So one, I've exposed it to
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  Speaker 3: the kid's creditors, which I really don't like. Now I
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  Speaker 3: can tell you the upside of doing that is, of course,
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  Speaker 3: when you pass, it will avoid probate and automatically go
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  Speaker 3: to that surviving joint owner. So I guess that's a positive.
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  Speaker 3: I don't think it is, but it's a positive. The
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  Speaker 3: real problem with that, though, is generally if you don't
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  Speaker 3: have just one child, and you have let's say three kids,
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  Speaker 3: and this particular child happens to live close by, which
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  Speaker 3: is not uncommon, so for convenience purposes, you're thinking, I'm
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  Speaker 3: gonna throw this particular child's name on not only my
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  Speaker 3: brokerage account perhaps but also the bank accounts so that
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  Speaker 3: they can what pay bills and help me out, sure
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  Speaker 3: as I need it done. Well, if you've done that
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  Speaker 3: on two three accounts and you have multiple children and
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  Speaker 3: that then you die while that child likely is just
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  Speaker 3: going to get all those accounts, and you've disinherited effectively
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  Speaker 3: your other children, which you might not have meant to
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  Speaker 3: do so, but but you've done it. So folks, that's
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  Speaker 3: just a few of the problems with it. But that's
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  Speaker 3: why I wouldn't do that. And of course with real
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  Speaker 3: estate it's even worse. You've completed the gift, you know,
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  Speaker 3: you exposed it to the kid's creditors. You can't sell
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  Speaker 3: it without that person's name, I mean, without that joint
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  Speaker 3: owner helping you have the proceeds would go to that
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  Speaker 3: joint owner. I mean, just on and on problems with
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  Speaker 3: putting a child's name on a on a piece of property.
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  Speaker 2: Talking with Todd Lutsky from the law firm of Cushing
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  Speaker 2: and Dolan. If you have a question for Todd, this
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  Speaker 2: is your chance to ask him live on air. Studio
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  Speaker 2: line is opened still with some room onnitor eight to
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  Speaker 2: zero five two two six three. That is the number
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  Speaker 2: to call to speak with Todd Lutsky about your estate
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  Speaker 2: planning questions again. Eight eight eight to zero five two
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  Speaker 2: two six three. We're gonna take a quick break here,
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  Speaker 2: but when we come back, it's gonna be right to
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  Speaker 2: your questions with Todd Lutsky again. That phone number is
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  Speaker 2: eight eight eight to zero five two two six three.
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  Speaker 2: One more time, it's eight eight eight to zero five
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  Speaker 2: two two sixty three.
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  Speaker 1: Ask Todd with Todd Lutsky every Wednesday at ten thirty
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  Speaker 1: only here on the Financial Exchange Radio Network. You're listening
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  Speaker 1: to Ask Todd with Todd Lutsky on the Financial Exchange
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  Speaker 1: Radio Network.
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  Speaker 2: Still got some room on the phone lines if you'd
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  Speaker 2: like to speak Todd Lutsky, we got plenty of space
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  Speaker 2: so that you can ask your estate planning questions. Eight
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  Speaker 2: eight eight to zero five two two sixty three is
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  Speaker 2: the number again, it's eight eight eight to zero five
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  Speaker 2: two two sixty three. Let's go to Carleen from Florida. Carleen,
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  Speaker 2: what's your question for Tom Lutsky?
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  Speaker 4: I have an irrevocable trust and my nephew is the trustee,
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  Speaker 4: and I would like to get an equity line. Is
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  Speaker 4: there any way that I can do that?
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  Speaker 5: So?
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  Speaker 3: Uh, how long ago did you set this trust up?
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  Speaker 4: What was in twenty fourteen?
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  Speaker 3: Two thy fourteen? And your house? Is this your primary
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  Speaker 3: residence that you put in?
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  Speaker 6: Yeah?
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  Speaker 3: Okay? And and by chance, when you set this trust
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  Speaker 3: up and deeded the property into this trust, do you
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  Speaker 3: recall anybody using the word life estate reserving a life
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  Speaker 3: estate for you.
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  Speaker 4: That's what my tax to say. It says, my niece
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  Speaker 4: and two nephews, it says, I can't even think, is
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  Speaker 4: that awful? SND irrevocable? Wait a minute, I think, yeah, yeah, you'red.
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  Speaker 5: Irrevocable trust, irrevocable trust twenty fourteen and it does and
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  Speaker 5: above that it, says Colleen mcgloftin that's me Life of
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  Speaker 5: State snd Irrevocable Trust of twenty fourteen.
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  Speaker 3: Okay, well that's very helpful, thank you. So a couple
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  Speaker 3: of things. When you reserve a life estate, it allows
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  Speaker 3: you not only to live there, but it allows you
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  Speaker 3: to keep existing mortgages if you had one when you
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  Speaker 3: put it in, which you may not have, but to
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  Speaker 3: get a revert to get a mortgage now you can try.
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  Speaker 3: I can't tell you the bank's going to do it.
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  Speaker 3: Every bank's different, but you're ultimately going to need the
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  Speaker 3: trustee of the trust to sign off and the life
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  Speaker 3: tenant to sign off on the mortgage. Okay, so you're
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  Speaker 3: gonna need both and and I don't know that the
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  Speaker 3: bank will actually do that. So the one thing I
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  Speaker 3: always tell clients when they're setting up these trusts are
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  Speaker 3: you can't borrow against the property without creating, you know,
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  Speaker 3: without resetting that five year clock. So you're way beyond
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  Speaker 3: the five year medicaid clock. So your house is protected.
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  Speaker 3: So you need to think about it. If you've if
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  Speaker 3: you've not, if you're doing this in the future, for
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  Speaker 3: everybody else listening, you reserve a life estate like Carlene did, right,
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  Speaker 3: but you get the reverse mortgage, or not the reverse mortgage,
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  Speaker 3: the the home equity line of credit established before you
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  Speaker 3: create the trust, and that way you then transfer the
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  Speaker 3: encumbered property to the trust reserve. The life of state
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  Speaker 3: preserves the home equity line of credit even though you
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  Speaker 3: may not have borrowed against it in twenty fourteen in
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  Speaker 3: this example when the trust was set up, but you
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  Speaker 3: established it. So now when Carlene says I'd like to borrow,
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  Speaker 3: she could because she would have already had the home
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  Speaker 3: equity line of credit with that life estate, and she
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  Speaker 3: could tap the mortgage anytime she wants and it doesn't
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  Speaker 3: trigger the du on sale clause. But unfortunately, Carleen, it
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  Speaker 3: sounds to me like you did not do that prior
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  Speaker 3: to putting the property into the trust. So in order
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  Speaker 3: for you to get a home equity line now likely
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  Speaker 3: you're going to have to deed the property out or
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  Speaker 3: at least the remainder interest out of the trust to
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  Speaker 3: the kid's nieces, nephews, whoever you plan on leaving it to,
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  Speaker 3: and keep your life estate, and then all of you
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  Speaker 3: could go to the bank and get a mortgage and
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  Speaker 3: not reset the clock. If you want to reset the clock,
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  Speaker 3: then you need to take the property out, get it
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  Speaker 3: to a child or a beneficiary whoever's listed, and have
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  Speaker 3: them give it back to you, get your mortgage, put
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  Speaker 3: it in the trust, reserve a life estate. The downside
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  Speaker 3: with that is you're resetting your five year clock. Depending
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  Speaker 3: on how old you are, you may not want to
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  Speaker 3: do that. So it's a very good question and hopefully
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  Speaker 3: that answered it for you. But folks, interestingly enough, it's
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  Speaker 3: a new month and we've got a new guide and
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  Speaker 3: doing these life estates, which was the old month's guide.
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  Speaker 3: You know, you kind of give up. It's a way
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  Speaker 3: of leaving assets to family members, but the guide this
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  Speaker 3: month is how to leave assets to beneficiaries whoever that
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  Speaker 3: might be. What's the best way to do it? Is
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  Speaker 3: it outright? Is it staggered distributions? Do I want to
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  Speaker 3: control it for you know, the divorce proof situation. Do
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  Speaker 3: I want to get it to a next generation a
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  Speaker 3: state tax free? Do I have children that are special needs?
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  Speaker 3: I mean, there's so much to think about when you're
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  Speaker 3: leaving your assets to your children, and this guide will
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  Speaker 3: get you there. Starting your estate planning and you're thinking, well,
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  Speaker 3: how should I leave my assets? Get the guide eight
• 11:06
  Speaker 3: six six eight four eight five six nine nine or
• 11:10
  Speaker 3: Legal Exchange Show dot com again eight six six eight
• 11:14
  Speaker 3: four eight five six nine nine or Legal Exchange Show
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  Speaker 3: dot Com.
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  Speaker 2: Got another one for you, Tod. Let's go to Pam
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  Speaker 2: in Maine. Pam, what's your question for Todd Lutsky.
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  Speaker 6: Well, it's exactly what he needs to open the show with.
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  Speaker 6: I was just at my daughter's place in New York
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  Speaker 6: and when we were going over everything, and there's just
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  Speaker 6: one daughter and myself at this point. Huh, don't anticipate
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  Speaker 6: there being anymore. She does have a husband, and I
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  Speaker 6: have many assets over many different venues, approximately a million.
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  Speaker 7: Dollars okay, but the house is the main thing for her.
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  Speaker 7: She's like, I don't want to sell my childhood home
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  Speaker 7: and she doesn't want me to lose it basically to
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  Speaker 7: you know, in the event that I have to go
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  Speaker 7: into a home.
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  Speaker 3: Yes, so you know, it sounds like the house is
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  Speaker 3: a big item and it is for a lot of people,
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  Speaker 3: and so I think the type of planning that you
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  Speaker 3: would need to do to protect it for her, assuming
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  Speaker 3: you want to protect it for her. Again, we do
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  Speaker 3: what the client wants not always what the children want.
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  Speaker 3: So I want you to know that you would be
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  Speaker 3: the decision maker. But if that is something you wish
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  Speaker 3: to do, Yes, with an estate worth around a million
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  Speaker 3: dollars in the house worth some portion of that, I
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  Speaker 3: absolutely would transfer it to an irrevocable medicaid trust. Whether
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  Speaker 3: we reserve a life estate or not would be something
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  Speaker 3: we would determine. Then putting it in there is going
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  Speaker 3: to keep you in control. Can't get into every detail today,
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  Speaker 3: but you'd be ninety eight percent in control of that house.
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  Speaker 3: But five years down the road, if you got sick
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  Speaker 3: and went in the nursing home, it would be protected
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  Speaker 3: for your daughter, and then your daughter could live there,
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  Speaker 3: or you could control it through the trust for your daughter,
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  Speaker 3: any number of those things. So hopefully that helps a little.
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  Speaker 3: And yes, you're on the right track. That's exactly the
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  Speaker 3: way I would proceed.
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  Speaker 2: Got one more for you, Todd. Let's go to David
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  Speaker 2: in Tucker's This Boston or Brewster Boston. David in Boston.
• 13:13
  Speaker 2: You're up with Todd.
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  Speaker 8: Hi, Tod, thanks for taking the call. Just a quick question.
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  Speaker 8: I'm single and as I'm getting older, all right, to
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  Speaker 8: avoid probate what I want to do. I have a
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  Speaker 8: very close friend that I want to leave my four
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  Speaker 8: oh one k.
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  Speaker 5: Assets to.
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  Speaker 8: Yep, I'm going to leave my condos to my brother,
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  Speaker 8: but to avoid probate. My understanding is that if I
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  Speaker 8: put that friend as a beneficiary, that friend will be
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  Speaker 8: able to have access to those assets, provided he's able
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  Speaker 8: to get a certified death certificate.
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  Speaker 3: So so let's you're talking about the four oh one
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  Speaker 3: k one K. Yeah, yeah, if you name a designated
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  Speaker 3: beneficiary to four h on k, they should be able
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  Speaker 3: to walk in to the institution. I suppose if they
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  Speaker 3: have a death certificate to prove that you're deceased, and
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  Speaker 3: then they'll show their driver's license so they know who
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  Speaker 3: they are. Then they'll go pull the form, the designated
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  Speaker 3: beneficiary form that the financial institution has and make sure
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  Speaker 3: it matches who's sitting in front of them, and if
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  Speaker 3: it does, I think that they'll be able to just
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  Speaker 3: take take those assets. Not so easy though with the condo, right,
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  Speaker 3: what do you plan on doing with that?
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  Speaker 8: Well that that I'm not sure just yet. But going
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  Speaker 8: back to the going back to the UH four one K.
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  Speaker 8: Do I need a certified certificate?
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  Speaker 1: Yeah?
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  Speaker 3: Yeah, just get a certify that's rearially the only kind
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  Speaker 3: you can get. Get him a certified death certificate. And
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  Speaker 3: well he'll get it. He'll just go to the registry.
• 14:45
  Speaker 3: He'll just go to the to the the you know,
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  Speaker 3: to the board there and pick it up. So, yes,
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  Speaker 3: so I hope that helps a little. Though we do
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  Speaker 3: got a we got a scoot. But yeah, the condo
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  Speaker 3: would be my only comment. Pay attention to the condo.
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  Speaker 3: Probably use a trust for that.
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  Speaker 2: Mister Letsky, thank you how much for joining us today.
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  Speaker 3: My pleasure. Thank you.
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  Speaker 1: This has been asked Todd on the Financial Exchange Radio
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  Speaker 1: network Aske Todd with Todd. Lutsky has been presented by
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  Speaker 1: Cushing and Dolan, serving Massachusetts and New England for more
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  Speaker 1: Cushing and Dolan. Armstrong Advisory does not provide any legal
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