The Legal Exchange: Saturday Edition - Saturday, August 3, 2024

Episode Transcript

Speaker 1 (00:00):
This is the Legal Exchange with Tod Lutsky from the
law firm of Cushing and Dolan and Susan Powers of
the Armstrong Advisory Group. Each week, Todd and Susan will
discuss many topics, including estate planning, how to avoid probate,
and protecting your money from a nursing home. If you
need assistance in any of these areas, or have a
question about another issue that may affect your future, call

(00:21):
eight six six eight four eight five six ninety nine
to make an appointment. That's eight sixty six eight four
eight five six ninety nine. Operators are standing by. Now
Here are your hosts, Tod Lutsky and Susan Powers.

Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lotsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Lotski, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Welcome Todd.
How are you today?

Speaker 3 (00:52):
I am never better in you?

Speaker 4 (00:53):
I am great? Thank you? What do you have for
us to speak.

Speaker 5 (00:56):
A couple of things? I think we've got a great show.
We're going to go to California. We've got an appellate
court case they're dealing with basically, do a bunch of
emails and filling out an estate planning questionnaire equal enough
to amend a trust by a surviving spouse of a
second marriage over the deceased spouse's trust.

Speaker 4 (01:19):
To disinherit going on.

Speaker 5 (01:21):
To disinherit a daughter of the deceased spouse from a
second marriage. Wo wow, that's a lot of information. And
we're going to talk about that, okay, and how this works,
and how you can and cannot change trusts of deceased spouses,
and and and on and on we go. But they
are it's a it's a really great interesting case. And

(01:42):
then I have a real life story for you one
where I deal with uh an individual. So in this case,
how do you The part of the story is really
how do you protect a home from the nursing home
when someone has set up an irrevocable trust but did
not make the five year waiting peers. But the home
is located across the border in Maine, not in mass

(02:08):
But you're going into a nursing home in mass and
it's a married couple situation. Can you protect that home?
We talk about it a lot. It is a last
minute technique, but there was planning done. The planning didn't work.
But folks, since it's a new month, it's a new
guide and it's about planning. Last month was all about

(02:29):
the last minute techniques that you need to do. This
month is about, Hey, get out there and do your
state plan, put your trust in place, and learn how
to unlock the power of Medicaid irrevocable trust. Which is
the guide's name, and it explains to you in a
nice question and answer format, how this trust works, the

(02:50):
dos and don'ts for you, the tax issues, the gift
tax implications, the state tax implications, and you are all
the things that you can do with the assets that
are inside the trust and the things you cannot do.
It really will help you understand that an irrevocable medicaid trust,
different than other irrevocable trusts, is not as frightening as

(03:11):
you might think. That's really the way to think about it.
If you've never done one and you think you might
need one, get the guide and learn how to do it.
Eight six six eight four eight five six nine nine
or Legal Exchange Show dot Com again eight six six
eight four, eight, five, six, nine nine or Legal Exchange

(03:33):
show dot Com brand new guide on irrevocable trusts.

Speaker 3 (03:36):
For the month of August. Oh my gosh, Oh my gosh.

Speaker 5 (03:41):
Okay, back to California, California Appellate Court case. So here's
how it plays out. Jerry and Mary create a joint
family revocable trust. We talk about joint trust a lot.
I love them for moderate estates. They're wonderful. It is
a second marriage. And they do this in twenty eleven,

(04:04):
and they name the son that they have together, okay,
as successor trustee. His name is Tim. So we've got Jerry,
Mary and Tim as the successor trustee. Mary becomes the
sole trustee when Jerry dies in twenty twelve. Well, he
died a year after they did the trust, give or take.

(04:25):
Mary then wanted to exclude Wendy, Jerry's daughter from a
prior marriage, believing that she had been well taken care
of by her mother when her mother died. That may
or may not be true. June of twenty twenty, Mary, Tim,

(04:46):
and in a state planning attorney start emailing each other
about amending this trust, and then during that process, Mary
fills out a questionnaire. The attorne any questionnaire. We have
those on our site and you could fill them out
prior to doing your state planning. And actually returned that

(05:08):
questionnaire to the attorney and in the children's section it
did list Wendy, but it wrote in bold letters, would
like to drop Wendy from the will if possible. Okay,
Mary unfortunately died before the trust could be actually amended. Well,

(05:29):
what do you think happens? Well, in the Superior Court,
Tim said, I want the emails and the questionnaire to
be sufficient evidence to allow the trust to be amended
to cut out Wendy. Well, the court said neither the

(05:51):
emails nor the questionnaire was ever signed by Mary, and
went so far as to say, when you know, during
COVID they the Uniform Electronic Transaction Act in a lot
of states. They said that that Uniform Electronic Transaction Act
does not apply to the creation or execution of testamentary

(06:12):
trusts or wills.

Speaker 3 (06:14):
So that's out.

Speaker 5 (06:16):
And Mary's writings are not explicit enough as to actually
exclude Wendy as a beneficiary. So Superior Court says to Tim, no,
we're not going to amend the trust.

Speaker 2 (06:33):
Appeal, of course, because Tim would have been the only
one left standing, right.

Speaker 3 (06:37):
Well, I don't know.

Speaker 5 (06:38):
Maybe I don't know if there was other kids together,
but very good possibility. Pellet Court affirmed. Of course, they affirmed.
They basically said that the emails are not enough to
change the trust. They were done merely in anticipation of
doing a final Doctor. Tim, you lose again, Wendy, You're

(06:58):
still in you know what at the end of the day.
I think that's probably the right result, and I think
you really have to actually amend the trust now. Interestingly enough,
there's people who might be scratching their head right now saying,
wait a minute, Todd, this was a joint trust. Yes,

(07:18):
it became irrevocable when one joint owner died, which is
no different than if they had done two trusts. His
trust when he died would become irrevocable. So either way,
you might be saying, Todd, how on earth could marry
actually change Jerry's now irrevocable trust anyway, seems like you

(07:41):
shouldn't be allowed to do that. Well, there's something called
a limited power of appointment, a testamentary limited power of appointment,
that is a power that you are allowed to put
in documents. Now remember in a first marriage, you almost
always want this power or in the trust. Sure right,

(08:02):
you want the ability to change the beneficiaries of a
deceased spouse's trust, but you tend to limit it to
a class consisting of and you define that class when
you create the document, like children of all generations, or
nieces and nephews or siblings or whatever fits your situation.

(08:25):
So here the joint trust is now irrevocable after the
first spouse died, and they should be allowed to change
it if the power exists. And generally in first marriages,
we always want that flexibility. For example, I have it
set up, I die, we have two kids. My wife
later says, you know, we now have grandchildren. We'd like

(08:48):
to leave ten percent to the grandkids. She should be
allowed to change share my trust and leave ten percent
to the grandkids. Nothing wrong with that. It's great flexibility.
Share second marriage.

Speaker 4 (08:59):
Is that's a little different story.

Speaker 5 (09:01):
Do you really want to give that power? Maybe Jerry
didn't want to give that power to Mary. Maybe Jerry
wanted his daughter to get the assets. Maybe Jerry didn't
want to disinherit his daughter and say, even if her
mother provided for her, I don't want her hating me.

Speaker 3 (09:20):
I want her to.

Speaker 5 (09:21):
Know I took care of her too, So don't always
give that power. So what I do in second marriage
is I always begin the meeting by asking tough questions.
I look at both of them and say, I know
you all might get along, but if you put this
power in there, are you okay? Saying looking at each other,
saying if one dies first, do you think the other

(09:45):
one having this power might actually disinherit your family right?
And if you both say no, we don't care, we
think we trust each other, I'll put the power in.
But when I asked that question, it really resonated with them,
and if there's a pause and makes them decide whether
to put it in or not. Folks, learn how to

(10:05):
draft your trust, Learn how excuse me. These Medicaid irrevocable
trusts operate under the new guide Power of Unlocking the
Power of Medicaid Irrevocable Trusts eight sixty six eight four
eight five six nine nine or Legal Exchange show dot com.

Speaker 2 (10:22):
You've been listening to Todd Lutsky, a partner with a
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. We've got much
more to come when we return to the Legal Exchange
with Todd Lutski.

Speaker 1 (10:38):
Elder life planning can be overwhelming, so make sure you're
prepared or you can make costantly mistakes that affect your
overall plan. I Irrevocable trusts are the most common type
of trust that folks use for financial protection, and while
they can be complicated to create, they help keep your
assets safe because they contain specific protections that many of
us need, like the possibility of eliminating your taxes. Cushing

(11:01):
and Dolan are experts in elder lawn taxation and they
can devise a plane that covers you in every area
where issues can rise. Their new guide is called Unlocking
the Power of Irrevocable Medicaid Trusts. Learn more about how
these trusts can benefit your family by calling eight sixty
six eight four eight five six ninety nine right now.

Speaker 6 (11:19):
That's eight sixty six eight four eight.

Speaker 1 (11:21):
Five six nine nine, or you can request the guide
right now by visiting Legal Exchange showed dot com. The
proceeding was paid for and the views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and Armstrong
Advisory may contact you offering legal or investment services. Cushing
and Dolan and Armstrong Advisory do not endorse each other
and are not affiliated. Summer in New England is spectacular.

(11:42):
Winter in the US Virgin Islands is even better. Saint Croix,
Saint Thomas and Saint John are three of the most
incredible islands anywhere in the Caribbean, and their popularity has
soared over the past three years. If you're ready for
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Speaker 6 (11:59):
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Speaker 1 (12:00):
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January fourth. Celebrate New Years on Saint Croix and enjoy
world class cuisine, Christine Beaches, a wide variety of water sports,
and some of the greatest musical acts the islands have
to offer. Travel to and from New England is simple

(12:22):
and your state will be hassle free. Because this is
the American Caribbean, there's no passport needed and no money
to exchange. America's Caribbean Paradise is waiting for you. Go
to visit USVII dot com and make your plans today
that visit USVII dot Com.

Speaker 7 (12:39):
Last year, we introduced you to Mark Fodder, CEO of
Veterans Development Corporation. Mark is a career military man and
we're proud to have him back as the presenting sponsor
of the twenty twenty four DAV five K Boston.

Speaker 8 (12:50):
I'm a proud partner of the Disabled American Veterans Department
of Massachusetts. The DAV does incredible work and it was
one of the first organizations I became familiar with after
my military service ended in nineteen eighty four. As I
built my company, Veterans Development Corporation, I did it knowing
that I'd be giving back to fellow vets who need jobs,
support services, medical supplies, and much more. I work with

(13:11):
disabled veterans every day and is one of the key
reasons why I'm such a big supporter of Dan Stack
and the Disabled American Veterans Department of Massachusetts and this
year's DAV five K Boston. Please join me in supporting
this tremendous cause by taking part in this year's event
by making a donation to the DAV.

Speaker 7 (13:27):
Veterans Development Corporation is proud to be the presenting sponsor
of this year's DAV five k, taking place on Saturday,
November ninth at Fort Independence in South Boston. To register
for this year's race, visit DAV five k dot Boston.

Speaker 9 (13:40):
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(14:04):
three nine one. Cancer supportmass dot org. Cancer supportmass dot
org are.

Speaker 1 (14:10):
Listening to the Legal Exchange with Todd Ludsky, an expert
in elder life planning and taxation. Need help with your
estate plan? Call Tod right now and make an appointment.
Eight six six eight four eight five six ninety nine.
That's eight six six eight four eight five six ninety nine.

Speaker 2 (14:26):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Lutsky, a partner with a
law firm of Cushing and Dolan with a master's in taxation.

Speaker 4 (14:40):
Where are we headed now, Tod.

Speaker 5 (14:41):
We are going to head nowhere. We're gonna stay right
where we are. Okay, we have another real life story.
This one is one. These are the ones that I
get that I share with you, folks, that I'm involved in.
So I don't share everyone because you'd be bored. But
some that are interesting I liked him to bring up.
So that's what this one's all about. How do you
protect a home that's out of state when someone's going

(15:06):
to a nursing home in state?

Speaker 1 (15:08):
Right?

Speaker 5 (15:08):
Does it work? We've talked a lot about a home
being easy to protect. Right, So let's play out the string.
Wife and kids come in. By the way, they had
done planning. They set up one of these medicaid irrevocable
trusts two years ago. They didn't make the five years.
What do we do? That's the first problem. So they

(15:29):
didn't do the plan. They did the planning but didn't
get past the five years. So the wife and the
kids come in and say, you know, Dad's going into
the nursing home. And that was the situation with the trust.
They had about five hundred thousand outside the trust the
house worth about eight nine hundred thousand. We'd like to
protect at least the house. Well, I'm going to tell
them they can protect the money too, but let's focus

(15:49):
on the house because that's what they want to protect.
And they're saying, we're going to the nursing home. We'd
like to apply for medicaid. Okay, let's play out the
string a little bit further. The home itself is low
catered in Maine, just across the border. They had recently
moved down to Massachusetts to live with the son because
they wanted the son to help with dad's care. They

(16:10):
hadn't actually moved. They've been just spending a lot of
time there, sleeping there, going back and forth, and they
hadn't really given up their residency yet. Their primary residence
is still Maine, but they have really been spending a
lot of time in mass and thinking about maybe moving
there completely. Well, when Dad got too sick to stay
in the nurse stay at the house, they would put

(16:32):
him in a nursing home in mass Now they not
too far apart, they're just across the border, but in
mass So now we have to deal with the Mass laws. Well,
you're a mass resident for nursing home purposes after you
go in the nursing home for one day, so he's
a resident of mass we don't have that problem. So
then we say, we want to protect the house. But

(16:53):
can you protect the house because it's located across the border.
I mean, that's really the question. Everybody thinks a house
is automatically protected, and I myself tell people that you
hear it all the time. And generally speaking, the home,
if it's a primary residence and a community spouse is
living there is a non countable, non leanable asset as

(17:15):
long as it's less than a million period, there's no
value limitation.

Speaker 3 (17:19):
Excuse me, you get it.

Speaker 5 (17:23):
But it also needs to be located in Massachusetts.

Speaker 2 (17:28):
How does that work and she's still living there.

Speaker 5 (17:30):
Well, that's what we're going to talk about, and that's
the analysis. Are we going to get these people on medicaid?

Speaker 3 (17:34):
Folks?

Speaker 5 (17:34):
Even though they didn't make the five year rule. The
answer is going to come right after this. But I
want to tell you first about this trust that they
set up. They did set up a Medicaid irrevocable trust
two years ago, not afraid by the word irrevocable. But
if you've been afraid, call and get the guide Unlocking
the Power of Medicaid Trust, brand new for the month.

(17:56):
It is a question and answer format that really walks
you through the estate tax rules, the gift tax rules,
the income tax rules of the trust, showing you there's
going to be very little change for you, shows you
how you're still in control, shows you how your house works,
shows you what the dos and don'ts are for you

(18:17):
day to day, and especially if you've not done your
planning and you want to get started, this guide will
help you feel more comfortable with the trust before you
meet the lawyer. Call and Get It eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com again eight sixty six eight four eight

(18:38):
five six nine nine or Legal Exchange Show dot com.
How are we going to fix this? So here's the story,
and this was real. I had to I had to
go through all this. So you got to be financially
eligible to be to get un medicated as a married couple.

(18:58):
What does that entail? One the community spouse is allowed
to keep one hundred and forty eight thousand dollars. Well,
they have five hundred thousand, Well she gets one hundred
and forty eight. What happens to the other five hundred, Well,
the other five hundred we're not gonna spend a lot
of time on right now, but would simply be converted
to a medicaid annuity to pay out to her. So

(19:22):
we take that and we convert it from the excess
resources are converted from an asset to an income stream
for the healthy spouse, and the healthy spouse is allowed
to have as much income as the healthy spouse can generate,
no limits, no limits. So we can fix that, and
that wasn't the problem. Usually I say the home isn't

(19:46):
the problem, but in this case, the home at least
initially presented itself as a problem.

Speaker 3 (19:53):
And here's why.

Speaker 5 (19:55):
The home she's also allowed to keep by the community spouse.
So general rule the community spouse that the home is
non countable provided the community spouse is living there and
it was the primary residence and it's located in Massachusetts.
Wah wah, wah, those are the rules. Yeah, there's no

(20:18):
other rules, and it's non leanable. It's a home run
would be non countable. This home is located in Maine.

Speaker 3 (20:27):
What do we do well.

Speaker 5 (20:28):
I looked through the regulations a little more, and I said, well,
what about single people. So there's a different statute. Five
twenty eight A is the one I read to you.
Five point twenty seven.

Speaker 3 (20:43):
J eight. They're G eight.

Speaker 5 (20:47):
If you had to look at it just to give
you the site is just say you know, yeah, yep.
It's a different statute that deals with protecting a home
for single people. For single people, it says, the primary
residence is noncountable as long as you left the house
and went to a nursing home it's less than a million,
seventy one thousand dollars in value, and you either check

(21:13):
a box you intend to return home, or there's a
whole list of people that said it's non countable provided
none of the following people are living there. There's a
whole bunch of regulations. So this one says, provided none
of the following people are living there. Number one the spouse.
Oh well, in this case, remember it was the husband

(21:36):
that's going in the nursing home. The community spouse is
still living there. So now I don't have to go
through any more of the regulation. I know that the
house will be I don't have to check a box.

Speaker 4 (21:46):
So even though it's in Maine and not in mass
well that she's not single.

Speaker 5 (21:50):
That's my point, right, You're I'm going to look at
it as saying she's not the one applying.

Speaker 6 (21:56):
He is.

Speaker 5 (21:57):
Yes, he's married, but I can apply saying that it's
non countable because of him.

Speaker 4 (22:04):
Oh right, okay, yep.

Speaker 5 (22:06):
I want to say it's non countable because his spouse
is living there. So if his spouse is living there,
it's non countable. And nowhere in this statute does it
say that house has to be in Massachusetts. Only if
you're married and your spouse is living there, and you

(22:31):
want to go the married route, then it says the
house has to be located in Massachusetts.

Speaker 3 (22:36):
But this section doesn't say that.

Speaker 5 (22:38):
So we applied for medicaid and we got denied, and
I went to a fair hearing, and I explained to
them at the fair hearing that everywhere in the statute,
the whole regulations, when they want something to apply another
section to apply, they cite it. Yes, they didn't cite
it here, and they didn't put the valuation the location

(23:00):
of the property here. So this section does not mandate
that the statute that the house be located in Massachusetts approved.

Speaker 4 (23:10):
Wow.

Speaker 5 (23:11):
So they came back and they said, yep, that's what
the statute says. Again, folks, we try to just do
what the statute says, but you gotta sometimes show show
them what the statue, what the statute says. You like me,
like everybody else, we don't want to read this nonsense.
It's boring. I get it.

Speaker 4 (23:27):
I think you like to read it.

Speaker 5 (23:29):
I like to read it. No one likes to read it.
But when you read it.

Speaker 3 (23:33):
It really tells you how it works.

Speaker 5 (23:35):
So we were able to actually save the house from
the nursing home, even though it was not located in
mass which is why I always tell people to never
apply for medicaid on your own. But I also always
tell people to avoid all this last minute nonsense by
getting your trust done. Learn how these medicaid trusts work,

(23:55):
get the guide, it's brand new for the month, and
then you won't be stuck with this last minute situation.
Eight sixty six eight four eight five six nine nine
or Legal Exchange show dot com.

Speaker 2 (24:08):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing in Dolan. I'm Susan Powers a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your listener questions when we return to the
Legal Exchange with Todd Lutsky.

Speaker 1 (24:25):
Elder life planning can be overwhelming, so make sure you're
prepared or you could make costly mistakes that affect your
overall plan. They irrevocable trusts are the most common type
of trust that folks use for financial protection, and while
they can be complicated to create, they help keep your
assets safe because they contain specific protections that many of
us need, like the possibility of eliminating your estate taxes.

(24:47):
Cushing and Dolan are experts in elder lawn taxation and
they can devise a plan that covers you in every
area where issues can rise. Their new guide is called
Unlocking the Power of Irrevocable Medicaid Trusts. Learn more about
how these us can benefit your family by calling eight
six six eight four eight five six ninety nine right now.

Speaker 6 (25:05):
That's eight six six eight four eight.

Speaker 1 (25:07):
Five six nine nine, or you can request the guide
right now by visiting Legal Exchange show dot com. The
proceeding was paid for and if you've expressed our solely
those of Cushing and Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legal or investment services.
Cushingan Dolan and Armstrong Advisory do not endorse each other
and are not affiliated.

Speaker 10 (25:25):
Recent reports suggests that a record four point one million
Americans may retire this year alone. Hi, this is Mike
Armstrong from the Armstrong Advisory Group, and if you're one
of them, you'll want to have a retirement plan in
place that focuses on several objectives. When to actually retire
is a very important one to consider. Retiring early, while
giving you more time to enjoy life after work, also
means you'll need your money to last longer. Retiring later

(25:48):
may not give you as much time to enjoy life's pleasures,
but you'll have more time to save money. It's important
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our new guide may help. It's called a Day in
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The guide discusses these issues and more, so please call
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(26:09):
again eight hundred thirty nine three for zero zero one.

Speaker 1 (26:12):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide to specific financial, legal, or tax advice. Consult
your own financial, tax, intestate planning advisors before making any
investment decisions. Armstrong may contact you to offer investment advisory services.
Summer in New England is spectacular. Winter in the US
Virgin Islands is even better. Saint Croix, Saint Thomas and

(26:32):
Saint John are three of the most incredible islands anywhere
in the Caribbean, and their popularity has soared over the
past three years. If you're ready for your next fabulous vacation,
now's the time to check out the American Caribbean.

Speaker 6 (26:44):
Go to visit USVII dot.

Speaker 1 (26:46):
Com, where you'll find all the information you need to
book a trip that you'll never forget. The Saint Croix
Crucian Festival runs from December twenty sixth to January fourth.
Celebrate New Years on Saint Croix and enjoy world class cuisine,
Christine Beaches, a wide variety of water sports, and some
of the greatest musical acts the islands have to offer.
Travel to and from New England is simple, and your

(27:07):
state will be hassle free. Because this is the American Caribbean.
There's no passport needed and no money to exchange. America's
Caribbean paradise is waiting for you. Go to visit USVII
dot com and make your plans today. That's visit USVII
dot com. You're listening to the Legal Exchange, and it's
time for Ask Todd, the segment where Todd will answer

(27:31):
your questions about anything and everything that's included in the
estate planning process. Once again, here's Todd Lutsky and Susan Powers.

Speaker 2 (27:39):
Welcome back, Todd. We have a few questions from listeners
for you. First question comes from Michael in Midfield, mass
And he writes, if I place my home into an
irrevocable trust, would that reduce my estate tax liability by
the value of my home? With doing that prevent my
ears from I'm getting stepped up cost basis when I die.

Speaker 3 (28:04):
So there's a.

Speaker 5 (28:04):
Lot packed into this little question. First and foremost, this
irrevocable trust that we talk about in this guide is
very different, as I've always said, from other irrevocable trusts.
In fact, I had a listener that came in as
a meeting just last week, same idea. They had all

(28:26):
these ideas about how bad an irrevocable trust was, and
I had to explain to them, please don't think about that.

Speaker 3 (28:33):
For this kind.

Speaker 5 (28:35):
There's this spectrum of irrevocable trust, if you will, from
control to no control and so in this case, and
not only is it controlled and no control, the different
language of the trust also impacts the taxation of the trust,
which is what this questions asking about. So first and
foremost he's saying, does it reduce my estate tax liability?

Speaker 3 (28:57):
No? Why?

Speaker 5 (28:58):
Because you're not giving anything away with these trusts. The
asset transfer to the trust is deemed an incomplete gift
for gift tax purposes, meaning you have not relinquished enough
control over who ultimately gets that property until you die,

(29:19):
because in the trust there's this power of appointment that
allows you to rethink who might ultimately get the property,
and you can change your mind until the day you die.
So if it said equally to the kids, you say, oh,
I made a gift to all my kids. No I didn't,
because I can also change it and give to any
one kid or one grandkid. So we don't ultimately know who.

(29:42):
Not relinquishing enough what they call dominion in control over
the house or over the transfer to the trust makes
it an incomplete gift for gift tax purposes, so you
don't have to pay a gift tax, and it's also
going to be included in your estate for a state
tax purposes. Why not just because it's an incomplete gift,

(30:03):
but because in the trust itself it has language that
says I give it and retain the right to the income.
You always want the income. So the government also says
twenty thirty six of the Code says, if you give
something away and retain the right to the income or

(30:24):
the ability to control the beneficial enjoyment of the property,
you didn't give it away. It's going to be physically
pulled back into your estate for estate tax purposes. Thereby,
and that gets me to the last part of the question,
preserving the step up in basis. So because it's pulled
back into the estate, not your probate estate, it doesn't

(30:47):
actually come out of the trust, but for accounting purposes,
it's treated as if it's in your estate. Okay, so
subject to a state tax, not reducing your estate, but
a step up in basis.

Speaker 2 (31:01):
There was some kind of change for irrevocable trust which, oh,
we're different irrevocable Yeah, and the kind that you use, or.

Speaker 5 (31:09):
A revenue ruling that came out in twenty twenty three. Yes,
what a disaster, so everybody thought it applied to these
kinds of trusts. But without getting into a long explanation,
I'm just going to simply tell you that if you're
still worried about that twenty twenty three revenue ruling that
came out dealing with step up and basis, it applies

(31:32):
to the irrevocable trusts that are completed gifts that are
outside of your estate, not these, not these, So thanks
for bringing that up, Susan that said, this trust is
still great because this irrevocable Medicaid trust that we're talking
about in the guide Unlocking the Power of Medicaid irrevocable

(31:54):
trust is the one I just described in answering this
question for Michael, and it tells you how you preserve
that step up in basis, it tells you how the
gift tax rules work, and most importantly, in a question
and answer format, it basically tells you what you can
do and not do. Can I sell my house. How
does that work? Can I rent it? Can I collect

(32:16):
the rent? Can I invest my money? Can I get
the income? Who pays the income taxes? Folks, these are
just a few of the questions that they answer in
this guide. It will really help you figure out whether
or not you want to begin your estate plan or
change to an irrevocable trust from one you had eight

(32:36):
six six eight four eight five six nine nine or
Legal Exchange Show dot com again brand new guide eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com.

Speaker 2 (32:51):
Our last question comes from Dawn in Cotuit, Mass and
he writes, my wife and I are in our early
eighties and have two children. We own severalnal properties, one
of which my daughter lives in. We'd like to treat
our son and daughter equally, but want to make sure
our daughter receives the house that she's living in. We've
put off doing any planning and are afraid it may

(33:12):
be too late to protect our assets given our ages.
Should we pick two equal value properties, indeed one to
each of our kids?

Speaker 5 (33:20):
Now, wow, is that a horrible idea? I don't even
need to think about it. Sestically, No, there nothing good
can come from that. No, in all fairness, I don't
know the full value of their estate, but I'm assuting
they're under ten million dollars but their.

Speaker 2 (33:32):
Rental properties, so they've probably depreciated them over the years
and don't have any cost bases left.

Speaker 5 (33:37):
Yeah, so not only is there and that point wasn't
even what was jumping out of my head, But that's
a really good one. I mean giving away low basis
assets when they might not even need to. And again
I don't know the size of their estate. I mean,
if they're under twenty seven million, if they're under fourteen million,
why are we No, don't give it away, not those
assets anyway, because you're going to lose the capital gains

(33:59):
tax step up, and you're not really going to save
any estate taxes because with basic planning you can shelter that.
Even in twenty twenty six, now there could be a
mass tax depending on how old they are. Right, But
since they mentioned that they feel like they don't have
enough time to protect and they say something about.

Speaker 2 (34:18):
Protecting ages, so I assume from the nursing home right,
So if they're even talking about that, that means the
value of their estate is probably nowhere near fourteen million, yep.

Speaker 5 (34:29):
It's somewhere down, probably under five. So if that's the case,
and they're talking about irrevocable trusts, I'm going to say
a couple of things. One, no reason to give it
away just because of the tax side of things that
we talked about. You're not going to save anything on
the income on the estate tax side. Federally, you're probably
not going to save enough on the mass estate tax

(34:53):
side to offset the difference of trapping all the built
in capital gain in these potentially in the properties that
you give when you give it away to the kids.

Speaker 2 (35:02):
Because it's the lesser of the evils of five percent
mass state tax is state tax versus twenty percent thirty
percent capital gain tax depending let's go.

Speaker 5 (35:12):
Ten percent estate tax and mass twenty eight point eight
or thirty thirty percent plus appreciation.

Speaker 3 (35:17):
So even more.

Speaker 2 (35:18):
Than that on the income tax seemed to paying more
by giving it away.

Speaker 5 (35:24):
You could end up paying much more in taxes by
giving it away later for whoever sells it yep, than
by dying owning it. So you really have to do
that analysis, first of all. Second of all, giving away
houses and rental properties, I mean there's nothing good. I mean,
I want my house, I want to live there. I
can't think why would I know? I'm not going to

(35:44):
give it away, right. But in addition to that, you
know they're saying we might not have the time. Well,
put it into the irrevocable trust anyway. We don't know
if you're going to do a trust anyway, why not
put it in an irrevocable trust and get the five
year clock running.

Speaker 1 (35:59):
Me.

Speaker 3 (36:00):
You'll surprise ourselves and everybody lives longer than they thought.

Speaker 2 (36:03):
I think Todd, a lot of people get confused when
they hear that five year look back. They think that
they have to live for five years. Yes, but those
been it's only the nursing them that takes five years.
Everything else the day one.

Speaker 5 (36:18):
Y's right, and that's a really great point because they
do confuse the two, and that is not the case.
At the five years is just for the nursing home,
not for the estate tax part. And then I'll leave
you with this thought. I'll leave you with this thought too,
that treating them equally. Just say I treat you equally
and allow each other to buy each other half out.

(36:38):
That way you really will treat each other equally, or
they can trade off if they want. But when you
start giving one asset to another kid, you likely are
not going to treat them equally. But we can put
the language in there that says buy each other out
that's fine, or their interest out. So folks learn how
these trusts work. Medicaid era of vocable income only trusts

(37:02):
eight six six eight four eight five six nine nine
or Legal Exchange Show dot com.

Speaker 2 (37:09):
If you have a question you would like to ask Todd,
visit his website Legal Exchange Show dot com and click
on the ask Tod tab. Maybe I'll be able to
read your question on the air, and hopefully his answer
will stop you from becoming one of his next real
life stories. You've been listening to Todd Lutsky, a partner
with the law firm of Cushing and Dolan. I'm Susan Powers,

(37:30):
a financial advisor with the Armstrong Advisory Group. We'll be
back with more after this quick break on the Legal
Exchange with Todd Lutski.

Speaker 6 (37:38):
Elder life planning can be overwhelming, so make sure you're
prepared or you can make costly mistakes that affect your
overall plan.

Speaker 1 (37:46):
The irrevocable trusts are the most common type of trust
that folks use for financial protection, and while they can
be complicated to create, they help keep your assets safe
because they can take specific protections that many of us need,
like the possibility of eliminating or estate taxes. Cushing and
Dolan are experts in elder lawn taxation, and they can
devise a plan that covers you in every area where

(38:07):
issues can rise. Their new guide is called Unlocking the
Power of Irrevocable Medicaid Trusts. Learn more about how these
trusts can benefit your family by calling eight sixty six
eight four eight five six ninety nine right now.

Speaker 6 (38:19):
That's eight sixty six eight four eight.

Speaker 1 (38:21):
Five six nine nine, or you can request the guide
right now by visiting Legal exchange show dot com. The
proceeding was paid for and the views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other and are not affiliated. Summer in New England is spectacular.

(38:42):
Winter in the US Virgin Islands is even better. Saint Croix,
Saint Thomas, and Saint John are three of the most
incredible islands anywhere in the Caribbean, and their popularity has
soared over the past three years. If you're ready for
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the American Caribbean. Go to visit us dot com, where
you'll find all the information you need to book a

(39:03):
trip that you'll never forget. The Saint Croix Crucian Festival
runs from December twenty sixth to January fourth. Celebrate New
Years on Saint Croix and enjoy world class cuisine, Christine Beaches,
a wide variety of water sports, and some of the
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and from New England is simple and your state will
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(39:26):
no passport needed and no money to exchange. America's Caribbean
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Speaker 10 (39:39):
If you're getting close to retirement, you've likely thought about
how you'll spend all of your free time.

Speaker 6 (39:44):
Ah.

Speaker 10 (39:44):
This is Mike Armstrong from the Armstrong Advisory Group, and
with no more forty hour workweeks or hour long commutes
on your agenda, you might find yourself on the Links
in Florida or traveling the world with your spouse and family.
The financial pieces of the retirement puzzle are important. Having
a specific plan about how you want to live day
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and our new guide called it Day in the Life

(40:05):
of a Retiree may help. You can get it today
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Speaker 3 (40:11):
In the guide, we're going to discuss how to.

Speaker 10 (40:12):
Connect your financial needs in retirement to where and how
you'll be living. Call us again at eight hundred three
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Speaker 1 (40:25):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide is specific financial, legal or tax advice. Consult
your own financial, tax and to state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services. If you are a loved one needs
a nursing homes Day. Call time right now at eight
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(40:46):
let him make sure your assets are protected. That's eight
six six eight four eight five six nine nine or
visit him online at Legal Exchange show dot com.

Speaker 2 (40:57):
Welcome back into the Legal Exchange with toddlots I'm Susan Powers,
a financial advice with the Armstrong Advisory Group, and I'm joined,
of course by Todd Lutsky, a partner with the law
firm of Cushing A. Dolan with a master's in taxation.
So Todd, you're talking this month your guide is all
about Medicaid.

Speaker 4 (41:17):
Income only air vocable trusts.

Speaker 2 (41:19):
Yes, So when you're starting out in the process and
you meet with folks who are the ideal folks that
should really consider using an airevocable trust.

Speaker 5 (41:34):
So when I meet them, one of the questions I
always ask is how old are you? I think that's
where you have to start. And in my mind, of course,
there is no.

Speaker 3 (41:46):
Real rule.

Speaker 5 (41:47):
It's just my own made up rule that you know
sixty sixty five and over. I'm going to ask the
question four questions, usually one, what do we want to
accomplish today? We want to learn how to avoid probate, Yes,
check the box. We want to learn how to reduce

(42:09):
or eliminate our estate tax liability, Yes, check the box.
We want to learn how to provide a bloodline distribution
of assets to our family in some efficient not only
tax manner, but maybe credit or protection manner.

Speaker 3 (42:26):
Yes.

Speaker 5 (42:27):
Then the last question, again based on age, do you
want to protect these assets in the event you ever
needed nursing home care in the future. It's the answer
to that question, which I am not advocating, just educating,
which will tell me whether or not I'm going to

(42:47):
go to the whiteboard and talk about a revocable trust
or this irrevocable medicaid trust that we're talking about in
today's guide.

Speaker 2 (42:58):
So if they do want to do nurse home planning,
those are the folks that would do the irrevocable trust.

Speaker 5 (43:04):
And it's not just age, but age and size of
a state. I should mention that. I mean, you could
be sixty five, but if you've got ten million dollars
of assets, you're pretty much self insured. You don't need
my help to pay the nursing home because very likely
you have enough assets to generate enough income to pay

(43:30):
the nursing home. Who cares. You know, there's no reason
to save. The income is enough. So those are probably
the two main questions. And if they're younger but have
a medical condition, then that would be important too, you know, like,
oh I just was diagnosed with als or something. Oh
my gosh, that's in or Parkinson's or something that's a
mobility concern. Yeah, I think you probably want to get

(43:53):
the clock started even younger.

Speaker 2 (43:54):
Okay, so let's say they determine irrevocable trust is the
way they want to go, And then you say, great,
who do you want to be your trustees? How do
you counsel them to say, oh, we have three kids,
who should we pay?

Speaker 5 (44:08):
Yeah, so that's great, and you're right. You mentioned you
jumped right to the kids, So I think you've got
ahead of me a little bit. And I would say,
you know, first, I don't want I don't want mom
and dad serving as trustee. And you jump to that already,
and I agree. And so then you say, okay, well
mom and dad will have the power to remove and replace.

Speaker 2 (44:29):
Let me just back you up. Why can't they be
their own trustee?

Speaker 5 (44:32):
Well, I just because over time we've learned that mass health.
Although I think We've won all the arguments. I just
don't want to go down that road. If they are
the trustee, mass Health will argue that they're entitled to
get paid. And if they're entitled to get paid, then
arguably maybe principle might be used to pay them their

(44:52):
their fiduciary fees. That would never cause all the assets
and the trust to be at risk, only the peace
that would be needed to get paid. So just avoid
all that headache. Put a kid on. Do you need three? No,
just pick one. You're still treating the kids equally. Pick
a child that you think is good with that role,

(45:13):
handling lawyers, handling money making, following the rules of a trust.
Pick a child that's good with that role. Okay, that
would be what I would do. Great, And folks, that's
just some of the things you think about when you
create these trusts. The guide, which is new for the month,
Unlocking the power of Medicaid irrevocable trusts will give you

(45:35):
lots more answers to the income tax, the estate tax,
the gift tax rules. But more importantly than those cold things,
it tells you in a question and answer format, all
these dos and don'ts. Can I sell my house, Can
I live there? Can I buy a new one? Can
I collect rent? Folks, you will be amazed at how

(45:56):
much you can do and how little you can't do.
And if you haven't done your planning, get this so
you learn before you go to the lawyer how they
work and that you might like them. Unlocking the power
of Medicaid trusts eight sixty six eight four eight five
six nine nine or legal exchange show dot com Brand

(46:18):
new for the month eight six six eight four eight
five six nine nine or legal exchange show dot com.

Speaker 2 (46:25):
So we decide on the ir vocable trust, We decide
on who our trustee is going to be. The next
big step is funding. What type of assets should you
consider transferring into the name of your trust?

Speaker 6 (46:37):
Yeah?

Speaker 5 (46:38):
You you mentioned funding, and I immediately think, yes, what
kind go in? But I'm going to take it one
step further and say.

Speaker 3 (46:45):
Please do it.

Speaker 5 (46:47):
I think the first thing you need to think about, folks,
is you know, make sure the lawyer you're working with
helps you move the stuff in. When I'm at the board,
I always tell clients, see the box, how I filled
it up, That's how it's going to look when you leave. Yes,
the final meeting because we're going to move the real estate.
We're going to help you move the money, We're going
to work with your advisor, we're going to move the assets.

(47:10):
So first and foremost, Susan do the funding. Yeah, but
now to Susan's point, so your home home, Yeah, absolutely,
yes to both of those. So yeah, I want to
put my home in that's the biggest asset I have.
If I've got a rental I've got a vacation property,
I want to protect those.

Speaker 2 (47:28):
Well, how do you get what if you're relying on
that rental income, you need that money, what do you
what do you do with that rental property?

Speaker 5 (47:35):
Well, again, I think that's why it's so important to
understand this this guide and get this guide because it
explains to you in there that one of the paragraphs
in the trust, and that's the best way to describe
what you can do. The language of the trust tells
you what you can do and what you can't do,
and that language says you retain the right to the income,

(47:59):
not me. It shall get the income. So with that language,
that means that the rent can come right into the
trust bank account, and once it hits that trust bank account,
you can set up that account as an automatic transfer,
meaning you don't have to talk to the trustee. If

(48:19):
the trust says you shall get the income, then that
bank account, every time it receives rental income, that income
gets kicked out into your personal savings and checking account
for you to go spend however you want, just like now,

(48:42):
Absolutely no difference.

Speaker 2 (48:44):
In terms of the investment accounts. We know you can
move it over. What about if folks are concerned that
they're going to be triggering capital gains by transferring investments
into their trust.

Speaker 5 (48:55):
So in these trusts, they are designed again as not
only incomplete gifts for gift tax purposes. When we transfer
an asset in we're doing just that. We're gifting. We're
not selling, we're not liquidating. We're just retitling. And I
know you've done that, so you know when we retitle,

(49:18):
you can assure them that no, we're not selling. We're
just changing the name on the account from your personal
name to your name trust. So it would go from
Todd Lutsky to Todd Lutsky Family Irrevocable Trust. Oh, big change.
Not a big change on the name, but a big
change in terms of how it's owned. What about those

(49:38):
retirement todds. What do you do with those retirement accounts? Yeah,
so those are a whole nother tittle of fish. As
they say, those cannot go in the trust today.

Speaker 3 (49:51):
While you're living.

Speaker 5 (49:52):
When I say today, they cannot go in because if
you take them out and transfer them to the trust,
you're going to have a big income tax hit.

Speaker 4 (50:00):
Yep.

Speaker 5 (50:00):
And so I'd rather have you focus on living off
those assets and spending them down and then you can
have that designated beneficiary, perhaps be a testamentary trust to
protect it for the spouse. But short of that, don't
put it in the trust while you're living, folks. Those
are just some of the things you'll learn when you

(50:22):
get the Unlocking the Power of Medicaid Irrevocable Trust Guide
to help you better understand them. Brand new for the
month eight six six, eight four, eight five, six nine
to nine or Legal Exchange Show dot Com.

Speaker 2 (50:37):
Todd Lutsky from the law firm of Cushing and Dolan,
thank you so much.

Speaker 3 (50:40):
Thank you, Susan. Always a pleasure.

Speaker 2 (50:42):
I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
We thank you for joining us today and we'll be
back again next week on the Legal Exchange with Todd.

Speaker 1 (50:52):
Lutsky, how my life planning can be overwhelming, so make
sure you're prepared or you can make constantly mistakes that
affect your overall plan. Irrevocable trusts are the most common
type of trust that folks use for financial protection, and
while they can be complicated to create, they help keep
your assets safe because they contain specific protections that many
of us need, like the possibility of eliminating your estate taxes.

(51:16):
Cushing and Dolan are experts in elder lawn taxation and
they can devise a plan that covers you in every
area where issues can rise. Their new guide is called
Unlocking the Power of Irrevocable Medicaid Trusts. Learn more about
how these trusts can benefit your family by calling eight
sixty six eight four eight five six ninety nine right now.

Speaker 6 (51:34):
That's eight sixty six eight four eight.

Speaker 1 (51:36):
Five six nine nine, or you can request the guide
right now by visiting Legal Exchange showed dot com. The
proceeding was paid for and the views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legal or investment Services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other and are not affiliated. Summer in New England is spectacular,

(51:56):
Winter in the US Virgin Islands is even better. Saint Croix,
Saint Thomas and Saint John are three of the most
incredible islands anywhere in the Caribbean, and their popularity has
soared over the past three years. If you're ready for
your next fabulous vacation, now's the time to check out
the American Caribbean.

Speaker 6 (52:13):
Go to visit USVII dot.

Speaker 1 (52:15):
Com, where you'll find all the information you need to
book a trip that you'll never forget. The Saint Croix
Crucian Festival runs from December twenty sixth to January fourth.
Celebrate New Years on Saint Croix and enjoy world class cuisine,
Christine Beaches, a wide variety of water sports, and some
of the greatest musical acts the islands have to offer.
Travel to and from New England is simple and your

(52:36):
state will be hassle free. Because this is the American Caribbean.
There's no passport needed and no money to exchange. America's
Caribbean paradise is waiting for you. Go to visit USVII
dot com and make your plans today that visit USVII
dot com.

Speaker 11 (52:53):
Hi, I'm Lissa Hughes. This Veterans Day weekend, help honor
all we've served our country and join WBZ for the
annual DAV five k, a run or walk to support
disabled vets here in Massachusetts with housing, transportation and other
critical support, Saturday, November ninth at DCR's Castle Island in
South Boston. Let's thank all who have sacrificed for our

(53:14):
freedom and help our heroes on their road to recovery.
Visit DAV fivek dot Boston to register or donate today.

Speaker 7 (53:21):
The DAV five K Boston is presented by Veterans Development Corporation.

Speaker 1 (53:25):
Protecting your assets is your most important financial responsibility, and
derrevocable trusts can help you keep your assets safe from
probate and the nursing home. By calling Cushing and Dolan
right now at eight six six eight four eight five
six nine nine. Get their new guide called Unlocking the
Power of Arevocable Medicaid Trusts. That's eight sixty six eight
four eight five six nine nine, or request it online
by visiting Legal Exchange Show dot com. The proceeding was
paid for and the views expressed our sole leaders of

(53:46):
Cushing and Dolan. Cushing and Dolan and Armstrong Advisory may
contact you offering legal or investment services.

Speaker 6 (53:50):
CUSHINGA.

Speaker 1 (53:50):
Dolan and Armstrong Advisory do not endorse each other and
are not affiliated