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Ask Todd: Different ways 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: We are now joined by the one and only Todd
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  Speaker 2: Lutsky from the law firm of Cushing and Dolan. We
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  Speaker 2: got the phone lines open because we call the segment
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  Speaker 2: Ask Todd. You get to Ask Todd your estate planning
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  Speaker 2: questions live on air right now. As I mentioned, phone
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  Speaker 2: lines are open at eight eight eight to zero five
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  Speaker 2: two two sixty three. That is the number to call again.
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  Speaker 2: Eight eight eight to zero five two two sixty three
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  Speaker 2: is the number to call to ask Todd your estate
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  Speaker 2: planning questions. Reminder, we usually get through maybe two, occasionally
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  Speaker 2: three of these, so do get calling early and often
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  Speaker 2: to make sure we get to you. That number again
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  Speaker 2: is eight eight eight two zero five two two six three,
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  Speaker 2: mister Lutsky, how are you doing today?
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  Speaker 3: I am doing just fine, Hugh, I'm good.
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  Speaker 2: I'm I'm looking actually for someone to brush their teeth
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  Speaker 2: with me every morning.
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  Speaker 3: You don't like going it alone, Well.
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  Speaker 2: My dentist say is that brushing alone won't prevent cavities.
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  Speaker 3: Well, that's true.
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  Speaker 2: I'm looking for someone, you know, to kind of help
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  Speaker 2: out a little bit, Todd, I want to talk a
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  Speaker 2: little bit about concerns about leaving money to the next generation. Yes,
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  Speaker 2: if someone is nervous about leaving a large sum of
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  Speaker 2: money to a child or grandchild because they don't want
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  Speaker 2: them to blow all that money at once, what tools
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  Speaker 2: are available to spread out when someone receives an inheritance, and.
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  Speaker 4: So when you use a trust, and we use them
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  Speaker 4: for men things, and we focus lots of times on
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  Speaker 4: using trusts for things like probate and taxes. But I
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  Speaker 4: think and what you're asking me, Chuck, is also true
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  Speaker 4: that the family behind the estate plan is even better.
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  Speaker 4: And that's where the trust lives on after you're dead,
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  Speaker 4: to control things. Just like you mentioned, how and when
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  Speaker 4: people get assets to me can be more important than
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  Speaker 4: the other stuff. Although you need to protect the asset
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  Speaker 4: to make sure it's there to provide for the family.
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  Speaker 3: So you need the trust for that part.
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  Speaker 4: But if you're going to leave assets for children or
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  Speaker 4: any beneficiary of your choosing, one way to do it is,
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  Speaker 4: you know, stagger distributions. It's pretty simple. You could say,
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  Speaker 4: you know what, my kids are pretty level headed. I
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  Speaker 4: think they're pretty good with money. We don't have a
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  Speaker 4: big drug problem, we don't have an alcohol problem, they're
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  Speaker 4: not spend thrifts. So what I'll do is just because
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  Speaker 4: they're young. And this would depend on how old you are.
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  Speaker 4: Of course, when you're doing your planning, you know I've
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  Speaker 4: got younger kids, and so if we die today, I
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  Speaker 4: would want my kids to get it at certain ages
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  Speaker 4: twenty five, thirty, thirty five years of age, you know,
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  Speaker 4: and that way, as they reach those ages, the trustee
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  Speaker 4: would have to make a distribution. So at twenty five,
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  Speaker 4: the trustee or I should say, the kid could pound
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  Speaker 4: the table and say I want one third of my bucket,
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  Speaker 4: and the trustee would have to comply. Now at thirty,
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  Speaker 4: I want, you know, half the balance, which is another third,
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  Speaker 4: and the trustee would have to comply. And so prior
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  Speaker 4: to those ages, However, the trustee will have discretionary power
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  Speaker 4: for distributions such as you know, the kids going Usually
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  Speaker 4: we tie it to certain standards like health, education, welfare,
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  Speaker 4: and support. We call it maintenance and support the heymn's standards,
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  Speaker 4: and so that way, if the kid is going to
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  Speaker 4: college and needs money for college, the t trustee would
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  Speaker 4: not be able to say no. But if the trustee
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  Speaker 4: is if the kid is gonna say, you know, I'm
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  Speaker 4: taking a weekend in Vegas, well maybe that's not a
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  Speaker 4: good distribution time. And so the trustee would have some
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  Speaker 4: discretionary play over distributions during those ages. But again, as
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  Speaker 4: they reach those predetermined ages, mandatorily, the trustee couldn't say
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  Speaker 4: no if the kid wants it.
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  Speaker 2: With Todd Letski from the law firm of Cushing and Dolan,
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  Speaker 2: phone lines still have space on them. If you've got
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  Speaker 2: estate planning questions that you want answered, eight eight eight
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  Speaker 2: to zero five two two sixty three is the number again,
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  Speaker 2: that number is eight eight eight two zero five two
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  Speaker 2: two six three. Maybe you've got a question about in
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  Speaker 2: a state plan you've already done. Maybe you got in
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  Speaker 2: a question, Maybe you got a question about, hey, should
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  Speaker 2: I be doing something, or am I taking the right
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  Speaker 2: approach within the state plan that I'm working on. Either way,
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  Speaker 2: Todd's available right now to answer your questions live on
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  Speaker 2: air eight eight eight to zero two two sixty three.
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  Speaker 2: We're going to take a quick break here, but when
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  Speaker 2: we come back, it's right to your questions with Todd.
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  Speaker 2: That number again is eight eight eight two zero five
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  Speaker 2: two two six 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: Radio Network.
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  Speaker 2: All right, let's get right to your questions with Todd Lutsky.
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  Speaker 2: First up, we got Nancy in Norwell. Nancy, what's your
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  Speaker 2: question for Todd?
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  Speaker 5: Hi? I happen to be a beneficiary of the Tuna
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  Speaker 5: state that my father set up. And he set it
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  Speaker 5: up and he had my older brother and sister is
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  Speaker 5: the executors, okay, But unbeknownst to him, the executors met
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  Speaker 5: with the attorney that are originally set up the irrevocable
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  Speaker 5: trust and then decided to rearrange it and change it
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  Speaker 5: with out my parents wishing for that to be done.
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  Speaker 4: Okay, so I'm a little confused. Let me ask some
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  Speaker 4: more questions. So, first of all, you mentioned the word executor.
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  Speaker 4: So brother and sister are executor. That means their executor.
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  Speaker 4: Executor means over the will, just so you they have
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  Speaker 4: control as an executor, they would only have power over
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  Speaker 4: a will or in other words, only controlling assets that
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  Speaker 4: would be in the hands of the decedent in their
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  Speaker 4: own name, not joint no designated beneficiary on it, just
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  Speaker 4: like a bank account that was in let's say dad's
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  Speaker 4: name when he died.
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  Speaker 3: So two things.
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  Speaker 4: One, they only have control over assets that are in
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  Speaker 4: the decedent's name alone on the date of death. And two,
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  Speaker 4: no power whatsoever until the parent dies. So when you're
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  Speaker 4: asking the question, they're trying to change the trust. But
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  Speaker 4: parents are alive.
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  Speaker 3: At this time. Yeah, okay, are your parents still alive?
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  Speaker 5: No?
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  Speaker 4: Okay, So while your parents were alive, that irrevocable trust,
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  Speaker 4: which I've never read so it's hard for me to address,
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  Speaker 4: it could be changed like our medicaid. Irrevocable trusts can
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  Speaker 4: be changed right by something known as a limited power
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  Speaker 4: of appointment. But that limited power of appointment is granted
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  Speaker 4: to the parents the creators of the trust donors if
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  Speaker 4: you will, not a trustee and not an executor. So,
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  Speaker 4: first of all, the executor has no power over the
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  Speaker 4: trust because that has nothing to do with it. It's
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  Speaker 4: only a will. And so then the only other person
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  Speaker 4: that could change the trust would be a trustee, who
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  Speaker 4: has no power to change beneficiaries on a trust. But
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  Speaker 4: your parents, while they're alive, might have that power if
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  Speaker 4: it's built in a limited power of appointment. So I
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  Speaker 4: think what you're gonna need to do is you're gonna
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  Speaker 4: need to really find out. Your question is spot on.
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  Speaker 4: You should be asking these questions. But while your parents
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  Speaker 4: were alive, they very well may have had the power
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  Speaker 4: to change the document. Now do you know in fact
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  Speaker 4: that the document was changed before they died?
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  Speaker 6: Yeah?
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  Speaker 3: And did that change in the document cut out you?
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  Speaker 5: Uh? Not that I'm aware of.
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  Speaker 3: No, did it benefit the brother and sister more than you?
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  Speaker 5: Yep? And as children?
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  Speaker 4: So then what you need to do is, even if
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  Speaker 4: the parents did make the change while they were alive,
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  Speaker 4: then your only argument might be was their undue influence
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  Speaker 4: by the brother and sister over the parents manipulating them
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  Speaker 4: to make the change. And if you want that's going
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  Speaker 4: to require litigation. I'm not telling you to do it.
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  Speaker 4: Litigation is ugly and expensive, but and you've got to
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  Speaker 4: find out make sure there's a not a no contest
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  Speaker 4: clause in there, because then you could lose everything if
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  Speaker 4: you challenge it and there isn't no contest clause. So
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  Speaker 4: you've got to tap dance around and really pay attention
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  Speaker 4: before you just litigate. But I think a good hire
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  Speaker 4: a good lawyer before you do that, and they'll decide
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  Speaker 4: whether litigation makes sense or not. Okay, So I hope
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  Speaker 4: that helps a little bit. You really are going to
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  Speaker 4: need to just check into this before you litigate. But
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  Speaker 4: it is possible Mom and Dad had the power to
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  Speaker 4: change it. And if they did and it wasn't by
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  Speaker 4: undue influence, then it is what it is. But if
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  Speaker 4: you feel really strongly that it was done by undue influence,
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  Speaker 4: then hire a litigator in and get it, you know,
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  Speaker 4: look into.
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  Speaker 3: It, folks. That is exactly why.
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  Speaker 4: We're giving away the guide this month called how to
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  Speaker 4: Leave Assets to Beneficiaries. Because the trusts do that, they
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  Speaker 4: control how the assets get to your family, how when,
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  Speaker 4: why they can do things from creditor protection generation skipping
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  Speaker 4: tax benefits, divorce protection. They can provide outright distributions, they
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  Speaker 4: can provide staggered or distributions, or distributions based on you
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  Speaker 4: know who gets what. Maybe that sounds like what was
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  Speaker 4: going on in this case with Nancy. But folks, this
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  Speaker 4: can be one of the most important parts of your
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  Speaker 4: estate plan. So if you've done your plan, call and
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  Speaker 4: get the guide because it might give you ideas on
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  Speaker 4: how to change it. If you haven't done your plan,
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  Speaker 4: certainly call and get it because it will give you
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  Speaker 4: ideas on how to leave your assets to your families.
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  Speaker 4: Eight six six eight four eight five six nine nine
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  Speaker 4: or Legal Exchange Show dot com again eight six six
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  Speaker 4: eight four eight five six nine nine or Legal Exchange
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  Speaker 4: Show dot com.
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  Speaker 2: Todd, I get another one for you here. Let's go
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  Speaker 2: to Stephen in Spencer. Stephen, you are on with Todd Lutsky.
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  Speaker 6: Hey, Tod, how you doing?
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  Speaker 5: Thanks for having me?
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  Speaker 3: Uh huh, what's up?
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  Speaker 5: Hey?
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  Speaker 2: I get a question.
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  Speaker 6: I'm thinking about doing a trust for my kids. I'm
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  Speaker 6: just wondering if I put the money in the trust.
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  Speaker 5: Obviously I pay fees to the firm. Are there a
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  Speaker 5: fee that they would have.
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  Speaker 2: To pay to finalize the trust to get the money
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  Speaker 2: or is it a one time deal?
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  Speaker 4: So Stephen, a couple of questions. First one, just so
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  Speaker 4: I can help you with the kind of trust.
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  Speaker 3: How old are you I'm fifty eight. And how many
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  Speaker 3: kids there'll be? Three?
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  Speaker 1: Three?
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  Speaker 3: Are you married, divorced? Single?
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  Speaker 1: Married?
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  Speaker 3: Married?
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  Speaker 4: Okay, good, so you know again the size of your
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  Speaker 4: estate will matter, right if you want revocable trusts. But
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  Speaker 4: let's just focus on your trust question. In general, when
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  Speaker 4: you create a trust, you should pay a fee to
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  Speaker 4: the firm to create the trust. Generally it's a one
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  Speaker 4: time flat fee. Pay it so, and in fact I
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  Speaker 4: recommend that when clients are going to get their firm
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  Speaker 4: get their estate planning done, they should ask and it should.
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  Speaker 3: Probably be a fat flat fee hourly.
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  Speaker 4: You kind of get a little nervous, so flat fee,
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  Speaker 4: one time to the firm ongoing. No, you've signed everything,
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  Speaker 4: you executed, everything you pay. Your flat fee trust lives
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  Speaker 4: on during your life. There is no annual fee to
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  Speaker 4: the firm. At least, we don't charge an annual fee
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  Speaker 4: just because you have a trust. No, maybe you've got
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  Speaker 4: to pay an annual fee to have an income tax
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  Speaker 4: return done for the trust. You know, if it's an
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  Speaker 4: irrevocable trust. A revocable trust does not even require the
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  Speaker 4: filing of tax return, so no fee there. Short of that,
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  Speaker 4: I don't see any fees, And even operationally, you know,
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  Speaker 4: kids taking money out of the trust is not a fee.
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  Speaker 4: In fact, they might be trustees when you pass away,
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  Speaker 4: So hopefully that helps a little. I don't think there's
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  Speaker 4: any big ongoing fee for you. There you go, Todd,
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  Speaker 4: Let's do one more here. We've got Dave on the cape. Dave,
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  Speaker 4: you only got a couple of minutes here, so you've
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  Speaker 4: got to be quick. But what's your question for Todd?
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  Speaker 6: Okay, father in lost houses in an irrevocable trust. Okay,
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  Speaker 6: if he sells the house and moves into an assisted
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  Speaker 6: living facility, can he use that to pay rent there?
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  Speaker 6: The money took pay the rent at the assistant living.
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  Speaker 4: So one you're going to I'm going to have to
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  Speaker 4: know more about the trust. But let me give you
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  Speaker 4: my thoughts. So, if it's a Medicaid irrevocable trust and
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  Speaker 4: was designed ultimately to protect assets from the cost of
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  Speaker 4: nursing home care, I understand he's going into assisted living
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  Speaker 4: and not a nursing home at the moment. That doesn't
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  Speaker 4: mean that he might not end up there, but at
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  Speaker 4: this point he's not there. And so what will happen
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  Speaker 4: is you sell the house, the money will go into
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  Speaker 4: the trust remained protected. If it was designed to be protected,
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  Speaker 4: there should be no adverse capital gains tax. In the
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  Speaker 4: event that it's a grant or trust, taxes will be paid,
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  Speaker 4: money will sit there. There might be language in the
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  Speaker 4: trust that says he's entitled to the income from the trust.
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  Speaker 4: So if there's a million dollars in the trust because
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  Speaker 4: he sold a house and it's generating fifty thousand a
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  Speaker 4: year in income, yeah, he's entitled to that income and
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  Speaker 4: you can certainly use that money to pay the assisted
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  Speaker 4: living facility. So I just don't know how much income
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  Speaker 4: is going to be generated by the trust. And then
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  Speaker 4: you would really have to read the document pretty closely
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  Speaker 4: to find out what his access to principle is in
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  Speaker 4: the trust. So, in my example, if it was a
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  Speaker 4: million dollar home, that million dollars less taxes is principal
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  Speaker 4: and not sure what his access to principle is, so
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  Speaker 4: you have to read it to see if there's any
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  Speaker 4: way for him to access to principle to pay for
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  Speaker 4: the assisted living. But at least I hope that was
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  Speaker 4: a little helpful and best I could do without reading
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  Speaker 4: the document.
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  Speaker 2: Mister Lutski, thank you so much for joining us today.
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  Speaker 2: We appreciate the time, always pleasure.
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  Speaker 1: This has been asked on on the Financial Exchange Radio Network,
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  Speaker 1: asked on with Todd Ledskey has been presented by Cushing
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  Speaker 1: and Dolan, serving Massachusetts and New England for more than
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  Speaker 1: thirty years, helping families with the state and tax planning,
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  Speaker 1: Medicaid planning and probate law. Call hundred three nine three
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  Speaker 1: four thousand and one or visit Cushingdolan dot com. The
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  Speaker 1: views expressed in this segment are solely those of Cushing
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  Speaker 1: tax advice. Please consult with your illegal or tax advisor
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