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Why Your Estate Plan Needs the Right Words · The Legal Exchange

• 0:00
  Speaker 1: This is The Legal Exchange with Todd Lutzke from the
• 0:04
  Speaker 1: law firm of Cushing & Dolan and Susan Powers of
• 0:07
  Speaker 1: the Armstrong Advisory Group. Each week, Todd and Susan will
• 0:10
  Speaker 1: discuss many topics, including estate planning, how to avoid probate,
• 0:13
  Speaker 1: and protecting your money from a nursing home. If you
• 0:16
  Speaker 1: need assistance in any of these areas or have a
• 0:18
  Speaker 1: question about another issue that may affect your future, call
• 0:21
  Speaker 1: 866-848-5699 to make an appointment. That's 866-848-5699. Operators are standing by. Now,
• 0:31
  Speaker 1: here are your hosts, Todd Lutzke and Susan Powers.
• 0:38
  Speaker 2: Welcome into The Legal Exchange with Todd Lutzke. I'm Susan Powers,
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  Speaker 2: a financial advisor with the Armstrong Advisory Group, and I'm
• 0:45
  Speaker 2: joined by Todd Lutzke, a partner with the law firm
• 0:47
  Speaker 2: of Cushing & Dolan with a master's in taxation.
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  Speaker 3: Welcome, Todd.
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  Speaker 4: How are you today?
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  Speaker 3: Never better, and you?
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  Speaker 2: I'm great, thank you. What do you have for us
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  Speaker 2: this week?
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  Speaker 3: Of good cases, actually. One, you know, how do you
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  Speaker 3: treat jointly held property if it's held for convenience only?
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  Speaker 3: And what are the ramifications of this? So it's an
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  Speaker 3: interesting situation where this family had, the woman had two
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  Speaker 3: daughters and she actually created this particular language and then
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  Speaker 3: created a trust. And it just didn't work out exactly
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  Speaker 3: the way you would think with these fidelity accounts that
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  Speaker 3: she had, these investment accounts. So again, be very careful
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  Speaker 3: when you're defining who you want to get what and
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  Speaker 3: actually define them so that that can happen. And that's
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  Speaker 3: really what we're going to learn from here. It's literally
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  Speaker 3: a lot about drafting, but it's an interesting fact pattern.
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  Speaker 3: I think you'll enjoy that one. The next one, and
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  Speaker 3: by the way, that's in Illinois. So we're in an
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  Speaker 3: Illinois appellate court case there. Then we head over to
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  Speaker 3: Mississippi And this is an interesting one for a child
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  Speaker 3: born out of wedlock. So there is a wrongful death situation,
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  Speaker 3: married 48 years, two kids. All of a sudden, when
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  Speaker 3: they file the wrongful death claim, someone files a claim saying, oh, no, no,
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  Speaker 3: there's this kid that you don't know about. And does
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  Speaker 3: this child now become a beneficiary? And this is of
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  Speaker 3: the father, the child of the father. become a beneficiary
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  Speaker 3: for this wrongful death claim in the estate because they
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  Speaker 3: are really a child. Never mind the fact that there
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  Speaker 3: was 48 years of marriage and no estate planning, not
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  Speaker 3: even a will. Come on. I mean, what's going on here, folks? Anyways, folks,
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  Speaker 3: that's the kind of stuff that does happen when we
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  Speaker 3: don't plan. I'm going to go through those examples. However,
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  Speaker 3: not only is it important to define your beneficiaries, and or,
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  Speaker 3: as we said, make sure you figure out how you
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  Speaker 3: own your assets, like jointly held accounts versus putting things
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  Speaker 3: in trust. Well, when you're doing your planning, you need
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  Speaker 3: to think about an IRA because that's the most complicated
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  Speaker 3: asset to fit into your estate plan. It has income
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  Speaker 3: tax ramifications. It has estate tax ramifications. And if you're
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  Speaker 3: in a situation where you're trying to protect it from
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  Speaker 3: the nursing home, it has nursing home implications. How do
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  Speaker 3: you protect it, right? How do you deal with it?
• 3:18
  Speaker 3: Get this guide, folks, Naming Your Estate an IRA Beneficiary.
• 3:22
  Speaker 3: It will help you do all of these things. It
• 3:26
  Speaker 3: will help you not create adverse income tax consequences. It
• 3:30
  Speaker 3: will help you show you how to shelter it for
• 3:32
  Speaker 3: estate tax purposes, maybe leaving it directly to the spouse
• 3:35
  Speaker 3: is not the way to go, and then show you
• 3:37
  Speaker 3: how to set up a testamentary trust. We don't talk
• 3:40
  Speaker 3: about those a lot. Coupled with your estate plan where
• 3:43
  Speaker 3: you can have that asset end up there through the estate,
• 3:47
  Speaker 3: and protected from the nursing home without a five-year waiting period. Folks,
• 3:51
  Speaker 3: call and get the guide, 866-848-5699 or LegalExchangeShow.com. It is
• 3:59
  Speaker 3: the end of the month. It's the last chance to
• 4:01
  Speaker 3: get the guide, 866-848-5699 or LegalExchangeShow.com. You can download it
• 4:09
  Speaker 3: there or go to Cushing Dolan PC, our Instagram page,
• 4:13
  Speaker 3: for more.
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  Speaker 1: Illinois.
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  Speaker 3: Shall we head there? How to treat jointly held. So
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  Speaker 3: we have Elaine. She has two daughters, Marcia and Michelle. 2018,
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  Speaker 3: Elaine executes a will that had provisions in it for
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  Speaker 3: jointly held accounts stating that any account with only Elaine's
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  Speaker 3: funds held in it in a joint account situation are
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  Speaker 3: held for convenience purposes only. And were to be distributed
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  Speaker 3: as part of her residuary estate.
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  Speaker 2: So any account, not just bank accounts. Any account.
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  Speaker 3: Any account that's jointly held with her assets only. That
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  Speaker 3: means it's not treated as joint. It's going to go
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  Speaker 3: through the will. It's not going to avoid probate, just
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  Speaker 3: so you know what that means, folks. Okay. Well, in 2019,
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  Speaker 3: Elaine also then executed a revocable trust. Remember, 2018, she
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  Speaker 3: did the will. 2019, she does a revocable trust that
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  Speaker 3: also has that similar provision regarding jointly held accounts in it,
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  Speaker 3: convenience only. Elaine had a jointly held Fidelity account with
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  Speaker 3: all her money in it. So this is one that
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  Speaker 3: would apply. Well, in 2020, Elaine died. And Marcia was
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  Speaker 3: appointed PR. And during the inventory she filled out, It
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  Speaker 3: did not include any of the Fidelity accounts, which is
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  Speaker 3: not true.
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  Speaker 5: Right.
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  Speaker 3: Because if it was a jointly held account, it would
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  Speaker 3: normally avoid probate, but it won't this time because of
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  Speaker 3: that language. Well, the trustee of Elaine's trust filed a
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  Speaker 3: complaint alleging that Elaine's intent was to distribute the Fidelity
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  Speaker 3: account and one property to Michelle, the other daughter. who
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  Speaker 3: was in fact the sole beneficiary of the revocable trust.
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  Speaker 3: So remember, this asset could end up in that trust
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  Speaker 3: with a poor overwill.
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  Speaker 6: Yeah.
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  Speaker 3: Although we'll get to that, see if that actually happens. Okay. Well, Marcia,
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  Speaker 3: of course, isn't happy with that. So she objects, moving
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  Speaker 3: to dismiss that allegation that Michelle filed because Michelle was
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  Speaker 3: a necessary party to the action and wasn't named.
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  Speaker 6: Yeah.
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  Speaker 3: Well, the district court denied Marcia's motion and said, listen,
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  Speaker 3: a trustee has a right to file or bring an
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  Speaker 3: action on behalf of the trust without joining the person
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  Speaker 3: for whose benefit the action was brought.
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  Speaker 6: Right.
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  Speaker 4: They're in charge of the trust.
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  Speaker 3: So go away, Marcia. Seems like Michelle's going to get
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  Speaker 3: these assets. Okay. What do we learn from this? Well,
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  Speaker 3: We need to figure out what convenience language means and
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  Speaker 3: why we use it over Cushing and Dolan. We do
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  Speaker 3: this all the time. We have language that says, you know,
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  Speaker 3: the goal of such language is to prevent meaning any
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  Speaker 3: jointly held account is treated as, as disregarded for jointly
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  Speaker 3: held purposes. It's convenience only put it in the probate estate. Okay, fine.
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  Speaker 3: So that's where it would go, which then it would
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  Speaker 3: be governed by the will. Um, And so this language
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  Speaker 3: is designed to prevent accidentally disinheriting a child, right? Think
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  Speaker 3: about it, right? If, for example, you have one child
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  Speaker 3: who lives close by and you want that child to
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  Speaker 3: help with all the bills, et cetera, well, this would
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  Speaker 3: allow you to do that. But if you die with
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  Speaker 3: a joint account without that convenience language, then that account
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  Speaker 3: will avoid probate, good, and it will go all to
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  Speaker 3: the surviving joint owner. Well, if you have three kids
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  Speaker 3: that otherwise should have inherited, they're out.
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  Speaker 1: Right.
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  Speaker 3: So you accidentally disinherited those three kids. Well, the language
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  Speaker 3: we put in would cause the asset to be, or
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  Speaker 3: this language even in this case, would cause the asset
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  Speaker 3: to be a probate asset, ignoring the joint language and
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  Speaker 3: allowing the will to address where it goes, which is
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  Speaker 3: what was the design here. Now, if it was a
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  Speaker 3: pour over will, if that's in place, then the will
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  Speaker 3: would put all the assets into the trust. Interestingly enough,
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  Speaker 3: Michelle was the sole beneficiary of the assets in the trust,
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  Speaker 3: which seemingly was the intent of mom in this case.
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  Speaker 3: So if there was a pour over will in place,
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  Speaker 3: the assets then would go into the trust and then
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  Speaker 3: the terms of the trust would direct where they go. Now,
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  Speaker 3: interesting here, the trust was created after the will.
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  Speaker 5: Right.
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  Speaker 3: So I'm not sure you can have an effective pour
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  Speaker 3: over will into a trust that doesn't exist when the
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  Speaker 3: will is created.
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  Speaker 4: And it doesn't.
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  Speaker 3: It existed later.
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  Speaker 4: Speak to it.
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  Speaker 3: But I don't know that you can do that.
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  Speaker 6: Right.
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  Speaker 3: Even though the will doesn't technically exist until you die.
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  Speaker 3: And on the date of death, the trust did exist.
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  Speaker 3: But I don't think you can draft a will pouring
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  Speaker 3: into a trust that doesn't exist.
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  Speaker 7: Right.
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  Speaker 3: So I think they're going to have a problem with
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  Speaker 3: that in and of itself. So in any event, I
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  Speaker 3: do think the assets ultimately will find their way either
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  Speaker 3: to the will. Now, if the will... doesn't work and
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  Speaker 3: doesn't pour it into the trust, then it may not
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  Speaker 3: go equally. I mean, it may not go all to Michelle,
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  Speaker 3: but if it gets into the will and the will
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  Speaker 3: says equally to all kids, well, then Marcia might be
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  Speaker 3: able to get something. So it's going to be a
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  Speaker 3: function of that.
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  Speaker 4: What a nightmare. It should have just been in our trust.
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  Speaker 3: Unbelievable. In any case, folks, a no contest clause should
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  Speaker 3: have also been added here. You don't want to forget that.
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  Speaker 3: If you're potentially treating people unequally, put the no contest
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  Speaker 3: clause in here. They didn't address it. I'm just throwing
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  Speaker 3: it out there. Folks, call and get the guide. It's
• 10:10
  Speaker 3: the end of the month. Do your planning. And when
• 10:12
  Speaker 3: you're doing your planning, figure out how to fit your
• 10:14
  Speaker 3: IRA into your estate plan. 866-848- 5699 or LegalExchangeShow.com.
• 10:23
  Speaker 2: You've been listening to Todd Lutzke, a partner with the
• 10:25
  Speaker 2: law firm of Cushing and Dolan. I'm Susan Powers, a
• 10:29
  Speaker 2: financial advisor with the Armstrong Advisory Group. We've got much
• 10:32
  Speaker 2: more to come when we return to The Legal Exchange
• 10:35
  Speaker 2: with Todd Lutzke.
• 10:37
  Speaker 1: Leaving your IRA to your children may seem like the
• 10:40
  Speaker 1: obvious choice, but how they receive that money could have
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  Speaker 1: important tax consequences. Cushing and Dolan has a new guide.
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  Speaker 1: Why name your estate an IRA beneficiary? Under current rules,
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  Speaker 1: money within 10 years. That could mean taking retirement distributions
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  Speaker 1: larger tax bill. That's one reason why your IRA beneficiary
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  Speaker 1: Beneficiary by calling 866-848-5699.
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  Speaker 3: That's 866-848-5699.
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  Speaker 1: Or you can request the guide online at LegalExchangeShow.com. The
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  Speaker 1: proceeding was paid for and the views expressed are solely
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  Speaker 2: You've been saying one more year for the past five years,
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  Speaker 2: plans so they can better understand their income, investments, taxes,
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  Speaker 1: advisory services. Who you name as the beneficiary of your
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  Speaker 1: You're listening to The Legal Exchange with Todd Lutzke, an
• 13:43
  Speaker 1: expert in elder life planning and taxation. Need help with
• 13:46
  Speaker 1: your estate plan? Call Todd right now and make an appointment. 866-848-5699.
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  Speaker 1: That's 866-848-5699.
• 13:55
  Speaker 2: Welcome back into The Legal Exchange with Todd Lutzke. I'm
• 13:58
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 14:02
  Speaker 2: and I'm joined by Todd Lutzke, a partner with the
• 14:04
  Speaker 2: law firm of Cushing & Dolan with a master's in taxation.
• 14:09
  Speaker 4: Where are we headed now, Todd?
• 14:10
  Speaker 3: Mississippi. We have an appellate court case down there to
• 14:13
  Speaker 3: deal with children born out of wedlock. Happens. Oftentimes the
• 14:18
  Speaker 3: mother knows because they were there for the birth. But
• 14:22
  Speaker 3: sometimes the father may not know. So in this case,
• 14:26
  Speaker 3: we've got a situation where Dr. Larry Gibson died at
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  Speaker 3: age 71 after being struck by a logging truck. Janet,
• 14:36
  Speaker 3: his wife of 48 years. Long time. Good fact to
• 14:40
  Speaker 3: keep in the back of your mind. They had two kids.
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  Speaker 3: She immediately files for an appointment as administrator. Ruh-roh, what
• 14:48
  Speaker 3: does that mean? They didn't even have a will.
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  Speaker 7: Wow.
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  Speaker 3: Okay, and she also wanted to be the administrator and
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  Speaker 3: to bring a wrongful death action, which makes sense, right?
• 14:58
  Speaker 3: And the court, of course, granted both petitions. She's now
• 15:01
  Speaker 3: the administrator, and you can go forward with the wrongful
• 15:04
  Speaker 3: death action. Janet then files an affidavit attesting to the
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  Speaker 3: fact that she diligently searched for anyone who would have
• 15:13
  Speaker 3: a claim against the estate and went out of her
• 15:15
  Speaker 3: way also to file a publication in the local newspaper
• 15:18
  Speaker 3: telling everybody that so-and-so died and file your claim against
• 15:22
  Speaker 3: the estate. Well, six months later, which is kind of
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  Speaker 3: late in this case. Remember, this is state by state, folks.
• 15:32
  Speaker 3: Every state is different in terms of deadlines to file
• 15:35
  Speaker 3: a claim. Six months later, Naomi files a petition for
• 15:42
  Speaker 3: her minor child, MV, we'll call him, who was six
• 15:46
  Speaker 3: at the time, for determination of heirship, alleging MV is
• 15:49
  Speaker 3: Larry's son.
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  Speaker 2: The good doctor is not the good doctor after all.
• 15:54
  Speaker 3: Well, Janet denies any knowledge of MV. Probably true. Or
• 16:00
  Speaker 3: that Larry had any other heirs.
• 16:02
  Speaker 2: Period.
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  Speaker 5: Period.
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  Speaker 3: They're married 48 years. It's kind of hard to keep
• 16:06
  Speaker 3: that a secret, but we'll see. No action was taken
• 16:10
  Speaker 3: on Naomi's petition for over a year. Janet then filed
• 16:14
  Speaker 3: a petition to determine Larry's heirs and to dismiss Naomi's petition,
• 16:18
  Speaker 3: arguing that it was time barred. Well, one year after that,
• 16:22
  Speaker 3: Naomi's file files to exhume the body and determine the
• 16:26
  Speaker 3: DNA and paternity. The court, after a lengthy hearing, determined
• 16:31
  Speaker 3: that any wrongful death beneficiaries were The only, excuse me,
• 16:36
  Speaker 3: wrongful death beneficiaries were Janet and her two daughters. No
• 16:41
  Speaker 3: evidence Janet ever knew about MV or intended to commit
• 16:45
  Speaker 3: fraud by concealing it. Never came up. Naomi, on the
• 16:49
  Speaker 3: other hand, had knowledge of Larry's death and did not
• 16:52
  Speaker 3: seek paternity within 90 days of the publication.
• 16:56
  Speaker 7: Right.
• 16:57
  Speaker 3: Sorry, Naomi, your time barred. And MV, you're out of luck.
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  Speaker 3: Not an heir. in the estate. Probably the right decision,
• 17:08
  Speaker 3: but would have been interesting had she filed timely and
• 17:11
  Speaker 3: we would have been able to see whether or not
• 17:14
  Speaker 3: he was an heir. Although you'll see some of the
• 17:18
  Speaker 3: language that we use at Cushing and Dolan to kind
• 17:20
  Speaker 3: of prevent this from happening. Again, it's all about drafting.
• 17:23
  Speaker 3: It's all about planning, folks, making sure you use the
• 17:26
  Speaker 3: right words to cover what you want to have happen.
• 17:29
  Speaker 3: And when you're doing your planning, it's not only about planning,
• 17:31
  Speaker 3: but it's about funding your trust and learning how to
• 17:34
  Speaker 3: handle assets that are unique to your situation. And most
• 17:38
  Speaker 3: people have an IRA. And IRAs are complicated. So learn
• 17:43
  Speaker 3: how to deal with them from an income tax standpoint.
• 17:46
  Speaker 3: Leaving it to the spouse might not shelter it for
• 17:48
  Speaker 3: estate tax purposes. Maybe there's a better way to do that.
• 17:52
  Speaker 3: And of course, leaving it to each other does not
• 17:54
  Speaker 3: ever protect it from the cost of long-term care because
• 17:56
  Speaker 3: it remains in one of your names. at risk. You
• 18:00
  Speaker 3: want to prevent that from happening. You can learn how
• 18:04
  Speaker 3: to name the estate, the beneficiary coupled with a testamentary trust,
• 18:08
  Speaker 3: and you can have it sheltered for estate taxes and
• 18:11
  Speaker 3: immediately protected from the cost of long-term care upon the
• 18:15
  Speaker 3: death of the participant. Of course, provided they were 73
• 18:18
  Speaker 3: or had reached their required beginning date by that time, folks,
• 18:23
  Speaker 3: lots of information to get and understand how it works.
• 18:26
  Speaker 3: It's the end of the month. It's the last chance
• 18:28
  Speaker 3: to get the guide. Call and get it 866-848-5699 or LegalExchangeShow.com.
• 18:36
  Speaker 3: IRAs are difficult assets. 866-848-5699 or LegalExchangeShow.com. And you can
• 18:44
  Speaker 3: also go to Cushing Dolan PC Instagram page for more.
• 18:50
  Speaker 3: What can we learn here?
• 18:51
  Speaker 4: Lots to be learned here.
• 18:52
  Speaker 5: Whoa.
• 18:53
  Speaker 3: So let's take it slow. So when you're drafting, you've
• 18:58
  Speaker 3: got to define kids, stepkids, adopted kids, afterborn, out of marriage.
• 19:04
  Speaker 3: I mean, all these issues come up, right? So we
• 19:07
  Speaker 3: have language built into the trusts that state, if you're adopted,
• 19:12
  Speaker 3: you are a child or issue of the donor. Remember,
• 19:16
  Speaker 3: we don't use kids' names. We use words like descendant, child, issue.
• 19:21
  Speaker 3: These are legal terms of art that catch children. A child,
• 19:25
  Speaker 3: a grandchild, a great-grandchild, a great-great-grandchild. I mean, that's what
• 19:29
  Speaker 3: that means. Well, in that definition would be an adopted
• 19:33
  Speaker 3: child because we define it. Okay. So this language helps
• 19:38
  Speaker 3: us understand how and why stepkids are out.
• 19:42
  Speaker 4: Unless they include them specifically, right?
• 19:44
  Speaker 5: Yeah.
• 19:45
  Speaker 3: So for second marriages, folks, if you're listening and you
• 19:49
  Speaker 3: want to include in your estate children of your second marriage,
• 19:58
  Speaker 3: they must be listed in the definition section specifically defining
• 20:03
  Speaker 3: them as a child or they're out.
• 20:06
  Speaker 5: Okay.
• 20:06
  Speaker 3: So we do have language in our thing that says,
• 20:08
  Speaker 3: you know... With regard to child, children, and issue and
• 20:11
  Speaker 3: similar words, it shall specifically include, and we list the names.
• 20:16
  Speaker 3: If you don't do that, they will not be captured
• 20:20
  Speaker 3: in the term of art known as issue, child, children.
• 20:25
  Speaker 3: They will not be captured in there. Okay. And they
• 20:28
  Speaker 3: will be out.
• 20:29
  Speaker 1: Okay.
• 20:30
  Speaker 3: Well, we also have language that states a child born
• 20:33
  Speaker 3: out of wedlock. Separate paragraph. A child born out of wedlock,
• 20:40
  Speaker 3: like in the case here, is deemed to be the
• 20:43
  Speaker 3: child of the mother only unless they marry each other
• 20:48
  Speaker 3: or there is a voluntary paternity action. Hmm. Seemed to
• 20:54
  Speaker 3: me that this language would have been very helpful to
• 20:56
  Speaker 3: have in this case.
• 20:57
  Speaker 1: Yeah.
• 20:58
  Speaker 3: If you have that in this case, it would seem
• 21:00
  Speaker 3: to me that the initial coverage or the initial protection
• 21:04
  Speaker 3: would be Larry is a man. Therefore, this child born
• 21:11
  Speaker 3: out of wedlock is already deemed not to be his kid.
• 21:15
  Speaker 3: It starts out that way because of the language we
• 21:18
  Speaker 3: have in our document.
• 21:18
  Speaker 4: Unless he wanted to include him.
• 21:20
  Speaker 3: Unless he married.
• 21:21
  Speaker 4: Or wanted to include him.
• 21:25
  Speaker 3: Well, there's three things. Either A, marry. Yeah. B, say,
• 21:29
  Speaker 3: I want a voluntary paternity. Or C, oh, I'm. If
• 21:36
  Speaker 3: you acknowledge the child, then there's no issue, right?
• 21:38
  Speaker 6: Right.
• 21:39
  Speaker 3: And you can say, I actually know of MV, and
• 21:42
  Speaker 3: I want to take care of MV, and I define
• 21:44
  Speaker 3: MV as a child in my estate, then that would
• 21:46
  Speaker 3: be fine, too.
• 21:47
  Speaker 4: But don't tell my wife until I'm dead.
• 21:49
  Speaker 5: I know.
• 21:49
  Speaker 3: This is really complicated.
• 21:50
  Speaker 5: Come on, man.
• 21:51
  Speaker 2: 48 years, you're married.
• 21:53
  Speaker 3: Complicated situation. And it said the MV was six.
• 21:56
  Speaker 5: I know.
• 21:57
  Speaker 3: At the time of his death. So I'm starting to wonder.
• 22:02
  Speaker 3: He must have been pretty old.
• 22:04
  Speaker 5: Yeah, so.
• 22:06
  Speaker 3: These are kind of things that happen, folks. But again,
• 22:08
  Speaker 3: good drafting, good language helps prevent these things from happening
• 22:12
  Speaker 3: and protect you.
• 22:13
  Speaker 2: Having a plan.
• 22:14
  Speaker 4: Just have a plan.
• 22:15
  Speaker 1: Yeah.
• 22:15
  Speaker 3: And that was my next point, Susan. I think you're
• 22:17
  Speaker 3: spot on here. It's strange here. I said, you're married
• 22:19
  Speaker 3: 48 years and you never did an estate plan. Not
• 22:22
  Speaker 3: even a will.
• 22:23
  Speaker 5: Right.
• 22:23
  Speaker 3: I'm like, or if you did, you're listed as administrator.
• 22:29
  Speaker 3: So there was no will. That's what I have to assume.
• 22:31
  Speaker 3: But at least if you did a plan. You could
• 22:34
  Speaker 3: have avoided probate. You could have reduced estate taxes, of course. Remember,
• 22:38
  Speaker 3: those are all important things that we want to do.
• 22:40
  Speaker 3: But also, you could make sure that you define who
• 22:44
  Speaker 3: you want to get your stuff. And most importantly, who
• 22:47
  Speaker 3: you don't. So, I mean, if you knew he was around,
• 22:50
  Speaker 3: rather than acknowledge him in, you could have acknowledged him
• 22:53
  Speaker 3: to be out, right? Disinherit. That's okay, too.
• 22:56
  Speaker 2: Yeah, because you don't need to leave things to all children.
• 22:59
  Speaker 3: No, you don't.
• 22:59
  Speaker 4: Whoever you want.
• 23:00
  Speaker 3: And then, of course, if you disinherited, you put the
• 23:03
  Speaker 3: no contest language in. And so all that needs to
• 23:06
  Speaker 3: be done. Folks, just do your planning. Learn how to
• 23:08
  Speaker 3: do this. But when doing your planning, learn how to
• 23:12
  Speaker 3: name your estate the beneficiary of your IRA and help
• 23:16
  Speaker 3: it fit into your plan. 866-848-5699 or LegalExchangeShow.com. It's the
• 23:24
  Speaker 3: end of the month, last chance to get it. Also,
• 23:27
  Speaker 3: the IRA can be protected from the nursing home if
• 23:29
  Speaker 3: you understand how to name the estate the beneficiary. 866-848-5699
• 23:36
  Speaker 3: or LegalExchangeShow.com, and you can download it there.
• 23:40
  Speaker 2: You've been listening to Todd Lutzke, a partner with the
• 23:42
  Speaker 2: law firm of Cushing & Dolan. I'm Susan Powers, a
• 23:46
  Speaker 2: financial advisor with the Armstrong Advisory Group, and Todd will
• 23:49
  Speaker 2: be answering your listener questions when we return to The
• 23:52
  Speaker 2: Legal Exchange with Todd Lutzke.
• 23:55
  Speaker 1: Leaving your IRA to your children may seem like the
• 23:58
  Speaker 1: obvious choice, but how they receive that money could have
• 24:01
  Speaker 1: important tax consequences. Cushing and Dolan has a new guide.
• 24:04
  Speaker 1: Why name your estate an IRA beneficiary? Under current rules,
• 24:08
  Speaker 1: most adult children who inherit an IRA must withdraw the
• 24:11
  Speaker 1: money within 10 years. That could mean taking retirement distributions
• 24:14
  Speaker 1: while they're still working and earning income, potentially creating a
• 24:17
  Speaker 1: larger tax bill. That's one reason why your IRA beneficiary
• 24:21
  Speaker 1: should be part of your overall estate plan. Who receives
• 24:24
  Speaker 1: the account, how they receive it, and the tax consequences
• 24:27
  Speaker 1: that may follow all deserve careful consideration.
• 24:30
  Speaker 3: Get Cushing and.
• 24:30
  Speaker 1: Dolan's new guide called Why Name Your Estate an IRA
• 24:33
  Speaker 1: Beneficiary by calling 866-848-5699. That's 866-848-5699. Or you can request
• 24:41
  Speaker 1: the guide online at LegalExchangeShow.com. The proceeding was paid for
• 24:45
  Speaker 1: and the views expressed are solely those of Cushing and Dolan.
• 24:47
  Speaker 1: Cushing and Dolan and or Armstrong Advisory may contact you
• 24:50
  Speaker 1: offering legal or investment services. Cushing and Dolan and Armstrong
• 24:53
  Speaker 1: Advisory do not endorse each other and are not affiliated.
• 24:56
  Speaker 6: Seeing some high volume out there on those roads today, folks.
• 24:58
  Speaker 7: 93 northbound at exit.
• 25:00
  Speaker 4: Sound familiar?
• 25:01
  Speaker 1: The Braintree split is backed up.
• 25:02
  Speaker 2: If your commute feels endless, it might be time to
• 25:05
  Speaker 2: ask a bigger question. Are you working because you want
• 25:07
  Speaker 2: to or because you think you have to? At the
• 25:09
  Speaker 2: Armstrong Advisory Group, our financial advisors help individuals and families
• 25:14
  Speaker 2: build retirement income plans designed around their goals, savings, social security, investments,
• 25:20
  Speaker 2: and overall financial picture. Retirement shouldn't be a guessing game.
• 25:23
  Speaker 2: If you're concerned about what path you're on or have
• 25:26
  Speaker 2: questions about your financial plan, we may be able to help.
• 25:29
  Speaker 2: Visit armstrongadvisory.com and schedule a no-obligation meeting. The Armstrong Advisory Group.
• 25:35
  Speaker 2: We answer only to you. Schedule your meeting today at armstrongadvisory.com.
• 25:40
  Speaker 2: That's armstrongadvisory.com.
• 25:42
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 25:44
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 25:46
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 25:49
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 25:52
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 25:55
  Speaker 1: advisory services.
• 25:58
  Speaker 7: Our nation's veterans answered the call to serve. Today, the
• 26:02
  Speaker 7: Disabled American Veterans Department of Massachusetts is there to support
• 26:06
  Speaker 7: our veterans through benefits assistance, transportation services, advocacy, and community outreach.
• 26:12
  Speaker 7: Their mission is to ensure no veteran has to face
• 26:15
  Speaker 7: life's challenges alone. You can make a difference by volunteering
• 26:19
  Speaker 7: for the DAV Massachusetts or making a donation.
• 26:23
  Speaker 5: Learn more at DAVMA.org.
• 26:26
  Speaker 1: Leaving your IRA to your children may seem like the
• 26:29
  Speaker 1: obvious choice, but how they receive that money could have
• 26:32
  Speaker 1: important tax consequences. Cushman Dolan has a new guide. Why
• 26:35
  Speaker 1: name your estate an IRA beneficiary? Under current rules, most
• 26:39
  Speaker 1: adult children who inherit an IRA must withdraw the money
• 26:42
  Speaker 1: within 10 years. That could mean taking retirement distributions while
• 26:45
  Speaker 1: they're still working and earning income, potentially creating a larger
• 26:49
  Speaker 1: tax bill. That's one reason why your IRA beneficiary should
• 26:52
  Speaker 1: be part of your overall estate plan. Who receives the account,
• 26:55
  Speaker 1: how they receive it, and the tax consequences that may
• 26:58
  Speaker 1: follow all deserve careful consideration. Get Cushman Dolan's new guide
• 27:02
  Speaker 1: called Why Name Your Estate an IRA Beneficiary by calling 866-848-5699.
• 27:08
  Speaker 1: That's 866-848-5699. Or you can request the guide online at LegalExchangeShow.com.
• 27:15
  Speaker 1: The proceeding was paid for and the views expressed are
• 27:17
  Speaker 1: solely those of Cushing and Dolan. Cushing and Dolan and
• 27:19
  Speaker 1: or Armstrong Advisory may contact you offering legal or investment services.
• 27:22
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 27:25
  Speaker 1: other and are not affiliated. You're listening to The Legal Exchange,
• 27:29
  Speaker 1: and it's time for Ask Todd, the segment where Todd
• 27:32
  Speaker 1: will answer your questions about anything and everything that's included
• 27:36
  Speaker 1: in the estate planning process. Once again, here's Todd Lutzke
• 27:40
  Speaker 1: and Susan Powers.
• 27:42
  Speaker 4: Welcome back, Todd.
• 27:43
  Speaker 2: We have a few questions from listeners. First question comes
• 27:46
  Speaker 2: from Tony in Rockland, Mass., and Tony writes, Years ago,
• 27:50
  Speaker 2: I created a nominee realty trust listing one of my
• 27:53
  Speaker 2: children as the trustee and all four of my children
• 27:56
  Speaker 2: as beneficiaries. After listening to a recent show, I didn't
• 28:01
  Speaker 2: realize that my children technically own my home and vacation
• 28:04
  Speaker 2: home now.
• 28:05
  Speaker 3: Ruh-roh.
• 28:06
  Speaker 2: What can I do to fix this? I have a
• 28:07
  Speaker 2: good relationship with three of my kids, but the relationship
• 28:11
  Speaker 2: is strained with the fourth.
• 28:12
  Speaker 3: This is a problem. This is exactly the problem. This
• 28:17
  Speaker 3: is exactly why we don't give away assets when we're alive.
• 28:21
  Speaker 3: This is exactly why, and again, I understand real estate
• 28:24
  Speaker 3: lawyers and they all want to be helpful, but they
• 28:26
  Speaker 3: end up throwing the idea of, oh, you just bought
• 28:29
  Speaker 3: a house, put it in a realty trust and name
• 28:31
  Speaker 3: your kids as the beneficiary. Not realizing, and I know
• 28:34
  Speaker 3: you didn't realize that you gave away your house. Folks,
• 28:38
  Speaker 3: that's how nominee realty trusts work. You'll see the name
• 28:43
  Speaker 3: if you're ever wondering, well, how do I know if
• 28:44
  Speaker 3: I have one? It actually says that. The name of
• 28:47
  Speaker 3: the trust would be like the, you know, 250 School
• 28:50
  Speaker 3: Street Nominee Realty Trust, something like that. It'll have the
• 28:54
  Speaker 3: property address on it. If you have one of these,
• 28:57
  Speaker 3: please go look at the schedule of beneficiaries because they're attached. Well,
• 29:01
  Speaker 3: they're usually lost, but hopefully they're attached. And if you
• 29:07
  Speaker 3: see the kids' names there, you're in this case with Tony.
• 29:12
  Speaker 3: You gave away your house. You might not notice it
• 29:15
  Speaker 3: or realize it, but if any one of your kids
• 29:17
  Speaker 3: get divorced... You're going to know because the divorce attorney
• 29:22
  Speaker 3: is going to say, oh, you guys own this home
• 29:23
  Speaker 3: or you have an interest in this home.
• 29:25
  Speaker 4: Because you see beneficiaries, you think this is what happens
• 29:27
  Speaker 4: when I'm dead.
• 29:28
  Speaker 3: Right. The difference is, and the reason you say that, Susan,
• 29:31
  Speaker 3: is that the difference from this case is in these
• 29:35
  Speaker 3: nominee realty trusts, there's language that says the trustee should.
• 29:40
  Speaker 3: have no power to deal with the trust estate unless
• 29:45
  Speaker 3: directed by the beneficiaries. Trustees are handcuffed. Owner really is
• 29:51
  Speaker 3: the beneficiary.
• 29:52
  Speaker 1: Yeah.
• 29:52
  Speaker 3: Right. So they control the trust. So they own it.
• 29:56
  Speaker 3: So please don't give it away like this.
• 29:58
  Speaker 5: Now.
• 29:59
  Speaker 3: Can you fix it? Well, I mean, if this is
• 30:01
  Speaker 3: the only item you gave away and you have a
• 30:04
  Speaker 3: lot of other assets, maybe you still have some leverage, right? So,
• 30:08
  Speaker 3: you know, you basically, in order to change this, are
• 30:11
  Speaker 3: going to need all the beneficiaries.
• 30:13
  Speaker 4: Including the one you're estranged with or strained.
• 30:15
  Speaker 6: Right.
• 30:16
  Speaker 3: All the beneficiaries will have to sign something saying, we
• 30:20
  Speaker 3: are authorizing and directing the trustee. Remember, the trustee can't
• 30:24
  Speaker 3: act unless directed by the beneficiaries. So you do an
• 30:28
  Speaker 3: authorization and direction of beneficiaries authorizing the trustee to issue
• 30:34
  Speaker 3: a revised schedule of beneficiaries. Change the schedule of beneficiaries
• 30:40
  Speaker 3: from four people to mom and dad. Okay. Done. No
• 30:44
  Speaker 3: deed work. That's the reason people love these.
• 30:47
  Speaker 6: Oh, okay.
• 30:47
  Speaker 3: No deed has to be filed. Nothing needs to change.
• 30:50
  Speaker 3: Just make... Hmm. The change of the scheduled beneficiaries. And remember,
• 30:55
  Speaker 3: these are private. Scheduled beneficiaries are not on record at
• 30:58
  Speaker 3: the registry. That would be malpractice. Do not record them.
• 31:02
  Speaker 3: They are private. So now you swap out.
• 31:04
  Speaker 2: So now mom and dad are the beneficiaries. So they're
• 31:07
  Speaker 2: really the owners. So then they can transfer to a trust.
• 31:10
  Speaker 5: Exactly.
• 31:10
  Speaker 3: Stuff right. Once it's back in here, we're going to
• 31:12
  Speaker 3: get rid of this crazy nominee realty trust altogether. You're
• 31:15
  Speaker 3: going to do an authorization and direction of beneficiaries to
• 31:18
  Speaker 3: convey the property out to mom and dad since they're
• 31:21
  Speaker 3: now the beneficiaries. then they will convey the property out.
• 31:25
  Speaker 3: And then once they own it, they can take it
• 31:27
  Speaker 3: and put it into their own revocable or irrevocable trust or,
• 31:31
  Speaker 3: in essence, their own estate planning documents.
• 31:34
  Speaker 4: Somewhere not with the kids.
• 31:35
  Speaker 3: Right. And take care of their estate plan a much
• 31:38
  Speaker 3: better way. So, Tony, I don't think all hope is
• 31:41
  Speaker 3: lost yet. You're going to have to work with that
• 31:42
  Speaker 3: number four child. But, again, if the number four child
• 31:45
  Speaker 3: gets really, you know, kind of persnickety and doesn't want
• 31:48
  Speaker 3: to deal with it, If mom and dad have enough
• 31:51
  Speaker 3: other assets, they can just completely disinherit them from everything else.
• 31:54
  Speaker 5: Right.
• 31:54
  Speaker 3: That might not make them happy either. So you always
• 31:56
  Speaker 3: have that shot. But folks, this is exactly what we
• 32:00
  Speaker 3: deal with when you say dealing with different assets in
• 32:03
  Speaker 3: the estate. That was real estate. What about your IRA?
• 32:06
  Speaker 3: That's what this guide is about. It's the end of
• 32:08
  Speaker 3: the month. Learn how to make your IRA fit into
• 32:11
  Speaker 3: your estate plan in the most efficient manner possible. This
• 32:14
  Speaker 3: guide will allow you to demonstrate to you how to
• 32:18
  Speaker 3: shelter it from estate taxes and not increase required minimum
• 32:22
  Speaker 3: distributions on the income tax side. And if you couple
• 32:25
  Speaker 3: it with a testamentary trust, you can also protect assets
• 32:29
  Speaker 3: from the nursing home without a five-year waiting period. There's
• 32:32
  Speaker 3: a lot of rules built in here, so I can't
• 32:34
  Speaker 3: get into them all on the air. Get the guide.
• 32:37
  Speaker 3: It's the end of the month. Learn how to do this.
• 32:39
  Speaker 3: 866-848-5699 or LegalExchangeShow.com. Again, 866-848-5699. or LegalExchangeShow.com. And you can
• 32:52
  Speaker 3: always go to Cushing Dolan PC's Instagram page for more.
• 32:57
  Speaker 2: Our last question comes from Jean in Raina, Mass. And
• 33:00
  Speaker 2: Jean writes, my mother inherited a home on Cape Cod
• 33:03
  Speaker 2: back in the 70s. She's made some improvements, but her
• 33:06
  Speaker 2: cost basis is only around $ 50, 000. And the home is
• 33:09
  Speaker 2: now worth around.
• 33:11
  Speaker 3: $ 600, 000.
• 33:12
  Speaker 2: She wants me to have the cottage and wants to
• 33:14
  Speaker 2: add my name to the deed so we can avoid
• 33:17
  Speaker 2: probate when she dies. If she goes into a nursing home,
• 33:20
  Speaker 2: would this mean only half of the property would be protected?
• 33:24
  Speaker 2: Would it be better if she has only my name
• 33:27
  Speaker 2: on the deed instead?
• 33:29
  Speaker 3: First of all, the last part, we don't want her
• 33:32
  Speaker 3: name to be on the deed instead, right? So right now,
• 33:37
  Speaker 3: you said that mother inherited the property. It's in mom's name, yeah.
• 33:41
  Speaker 3: And so if she inherited the property, the first thing
• 33:43
  Speaker 3: I like about that, meaning it wasn't given to her
• 33:45
  Speaker 3: before death, that's just a big issue that you don't
• 33:47
  Speaker 3: even think about in the question. But when I see
• 33:50
  Speaker 3: that mom inherited the property back in the 70s, that's
• 33:53
  Speaker 3: wonderful because at least she got a step up in
• 33:54
  Speaker 3: basis and wasn't dealing with super low costs.
• 33:57
  Speaker 2: But even at that, it's only 50 grand.
• 34:01
  Speaker 3: Yeah, so that's true.
• 34:01
  Speaker 4: The value at the time.
• 34:02
  Speaker 3: But she did make some home improvements, so maybe it's up.
• 34:05
  Speaker 3: And the home is worth 600, so even if she
• 34:07
  Speaker 3: put 50 into it, you got 100 basis. So- Now
• 34:11
  Speaker 3: she wants to add my name to the deed to
• 34:14
  Speaker 3: avoid probate, which would work.
• 34:17
  Speaker 4: But do you want to do that?
• 34:18
  Speaker 3: I don't want to do that. And then she went
• 34:20
  Speaker 3: from bad to worse. Or should I just give her
• 34:24
  Speaker 3: the whole house is what I'm hearing, right? So my
• 34:27
  Speaker 3: options are bad or worse.
• 34:29
  Speaker 2: And mom wants to, the daughter's concerned about the nursing
• 34:32
  Speaker 2: home as well. So that doesn't help that either.
• 34:35
  Speaker 3: So a couple of things. First and foremost, let's start
• 34:39
  Speaker 3: with the bad idea, and then we'll get to the
• 34:41
  Speaker 3: worse idea. So the bad idea is putting your daughter's
• 34:44
  Speaker 3: name on the deed.
• 34:45
  Speaker 1: Why?
• 34:46
  Speaker 3: One, you've got a completed gift for 50% of the value.
• 34:48
  Speaker 3: There may or may not be a gift tax. You've
• 34:52
  Speaker 3: also lost a half step up in basis.
• 34:54
  Speaker 2: Right, because you give away your cost basis at the
• 34:57
  Speaker 2: same time.
• 34:58
  Speaker 3: Right, so you have that problem. And, of course, you've
• 35:02
  Speaker 3: exposed it to... your daughter's creditors, divorces, things like that.
• 35:07
  Speaker 3: I don't think your daughter really wants to have her
• 35:09
  Speaker 3: assets exposed to creditors before she needs to have them
• 35:12
  Speaker 3: exposed to creditors. So that's a problem. At least if
• 35:15
  Speaker 3: you kept 50% would be allowed to live there, she
• 35:18
  Speaker 3: wouldn't necessarily be able to kick you out. So that's helpful.
• 35:20
  Speaker 3: Although she could file a petition to partition and force
• 35:24
  Speaker 3: you to either buy her out or sell the property.
• 35:26
  Speaker 3: Imagine buying her back out for property you gave her
• 35:30
  Speaker 3: to begin with. What a horrible situation.
• 35:33
  Speaker 2: So But the good news is she would avoid probate.
• 35:36
  Speaker 3: Yeah, let's get to the good news. That's exactly right, Susan. Todd,
• 35:39
  Speaker 3: I've been so negative on this whole thing. Can you imagine?
• 35:41
  Speaker 3: Silver lining here. There is a silver lining because when
• 35:43
  Speaker 3: you die, it would actually avoid probate and it would
• 35:45
  Speaker 3: pass to the surviving joint owner outside of probate.
• 35:48
  Speaker 4: But at what cost?
• 35:49
  Speaker 3: Wow. Horrible, right? There's just nothing good about that. If
• 35:53
  Speaker 3: I give it outright to the child, I've just done
• 35:57
  Speaker 3: what I said on steroids. Now it's way worse. No control.
• 36:01
  Speaker 3: No right to sell.
• 36:02
  Speaker 5: No.
• 36:03
  Speaker 3: And bad taxes for the daughter. Yeah, complete carryover basis.
• 36:07
  Speaker 3: Good news, in five years, it'll be protected from the
• 36:09
  Speaker 3: nursing home.
• 36:10
  Speaker 5: There you go.
• 36:11
  Speaker 3: Folks, I'd rather lose my house than do this approach.
• 36:16
  Speaker 3: So if you're thinking of giving away your house to
• 36:19
  Speaker 3: your kids, don't do it. You want to protect it,
• 36:23
  Speaker 3: just put together a trust. And the trust can do
• 36:27
  Speaker 3: all of these things. Probate, protection, and most importantly... keep
• 36:32
  Speaker 3: you in control of your assets.
• 36:35
  Speaker 2: Because you still have that five-year look back, whether you
• 36:37
  Speaker 2: give it to a child or put it in a trust.
• 36:39
  Speaker 4: It's the same.
• 36:40
  Speaker 3: It'll protect it, step up in basis, divorce proof, everything. Folks,
• 36:44
  Speaker 3: that's another, this is just a house. We're going to
• 36:46
  Speaker 3: step back and say, don't forget about the IRA. How
• 36:49
  Speaker 3: do we deal with that? This was tough enough dealing
• 36:51
  Speaker 3: with a house. IRAs are complicated. Learn how to get
• 36:55
  Speaker 3: the most out of your IRA into your estate plan.
• 36:58
  Speaker 3: Last chance to get this guide, 866- 848-5699 or LegalExchangeShow.com. Again, 866-848-5699.
• 37:11
  Speaker 2: If you have a question you'd like to ask Todd,
• 37:13
  Speaker 2: visit his website, LegalExchangeShow.com and click on the Ask Todd tab.
• 37:18
  Speaker 2: Maybe I'll be able to read your question on the
• 37:20
  Speaker 2: air and hopefully his answer will stop you from becoming
• 37:23
  Speaker 2: one of his next real life stories. You've been listening
• 37:26
  Speaker 2: to Todd Lutzky, a partner with the law firm of
• 37:29
  Speaker 2: Cushing and Dolan. I'm Susan Powers, a financial advisor with
• 37:33
  Speaker 2: the Armstrong Advisory Group. We'll be back with more after
• 37:36
  Speaker 2: this quick break on The Legal Exchange with Todd Lutzky.
• 37:41
  Speaker 1: Leaving your IRA to your children may seem like the
• 37:43
  Speaker 1: obvious choice, but how they receive that money could have
• 37:46
  Speaker 1: important tax consequences. Cushing and Dolan has a new guide.
• 37:49
  Speaker 1: Why name your estate an IRA beneficiary? Under current rules,
• 37:53
  Speaker 1: most adult children who inherit an IRA must withdraw the
• 37:56
  Speaker 1: money within 10 years. That could mean taking retirement distributions
• 38:00
  Speaker 1: while they're still working and earning income, potentially creating a
• 38:03
  Speaker 1: larger tax bill. That's one reason why your IRA beneficiary
• 38:06
  Speaker 1: should be part of your overall estate plan. Who receives
• 38:09
  Speaker 1: the account, how they receive it, and the tax consequences
• 38:12
  Speaker 1: that may follow all deserve careful consideration. Get Cushing and
• 38:15
  Speaker 1: Dolan's new guide called Why Name Your Estate an IRA
• 38:18
  Speaker 1: Beneficiary by calling 866-848-5699.
• 38:20
  Speaker 5: That's 866-848-5699.
• 38:20
  Speaker 1: Or you can request the guide online at LegalExchangeShow.com. The
• 38:30
  Speaker 1: proceeding was paid for and the views expressed are solely
• 38:31
  Speaker 1: those of Cushing and Dolan. Cushing and Dolan and or
• 38:34
  Speaker 1: Armstrong Advisory may contact you offering legal or investment services.
• 38:37
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 38:39
  Speaker 1: other and are not affiliated.
• 38:44
  Speaker 2: You've been saying one more year for the past five
• 38:47
  Speaker 2: years and now. You're still sitting in the same traffic,
• 38:51
  Speaker 2: taking the same exits, wondering when work finally becomes optional.
• 38:56
  Speaker 2: At the Armstrong Advisory Group, we help people create personalized
• 38:59
  Speaker 2: retirement plans so they can better understand their income, investments, taxes,
• 39:04
  Speaker 2: and Social Security strategy. Don't say one more year again
• 39:07
  Speaker 2: without learning about these issues so you can make the
• 39:10
  Speaker 2: most educated decision for yourself and your family. We'll see
• 39:14
  Speaker 2: you next time. your no obligation meeting today by visiting
• 39:22
  Speaker 2: us at armstrongadvisory.com. That's armstrongadvisory.com. The Armstrong Advisory Group. We
• 39:29
  Speaker 2: answer only to you.
• 39:30
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 39:32
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 39:34
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 39:36
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 39:38
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 39:41
  Speaker 1: advisory services. Who you name as the beneficiary of your
• 39:44
  Speaker 1: IRA can affect more than who gets the money. Cushing
• 39:46
  Speaker 1: and Dolan's guide, Why Name Your Estate an IRA Beneficiary,
• 39:49
  Speaker 1: explains how that decision can affect taxes, asset protection, and
• 39:53
  Speaker 1: what's ultimately left for your family. Get the guide today
• 39:55
  Speaker 1: by calling 866-848-5699 or request it online at LegalExchangeShow.com. The
• 40:01
  Speaker 1: proceedings paid for and the views expressed are solely those
• 40:03
  Speaker 1: of Cushing and Dolan. Cushing and Dolan and or Armstrong
• 40:06
  Speaker 1: Advisory may contact you offering legal or investment services. Cushing
• 40:09
  Speaker 1: and Dolan and Armstrong Advisory do not endorse each other
• 40:11
  Speaker 1: and are not affiliated.
• 40:14
  Speaker 7: Our nation's veterans answered the call to serve. Today, the
• 40:18
  Speaker 7: Disabled American Veterans Department of Massachusetts is there to support
• 40:22
  Speaker 7: our veterans through benefits assistance, transportation services, advocacy, and community outreach.
• 40:28
  Speaker 7: Their mission is to ensure no veteran has to face
• 40:31
  Speaker 7: life's challenges alone. You can make a difference by volunteering
• 40:35
  Speaker 7: for the DAV Massachusetts or making a donation.
• 40:39
  Speaker 5: Learn more at davma.org.
• 40:43
  Speaker 1: You're tuned to The Legal Exchange with Todd Lutzke. If
• 40:46
  Speaker 1: you or a loved one needs a nursing home stay,
• 40:48
  Speaker 1: call Todd right now at 866-848-5699 and let him make
• 40:53
  Speaker 1: sure your assets are protected. That's 866-848-5699 or visit him
• 40:56
  Speaker 1: online at LegalExchangeShow.com.
• 41:02
  Speaker 2: Welcome back into The Legal Exchange with Todd Lutzke. I'm
• 41:05
  Speaker 2: Susan Powers, a financial advisor with the Armstrong Advisory Group,
• 41:09
  Speaker 2: and I'm joined by Todd Lutzke, a partner with the
• 41:12
  Speaker 2: law firm of Cushing & Dolan with a master's in taxation. Todd,
• 41:17
  Speaker 2: it's the end of the month. This month we're talking
• 41:20
  Speaker 2: about testamentary trust. So I want to kind of do
• 41:23
  Speaker 2: the lightning round of testamentary trust. So who should actually
• 41:29
  Speaker 2: consider using A testamentary trust.
• 41:32
  Speaker 4: And what is it?
• 41:32
  Speaker 5: Yeah.
• 41:33
  Speaker 3: So these are very different than the trust we always
• 41:37
  Speaker 3: talk about. So let's like, we just talked about one earlier, Susan,
• 41:40
  Speaker 3: called a nominee realty trust. Well, that's a trust, but
• 41:43
  Speaker 3: it's different. We talk about living, you know, revocable trust
• 41:47
  Speaker 3: and Medicaid trusts. Very different.
• 41:49
  Speaker 2: Yeah.
• 41:50
  Speaker 3: Well, this is a testamentary trust. It's also its own entity.
• 41:54
  Speaker 3: It's different. So your question specifically, who should use them?
• 42:01
  Speaker 3: You only would do this if you're married. Okay. So
• 42:04
  Speaker 3: I think that's step one.
• 42:05
  Speaker 4: Married couple.
• 42:06
  Speaker 3: Single people really don't need these testamentary trusts. Okay. Number two,
• 42:13
  Speaker 3: you do them if you're married and you are thinking
• 42:17
  Speaker 3: about your estate planning. And your estate planning, one of
• 42:22
  Speaker 3: the objectives in your estate plan is to protect assets
• 42:26
  Speaker 3: from the nursing home.
• 42:27
  Speaker 7: Okay.
• 42:27
  Speaker 3: So, I mean, obviously you want to avoid probate. You
• 42:29
  Speaker 3: want to reduce death taxes. You want to provide a
• 42:32
  Speaker 3: bloodline plan to your family and get it to them efficiently.
• 42:35
  Speaker 3: Those are three pretty much check the box yes every time.
• 42:40
  Speaker 3: It's that fourth question that isn't always a yes. You know,
• 42:44
  Speaker 3: are you concerned about protecting assets from the nursing home? Well,
• 42:48
  Speaker 3: if it's no... then this testamentary trust probably not needed
• 42:53
  Speaker 3: for you. But if it's yes, yeah, I think you
• 42:57
  Speaker 3: need to understand them.
• 42:59
  Speaker 2: So you'd have your irrevocable trust and a testamentary trust?
• 43:03
  Speaker 2: You'd have to do two trusts?
• 43:04
  Speaker 3: You would. Well, remember, the testamentary trust, so maybe more
• 43:08
  Speaker 3: about what it is. A testamentary trust is built into
• 43:13
  Speaker 3: your will. You know, I like to say that I
• 43:16
  Speaker 3: didn't learn all the big words in law school, so
• 43:17
  Speaker 3: we'll just call it.
• 43:20
  Speaker 3: A will trust built into your will. If it's built
• 43:24
  Speaker 3: into your will, yes, it's a trust, but it doesn't
• 43:27
  Speaker 3: really exist until you die.
• 43:29
  Speaker 5: Okay.
• 43:30
  Speaker 3: So it's sort of set up to take care of
• 43:33
  Speaker 3: an IRA, which we'll try to connect those dots in
• 43:36
  Speaker 3: a minute, when you die. But the other trust, the
• 43:41
  Speaker 3: Medicaid irrevocable trust that we would have with them as well, again,
• 43:45
  Speaker 3: there is either going to be one or probably two trusts,
• 43:48
  Speaker 3: one for husband and wife. Those trusts actually exist right away.
• 43:53
  Speaker 4: Okay.
• 43:53
  Speaker 3: The day you sign them, they exist, and we put
• 43:56
  Speaker 3: stuff in them. And that starts your clock. And that
• 43:59
  Speaker 3: starts your five-year clock. On the items we can put
• 44:01
  Speaker 3: in there, it's the IRA that we cannot put in there,
• 44:06
  Speaker 3: which requires us to use the testamentary trust.
• 44:09
  Speaker 5: Right.
• 44:09
  Speaker 2: So if I think about the folks that are concerned
• 44:12
  Speaker 2: about long-term care protection— Usually they're, you know, in their
• 44:16
  Speaker 2: 60s or so. So is there like an age minimum
• 44:20
  Speaker 2: for doing this?
• 44:20
  Speaker 3: I'm going to say, you know, obviously if you're having
• 44:25
  Speaker 3: health issues, I don't think age matters. But like if
• 44:27
  Speaker 3: you're diagnosed with, you know, Parkinson's or you're diagnosed with,
• 44:31
  Speaker 3: you know, some MS or something and you're younger, well,
• 44:34
  Speaker 3: you know, that could be a problem. But yeah, generally speaking, 65-ish,
• 44:39
  Speaker 3: you come in, I'm going to ask the question. You're 55.
• 44:43
  Speaker 3: I might not ask it yet. You're probably a little younger.
• 44:46
  Speaker 3: The kids might be younger. You're not ready for the
• 44:48
  Speaker 3: irrevocable trust quite yet. But yeah, 65 and up, I
• 44:52
  Speaker 3: can't see why I wouldn't at least ask the question.
• 44:57
  Speaker 3: And folks, this is what we're talking about. When we
• 45:00
  Speaker 3: talk about wanting to do, now we're starting to learn
• 45:03
  Speaker 3: who can use this guide. Why do we want this guide? Well,
• 45:06
  Speaker 3: I'm in that 65 and over area. My estate is
• 45:09
  Speaker 3: probably 4 million or so or less. I have an
• 45:13
  Speaker 3: IRA and I want to learn how to make sure
• 45:15
  Speaker 3: that IRA is not only protected from estate taxes. I
• 45:20
  Speaker 3: want to maybe use it to help shelter it for
• 45:22
  Speaker 3: estate taxes. I want my spouse to enjoy it and
• 45:27
  Speaker 3: have access to it. and not lose the required minimum distributions,
• 45:31
  Speaker 3: not be penalized when I die to get quicker payouts
• 45:34
  Speaker 3: and cause bigger income taxes. And at the same time,
• 45:38
  Speaker 3: I'd like it to be protected from the nursing home
• 45:39
  Speaker 3: in case my spouse gets sick after I die without
• 45:42
  Speaker 3: a five-year waiting period. This guide is for you. It's
• 45:46
  Speaker 3: the end of the month, last chance to get it.
• 45:47
  Speaker 3: It will explain this whole testamentary trust component that goes
• 45:52
  Speaker 3: with it that Susan was just discussing with me.
• 45:54
  Speaker 2: 866-848-5699.
• 45:59
  Speaker 3: Or LegalExchangeShow.com. Again, end of the month, folks. Last chance
• 46:03
  Speaker 3: to get it, 866-848-5699, or LegalExchangeShow.com to download it there,
• 46:11
  Speaker 3: or go to Cushing Dolan PC, our Instagram page, for more.
• 46:14
  Speaker 2: Okay, so you have a married couple concerned about protecting
• 46:17
  Speaker 2: from the nursing home. They're doing their irrevocable trust planning,
• 46:21
  Speaker 2: and now you have this testamentary trust language.
• 46:24
  Speaker 4: You have it in both of their wills?
• 46:26
  Speaker 3: Yeah, you know, we do. So I think as a
• 46:29
  Speaker 3: general rule, we're just going to say we're going to
• 46:30
  Speaker 3: throw it in both of their wills.
• 46:34
  Speaker 7: Okay.
• 46:35
  Speaker 3: Mostly both of them are going to have some kind
• 46:37
  Speaker 3: of a retirement plan.
• 46:38
  Speaker 1: Yeah.
• 46:39
  Speaker 3: And if they do, it should go in both. I mean,
• 46:41
  Speaker 3: if there's actually no retirement plan for somebody, you could
• 46:45
  Speaker 3: leave it out. But there's no harm in having it in.
• 46:48
  Speaker 3: It just might not grab anything. That's all.
• 46:50
  Speaker 2: All right. So you have this language in there. You've
• 46:53
  Speaker 2: signed all your documents. Yes. How do you actually protect
• 46:56
  Speaker 2: the IRA? Is it like a look-back period, like the
• 46:58
  Speaker 2: five-year look-back, or how does this work?
• 47:00
  Speaker 3: Yeah, so the great news about this is that everybody
• 47:03
  Speaker 3: knows about this five-year rule, and it's always like, that's
• 47:05
  Speaker 3: a big thorn in my side, this five-year thing.
• 47:08
  Speaker 4: Which goes by in a flash, we all know.
• 47:10
  Speaker 3: Oh, my God, yeah. So what does it really do? Well,
• 47:14
  Speaker 3: the benefit of it is when it goes through, it's
• 47:17
  Speaker 3: going to go to probate. So it's one item that
• 47:19
  Speaker 3: you're directing into your will, so that's going to be
• 47:21
  Speaker 3: a probate item. But it's only one item, folks. Don't
• 47:23
  Speaker 3: get put off by that. Once it goes into the
• 47:26
  Speaker 3: testamentary trust for the benefit of your spouse.
• 47:31
  Speaker 4: So you're dying first.
• 47:32
  Speaker 3: Yeah, you have to die.
• 47:33
  Speaker 4: So when you die.
• 47:34
  Speaker 3: Good point. Okay. This part only works when you die.
• 47:38
  Speaker 4: Okay.
• 47:39
  Speaker 3: But if I didn't do it, it would just go
• 47:40
  Speaker 3: to my spouse and be at risk for the nursing home.
• 47:42
  Speaker 1: Right.
• 47:43
  Speaker 3: Sitting in her name. That's not helpful and taxable when
• 47:46
  Speaker 3: she dies. Instead, we force it into the testamentary trust
• 47:51
  Speaker 3: through the will. Once it gets in there, now it's
• 47:55
  Speaker 3: in a bucket for the benefit of your spouse. Good.
• 47:59
  Speaker 3: We want to provide that. And it will be sheltered
• 48:04
  Speaker 3: for estate taxes, meaning it's going to be taxed now,
• 48:06
  Speaker 3: but it's in that formula. So you're allowed to shelter
• 48:10
  Speaker 3: assets so they're not taxed later when the spouse dies.
• 48:15
  Speaker 3: And it's designed in a way, and again, assuming the
• 48:18
  Speaker 3: spouses are relatively close in age, within three, four, five years,
• 48:22
  Speaker 3: it doesn't matter. That means that the required minimum distributions
• 48:26
  Speaker 3: coming out of that IRA to the trust will be
• 48:32
  Speaker 3: based on the life expectancy of the decedent on the
• 48:35
  Speaker 3: date of death.
• 48:36
  Speaker 2: Okay.
• 48:36
  Speaker 3: So if you die.
• 48:37
  Speaker 4: So same as they were if you were living.
• 48:38
  Speaker 1: Yeah.
• 48:38
  Speaker 3: So let's say, you know, the spouse is 76 and
• 48:43
  Speaker 3: the decedent who died was 78. It'll just come out
• 48:46
  Speaker 3: over a 78-year-old life expectancy instead of a 76-year-old life expectancy.
• 48:51
  Speaker 2: Okay.
• 48:52
  Speaker 3: Who cares? From an income tax standpoint, that's not going
• 48:55
  Speaker 3: to cause a problem.
• 48:56
  Speaker 4: Okay.
• 48:57
  Speaker 3: So now we have the wife getting the money, using
• 49:01
  Speaker 3: it from the trust as needed. No adverse income tax
• 49:05
  Speaker 3: consequence because it's coming out over a normal life expectancy.
• 49:11
  Speaker 3: And if she gets sick the next day, he dies
• 49:15
  Speaker 3: and she's got to go to the nursing home. 100%
• 49:18
  Speaker 3: protected from the nursing home. No five-year look back.
• 49:22
  Speaker 1: Okay.
• 49:22
  Speaker 4: That's nice.
• 49:23
  Speaker 1: It is.
• 49:24
  Speaker 3: It's really an amazing technique.
• 49:26
  Speaker 2: So let me ask you this then, Todd, because for
• 49:28
  Speaker 2: a lot of our mutual clients where they've done the
• 49:31
  Speaker 2: irrevocable trust planning, they've moved their house and maybe some
• 49:34
  Speaker 2: investment accounts and some bank accounts and so forth.
• 49:37
  Speaker 5: And they've been.
• 49:38
  Speaker 2: living on their IRAs because that's the money that's accessible
• 49:41
  Speaker 2: to them.
• 49:42
  Speaker 3: And we would want them to do that. That's perfect.
• 49:44
  Speaker 2: What if she had been relying on this? How does
• 49:47
  Speaker 2: she access that if it's going to be protected from
• 49:50
  Speaker 2: the nursing home? Is it restricted like the irrevocable?
• 49:52
  Speaker 3: Yeah, so great, great question. So there's, of course, Medicaid
• 49:56
  Speaker 3: rules that address testamentary trusts differently than the living irrevocable
• 50:03
  Speaker 3: trust that's in existence right now. So with testamentary trusts,
• 50:07
  Speaker 3: the language in there says all the income and all
• 50:12
  Speaker 3: the principal can come out to the spouse in the
• 50:19
  Speaker 3: trustee's sole discretion.
• 50:20
  Speaker 4: Without restrictions.
• 50:21
  Speaker 3: No restriction. So the kid's the trustee, makes the distributions.
• 50:25
  Speaker 2: Giant loophole. It feels like a giant legal loophole.
• 50:28
  Speaker 3: It's wonderful planning. Last chance to get the guide. Learn
• 50:32
  Speaker 3: about these testamentary trusts and your IRA today. 866-848-5699, and LegalExchangeShow.com. Again, 866-848-5699.
• 50:46
  Speaker 2: Todd Lutzke from the law firm of Cushing and Dolan,
• 50:49
  Speaker 2: thank you so much.
• 50:50
  Speaker 3: Always a pleasure. Thank you.
• 50:51
  Speaker 4: I'm Susan Powers.
• 50:53
  Speaker 2: Thank you for joining us this week, and we'll be
• 50:55
  Speaker 2: back again next week on The Legal Exchange with Todd Lutzke.
• 51:00
  Speaker 1: Leaving your IRA to your children may seem like the
• 51:02
  Speaker 1: obvious choice, but how they receive that money could have
• 51:05
  Speaker 1: important tax consequences. Cushing and Dolan has a new guide.
• 51:08
  Speaker 1: Why name your estate an IRA beneficiary? Under current rules,
• 51:12
  Speaker 1: most adult children who inherit an IRA must withdraw the
• 51:15
  Speaker 1: money within 10 years. That could mean taking retirement distributions
• 51:19
  Speaker 1: while they're still working and earning income, potentially creating a
• 51:22
  Speaker 1: larger tax bill. That's one reason why your IRA beneficiary
• 51:25
  Speaker 1: should be part of your overall estate plan. Who receives
• 51:28
  Speaker 1: the account, how they receive it, and the tax consequences
• 51:31
  Speaker 1: that may follow all deserve careful consideration. Get Cushing and
• 51:34
  Speaker 1: Dolan's new guide called Why Name Your Estate an IRA
• 51:37
  Speaker 1: Beneficiary by calling 866-848-5699.
• 51:39
  Speaker 5: That's 866-848-5699.
• 51:39
  Speaker 1: Or you can request the guide online at LegalExchangeShow.com. The
• 51:49
  Speaker 1: proceeding was paid for and the views expressed are solely
• 51:50
  Speaker 1: those of Cushing and Dolan. Cushing and Dolan and or
• 51:52
  Speaker 1: Armstrong Advisory may contact you offering legal or investment services.
• 51:56
  Speaker 1: Cushing and Dolan and Armstrong Advisory do not endorse each
• 51:58
  Speaker 1: other and are not affiliated.
• 52:00
  Speaker 6: You spent years preparing for retirement, but there comes a
• 52:02
  Speaker 6: point when building your savings is only part of the plan. Hi,
• 52:05
  Speaker 6: this is Mike Armstrong from the Armstrong Advisory Group. Saving
• 52:08
  Speaker 6: more may provide additional financial security, but it can also
• 52:12
  Speaker 6: mean working longer than you need to. That means waiting
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  Speaker 6: being with family, or simply having more freedom to decide
• 52:20
  Speaker 6: how you spend your time. These are some of the
• 52:22
  Speaker 6: ideas included in our new guide, Five Hidden Costs of
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  Speaker 6: Saving Too Much for Retirement. A retirement plan shouldn't just
• 52:29
  Speaker 6: tell you how much money to save. It should help
• 52:31
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• 52:34
  Speaker 6: and when you may be in a position to start
• 52:36
  Speaker 6: doing it. Get your free copy today by calling Armstrong
• 52:38
  Speaker 6: Advisory Group at 800-393-4001.
• 52:39
  Speaker 5: That's 800-393-4001.
• 52:40
  Speaker 3: Or you can request the guide at armstrongadvisory.com.
• 52:48
  Speaker 1: The proceeding was paid for by Armstrong Advisory Group, a
• 52:50
  Speaker 1: registered investment advisor. Nothing in the ad or in any
• 52:52
  Speaker 1: Armstrong guide is specific financial, legal, or tax advice. Consult
• 52:54
  Speaker 1: your own financial, tax, and estate planning advisors before making
• 52:56
  Speaker 1: any investment decisions. Armstrong may contact you to offer investment
• 52:59
  Speaker 1: advisory services. Who you name as the beneficiary of your
• 53:01
  Speaker 1: IRA can affect more than who gets the money. Christian
• 53:04
  Speaker 1: Dolan's guide, Why Name Your Estate an IRA Beneficiary, explains
• 53:07
  Speaker 1: how that decision can affect taxes, asset protection, and what's
• 53:11
  Speaker 1: ultimately left for your family. Get the guide today by
• 53:13
  Speaker 1: calling 866-848-5699 or request it online at LegalExchangeShow.com. The proceedings
• 53:19
  Speaker 1: paid for and the views expressed are solely those of
• 53:21
  Speaker 1: Cushing and Dolan. Cushing and Dolan and or Armstrong Advisory
• 53:24
  Speaker 1: may contact you offering legal or investment services. Cushing and
• 53:26
  Speaker 1: Dolan and Armstrong Advisory do not endorse each other and
• 53:29
  Speaker 1: are not affiliated.
• 53:32
  Speaker 7: Our nation's veterans answered the call to serve. Today, the
• 53:36
  Speaker 7: Disabled American Veterans Department of Massachusetts is there to support
• 53:39
  Speaker 7: our veterans through benefits assistance, transportation services, advocacy, and community outreach.
• 53:46
  Speaker 7: Their mission is to ensure no veteran has to face
• 53:49
  Speaker 7: life's challenges alone. You can make a difference by volunteering
• 53:53
  Speaker 7: for the DAV Massachusetts or making a donation.
• 53:56
  Speaker 5: Learn more at davma.org.