The Legal Exchange: Saturday Edition - Saturday, December 2, 2023

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Episode Transcript

(00:00):
This is the Legal Exchange with ToddLutsky from the law firm of Cushing and
Dolan and Susan Powers of the ArmstrongAdvisory Group. Each week, Todd and
Susan will discuss many topics including estateplanning, how to avoid probate, and
protecting your money from a nursing home. If you need assistance in any of
these areas, or have a questionabout another issue that may affect your future,

(00:21):
call eight six six eight four eightfive six ninety nine to make an
appointment. That's eight six six eightfour eight five six ninety nine. Operators
are standing by. Now Here areyour hosts, Tod Lutzky and Susan Powers.
Welcome into legal exchange with Todd Lutzsky. I'm Susan Powers, of financial
Advisor with the Armstrong Advisory Group andI'm joined by Todd Lutsky, a partner

(00:45):
with the law firm of Cushing andDolan with a master's in taxation. Welcome
Todd. How are you today?I never better? And you I'm good?
Thank you. What do you havefor us? So? I've got
two cases, a Utah appellate courtcase and a New Jersey Appellate Court case
and they're both, interestingly enough,dealing with divorces and second marriages, which
unfortunately is all too common these days, but it really does impact your estate

(01:10):
plan. So in this case,it was as a longer story, but
Ken and Sue Weeks created an irrevocabletrust with two properties in it, and
the real estate was put in therefor these two properties. One deed misspelled
the name of the trust and theother deed misspelled the name of the trustee.
Of course, then they got divorced, and that's where the problem started
because the divorce agreement awarded the propertiesto Ken, but he never took the

(01:34):
property out of the trust, andon and on we go. People who
don't update their estate plan. That'sa problem. And then we're gonna head
over to New Jersey and we haveanother situation where there were bonds created.
So in this case US Treasury bondsand Jean and Mike got divorced in twenty
eighteen. Mike owed Jane two hundredthousand dollars to be paid later when he

(01:55):
sold the house. Time goes onand the payments aren't a curing the right
way. She finds some Treasury bondsand do the Treasury bonds were never changed
as to who the pod was andis that a payment? Is that's her
inheritance, Folks, you can seethe problems when you get a divorce.
You got to revisit your estate planeverything, and folks setting all that aside,

(02:17):
it is a new month when wetalk about doing a state plan.
Whether you're married or not, youcertainly need to do your estate plan,
or if you're divorced or not,you need to do your estate plan.
And this one is called a taleof two objectives where you can reduce your
estate tax and increase your asset protectionplanning at the same time. So some

(02:38):
people might just want to do astate taxes. This guide shows you how
to reduce those, and some peoplewant to do nursing home planning. Maybe
you need both. This guide showsyou how to do both. And most
importantly, the new mass ve statetax it changed, it went up.
In this guide it explains the wholeMassachusetts of state tax and gives you any

(03:00):
example on how to calculate the newmass estate tax and how to save your
estate taxes. So please call andget it. A Tale of two objectives
reducing a state taxes, increasing assetprotection planning it's eight six six eight four
eight five six nine nine or LegalExchange Show dot com again eight six six

(03:20):
eight four eight five six ninety nineor Legal Exchange Show dot com. You
give your family the gift of astate tax elimination this season? Why not?
I would enjoy that. I wouldenjoy that gift. Yeah, this
new state tax exemption is super important. It's brand new guide, folks,
try and get it all right.Let's head back to Utah and see if
we can't solve this person's problem.So, Canon Sue Weeks create this irrevocable

(03:44):
trust. They put two pieces ofreal estate in it, and late and
the one deed misspelled the name ofthe trustee. One deed misspelled the name
of the trust. Well, asyou might imagine, Ken and Sue get
divorced later on, and there's asettlement agreement. In the settlement agreement awards
the two properties to Ken, whichhe then leaves in the trust. That's

(04:05):
kind of a problem, wher,it's a yourrevicable trust. Well, Ken,
then Mary's Michelle shocker right and writes. Ken starts writing notes telling the
trustee, reminding the trustee that histwo kids and Michelle are beneficiaries of this
trust, and Michelle is allowed tolive in this property when I die.

(04:28):
Well, Ken died unexpectedly, andMichelle tries to enforce these notes in these
writings and says, hey, waita minute, I get to live in
the property. She contends that themisspellings of the deed into the trust and
the trustee's name created a whole newtrust, and she's now a beneficiary of
the trust. Plus the trust thatexists says the word set law's wife,

(04:53):
and she says, I'm the wife, therefore I'm a beneficiary. Well,
the trial court didn't really agree withthat. Trial court said, you can
have all these little notes and littlewritings and so forth telling the trustee what
you think, but that does notclear clearly change the intention of the creator

(05:15):
of the trust or how the propertiesare governed by that trust. And in
addition, the word settler's wife wasactually defined in the trust not to be
Michelle. It was defined to beSue. And if they meant it to
be another person, they could havedrafted it that way, and they did
not draft it that way. Andof course the divorce decree itself simply awarded

(05:41):
the two properties to Ken. Itnever mentioned the trust, it never modified
the trust. Therefore it did notchange the trust, and therefore the trust
lives on just fine after the divorce. And so Michelle, you're out,
and by the way, you oweforty five thousand dollars for you efforts.
Oh well, that was pleasant.But you see what happens when you don't

(06:05):
fix things right, right, Andso that's really where we're at here.
I mean, I think they cameup with the right result. I mean,
that's you can't just randomly change irrevocabletrusts. And that's why they work,
folks. That's why planning works sowell, because your intentions will be
honored by the courts. So inthis case, you know, when you

(06:26):
get a divorce, you need togo through and look at what you have,
and you know, are you stillclose with the kids? He apparently
was. He wanted his kids tobe involved, you know, and if
you know, if you're going todo that, you need to make some
changes to your documents. Sure,even if you didn't remarry. But because

(06:46):
hypothetically speaking, his ex wife couldbe receiving assets when he dies if he
doesn't change any of that, right, that's right. It's very important that
you make changes. Now, Iget it. It's an irrevocable trust.
And you can see how he triedto tell the trustee to do things,
but trust he can't just do things. You have to do with the trust
allows, right, but remember alot of the trust that we prepare.

(07:10):
I suspect that this was probably somekind of a medicaid trust because he was
living when he did it, andhe was still kind of enjoying the assets.
If you're still close with your children, then there should be a language
in there that allows you to distributethe property out to your kids, you
know, and then hopefully you couldredo your estate plan and create a new

(07:31):
trust with the ability to take careof both the kids who would be motivated
and the new spouse. Right now, remember don't ever use language in your
document that says you know spouse.Always define it. If you just use
the word spouse, then yes,it could be any new spouse that you
have, and you may not wantthat, right, So I'm a big

(07:54):
fan of not using that kind oflanguage. But so here, that would
be one reason to do this ifyou didn't remarry, Well, maybe the
trust works just fine and takes careof your kids. But read it look
it over. But in his case, he actually remarried, so shame on
him. At this point. Ifyou're remarrying, right, you need to

(08:18):
undo this trust. You need tofigure out a way to break the trust.
There's all kinds of mechanisms that canbe done, from non judicial settlement
agreements that can change documents. There'syou know, decanting, all kinds of
things that can generally be done.And I'm sure there was language in there
that allowed this to be changed insome way. You need to do that,

(08:39):
and then you need to create anew estate plan to take care of
both your children and your new spouse. You know, if that's what you
want to do. Now, Ican tell you that in this case,
he should have put that together.I have a real life story where I
did planning a why ago years six, seven, eight years ago for an

(09:01):
individual. He was single at thetime. He comes back in last week
literally with someone that he's known years. I mean they're older now, I
mean like fifty years ago. They'vehooked up again. So it's really nice.
They're not married, and it wasa pleasure. They're so fun together.
And then he said, I wouldlike to change my irrevocable trust that

(09:24):
I did with you, Todd toadd her, and I said, well,
you can't add her because she wouldnever have been in the class of
beneficiaries. And he said, Itotally get it, he goes. I
just wanted to see if there wasanything else I can do, he goes.
I certainly don't want to disrupt whatI've done and protected from the nursing
home if it can't be. Nowthat it's good. She has her own

(09:46):
assets. He has his own assets, so it's not going to matter.
So we just did planning for herand he provided. She provided a little
bit for him, but for themost part, they can take care of
each other, so it didn't matter. But my point is that the documents
work and they're changeable, folks.But to you're planning, learn how to
do both. If you want estatetax planning and nursing home planning. Get
the brand new guide A Tale ofTwo Objectives eight sixty six eight four eight

(10:11):
five six ninety nine or Legal Exchangeshow dot com. You've been listening to
Todd Lutsky, a partner with thelaw firm of Cushing and Dolan. I'm
Susan Powers, a financial advisor withthe Armstrong Advisory group. We've got much
more to come when we return tothe Legal Exchange with Todd Lutski. Early
estate planning can have many benefits,especially if you want to protect the assets

(10:33):
that you've worked so hard to attain. If you're retired or nearing retirement and
you haven't done your planning yet,you could be missing out on benefits that
can save you thousands of dollars.But there's another advantage. Doing your planning
the right way might also help youeliminate your estate taxes. Cushing and Dolan
are experts in elder law and taxation, and they have a new guide out
this month called the Tale of TwoObjectives, Reducing Estate Taxes and Increasing Asset

(10:58):
Protection. In it, you'll learnhow to keep your assets in your family
and avoid probate while potentially eliminating yourestate taxes. Call eight sixty six eight
four eight five six ninety nine andget your free guide that's eight six six
eight four eight five six nine nine, or you can request your copy online
from our website Legal exchange show dotcom. The proceeding was paid for and
the views expressed are solely those ofCushing and Dolan. Cushing and Dolan and

(11:22):
or Armstrong Advisory may contact you offeringlegal or investment services. Cushing and Armstrong
do not endorse each other and arenot affiliated. Veterans Development Corporation is a
proud partner of the DAV five KBoston. Let's meet their CEO, Mark
Vonner. I enlisted in the MarineCorps when I was eighteen years old,
joining a long line of family memberswho also serve DOT country. After my
service, I connected with the VAHealthcare Systems, where I attended meetings with

(11:46):
disabled veterans and learned for the firsttime about the DAV. I was so
impressed with the work they do tohelp millions of veterans, including providing necessary
services like transportation, education, andfinancial opportunities. Today I stand al pod
of the DAV and the twenty twentythree DAV five K. My company,
Veterans Development Corporation, is a generalcontracting front working with many disabled veterans,

(12:07):
and I hope that by sharing mystory, many other disabled veterans will be
able to reach their goals once theyinclude this service. Veterans Development Corporation is
proudly partnered with the Disabled American VeteransDepartment of Massachusetts and the presenting sponsor of
the dav five K Boston. Ifyou'd like to help our great American heroes
by making a donation, visit davfive K dot Boston. The US Virgin

(12:31):
Islands is Saint Croix, Saint Thomas, and Saint John. Visit one or
all three and enjoy the vacation ofa lifetime. Each island is special in
its own unique way, So whetheryou want the heritage of Saint Croix,
the pristine beaches of Saint Thomas,or the common relaxation of Saint John,
the US Virgin Islands is one ofthe top vacation spots to visit in the
Caribbean. You can expect perfect temperatures, a wide variety of water sports,

(12:56):
world class cuisine, and a vibrantNightLive. From the moment you arrive,
you'll fall naturally in rhythm with theheartbeat of the islands. There's no money
to exchange, and travel from NewEngland could not be easier. Make your
plans now by going to visit USVIIdot com. Learn about all three islands
and plan the ideal vacation for youand your family. America's Caribbean paradise is

(13:16):
waiting for you, so head tovisit USVII dot com for more information and
to reserve your trip today. That'svisit USVII dot com earliest date. Planning
is crucial if you want to protectyour assets and avoid massive tax consequences.
Learn more in cushingan Dolan's new guide, A Tale of Two Objectives, Reducing

(13:37):
estate taxes and increasing asset protection.Call eight six six x eight four eight
five six ninet nine or request yourcopy online from our website Legal exchange show
dot com. The proceeding was paidfor and the views expressed are solely those
of Cushing and Dolan. Cushing andDolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushingand Dolan and Armstrong Advisory do not endorse
each other and are not affiliated.You're listening to the Exchange with Todd Lutsky,

(14:01):
an expert in elder life planning andtaxation. Need help with your estate
plan? Call Todd right now andmake an appointment. Eight sixty six eight
four eight five six ninety nine.That's eight sixty six eight four eight five
six ninety nine. Welcome back intothe Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor withthe Armstrong Advisory Group, and I'm joined

(14:24):
by Todd Lutsky, a partner withthe law firm of Cushing and Dolan with
a master's in taxation. Where arewe headed now, Todd, We're going
to go to New Jersey where wehave an appellate court case there. So
this one is interesting. We haveGene and Mike. They get divorced in
twenty eighteen. Turns out Mike O'sgene about two hundred thousand dollars and that's

(14:46):
to be paid when he sells thehouse. Okay, Well, he paid
Gene about one hundred and ten thousanddollars when he was diagnosed with pancreatic cancer,
and prior to the death, Gene, as power hour of attorney,
took seventeen thousand dollars from the bank. Okay, So she then paid for

(15:07):
the funeral expenses, and so shewas still pow of attorney when after they
got divorced, Yeah, I guess, so oh no, prior to death,
I guess. After the Yeah,he didn't change it. He didn't
change it. And then she paidfor the funeral expenses and some estate.
Then she filed a claim for theestate to say, okay, well he
still owes me about one hundred grandyep. Then she was going through the

(15:28):
house and she found some some SeriesEE bonds that had payable on death to
Gene seventy seven thousand dollars. Soshe cashed those. Now she's got that
money. Then the estate, lookinginto her claim, denied the claim and
said, you know what, youwere paid one hundred and ten thousand dollars.

(15:48):
You took seventeen thousand dollars and yougot seventy seven thousand dollars in bonds.
Not only are we denying your claim, I think you owe the estate
some money. She wasn't overly hapwith that result, so she appealed and
the court reversed. Really yeah,the appellate court reversed, And here's why.
So Gene argued that the lower courtmisapplied the new Jersey marital law to

(16:14):
bonds. Bonds are governed by federallaw, which preempts state law, and
she's right, right, interesting,and the ownership or survivor designation on bonds
can only be changed by reissuing thebond through the US Treasury. If you
didn't get it reissued, it ain'treissued. So a divorce settlement decree cannot

(16:37):
change the ownership of a bond.You got to go through the US Treasury.
Therefore, the seventy seven thousand dollarsthat she got was not a payment
separate and aside, it was aninheritance. Uh so that doesn't count as
the payment. So get her somemore money because she's owed it under the
divorce decree. Interesting, and youknow what, and right, it sounds

(16:59):
like it's right. Right, that'sa fair result. That's exactly what happens
when you get divorced. You know, if you don't go take a look
at your situation, you could leavethings on the table that you might not
have wanted left on the table.Yeah, and that's what happened here.
And so I think it's the rightresult. And I think for you folks
when we talk about planning, wehave a brand new guide this month called

(17:22):
a Tale of Two Objectives where youcan learn how to reduce your estate tax
and do asset protection planning at thesame time if you wish or one or
the other. But the reason Ilike it is you got it, like
this person didn't. Well, maybethey just never went back and did their
planning. So whether you're getting divorcedor whether you are married, make sure
you have a plan in place.And that plan is what this guide talks

(17:48):
about. And this guide also talksabout the brand new Massachusetts of state tax,
so not just states you know aroundNew England, but also Massachusetts a
state tax. The new guide thenew eggs exemption and how to calculate that
is also in here, and soplease call and get it. A tale
of two objectives brand new for themonth eight six six eight four eight five

(18:10):
six nine nine or Legal Exchange Showdot com again eight sixty six eight four
eight five six ninety nine or LegalExchange Show dot com and learn how to
calculate your own estate tax savings.Really what it does. Let's talk a
minute about what we can learn fromthis case. Well, as we said

(18:30):
already, once you have gone througha divorce, you need to think about
changing designated beneficiaries on everything, notjust relying on some revocation statute, which
there is, and I'll talk aboutrevocation statutes in a minute, but it's
important to change things like life insuranceright iras four oh one k's you know

(18:52):
obviously in this case, bonds thatyou can't just randomly change. They would
have told you when you look thatyou needed something more than that, you
needed to go actually get it reissued, old employer plans, old employer life
insurance plans. There's things you don'tthink about. Spend a little time on
this four oh one K idea,Susan, what you're saying employer plans?
Right. I actually had a realreal life situation where, you know,

(19:17):
the wife came in and the husband, who was a partner in a law
firm, no less, went hikingwith his kids, fell down the mountain.
One kid died, the other kidfloated down the river and was survived.
He died, and so the husbanddied. And guess what, he
never changed his four oh one Kand he was divorced, So he had
gotten divorced, never changed it,married, you know obviously visiting with his

(19:41):
kids, went on a vacation.And now she's saying I'm entitled to the
four oh one K, and youknow what she is, you know,
because she was still on it.She was the beneficiary on the four oh
one K. Remember four to onek's are tough, So you can't even
change you as a spouse, youmust be on the four oh one K
unless the spouse signs off, soand usually notarize sign off. Yeah,

(20:06):
so it's not you know, you'vegot to make sure you you actually step
up to the plate. I raysare different, but those employer plans are
different, right, Iras, youcan name anybody you want, you don't
have to name your spouse. Butwow, so that's a really important thing
to think about. So now thereare revocation statutes, and there are some
states, and we have one herein mass and each state has their own

(20:29):
kind of revocation statute that can saveyou in some cases. I'm not telling
you to rely on these save youfrom what time? So there are some
revocation statutes that say, when youget divorced, you know, the life
insurance beneficiary designation automatically revokes the spouseyou know, automatically revokes you know.
So there's certain these revocation statutes allowbeneficiaries to if you get divorced, to

(20:55):
automatically exclude the spouse that's no longerthe spouse. So well, those are
out there to prevent some of thisfrom happening, but clearly not in all
states though, right, I can'tspeak to that. I don't know if
every state has one or not,or how that state statute actually operates another.
What it governs and what it doesn'tgovern is important because take this example

(21:18):
for ourselves in New Jersey here,whether you had a revocation statute or not,
it clearly doesn't govern right. USTreasury bonds those have to be reissued
period, right, And you couldbe in the throes of a divorce.
Yeah, and if someone passes away, they're still legally your wife or your
husband, if you know so,they'll be entitled and they don't make your

(21:42):
rollover in your grave absolutely has tobe you know, retitled. So so,
folks, the message here is inthis case, I don't know if
if after the divorce here, youknow, Gene remarried or didn't remarry,
but he died, so Gene shouldbe thinking about saying, look, book,
I now need to sit down andredo my will and my trust plan.

(22:03):
Because Gene is the survivor, andshe went through this and she's learning
that she did benefit in some waybecause something wasn't changed. That should trigger
her to say, I didn't remarry, and even if I don't remarry,
I'd better at least get my ducksin a row to take care of my
kids if I have them, yeah, or my loved ones. If I
want to leave something to somebody,and then I need to decide whether it

(22:25):
should be a revocable or an irrevocabletrust. I need to make sure I
fund my trust. I need tomake sure my accounts either have their appropriate
designated beneficiary on them or are ownedby a trust. I want to do
that enough. Course, for allof you listening out there who have gotten
divorced and gotten remarried, all themore reason now you need to sit down

(22:48):
and say, I need to sitdown with my new spouse and say,
how are we going to pool ourassets and take care of each other but
not in disinherit my kids or yourkids? All right? How do we
take care of each other and notdisinherit each other's kids and take care of
each other's kids in a way thatwe want to And most importantly, if
one of us die first, howmuch control do I want to give the

(23:11):
surviving spouse over the assets in thedeceased spouse's trust. All things that need
to be thought about. These weretwo prime examples of divorce and how it
can really end up screwing up yourestate plan. If you don't take time
setting all that aside, get thenew guide and learn how to do your

(23:32):
estate plan upfront. It explains howto do all the calculations of your estate
tax eight six six eight four eightfive six nine nine or Legal Exchange show
dot com. You've been listening toTodd Lutsky, a partner with the law
firm of Cushing and Nolan. I'mSusan Powers, a financial advisor with the
Armstrong Advisory Group, and Todd willbe answering your listener questions when we return

(23:56):
to the Legal Exchange with Todd Lutsky. Early estate planning can have many benefits,
especially if you want to protect theassets that you've worked so hard to
attain. If you're retired or nearingretirement and you haven't done your planning yet,
you could be missing out on benefitsthat can save you thousands of dollars.
But there's another advantage. Doing yourplanning the right way might also help
you eliminate your estate taxes. Cushingand Dolan are experts in elder law and

(24:21):
taxation, and they have a newguide out this month called the Tale of
Two Objectives, Reducing estate taxes andincreasing asset protection. In it, you'll
learn how to keep your assets inyour family and avoid probate while potentially eliminating
your estate taxes. Call eight sixtysix eight four eight five six ninety nine
and get your free guide that's eightsix six eight four eight five six nine

(24:41):
nine, or you can request yourcopy online from our website Legal exchange show
dot com. The proceeding was paidfor and the views expressed are solely those
of Cushing and Dolan. Cushing andDolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushingand Armstrong do not endorse each other and
are not affiliated. The US VirginIslands is Saint Croix, Saint Thomas,

(25:03):
and Saint John. Visit one orall three and enjoy the vacation of a
lifetime. Each island is special inits own unique way, So whether you
want the heritage of Saint Croix,the pristine beaches of Saint Thomas, or
the common relaxation of Saint John,the US Virgin Islands is one of the
top vacation spots to visit in theCaribbean. You can expect perfect temperatures,

(25:23):
a wide variety of watersports, worldclass cuisine, and a vibrant nightlike From
the moment you arrive, you'll fallnaturally in rhythm with the heartbeat of the
islands. There's no money to exchange, and travel from New England could not
be easier. Make your plans nowby going to visit USVII dot com.
Learn about all three islands and planthe ideal vacation for you and your family.

(25:45):
America's Caribbean paradise is waiting for you, so had to visit USVII dot
com for more information and to reserveyour trip today. That's visit USVII dot
com. Veterans Development Corporation is aproud partner of the dav five K Boston.
Let's meet their CEO, Mark Vunner. I served probably in the Marine

(26:07):
Corps from nineteen eighty one to nineteeneighty four and was honored to receive the
US Marine Corps Expeditionary Medal, oneof the oldest decorations still issued to active
duty personnel. I started Veterans DevelopmentCorporation to give back to the veteran community.
Many of my employees are former veterans. It is my distinct pleasure to
work with them each and every day. This is why I'm so excited to
be partnering with the Disabled American VeteransDepartment of Massachusetts on this year's DAV five

(26:32):
K. If not for the DAVmany of our disabled veterans would not have
access to critical services that they needto live comfortably. I hope that by
telling my story, many more ofour veterans will achieve their goals in dreams.
Post Service Veterans Development Corporation is proudlypartnered with the Disabled American Veterans Department
of Massachusetts and the presenting sponsor ofthe DAV five K Boston. If you'd

(26:53):
like to help our great American heroesby making a donation, visit DAV fivek
dot Boston. Listening to the LegalExchange, and it's time for Ask Todd,
the segment where Todd will answer yourquestions about anything and everything that's included
in the estate planning process. Onceagain, here's Todd Lutsky and Susan Powers.

(27:14):
Welcome back, Todd. Have afew questions from listeners for you.
First question comes from Shila and Dighton, mass and Shila writes, my husband
and I are worth three point fivemillion in total now that the Massachusetts death
tax has been raised to two million. Do I still need to do a
trust? I have long term careinsurance, so I'm not concerned about nursing
home. About the nursing home andour only son will inherit everything. Okay,

(27:41):
well bother, Yeah, no,you need to bother. There's always
a need to bother. So inthis case, it is true. So
let's just educate everybody a little bitabout the Massachusetts a state tax change,
which is great. And by theway, there's still state tax exemptions in
other states. Need to pay attentionto around New England from Connecticut to Rhode

(28:02):
Island and New Hampshire's our favorite stateto go to die where there is no
estate tax. Maine has an exemption. So but in Massachusetts the exemption,
which was the lowest of all theNew England states, bumped up from one
million to two million dollars, whichnow means it is huge. I mean
it's still the lowest of the NewEngland states, but it's huge relatively speaking.

(28:27):
It's huge for us Massachusetts people.But what that means is that as
a single person, and I thinkwe should address that, if you are
worth two million or less, youwill owe no estate tax. Okay,
because that's that's the threshold. Andit's even a little different than that because

(28:48):
you actually get a credit now.So even if they were to tax you
on the two million. By theway, the tax on two million dollars
in Massachusetts is ninety nine six hundreddollars. Okay, that's the tax on
two million, and that's the creditthat they now give you. So it's
not just that you owe no tax. You actually get a credit. So
they would say, what's the taxon two million, ninety nine six?

(29:10):
Then they give you a credit forninety nine six, and so therefore no
tax. Now that's a little differentthan how it used to be, right
because under the old rules, ifyou gave everything away, like if you
had four million dollars and you gaveeverything away, if you gave away like
two million dollars, you would think, I only have two million left,
and then you would have no tax. If you have a two million dollar

(29:32):
exemption, under the old rules,you would still pay tax on the two
million because you'd have no exemption.Your exemption would be zero. Now if
you do that and you give awaytwo million and you have two million left,
yeah, they're going to calculate thetax on the two million, just
like they would have under the oldrules. But now you have a credit
of ninety nine six, So eventhough the tax comes up to ninety nine

(29:53):
and six on the two million,they give you a credit. Why would
they do that? Was it amistake? I have no idea. But
that's the way the statue tell anybody. That's the way the statue reads.
My friends, so well, thegood news is it has gone up to
two million. To answer Sheila's question, it has gone up to two million.
So for single people, no taxon the first two million. For

(30:15):
married couples, no tax on thefirst four million. But in order to
get that, you must plan.She's saying, do I need to plan?
Yes, you do. As amarried couple, you you. If
you don't plan and you just leaveeverything to your spouse and no trust,
then you waste the first exemption.That first two million dollars when the first

(30:36):
spouse dies is lost and you gotfour million or in this case three point
five million, but you only havea two million dollar exemption. There will
be tax too, so you haveto have your trust so you can grab
the first to diee exemption. You'llhave about one point five million subject to
tax, and that's about one hundredand fifty grand. Why do you want
to do that? Now? Ifyou have a trust, it will grab

(30:59):
or shelter that first two million,or some portion of that two million if
you don't have enough, making itnot taxable when the survivor dies, but
held in trust and enjoying the benefitsof it by the surviving spouse, but
not owned by the surviving spouse.So do you need planning, Sheila?
Yes, and folks, well,the exemption has gone up to two million.

(31:21):
It costs twice as much to notplan, so please do your planning,
and please it's a brand new guidethis month, folks, a tale
of two objectives, reducing a statetaxes and doing asset protection planning at the
same time. Get the guide andit explains to you an example form how
to calculate your mass tax under thenew mass exemption. It gives you examples

(31:45):
of how the benefits are for peoplewho have higher networks. In other words,
if you do your federalistate tax planning, it does a like an eight
or ten million dollar example. Itexplains how to how that works. It
explains how the the state estate taxescalculated and puts an example in there.
And it also tells you that ifyou don't have as much but you want

(32:07):
to reduce the mass tax and protectit from the nursing home, it gives
you an example on how to dothat as well. Folks, get the
new guide. It is brand newthis month eight six six eight four eight
five six nine nine or Legal ExchangeShow dot com again eight six six eight
four eight five six nine nine orLegal Exchange Show dot Com tod our.

(32:30):
Last question comes from Robert in Loudin New Hampshire, and Robert writes,
I moved to New Hampshire to reducemy income taxes, but my health is
failing. I created my irrevocable trustin twenty ten as a New Hampshire resident.
Do I need to create a newtrust if I move back to Massachusetts
to be closer to my family.Does it make a difference if I will

(32:51):
be selling my primary residence in NewHampshire and buying a new home in Massachusetts.
The tough part about answering this questionis, and maybe you can fill
in the blank for me, Susan, is what is Robert worth? I
mean, is he under two milliondollars? I don't know, So let's
assume for the moment that he is. And again it sounds like he's single
anyway, so I'm not sure itwould really matter. So as a single

(33:15):
person, maybe it's not going tomake too much difference because if he moves
back to mass he only has theone two million dollar exemption. Now,
remember, if he becomes a residentof mass he will get that two million
dollars, which it sounds like hewill because he's going to buy a new
house in mass So he probably willnot need to change his trust. So
even though he was a New Hampshireresident when he created it, right,

(33:36):
so it'll it'll be an ear.I don't know if it was irrevocable,
yes, so he created an irrevocabletrust. You do not have to change
your irrevocable trust when you move fromstate to state. I don't care what
state you're in, because if youdid, then no one would ever do
irrevocable trust. Point do you haveto restart your clock? The only thing
that happens to him when he comesto Massachusetts is that that unless they change

(34:01):
the situs of the trust, whichwhat does that mean? Which is the
laws in which that trust will begoverned by the situs where it's located.
If he didn't change that, itwould just say that this trust is governed
by the laws of New Hampshire.So what right doesn't matter. Each state
has, you know, to respectthe other state's laws. And so he

(34:22):
could come here and if it's funded, it would still avoid probate for him.
It would still be protected from thenursing home if that's what it was
designed to do. Yep, thatwon't change moving states. We don't have
to start over or change the clockin any way. That five year waiting
period will still be running just finefor him, and so I would say
no, he should, probably,however, update his will, health care

(34:46):
proxy, power of attorney. Thebasic documents to be Massachusetts documents are those
more states specific than the trust.Yeah, they tend to be a little
more state specific than the trust.So I would say, you know,
to if you're going to become aresident, then do that, okay.
It also helps show that you wantto be sure a resident of the state.

(35:07):
So I would absolutely try to dothat. So I think he can.
He can keep the trust the wayit is and still be okay.
So that's good. So he doesn'thave to change yet. So on the
flip side of that coin, Todd, if someone is in Massachusetts and they
move elsewhere, there are things thatthey need to do if they're going to
keep real estate in Massachusetts. Correct. Yeah, and that's a good point.

(35:29):
So if he you know, ifhis house was left in New Hampshire,
let's let's keep it Robert for aminute, then I'll do yours.
If he left from New Hampshire andcame to mass but kept his house in
New Hampshire, Massachusetts cannot tax theNew Hampshire house, so it does it
matter, right, Okay, Sofor him in New Hampshire doesn't have any
estate tax, so he probably wouldnot need to do anything different. He

(35:51):
could leave it owned by the trust. Massachusetts cannot tax it because it's out
of state property. And we moveon the reverse what you're saying, Susan,
which is a great point. Peoplemove to Florida or New Hampshire.
Yeah, and keep the Cape house. Well, if you keep real estate
in mass even though you move outof mass because again people are moving out

(36:14):
of mass to escape the estate tax. Although you don't have to as much
now because we have a higher exemption. But you can't leave Massachusetts real estate
in your name or in your revocabletrust. It needs to be put in
an LLC. Otherwise Massachusetts will stilltax you as a non resident on the
asset in Massachusetts as a percentage ofyour entire estate. Folks, there's lots

(36:36):
to learn about when you're dealing withyour estate taxes. Get the new guide
A Tale of Two Objectives and learnhow estate tax rules work for federal estate
tax calculations and trusts, and learnhow they work for Massachusetts as well in
state estate taxes eight six six eightfour eight five six nine nine or Legal

(36:57):
Exchange Show Dot. Coming to ToddLutsky, a partner with the law firm
of Cushing and Dolan. I'm SusanPowers, a financial advisor with the Armstrong
Advisory Group. We'll be back withmore after this quick break on the Legal
Exchange with Todd Lutsky. Early estateplanning can have many benefits, especially if
you want to protect the assets thatyou've worked so hard to attain. If

(37:20):
you're retired or nearing retirement and youhaven't done your planning yet, you could
be missing out on benefits that cansave you thousands of dollars but there's another
advantage. Doing your planning the rightway might also help you eliminate your estate
taxes. Cushing and Dolan are expertsin elder law and taxation, and they
have a new guide out this monthcalled the Tale of Two Objectives, Reducing
Estate Taxes and Increasing Asset Protection.In it, you'll learn how to keep

(37:44):
your assets in your family and avoidprobate while potentially eliminating your estate taxes.
Call eight sixty six eight four eightfive six ninet nine and get your free
guide that's eight six six eight foureight five six ninety nine, or you
can request your copy online from ourwebsite Legal exchange show dot com. The
proceeding was paid for and the viewsexpressed are solely those of Cushing and Dolan.

(38:05):
Cushing and Dolan and or Armstrong Advisorymay contact you offering legal or investment
services. Cushing and Armstrong did notendorse each other and are not affiliated.
Veterans Development Corporation is a proud partnerof the dav five K Boston. Let's
meet their CEO, Mark Vunner.I'm no stranger to the military community.
My late uncle Albert Warner, Sir. Probably in the First Marine Division in
World War Two and gave the ultimatesacrifice for his country. I am surrounded

(38:30):
by a family of disabled veterans,including my father Victor and brother Timothy.
I am a veteran and I havededicated my business and my life to helping
veterans. My company, Veterans DevelopmentCorporation, works to help disable veterans every
day, and it's one of thekey reasons why I'm such a big supporter
of Dan Stack and the Disabled AmericanVeterans Department of Massachusetts. I am so

(38:52):
thrilled to be proudly partnered with thisyear's DAV five K. Veterans Development Corporation
is proudly part with the Disabled AmericanVeterans Department of Massachusetts and the presenting sponsor
of the DAV five K Boston.If you'd like to help our great American
heroes by making a donation, visitDAV FIVEK dot Boston. The US Virgin

(39:14):
Islands is Saint Croix, Saint Thomas, and Saint John. Visit one or
all three and enjoy the vacation ofa lifetime. Each island is special in
its own unique way, so whetheryou want the heritage of Saint Croix,
the pristine beaches of Saint Thomas orthe common relaxation of Saint John. The
US Virgin Islands is one of thetop vacation spots to visit in the Caribbean.

(39:36):
You can expect perfect temperatures, awide variety of water sports, world
class cuisine, and a vibrant nightlife. From the moment you arrive, you'll
fall naturally in rhythm with the heartbeatof the islands. There's no money to
exchange, and travel from New Englandcould not be easier. Make your plans
now by going to visit USVII dotcom. Learn about all three islands and
plan the ideal vacation for you andyour family. America's the Caribbean Paradise is

(40:00):
waiting for you, so head tovisit USVII dot com for more information and
to reserve your trip today. That'svisit USVII dot com. Early estate planning
is necessary if you want to protectyour assets from the nursing home, save
money, and potentially eliminate your estatetaxes. Call Cushing and Dolan and get
their new guide called The Tale ofTwo Objectives Reducing Estate Taxes an increasing asset

(40:22):
Protection. Call eight six six xeight four eight five six nine nine.
That's eight six six eight four eightfive six nine nine, or request your
copy online from our website Legal exchangeshow dot com. The proceeding was paid
for in The views expressed are solelythose of Cushing and Dolan. Cushiingan Dolan
Indoor Armstrong Advisory may contact you offeringlegal investment services. Cushingendolan and Armstrong Advisory
do not endorse each other and arenot affiliated. Your tune to the Legal

(40:43):
Exchange with Todd Lutsky. If youare a loved one needs a nursing homestay,
call Todd right now at eight sixsix eight four eight five six ninet
nine and let him make sure yourassets are protected. That's eight six six
eight four eight five six nine nine, or visit him online at Legal exchange
show dot com. Welcome back intothe Legal Exchange with Todd Lutsky. I'm

(41:04):
Susan Powers, a financial advisor withthe Armstrong Advisory Group, and I'm joined,
of course by Todd Lutsky, apartner with the law firm of Cushing
and Dolan with a master's in taxation. Todd, I just want to go
back to when you were talking aboutthe Massachusetts a state tax exemption amounts going
to two million dollars. Yes,that was put into place retroactive to January

(41:29):
first of this year. That's agreat point. That's a very good point.
It absolutely is. So what thatmeans in English for people is if
you died in January and you're filingin a state tax return for mass because
you were worth three million, andyou're married, right, and one spouse
died, and you're filing a taxreturn thinking you owe tax in September,

(41:54):
you can go back and amend thereturn depending on how much you're worth,
and say, oh, I getto use a two million dollar exemption,
not one even though I died inJanuary. In the law passed in I
don't even know, probably passed inSeptember October. It's recent, so it's
retroactive back. So can you geta refund if you've already paid your taxes?

(42:15):
Yes? So take a single person, right who died and is worth
three million? Is worth say isworth two million? Yes, and wrote
a check for one hundred grand inSeptember because they died in January and the
tax return is due nine months afteryou die. Yes, you will get
a refund. Now what they're tellingus at the state level is don't worry.

(42:37):
You don't have to file a newtax return. You know, on
amended tax you will be getting acheck as a refund because you died,
and they will see that you nowdon't owe tax. That's what they're saying.
Huh. I don't know if I'myeah, if i'm if i'm if

(42:59):
I haven't a an accountant who didthis for me, I might say,
you know, what's the downside ofshooting off an amended return right and requesting
the refund. I'm not going toget double refund, but I put you
higher in the pile of what they'redoing. Yeah, I don't. I
don't know that I would. Imean, I might wait a little bit,
see, you know, I mightwait till the end of the year
to see, you know, whatthey've done, how much they've returned.

(43:20):
But yeah, yeah, it's goodnews though it's retroactive. So yeah,
please folks, if you had aloved one that you died earlier this year,
in the first nine months of theyear, and you feel like you
paid state taxes unnecessarily in Massachusetts becausenow the exemption's two million, you know,
go talk to your your lawyer mhm, or you're a state administration
attorney and say, hey, howdo we how do we get a refund

(43:44):
here? I want my money back. So, if you do have someone
who's worth less than two million thatpasses away, do you actually have to
do anything when they die? Todd, Well, yeah, you still need
to, you know, talk withyour state administration attorney and find out because
if you died with assets in Massachusettspiece of real estate, there's still a
lean on it. You still haveto show Massachusetts that there's no tax to

(44:05):
even if you were never in anursing home. Right, two different leans.
There's a mass Health lean if you'rein a nursing home. So if
you're never in a nursing home,there will be no mass Health lean.
But if you die period nursing homeor not, they will have an at
death lien for death taxes in massThey won't let you just sell the property

(44:28):
without showing them signing. And there'slike a form M seven ninety two if
you're over two million to release thelien. Or there's a simple AFFI David
sixty five CE affid David form thatsays I'm testifying that there is no tax
to because I'm under the exemption.Okay, So you have to file that
to release the lian so that thebeneficiaries can sell the property. Okay.

(44:49):
And that goes on automatically on anypiece of real estate when someone dies in
mass So the confusion thing about itis if you go to the registry and
look, you will find no lean. Okay, you will never find a
lian. But what you have todo, as the surviving beneficiaries of the
decedent is file the release of lienbecause the buyer's attorney will say, oh,

(45:13):
I noticed that the owner is deceased, and until there's a release of
lean filed, we assume there's amasslean there. So no one in Massachusetts
files it. You have to filethe release. God. You know,
folks, you don't think of thesethings, but it's important to do your
planning, get your trusts in order. The new guide this month is a

(45:34):
tale of two objectives. It basicallyexplains federal estate taxes and state estate taxes,
in this case specifically Massachusetts, butit talks about generally state estate taxes.
It gives you formulas you could plugyour own estate plan into this guide
and your own numbers and learn howmuch savings you have in a state taxes

(45:57):
and how they work. It discussesportability and the new Massachusetts of state tax
and it helps you do both ifyou want to then say okay, that's
great, I don't need federal butI want to save my estate taxes at
the state level and protect my assetsfrom the nursing home. It shows you
how that works as well. Calland get the new guide A Tale of
Two Objectives eight six six eight foureight five six nine nine or Legal Exchange

(46:22):
Show dot com Brand New for theMonth eight six six eight four eight five
six nine nine or Legal Exchange Showdot com. So Todd, you mentioned
portability is one of the topics that'sincluded in this guide. We don't talk
about it very often. We've mentionedit in the past, but not a
lot. So what is portability?Yeah, so portability is still around and

(46:45):
it's very important. It came outand I don't think in early two thousand,
I want to say, or twentyten or something, but it's been
around for a while and it allowsyou to use the unused exemption of the
first spouse to die. Example.Right now, we have roughly a twelve

(47:07):
point nine let's just call it thirteenmillion for easy numbers. We have a
thirteen million dollar exemption. If youdid no planning by accident, and there's
many people who do this and youdie and leave everything to your spouse,
you have used none of your exemptionbecause everything just passed to the spouse,
and you get a big marital deduction. Now it's not automatic, so you

(47:31):
got to be careful here. Thisdoesn't just automatically happen. So if you've
not done any planning and you justdon't do anything when the spouse dies,
you'll lose this. So you haveto then actually file a federal return.
And if there's no tax due,you have five years to file that federal

(47:52):
return even though one wasn't due becauseyou were under under the thirteen million dollar
exemption, you file the return toelect portability. If you don't file that
return, you will not get portability. So please FORLLW And that's a big
chunk of change you'd be saving havingit. It is not an automatic thing,

(48:13):
but it's wonderful, so if youknow about it, you'll file.
And so in this example where myclient died with say eight million dollars of
assets as a married couple and don'tdo any planning. If the surviving smouse
spouse is aware of it, theywill say I got to file a return
federally to elect portability because my spousewho died used none of his thirteen million

(48:37):
dollar exemption. So now I havea thirteen million dollar coupon as a surviving
spouse to add on when you die, to add on to whatever the federal
exemption is available when I die.So if they lower the exemption in twenty
twenty six to six million, Iwill have the thirteen million. You're gonna
have nineteen and that doesn't get thecoupon. That's right, Wow, coupon

(49:00):
does not get reduced. So it'sa wonderful thing to have, but we
don't rely on it. You needto do your planning to shelter on sets.
It's better to shelter them than relyon the portability. Sometimes it sounds
a little too good to be true, and it doesn't apply to states,
so be very careful. Don't think, oh, for some reason, I

(49:22):
can just do this and it's gonnabe fine for the state. No,
it does not apply for states.There's got to be some kind of a
catch that goes along with it justsounds too easy. Well, when you
get it, I mean, yeah, it's it doesn't index for inflation.
So in other words, it's thirteenmillion is stuck right, doesn't grow,
Whereas right now the exemption has beenincreasing for inflation each year. Remember it

(49:45):
was like eleven million, then itwent up to twelves, up to thirteen.
I think it's going to be likethirteen million, sixty thousand dollars if
something come twenty twenty four. Nota lot of an increase. It's still
pretty good. No, it's thirteenmillion, six hundred thousand. Yeah,
I'd have to check out something.It's definitely going up. But it's not
index for inflation. It's not automaticlike we talked about. It doesn't apply

(50:07):
to generation skipping tax exemptions. Folks, you really need to get your planning
done and use these trusts. Thisguide this month, A Tale of Two
Objectives explains how the trusts operate toshelter both state and federal estate taxes,

(50:27):
and they do it also to shelterassets from the nursing home, so you
have both options. A Tale ofTwo Objectives brand new guide, Please get
it eight six six eight four eightfive six nine nine where you can go
to the website and download it.Legal Exchange Show dot com. Todd Lutsky
from the law firm of Cushing andDolin, thank you so much. Thank

(50:49):
you, Susan. Always a pleasure. I'm Susan Powers, of Financial Advisor
with the Armstrong Advisory Group. Wethank you for listening and we'll be back
again next week on the Legal Exchangewith Todd Lutsky. Early estate planning can
have many benefits, especially if youwant to protect the assets that you've worked
so hard to attain. If you'reretired or nearing retirement and you haven't done
your planning yet, you could bemissing out on benefits that can save you

(51:12):
thousands of dollars. But there's anotheradvantage. Doing your planning the right way
might also help you eliminate your estatetaxes. Cushing and Dolan are experts in
elder law and taxation, and theyhave a new guide out this month called
The Tale of Two Objectives, ReducingEstate Taxes and Increasing Asset Protection. In
it, you'll learn how to keepyour assets in your family and avoid probate

(51:32):
while potentially eliminating your estate taxes.Call eight sixty six eight four eight five
six ninet nine and get your freeguide that's eight six six eight four eight
five six nine nine, or youcan request your copy online from our website
Legal exchange show dot com. Theproceeding was paid for and the views expressed
are solely those of Cushing and Dolan. Cushing and Dolan and or Armstrong Advisory

(51:52):
may contact you offering legal or investmentservices. Cushing and Armstrong do not endorse
each other and are not affiliated.The US Virgin Islands is Saint Croix,
Saint Thomas, and Saint John.Visit one or all three and enjoy the
vacation of a lifetime. Each islandis special in its own unique way,
so whether you want the heritage ofSaint Croix, the pristine beaches of Saint

(52:15):
Thomas, or the common relaxation ofSaint John, the US Virgin Islands is
one of the top vacation spots tovisit in the Caribbean. You can expect
perfect temperatures, a wide variety ofwatersports, world class cuisine, and a
vibrant nightlike from the moment you arrive, you'll fall naturally in rhythm with the
heartbeat of the islands. There's nomoney to exchange and travel from New England

(52:36):
could not be easier. Make yourplans now by going to visit USVII dot
com. Learn about all three islandsand plan the ideal vacation for you and
your family. America's Caribbean paradise iswaiting for you, so had to visit
USVII dot com for more information andto reserve your trip today. That's visit
USVII dot com. Veterans Development CorpsOpera is a proud partner of the DAV

(53:01):
five K Boston. Let's meet theirCEO, Mark Vunner. I enlisted in
the Marine Corps when I was eighteenyears old, joining a long line of
family members who also served Dot Country. After my service, I connected with
the VA Healthcare Systems, where Iattended meetings with disabled veterans and learned for
the first time about the DAV Iwas so impressed with the work they do

(53:22):
to help millions of veterans, includingproviding necessary services like transportation, education and
financial opportunities. Today I stand aproud partner of the DAV and the twenty
twenty three DAV five K. Mycompany, Veterans Development Corporation, is a
general contracting front working with many disabledveterans, and I hope that by sharing
my story, many other disabled veteranswill be able to reach their goals once

(53:43):
they include their service. Veterans DevelopmentCorporation is proudly partnered with the Disabled American
Veterans Department of Massachusetts and the presentingsponsor of the DAV five K Boston.
If you'd like to help our greatAmerican heroes by making a donation, visit
DAV fivek dot Boston.