The Legal Exchange: Saturday Edition - Saturday, June 8, 2024

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, includingestate planning, how to avoid probate,
and protecting your money from a nursinghome. If you need assistance in any
of these areas, or have aquestion about another issue that may affect your
future, call eight sixty six eightfour eight five six ninety nine to make

(00:24):
an appointment. That's eight sixty sixeight four eight five six ninety nine.
Operators are standing by. Now Hereare your hosts, Tod Lutsky and Susan
Powers. Welcome into the Legal Exchangewith Todd Lutsky. I'm Susan Powers,
a financial advice with the Armstrong AdvisoryGroup, and I'm joined by Todd Lutsky,

(00:44):
a partner with the law firm ofCushing and Dolan with a master's in
taxation. Welcome Todd, How areyou today? I am never better in
you? Excellent? Thank you.What do you have for us? A
couple of cases as you might expect, Iowa Supreme Court case and an Ohio
a pellic Cord case, my oldstomping grounds. I always like to go
back there. So this one,this first one, is basically large gifts

(01:11):
are not always because of undue influenceor lack of capacity. So that's what
we're going to find out here.How Janice first met Albert when he rented
a house from her and her latehusband. But they stayed in touch with
each other and did a lot ofthings, and as you might imagine,
he ended up getting stuff and that'snot always bad can be, And we're

(01:33):
going to learn about how to actuallytreat businesses and how to dispose of them
in that situation. Then we're gonnago over to Ohio and look at this
appellate Cord case here where you basicallyhave a parent who is not always the
best guardian or are they right?Or a child or a sibling, how
do we deal with special needs situationsand planning around it. So we're going

(01:57):
to find out a lot about what'sgoing on in that world. So all
that said, by the way,both of these dealing with a business will
find a hog farm actually or aspecial needs child require trust planning, And
that really leads us into the guidethis month, which is the differences between
revocable and irrevocable trusts, which isreally a guide that answers the most frequently

(02:22):
asked question, and I'm happy thatyou can finally get that answered by getting
the guide. It talks about thedifferences not only on the income tax side,
gift tax side, of course,estate tax side. It explains that
on both of these. It talksabout the operation of the trust, what
you can do and not do duringlife, and you can compare them and

(02:43):
get yourself started as to determining whichplan is right for you. And I'll
leave you with this thought that youmight find that there's more similarities than differences.
Get the guide, folks. Revocableversus irrevocable Trusts eight six y six
eight four eight five six nine nineor Legal Exchange Show dot com again eight

(03:05):
six six eight four eight five sixnine to nine or Legal Exchange Show dot
Com. Over to Iowa we goSupreme Court Big case. So Janie meets
Albert as I told you when theywere renting their house from He rented the
house from from her and her nowlate husband, But after her husband died

(03:25):
they remained friends and afterwards after theywould go on trips together Janis would pay,
not Albert. They agreed at somepoint to raise hogs on a farm
together, and they put together apartnership. Jannis even gave Albert ten acres
of land as tenants in common withJanice to raise these hogs. Albert did

(03:49):
not contribute anything to this venture financially. Financially, and then in twenty seventeen
and twenty nineteen, Janis had somediagnosis of cognitive assessment issues and a little
early dementia and mild cognitive of functiondisability mild. In twenty nineteen, Jannis
ended up giving her half of theinterest in the hog farm to Albert.

(04:13):
So now Albert owns the whole hogfarm. Yep. Well, Laura the
daughter found out and wasn't really happyabout that. She found out from the
accountant who recalled Janis and Albert comingin to the accountant's office to discuss it.
Janis actually did all the talking,not Albert, and she was actually
able to draw out all the boundarieson the aerial map to me that shows
cognitive share function. Well, thetrial court and the appellate court both agreed

(04:39):
with Laura and said, you knowwhat, we got to set this deed
aside for lack of capacity and undueinfluence, and both courts agreed. Well,
Albert wasn't too thrilled with that,so he appealed to the Supreme Court,
and as you might imagine, theSupreme Court reversed, stating that in
order to have undue influence, whichis true, you need to have a

(05:00):
confidential relationship. Let me explain whatthat means a couple of things. One,
Janie didn't rely solely on Albert forany advice. She relied on her
accountant, as we heard, shehad relied on another tenant, farmer that
she had she talked to her daughters. In addition, Albert handled none of
Janis's finances. She did it all, and any of the books of the

(05:23):
partnership for that matter. Jennie didit all. And ultimately this gift was
really just nothing more than a completionof the pattern of giving and generosity that
she showed towards Albert over the years. Gonna look like anything's out of the
ordinary here, So and again,cognitive impairment is easily determined based on mental
capacity, and you do not needto have contractual capacity to make it.

(05:48):
There's not the same as testamentary capacity. Right, So as long as you
know who your loved ones are,you can name your children, your grandchildren.
I mean, you know the youknow the nature of your bounty.
If you will, you're probably okay. She was doing the books on the
business. She had to be prettysharp, I think. So. Yeah,
and so I think this is theright decision and it shows you what

(06:13):
you have to go through sometimes.But this brings me to the planning idea.
Right, what do we learn fromthis? What are the tips and
lessons that we can take away fromthis? Well, first of all,
let's pretend you have a business,because this was a hog business, hog
raising family business. So anybody whohas a business, right, when you're
transitioning a business, you need tothink about it. Gifting it isn't always

(06:34):
the best idea, right, Imean here she ended up. Yeah,
she gave him half, but youknow the other half, you basically gave
him probably a huge capital game.Maybe she could have put together a trust
that would have held the property andtill she died and then had the trust
say that that particular property goes tothat Albert. But maybe all the their

(07:00):
assets go to her children. Imean, she could be very clear about
how she wants the assets, youknow, directed after she passes. It
would have prevented perhaps the litigation.Again, if you do planning like that,
it probably shows less of a youknow, undue influence or or even
what cognitive impairment is based on medicalrecords. But at least it shows forethought.

(07:24):
And you know you're not you know, you're not likely to say it
was undue influence or as easily so, so you know, I think things
like that need to be thought about. And interestingly enough, you know,
how else do you do it?Well? You know, I had a
client recently, had a floor coveringbusiness, and we're doing some estate planning
for them, and you know,they say, well, I want to

(07:45):
give my child who's involved in thebusiness. Now, not all children are
a child who's involved in the business. I'd like to get them some of
the some of the stock. Andthat's okay. How do we do it?
Well, we don't always just giveit away, but in this case,
we can make a gift to achild a little but split it up,
like do voting and non voting shares, right, you don't want to
be given away voting, so votingshares control the company, non voting shares

(08:11):
don't. So like you, ifyou're a non voting shareholder, you can't
decide when to sell a company.You can't decide when distributions are made to
the shareholders. You can't really decidehow the company operates. That's the voting
shareholders responsibility. And again the foundingparent, you know, when we're making

(08:33):
this transition, until they're ready togive up control, they shouldn't. But
when you do, like a nineto one non voting stock dividend, that
means for every you know, shareI have, there'll be nine non voting
shares. So if I have onehundred shares, there'll be nine hundred non
voting, and I'll have one hundredvoting. Granted that represents one hundred percent

(08:54):
control of the business, but tenpercent of the value. Right, ninety
percent of the value is non voting. I'm not suggesting right away you give
away ninety percent of the company becauseyou can have voting in non voting owned
by the owner. Oh sure,and you just give away a little bit
that you want. That's exactly right. That's how it would start. The
owner would still own in this case, I say a thousand shares and then

(09:16):
peel off the non voting share.So even if you end up giving your
kid, you know, ten percentor twenty percent of the company, it's
non voting. But the child thenfeels like they have a sense of ownership
because if the voting shareholder decides tosell, which they can, at least
you know you're going to get twentypercent of the proceeds, right, And

(09:37):
that's important and I would help keepthe child interested. I would think that
that business owner could also determine intheir documents who gets those voting shares exactly
when they pass away. And that'sexactly how you set it up, is
you you design the disposition of theassets based on items, and you can
certainly do that so you can takecare of that child that way. So

(09:58):
just there's many ways to transition ina business. That's just one of them.
But either way, folks, thisguide the differences between revocable and irrevocable
trusts allows you to do it witheither one. They can own business interests
as well, either one. Getthe guide eight sixty six eight four eight
five six nine nine or our websiteLegal Exchange Show dot com. You've been

(10:22):
listening to Todd Lutsky a partner withthe law firm of Cushing and Dolan.
I'm Susan Powers, a financial advisorwith the Armstrong Advisory Group. We've got
much more to come when we returnto the legal exchange with Todd Lotsky.
Revocable and irrevocable trusts are commonly usedto protect your assets, but there are
significant differences between the two. Don'ttake chances securing your future. Call Cushing

(10:43):
and Dolan right now at eight sixsix eight four eight five six ninety nine
and get their brand new guide calledthe Differences between Revocable and Irrevocable Trusts.
Cushing and Dolan are experts and elderlife planning and they can answer critical questions
that you may have as you determinewhich trust may be best for you and
your family. The guide contains crucialinformation about a variety of topics, including
the income tax effects of both trusts, ways to leave assets to your children,

(11:07):
as well as many other factors youshould consider in the estate planning process,
such as your net worth, yourage, and your marital status.
Call today eight six six eight foureight five six nine nine. That's eight
sixty six eight four eight five sixnine nine or request the guide online from
their website Legal exchain showed dot com. The proceeding was paid for in The
views expressed are sole lead those ofCushing and Dolan. Cushing and Dolan and

(11:28):
or Armstrong Advisory may contact you're offeringlegal or investment services. Cushing and Armstrong
do not endorse each other in arenot affiliated. There's no better place to
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(12:35):
IRA was a straightforward process until thepassage of the Secure Act in twenty nineteen
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(12:58):
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also request it online from our websiteArmstrong Advisory dot com. The proceeding was

(13:22):
paid for by Armstrong Advisory Group,a registered investment advisor. Nothing in the
ad or in any Armstrong guide aspecific financial, legal, or tax advice.
Consult your own financial, tax intostate planning advisors before making any investment
decisions. Armstrong may contact you tooffer investment advisory services. For forty years,
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Connect with Cancer Support Community Massachusetts forfree emotional support, educational resources,
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nine, three, three nine one. Cancer supportmass dot org. Cancer
supportmass dot org. You're listening tothe Legal Exchange with Todd Lusky, an

(14:09):
expert in elder life planning and taxation. Neat help with your estate plan.
Call Todd right now and make anappointment. Eight six six eight four eight
five six ninety nine. That's eightsix six eight four eight five six ninety
nine. Welcome back into the LegalExchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong AdvisoryGroup, and I'm joined by Todd

(14:31):
Lutsky, a partner with the lawfirm of Cushing and Dolan with a master's
in taxation. Back to your oldstomping grounds, Todd back to Ohio,
heading down or over to Ohio.I suppose maybe both. Uh. This
case is an interesting one. It'sso a re uh. Ariana Arianna,

(14:52):
at eighteen, was diagnosed with schizophrenia. Cantonia experienced mental challenges for years.
She had itself. She was evenself harming suicide attempts. So she was
involuntarily committed to the Southern Ohio DevelopmentCare Center, and this Advocacy Protection Services,

(15:13):
Inc. Was appointed as guardian.Okay, I know you're saying,
where's the mother, the family member? Where she's eighteen? Melissa the mother
decided to file for a competing guardianship. Wait, I should be the guardian.
Well, the court denied Arianna ordenied that because Ariana was not even

(15:37):
living with her mother when she wascommitted, and the court believed that Melissa
the mother could not really provide thecare needed here. This was pretty serious,
so they denied it. That wasin twenty seventeen. Fast forward to
twenty twenty two, Melissa tries againto remove the guardian. This court appointed

(15:58):
guardian witness has actually said, well, Ariana has shown significant improvement over the
years. She's actually in the processof being transferred to a less restrictive unit,
and so they denied the removal.Going forward, now you can still
advocate for your you know, butyou got you can't be guardian and it

(16:18):
seems to make sense. Things aregoing well, Well, it didn't matter.
Melissa appealed, So we go tothe appeal and she argues that the
court didn't really apply the best interestof the child standard. She's not really
a child anymore, but she stillyou got to apply this best interest of
the child. Well, the courtdecided to look to the statute for guidance,

(16:40):
which is smart, and how doyou remove an existing guardian? What's
required to remove an existing guardian?Right, well, neglect of duty,
incompetency, fraudulent conduct, Well,the court said, of this seems to

(17:00):
exist. In fact, there's beensignificant improvement. They must be doing a
really good job. They're moving into a less restrictive facility. Things are
good. So Melissa, sorry,we're not going to remove the guardian and
you can continue to advocate for yourdaughter, but you're just not going to
be the guardian and that's too badfor you, but good for your daughter.
We think now that may seem harsh, but probably is the right decision,

(17:23):
don't know. But what I wantto talk about in which why am
I telling you this story Because thetips and lessons we want to go through
is many people have disabled children,special needs child of some sort, children
or grandchildren more than you would think. Yeah, throwing grandchildren more than you
would think. And so I thinkwe're going to spend a little time saying,

(17:45):
well, how do we plan forthese special needs children as a parent
or for themselves if they need todo it? And best guess what trusts
are needed to do that? Andthese trusts are generally special needs trust But
the guide we're talking about is helpingthe parent do the estate plan, and

(18:06):
they need to understand the differences betweena revocable and an irrevocable trust, not
only from taxes, whether it's gifttaxes or income taxes or estate taxes,
which there are differences, but howyou can leave the assets to children through
special needs trusts that are built into these trusts. So, folks,
this guide is going to help youfigure out how to get your estate plan

(18:27):
in order, and you'll see thatthere's really more similarities than there are differences
between these trusts. So get theguide Differences between revocable and irrevocable Trusts eight
sixty six eight four eight five sixnine nine or legal exchange show dot com.
You can download it there again eightsixty six eight four eight five six

(18:49):
nine nine or Legal exchange show dotcom. There's a lot of people out
there, Todd that think if theyhave a special needs child or grandchild,
they have to disinherit them so thatthey don't lose their benefits. That's a
big concern for people. You hearit right heartly. Yeah, so it
is true and it's not the case. So like an example, when you

(19:11):
have a disabled child, you knowyou've got to figure out how to set
up your plan. Whether the trustis revocable or irrevocable I mentioned earlier,
they're very similar. You can dothis with either. Trust doesn't make a
difference because it really is about whathappens when you pass. Right, you
know, you can set up onefor them while they're living, but you
don't need to. You can putit in your own trust so that it

(19:33):
comes into existence when you when youpass and so you might say equally to
my kids. But the share establishedfor Billy is going to be in a
special need share. And what's thelanguage we put in there? We put
language in there like distributions from thatbucket can be made to that child in

(19:56):
the trustees' soul discretion, right,sole discretion, so provides one the child
doesn't own it. Yeah, soif the child doesn't own it, then
it's not an asset subject to losinggovernmental benefits because they don't own it.
And it'll never be included in thatchild's estate, it'll but yet it's there

(20:18):
for that child to enjoy without causing, as you said, Susan, that
child to lose governmental benefits. Anddo you have to have a disinterested trustee
for that type of a trust?Odd? Or would you have like a
sibling or some other family member forthat type of a trust? Yeah?
And that's really where I'm headed next, because I think, Okay, so
now we know how the trust iscreated in these existing estate planning documents,

(20:41):
and then who runs it when theparent's dead? And here this was what
the fight was over. They hadsome company listed as the guardian and not
the mother. Well, who dowe want to be trustee of the trust.
This isn't guardian, I get it, but it's someone controlling the money
for that person, which is muchwith a much like what a guardian would

(21:03):
do. You know who should doit? I quite frankly think it should
be a family member. I thinkit might be a sibling. No,
maybe it's an aunt or uncle,maybe it's because of but generally a sibling.
Why because one, they probably knowthat child's disability, They know that
child's needs, they know how thatchild acts and reacts. They love them,

(21:27):
They have their best interest in mine, right, and so I think
putting a child on is probably theright way to go. And remember,
don't necessarily give it to a healthychild and tell that child just take care
of your brother. Right, that'snot a good idea. What if they
get divorced or any other issue,any creditors divorces of that child, Not

(21:48):
to mention every time they take careof their brother, it would be a
gift. It might be a gift, tax involved. It's not worth it.
Setting it up in the trust providesprotection for both the disabled child and
the brother who's Karen or the trusteewho's caring for the child. So you
walk through that example of it setup when they parents die. Why do
some people have special needs trust setup before they pass away? Well,

(22:11):
that would be maybe before because otherparent other family members want to contribute to
this child's fund. Okay, ifyou will, so, then yeah,
set up something where anybody can giftto it. So not done that often,
I must say. And one ofthe thought on this is now that
I've explained to you that yes,an irrevocable and a revocable trust both can
handle this special needs bucket for thechild. Which trust would you do in

(22:40):
this case? Most of the timethat parents are like, well, we
need to make sure we protect ourassets so that there is something left for
that child. And sometimes they wantto leave more to that child than the
other children, so that there's acushion which relieves the other children the burden
of having to take care of thechild. So you need to protect it.

(23:03):
Well, if your goal is tomake sure there's something there for that
child, I'm going to likely suggestan irrevocable trust because of the nursing home
threat right, Whereas with the revocabletrust, and this would be one difference.
I suppose that the revocable trust willnever provide you any protection from creditors

(23:23):
or nursing homes right, and youcould lose the assets before you die,
whereas with the irrevocable you wouldn't.So I can't always tell people what to
do, but if there's a specialneeds child, the revocable trust probably not.
The irrevocable trusts probably the way togo. Folks lots to learn about

(23:45):
how to leave assets to children andyour trusts. This guide revocable or irrevocable
describes how to leave the assets tothe children, along with many other differences
and similarities. Only a few differences, I think a lot more similarities.
Get the guide eight six six eightfour eight five six nine nine or Legal

(24:07):
Exchange show dot com. You've beenlistening to Todd Lutsky, a partner with
the law firm of Cushing and Dolan. I'm Susan Powers, a financial advisor
with the Armstrong Advisory Group. Toddwill be answering your listener questions when we
return to the Legal Exchange with ToddLutsky. Revocable and irrevocable trusts are commonly
used to protect your assets, butthere are significant differences between the two.

(24:30):
Don't take chances securing your future.Call Cushing and Dolan right now at eight
six six eight four eight five sixninet nine and get their brand new guide
called the Differences between Revocable and IrrevocableTrusts. Cushing and Dolan are experts in
elder life planning, and they cananswer critical questions that you may have as
you determine which trust may be bestfor you and your family. The guide

(24:51):
contains crucial information about a variety oftopics, including the income tax effects of
both trusts, ways to leave assetsto your children, as well as many
other factors you should consider in theestate planning process, such as your network,
your age, and your marital status. Call it today eight six six
eight four eight five six nine nine. That's eight sixty six eight four eight
five six nine nine, or requestthe guide online from their website legal exchainshow

(25:15):
dot com. The proceeding was paidfor in the views expressed our sole leaders
of Cushing and Dolan. Cushing andDolan and or Armstrong Advisory may contact you
offering legal or investment services. Kushingand Armstrong do not endorse each other and
are not affiliated. Hi am LisaHughes. This Veterans Day weekend. Help
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five k, a run or walkto support disabled vets here in Massachusetts with

(25:37):
housing, transportation, and other criticalsupport, Saturday, November ninth at DCR's
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and help our heroes on their roadto recovery. Visit DAV fivek dot Boston
to register or donate today. TheDAV five K Boston is presented by Veterans
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This network provides free transportation to andfrom any VA medical appointment for veterans of
all eras. To become a volunteerdriver, you do not need to be
a veteran or a DAV member.You just need to have the willingness to
help our veterans and have a validdriver's license. Sign up now at DAVM

(26:22):
dot org. That's DAVM dot org. There's no better place to vacation than
the United States. Virgin Islands.Saint Croix, Saint Thomas and Saint John
have everything you need to enjoy aspectacular, romantic getaway or a week long
family vacation. From the moment youarrive, Gil fall naturally in rhythm with
the heartbeat of the islands. Theweather is perfect all year round. Some

(26:45):
book now and experience the most beautifulbeaches anywhere in the Caribbean. World cuisine,
iconic history, a wide variety ofwater sports, and an energetic nightvice.
There's no money to exchange, nopassport required, and travel from the
England could not be easier. Makeyour plans now by going to visit USVII
dot com. Learn about all threeislands and plan the ideal vacation for you

(27:08):
and your family. America's Caribbean paradiseis waiting for you, so head to
visit USVII dot com for more informationand to reserve your trip today. Go
to visit USVII dot com. That'svisit USVII dot com. You're listening to
the Legal Exchange and it's time forAsk Todd, the segment where Todd will

(27:30):
answer your questions about anything and everythingthat's included in the estate planning process.
Once again, here's Todd Lutsky andSusan Powers. Welcome back. Todd have
a few questions from listeners for you. First question comes from Rose in Conway,
New Hampshire, and rosewrites, mysister and I inherited our parents' vacation

(27:51):
home in New Hampshire. What's thebest way to protect this home so our
families can continue to enjoy the propertyfor years to come. We are both
in our so and want to makesure we don't lose the property if one
of us ends up in a nursinghome. So it sounds to me like
the two siblings, two sisters haveinherited the property fifty to fifty yep,

(28:14):
so it's in their own name.So they now so you folks know,
they all need to know that thisis an asset of their respective estates.
And so it sounds to me likeit's not going to be rented, it's
just going to be Yeah, theydid not mention anything about renting. So

(28:34):
again, I only say that becauseif it was a because many people might
inherit a rental property or turn whateverthey get into a rental property. If
that were the case, I wouldbe talking about immediately putting it into an
LLC. Okay, that would beone way to protect them from creditors.
I don't see that as the issuehere. I see this as their families
enjoying it, so they're going tobe using it, so LLCs are out,

(28:56):
but how they own it would becritical. So let's just say one
sister comes in. Let's say it'sRose, and she says, I want
to do estate planning, which youshould do, right. You want to
take not only your half of thisvacation home, but all of your other
assets, right and put them together, at them up and let's figure out

(29:18):
what kind of a state plan makessense for you. You're in your seventies,
and depending on how much they areworth other assets, we might be
doing a revocable or an irrevocable trust. And if their goal is to protect
the asset so that it can bethere for their kids to continue to enjoy
and maybe raise their family enjoying thatvacation property as well, and provided they're

(29:45):
not you know, well over fivemillion, six million dollars in assets,
sure, and I'm just throwing thatout as a number, Well, then
we need we would probably be talkingabout and irrevocable again thinking, what what's
the way to go for you?Whenever anybody comes in, we need to
help them figure out do we needthe revocable route or the irrevocable route.

(30:07):
And so in this case, basedon what I'm seeing, probably the irrevocable
because protection is important. So ifRose come in, comes in, and
Rose does her planning, yes,what if her sister doesn't do any planning?
And that's really important. So whenyou're asking clients and again just stick
with Rose for a minute about herassets and learning about how they're owned,

(30:33):
she's going to say, oh,I own this half with my sister.
It's gonna come out sure. Andso then you've got to chime in and
say, well, okay, thisis a great plan for you. We're
going to do this irrevocable trust planningand get your assets all protected. But
if what you're hearing is this isdesigned to protect it for all the families,
both sides, then you probably needto suggest at least to that your

(31:00):
client Rose, that maybe your sistershould come in or get her own lawyer
and do the planning, because ifwe protect your half, but if she
gets sick and goes to the nursinghome, her half is not protected,
right and at that risk for youbecause you only ownly half, you now
may have to step up and buyout that half, or their kids might
have to buy I mean, somethingwill have to happen to protect that half

(31:22):
for both sides of the family.Not different than a lot of two families
where siblings live together upstairs and downstairs. Yeah, same idea. If one
does it, probably both should doit. And especially where it would be
a second home not a primary residencefor either one of them, then it's
even more so. Well, absolutelyabsolutely so, folks. This is a

(31:45):
great example as to why you needto get this guide. The differences between
revocable and irrevocable trusts is critical,especially if you've not started your planning.
You might not know which way togo. You might not feel comfortable with
the irrevocable because of the word.But if you get the guide, you're

(32:06):
going to learn about all the dosand don'ts, how it operates day to
day, and you'll see that maybeyou are comfortable with it. And it
also gives you the dos and don'tsfor revocable trusts. It not only talks
about taxes, but how it works. Get the guide. It'll help you
get started if you've already done yourplanning. Yeah, might be time to
switch from a revocable to an irrevocable. Learn how it works eight six six

(32:30):
eight four eight five six nine nineor Legal Exchange Show dot com once again
eight six six eight four eight fivesix nine nine or Legal Exchange Show dot
Com. Our last question comes fromJohn in Massachusetts and John Wrights. I
am sixty six and live with mylongtime girlfriend. I know I need to

(32:51):
do some trust planning, but canI make accommodations for my girlfriend in my
trust if we aren't married? Wouldit be beneficial? Well, if we
get married, well, you gota lot of unpacking to do here.
So when you're not married and youwant to set up a trust again,
you got to start thinking about whatkind of trust, revocable or irrevocable,

(33:15):
and so in either trust you canprovide or accommodate for anybody you want,
girlfriend not girlfriend's special friend doesn't matter. Partner doesn't matter. So yes,
you can put language in there thatmight say you know something along the lines

(33:36):
where upon my death, if soand so is still living with me on
the date of my death. Becauseif you're not married. You can't say
wife or right or spouse is notliving with me, is living with me
on the date of my death.Then we will hold the house in trust
for this person who has to payall the bills in the upkeep. And

(33:58):
then have you know reasons for whenthat would end. You know, whether
it's they don't pay a bill forninety days, or they tell us they
don't want to live there in it, or they move out and they're gone
for six months. You put youput trigger language in to protect it.
But at least you've provided for thatperson. Important to put that language in
provided we're living together, because ifyou've separated, you might not want to

(34:21):
keep that person in there, andyou might not remember to modify your document
just because you have broke up withyour with your significant offer. And that
way you provide for them. Butultimately that property can still go to your
bloodline after exactly. And so youknow very important that you that you that

(34:42):
you do that planning it. Andthis is a whole reason to plan no
matter what. This doesn't even dealwith probate or taxes or anything. This
is just family. So what ifthey say, all right, well,
what are the benefits if we doget married, So there there are pros
and cons I suppose depending on howmuch each person is bringing to the marriage,
which we don't know here. Soyou know, if you get married,

(35:06):
then a house is becomes automatically noncountable for the spouse who's living there
at risk. Yeah, so technicallyit's not at risk. Doesn't mean it's
going to get to the family ultimately, but at least it provides that protection
for the spouse. But it alsowhen you get married, causes all the
assets from both sides of the marriageto be at risk for the nursing home

(35:28):
if either one gets sick, Whereasif you stay not married, then all
the assets of the one who's notsick are not at all at risk for
the one who gets sick because we'renot married. Just for the for the
medicaid world, it's just a stranger, has no impact. So you have

(35:51):
to think about it from that perspective. And another perspective might just be strictly
taxes depending on how much each ofyou are. Maybe if you're over the
two million dollar mark in Massachusetts,the new exemption, you know, by
getting married, you can double thatexemption to four million and delay taxes until
the surviving spouse's death. You canstill provide for each side of the family,

(36:16):
you know, through the trust planninglanguage. Yeah, so if you
think about it, let's say you'veboth done your planning on your own and
then you decide to get married.Do you need to do new planning now
as a married couple. Absolutely,this is a hard stop. So if
you have existing estate plans in placeand you get married, yes, you've

(36:37):
got to fix it. Okay,You've got to now redo the trust because
as many times people say, wellwe can just use these existing trusts,
they're not designed as married couple trusts. In the language is entirely different,
So please start over on that front, folks, call and get the guide
you learn the differences between revocable versusirrevocable trusts eight six six eight four eight

(37:01):
five six nine nine, or goto our website Legal Exchange Show dot com.
If you have a question you wouldlike to ask Todd, visit his
website Legal Exchange Show dot com andclick on the ask Tod tab. Maybe
I'll be able to read your questionon the air, and hopefully his answer
will stop you from becoming one ofhis next real life stories. You've been

(37:22):
listening to Todd Lutsky, a partnerwith the law firm of Cushing and Dolan.
I'm Susan Powers, a financial advisorwith the Armstrong Advisory Group. We
will be back with more after thisquick break on the legal exchange with Todd
Lutsky. Revocable and irrevocable trusts arecommonly used to protect your assets, but
there are significant differences between the two. Don't take chances securing your future.

(37:46):
Call Cushing and Dolan right now ateight six six eight four eight five six
ninet nine and get their brand newguide called the Differences between Revocable and Irrevocable
Trusts. Cushing and Dolan are expertsin elder life planning and they can answer
critical questions that you may have asyou determine which trust may be best for
you and your family. The guidecontains crucial information about a variety of topics,

(38:07):
including the income tax effects of bothtrusts, ways to leave assets to
your children, as well as manyother factors you should consider in the estate
planning process, such as your networks, your age, and your marital status.
Called today eight six six eight foureight five six nine nine. That's
eight sixty six eight four eight,five, six nine nine, or request
the guide online from their website,the Legal exchainshow dot com. The proceeding

(38:30):
was paid for in the views expressedare sole lead those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisorymay contact you offering legal or investment
services. Cushing and Armstrong do notendorse each other and are not affiliated.
HI. This is Mike Armstrong fromthe Armstrong Advisory Group. Taxation is a
critically important element to beware of whenyou're building your estate plan, especially when
it comes to understanding inherited irays.The tax treatment of these accounts depends on

(38:52):
a variety of factors, including thisspecific type of iray, the relationship between
the deceased and the beneficiary, andthe beneficiary's personal circumstance. Answers in this
month's new free guide from the ArmstrongAdvisory Group called The Complexities of Inherited Iras
will help you understand the possible taxcomplications you could face when inheriting an IRA.
Plus, we'll walk you through therecent changes to federal rules regarding these

(39:15):
accounts. Get your free guide todayby calling eight hundred thirty nine three four
zero zero one eight hundred three ninethree four zero zero one, or you
can also request the guide at ArmstrongAdvisory dot com. The proceeding was paid
for by Armstrong Advisory Group, aregistered investment advisor. Nothing in the ad
or in any Armstrong Guide a specificfinancial, legal, or tax advice.
Consult your own financial tax into stateplanning advisors before making any investment decisions.

(39:36):
Armstrong may contact you to offer investmentadvisory services. There's no better place to
vacation than the United States. VirginIslands. Saint Croix, Saint Thomas,
and Saint John have everything you needto enjoy a spectacular, romantic getaway or
a week long family vacation. Fromthe moment you arrive, You'll fall naturally
in rhythm with the heartbeat of theislands. The weather is perfect all year

(39:59):
round. Up now and experience themost beautiful beaches anywhere in the Caribbean.
World cuisine, iconic history, awide variety of water sports, and an
energetic night life. There's no moneyto exchange, no passport required, and
travel from New England could not beeasier. Make your plans now by going
to visit USVII dot com. Learnabout all three islands and plan the ideal

(40:22):
vacation for you and your family.America's Caribbean paradise is waiting for you,
so head to visit USVII dot comfor more information and to reserve your trip
today. Go to visit USVII dotcom. That's visit USVII dot com.
If you are a loved one needsa nursing homestay, call Todd right now

(40:42):
at eight six six eight four eightfive six nine nine and let him make
sure your assets are protected. That'seight six six eight for eight five six
nine nine, or visit him onlineat Legal Exchange show dot com. Welcome
back into the Legal Exchange with ToddLatsky. I'm Susan Powers of NTEL advisor
with the Armstrong Advisory Group, andI'm joined, of course by Todd Lutsky,

(41:04):
a partner with the law firm ofCushing and Dolan with a master's in
taxation. So, Todd, youtalk oftentimes about funding your trust. What
exactly does that mean and how isit done? So let's talk. Since
we're talking about the differences between revocableand irrevocable, is there any difference between

(41:25):
funding a revocable or an irrevocable trustor similarities or spoiler lyrics. So you
know, you say, how isit done? Well, it does vary
depending on the type of asset,but you can put any asset you want.
Let's just talk in general first.You can put pretty much any asset

(41:45):
you want into either trust except oneokay, an ira okay, or tax
And I think that's just just asa general answer, right, I don't
care what you have. It cango in accept qualified plan assets, and
it can go in the revocable orthe irrevocable. But you have to actually

(42:06):
put it in there or it's nothelping you do what the trust is designed
to provide. Yeah, okay,So how do you actually get them in
there? Like, let's say you'rehome, for example, how do you
actually fund your trust? So tofund it, let's talk start with the
real estate, right, So,if it's your home, you prepare a

(42:29):
new deed transferring the property from yourname directly. Don't even you could go
directly into either the revocable or theirrevocable trust. You put it on record,
and you file a trustee certificate acknowledgingthat the trust exists, so you
can keep the trust private. Yah, the trust itself does not need to

(42:50):
be put on record, just thedeed and just the trust the certificate.
And I know that you guys overat guys and gals over at Cushing and
Dolan, you actually do that deedwork to transfer the property. We've seen
many times, you know they somefolks get handed a plan and say,
okay, good luck, go implementhere. They're not actually funded on their

(43:13):
behalf. Yeah, here are theboxes that we put together for you,
and they're all if they're empty,and if they're empty, they're not doing
anything. So you know what wouldbe like a problem with that. So
with your if you leave your trustempty and it's revocable, yeah, what
happens, Well, no probate,you have an avoided probate. It's going
to go through probate likely depending ifit's in your name alone, it's going

(43:37):
to go to probate, and ifit if it's jointly owned, it's going
to avoid probate. But it's goingto go to the surviving spouse. So
it's not going to be sheltering anythingfirst a tax purpose, So that's really
not helpful, no, and it'snot necessarily ultimately going to get to your
family the way you want it eithermcause it's not like protecting it from like
special needs children or the wars,proofing and so forth. You don't have

(43:58):
that benefit. We didn't get anyof that. Well, if you talk
switch gears to an irrevocable and youleave it empty, the same problems can
exist. The probate is not avoided, the bloodline planning distribution won't happen.
You won't have enough assets in thereto shelter assets first a tax purposes.
Yeah, all the same things happenbadly with an irrevocable trust that's not funded.

(44:24):
Plus plus a kicker one more.The goal of the irrevocable is to
get a five year clock running sothat it's protected from the nursing home.
If I've not put anything in it, I've never started that clock. So
you really got double whammy of problemsif you don't fund your trust. So

(44:46):
Todd, when it comes to yourreal estate, what happens if you have
a mortgage on your home? Canyou still move that into your revocable or
irrevocable trust? Yeah, you know, I got this very question the other
day. I was doing a seminarand ask, you know what can I
do so revocable, no problem,You can put it in any time you
want and doesn't have an ef fact, you don't have to tell the bank

(45:07):
anything irrevocable for your home. Atleast you've got to reserve a life of
state in the deed and put theremainder interest in the trust. And now
you don't have to tell the bankanything because you can't trigger the do on
sale clause because you didn't give awayyour right to live there. Got it.
So that's the way to go.Things to think about, folks.

(45:29):
But the differences between revocable and irrevocabletrust you're starting to see from these questions
that a lot of the stuff isthe same, a lot more similarities and
differences. But get the guide learnfor yourself. If you haven't done your
planning, get an idea of whichone might be right for you. If
you've done your planning, maybe you'lllearn that it might be time to change

(45:51):
from one to the other, becauseyou're going to learn how revocable trusts and
irrevocable trusts are similar, not justfrom gift in a state and income taxes,
but operationally how it works. Getthe Guide eight sixty six eight four
eight five six nine nine or legalexchange show dot com and download it there
again eight six six eight four eightfive six ninety nine or legal exchange show

(46:16):
dot com. So funding your trustis essentially transferring the asset out of your
ownership into the ownership of your trust. Yes. So you mentioned you can
put everything but iris in there,and I'm gonna expand your iras as traditional
roth iras, employer plans and soforth. Absolutely right. Do you have
to do anything with them when youdo your estate planning? Do you have

(46:38):
to change the beneficiaries or update fromthat perspective at all? Yeah, you
have to think about how to treatthese. These have lots of questions that
have to be asked. So ifyou're doing a revocable trust plan, you
then need to look at the planand say, well, when we die
in the trust, are we leavingour assets equally to our kids? Outright?

(47:05):
Meaning just take it. We don'tneed to protect it from divorces.
We're happy with the kids having it. Let them have it happens perfectly,
okay, No right or wrong ifthat's what you're doing, or even if
you're staggering the distributions until they reacha certain age twenty five, thirty thirty
five, and then they get it. If they're ultimately getting the asset,

(47:28):
then likely the designated beneficiary on theretirement account will be number one primary spouse
always number two. It will bethe kids pay it out, because that's
what the trust says. If therevocable trust said, well, I do

(47:52):
want to protect it from future divorces, and I want it held in trust,
I don't want it going out rightaway, and protect it from generation
skipping tax benefits as well. Ohwell, then you need to look at
how much is in the IRA.In other words, if I've got enough
that I'm sheltering from creditor protection anddivorces already, and the IRA is not

(48:14):
that bad, well then maybe I'dlet the kids be the contingent beneficiaries again.
But if I've got a big numberthere and I want to protect that
from nursing from divorces and creditors andthe like, well then I might make
the trust the designated beneficiary in thecontingent position secondary primary always the spouse,

(48:36):
and then the trust. So itdepends. I might get it in the
trust, I might not. Okay, switching gears to an irrevocable trust plan.
Probably you're never going to name theirrevocable trust the outright beneficiary. Again,
the primary is always the spouse.Let's stick with that. The contingent

(49:01):
with an irrevocable Medicaid trust plan,depending on how much it's worth. Obviously,
if it's a really large IRA,maybe I wouldn't do this. But
depending on how much it's worth,I might be naming the primary. And
I know I said primary is usuallythe spouse. But in this case,
if I want to protect it fromthe nursing home, I'm going to name

(49:24):
the estate of the IRA owner thebeneficiary and then build in the IRA owner's
will a testamentary trust to catch thatIRA money. Why would you do that?
If you do that and you don'tgive it directly to the spouse,

(49:45):
then it shelters an asset for astate tax purposes, because remember, if
it passes right to the spouse,it's going to be included in the spouse
as a state number one number two. By having it go through probate into
this testamentary trust, there's a medicaidregulation that says it's automatically protected from the
nursing home for the surviving spouse.No waiting period, you know it's an

(50:08):
IRA, no waiting period at all. Even though it's an IRA, and
you can still have complete access tothe income and the principle and it's protecting.
Sounds like a fabulous loophole to makeit absolutely is, But as you
might imagine, lots to think aboutwhen you're funding the trust, and lots
to understand about the differences between revocableand irrevocable trust or the similarities. Call

(50:30):
and get the guide, folks,it's new for the month eight six six
eight four eight five six nine tonine or Legal Exchange show dot com.
Todd Letsky from the law firm ofCushing in Dolan, thank you so much.
Thank you, Susan, always apleasure. I'm Susan Powers, a
financial advisor with the Arnstrong Advisory Group. We thank you for joining us today

(50:50):
and we'll be back again next weekon the Legal Exchange with Todd Lutsky.
Revocable and irrevocable trusts are commonly usedto protect your assets, but there are
signific differences between the two. Don'ttake chances secure in your future. Call
Cushing and Dolan right now at eightsixty six eight four eight five six nine
nine and get their brand new guidecalled the Differences between Revocable and Irrevocable Trusts.

(51:12):
Cushing and Dolan are experts in elderlife planning and they can answer critical
questions that you may have as youdetermine which trust may be best for you
and your family. The guide containscrucial information about a variety of topics,
including the income tax effects of bothtrusts, ways to leave assets to your
children, as well as many otherfactors you should consider in the estate planning
process, such as your network,your age, and your marital status.

(51:34):
Call today eight six six eight foureight five six nine nine. That's eight
sixty six eight four eight five sixnine nine, or request the guide online
from their website legal exchainshow dot com. The proceeding was paid for in The
views expressed are solely those of Cushingand Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legalor investment services. Cushing and Armstrong do
not endorse each other and are notaffiliated. There's no better place to vocation

(51:58):
than the United States. Virgin Islands. Saint Croix, Saint Thomas, and
Saint John have everything you need toenjoy a spectacular, romantic getaway or a
week long family vacation. From themoment you arrive, you'll fall naturally in
rhythm with the heartbeat of the islands. The weather is perfect all year round,
so book now and experience the mostbeautiful beaches anywhere in the Caribbean.

(52:19):
World cuisine, iconic history, awide variety of water sports, and an
energetic nightlife. There's no money toexchange, no passport required, and travel
from New England could not be easier. Make your plans now by going to
visit USVII dot com. Learn aboutall three islands and plan the ideal vacation
for you and your family. America'sCaribbean paradise is waiting for you, so

(52:43):
head to visit USVII dot com formore information and to reserve your trip today,
go to visit USVII dot com.That's visit USVII dot com. Inheriting
and IRA was a straightforward process untilthe passage of the Secure Act in twenty
nineteen and the more recent changes thathave made things a bit more complicated.
Hi, this is Mike Armstrong fromthe Armstrong Advisory Group, and it's really

(53:06):
important that you develop a strategy todeal with these changes to the law,
or you and your family could facesignificant tax consequences in the future. If
you've inherited money from your spouse,the process remains relatively simple, but if
you're inheriting an IRA from someone otherthan your spouse, there are numerous issues
that you'll want to beware of.To protect those assets, call us right
now at eight hundred three nine threefour zero zero one and ask for your

(53:30):
copy of our new guide called TheComplexities of Inherited Iras. That number again
is eight hundred three nine three fourzero zero one, or you can also
request it online from our website ArmstrongAdvisory dot com. The proceeding was paid
for by Armstrong Advisory Group, aregistered investment advisor. Nothing in the ad
or in any Armstrong Guide a specificfinancial, legal, or tax advice.
Consult your own financial, tax andto state planning advisors before making any investment

(53:52):
decisions. Armstrong may contact you tooffer investment advisory services.