The Legal Exchange: Sunday Edition - Sunday, November 26, 2023

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Episode Transcript

(00:01):
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 six 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 advisor the Armstrong Advisory Group, and I'm joined by Todd Lutsky,

(00:47):
a partner with a law firm ofCushing and Dolan with a master's in taxation.
Welcome Todd. How are you today? I'm never better in you.
I am great? Thank you.What do you have for us this week?
Well, we've got a sh acase out of Indiana and one out
of New York. Interesting this firstone in Indiana is a deed transferred by

(01:08):
intimidation. That doesn't sound good now. In fact, on September of twenty
twenty, Robert signed a deed transferringthe home to son Jimmy and his wife
who was living with I'm sorry toROBERTA transferred the deed to was living with
her at the time. With thedeed, I'm not even going to get

(01:30):
into any more facts. That's badenough as it is gifting a house to
children or children and a spouse.Nothing good can come from this. So
stay tuned and learn about all thebad things that happen in this case,
because it just goes downhill from there. Well, then we head over to
New York and we have a situationwhere there's a failure to mention a child

(01:53):
in a will. So there's awill prepared in twenty sixteen that basically treats
the kids equally well. In twentytwenty, Dad died and Melanie, his
fiance, produced a will in twentysixteen, four years before his death,

(02:14):
showing that he disinherited one child,forgot to mention the other child, and
left everything to Melanie. That doesn'tsound suspect at all, So little concerned
about how this might happen and wherewe head from this, and whether this
is a good thing or a badthing, or maybe we should do more
planning. But folks, before wego back to the Indiana case, which
was all about gifting a house away, that's in fact what our guide is

(02:35):
about this month. In fact,it's the last chance. We are at
the end of the month. Ihope everybody had a nice Thanksgiving and we
are going to talk about giving assetsaway and how best to do it or
should we do it. There's incometax issues, there's gift tax issues,
there's estate tax issues. You haveto figure out whether or not you give
away something with a high basis versusa low basis. You have to decide

(02:59):
whether you want to even give itaway at all or put it into a
separate gifting trust. Folks, giftingsounds easy, but it's complicated. Get
the guide making the most of giftingassets, Last chance to get it this
month eight six six eight four eightfive six nine nine, or go to

(03:19):
Legal Exchange Show dot com again eightsix six eight four eight five six nine
nine or Legal Exchange Show dot com. Just keep your stuff, Just keep
your stuff. I'm with you,Susan, just keep your stuff. Well,
this person didn't, so let's goback to Indiana. So in September
again of twenty twenty, Roberta signsa deed over transferring the house to son

(03:45):
Jimmy and his wife. Jimmy wasliving with her at the time, and
Jimmy got a little legal help tomake sure the deed was done right now.
Interestingly enough, it was not recordeduntil November two, two months later.
It was recorded well in between thattime. September twenty fourth, the
daughter has a power of attorney signed, naming daughter Niela as the power of

(04:11):
attorney. That means the power totransfer property or sign checks or pay bills.
Well, interestingly enough, on Octoberninth, still before the other deed
was ever recorded, Nila signed anew deed transferring the property to all the
kids and reserving a life estate forRoberta. So everybody's treated equally in light

(04:31):
and Roberta gets a life estate sothe right to live there. Okay,
Well, needless to say that onAugust twenty twenty one, they wanted a
quiet to title action because we obviouslyhave two deeds floating around, and you
know, do we have a problem. Which deed is valid, Which deed
is not valid? What was thatYou just said, a quiet to title?
Quiet title? Yeah, you wantto quiet the title. In other

(04:53):
words, the title is the problem. Yeah, figure out the problem.
We we gotta that. They callit a quiet title action and so so
okay. So then they file anaction saying that Jimmy violated the Consumer Protection
Act when he took this property frommom. And the trial court agreed and
they invalidated the deed. Well,Jimmy didn't like that, I'm sure,

(05:16):
so he appealed and NILA argued thatthe court used the wrong standard of undue
influence anyway or no. They arguedthat they used the wrong standard of undue
influence, and the court agreed,saying the wrong standard was used. The
appellate court said the wrong standard wasused, but went ahead and looked further

(05:36):
at the facts and the testimony ofthe case. Turns out that Jimmy threatened
Roberta, putting her in a nursinghome, throwing her out of the house,
preventing her from family members from visitingher if he didn't get the deed,
and so he got the deed.Wow, Well that's intimidation. And
so on those facts, the courtsaid, we don't care about what standard

(05:56):
was used. You can't get adeed through intimidation, and so they invalidated
the deed. Well, at theend of the day, I think that's
the right answer. But really,folks, what can we learn from this?
Don't give away your stuff, keepyour stuff, and if you're going
to keep it, own it theright way. Yeah, I mean you
said it in the beginning, right, So here, you know, whenever

(06:17):
you give away stuff, you losecomplete control over that item, right,
and you risk yourself even being thrownout or whatnot. So let's run through
some of the pros and cons hereof what happened and why I would never
want to give away cons than pros. Yeah, I mean, if you
give it away, first of all, you've lost control. You could get

(06:39):
thrown out like she was being threatenedbefore to be thrown out, but in
reality she should have known. Well, of course you don't know when you're
old. But if you own it, nobody can throw you out. But
if you give it away, yeah, you certainly can get thrown out.
Say you wanted to sell it downthe road, Well, if you don't
keep any right to your house andyou give it all away. You can't

(07:00):
sell it right because you don't ownit, so the owners the kid,
would have to sell it. Soyou need his permission to sell it.
And if you have someone who's threateningto throw you out of your home,
likely he's not going to give youthe money back. But even if you're
absolutely right, even if you don'tset this up and everything is going well,
you would never do this, evenif you trust a kid, because

(07:21):
of that very thing, Susan,you're not sure that if you do sell
it, you never get the moneyback. But let's play out the string.
If you do sell it and thekid doesn't live there, you're living
there, which is more likely thannot the case. Well, well,
if you're living there, then whenhe gets the money, he's got to
pay the capital gains tax because hedoesn't get a capital gains exclusion on the

(07:43):
sale of a primary residence. Whybecause it's not his primary residence. So
now we're paying unnecessary taxes on thesale. And then, as you said,
you got to beg the kid togive your money back because you don't
have the money you need as aparent to buy your new downside home.
So hopefully the kid gives it back, and then if he does give it
back, there's potential gift tax ramificationson top of the capital gains tax ramifications

(08:11):
that you just incurreg it's coming backwith a haircut. So this is a
bad idea. And let's just sayeverything worked out swimmingly and you never really
wanted to sell it, but youdie and then the child says, well,
I don't need it. I gotmy house. I want to sell
it. Now you've stuck him witha carryover basis. You've given him your

(08:33):
cost basis. And so if there'sa lot of built in gain in the
property because you bought it a longtime ago, then he's stuck with that
gain and he's going to pay thecapital gains tax. So even if everything
works out well, you still harmyour children by giving away a house to
children. So, folks, nothinggood comes from this, right, don't

(08:56):
give it away. Even if youretained a life estate and gave the remainder
interest to the kids, much likethe daughter did, you still have the
problem. Right, what if youwanted to change your mind after you set
up a life estate arrangement that youkeep so at least now you can't be
thrown out, you get to livethere, but you decide that you want
to take care in this case Nilawho starts to take care of you and

(09:18):
you want Nila to have the house. Well, good luck asking the other
kids that are remainder interest to giveup their interest. You can't do it.
This is why I tell people irrevocabletrusts. They sound like you give
up control, but you keep waymore control than if you put it in
the trust, because then if yougive it away, if it's in the
trust, folks, you can sellit when you want. You can remove

(09:39):
the trustee. There's no adverse capitalgains, tax consequences. You'll have use
of the money. If you wantto buy another house, it's still protected
because it's still inside the house.Folks. There's so much you need to
know when you give away assets.Learn how to make gifting work for you
and how to make gifting fit intoyour estate plan situation correctly. The end

(10:03):
of the month, call and getthe guide Making the most of Gifting your
Assets eight six six eight four eightfive six nine nine, or you can
go to our website and download itright there. Legal Exchange Show dot Com
eight six six eight four eight fivesix nine nine or Legal Exchange show dot
com. You've been listening to ToddLutsky, a partner with the law firm

(10:26):
of Cushing and Dolan. I'm SusanPowers, a financial advisor with the Armstrong
Advisory Group. We've got much moreto come when we return to the Legal
Exchange with Todd Lutsky. Legacy planningis incredibly important if you want to make
sure you keep your assets in yourfamily, but if it isn't done properly,
you can create significant problems. Giftingassets to your children is admirable,

(10:48):
but may not always be the bestcourse of action, especially if they're financial
difficulties or a divorce proceeding. Learnhow to protect yourself and your family by
calling Cushing and Dolan and asking fortheir brand new guys called Making the Most
of Gifting Assets. In it,you'll learn about information related to the gifting
process, what tax issues may arisefrom a major gift like a home or
vacation property, and what happens tothe asset if a child has creditor issues.

(11:11):
Call eight sixty six eight four eightfive six ninety nine. That's eight
six six eight four eight five sixnine nine, or requested online from their
website Legal Exchange show dot com.The proceeding was paid for and the views
expressed are solely those of Cushing andDolan. Cushing and Dolan and or Armstrong
Advisory may contact you offering legal orinvestment services. Cushing and Armstrong do not

(11:33):
endorse each other and are not affiliated. If you're looking for an incredible vacation
filled with sun, fun and noneed for a passport, look no further
than the United States Virgin Islands.Saint Croix, Saint Thomas, and Saint
John were voted the number one vacationdestination to visit this December, according to
US News and World Report. Decemberis the start of the dry season in

(11:54):
the islands, so you can expectperfect temperatures, beautiful beaches, a wide
variety of water sports, world classcuisine, and a vibrant nightlife. From
the moment you arrive, you'll fallnaturally in rhythm with the heartbeat of the
islands. There's no money to exchange, and travel from New England could not
be easier. Make your plans nowbefore Old Man Winter comes calling. Had

(12:16):
to visit USVII dot com. Learnabout all three islands and plan the ideal
vacation for you and your family.America's Caribbean paradise is waiting for you.
So had to visit USVII dot comfor more information and to reserve your trip
today. That's visit USVII dot com. Veterans Development Corporation is a proud partner

(12:37):
of the DAV five K Boston.Let's meet their CEO, Mark Vonner.
I'm no stranger to the military community. My late uncle Albert Warner, Sir.
Probably in the First Marine Division inWorld War Two and gave the ultimate
sacrifice for his country. I amsurrounded by a family of disabled veterans,
including my father Victor and brother Timothy. I am a VET, and I

(13:00):
have dedicated my business in my lifeto helping veterans. My company, Veterans
Development Corporation, works to help disableveterans every day, and it's one of
the key reasons why I'm such abig supporter of Dan Stack and the Disabled
American Veterans Department of Massachusetts. Iam so thrilled to be proudly partnered with
this year's DAV five K. VeteransDevelopment Corporation is proudly partnered with the Disabled

(13:24):
American Veterans Department of Massachusetts and thepresenting sponsor of the DAV five K Boston.
If you'd like to help our greatAmerican heroes by making a donation,
visit DAV five k dot Boston.For forty years, Cancer Support Community has
been a relentless ally for anyone impactedby cancer, with free services provided online
and in person. With their newestlocation in Massachusetts, connect with Cancer Support

(13:48):
Community Massachusetts for free emotional support,educational resources, patient navigation, financial counseling
and more. Six one, seven, seven, nine, three nine one.
Cancer supportmass dot org. Cancer supportmassdot org. This is Tucker Silva
of the Financial Exchange and I'm joinedtoday by state planning attorney Todd Lutsky,

(14:11):
a partner with the law firm ofPushing and Dolan with a master's in taxation.
And today we're talking about the implicationsof gifting assets away. Todd,
if you're trying to protect your assetsfrom the cost of long term care expenses,
what are the risks in giving yourassets to a child rather than transferring
them to an irrevocable trust. Yeah, that's a great question. So many
people feel like, oh my gosh, it's an irrevocable trust. I've lost

(14:33):
all control. I've given up theability to do just about anything. You
know, you hear that all thetime. But you know what, think
about it. If I instead gavemy investment portfolio to my children, right,
or my rental property to my children. I mean, how much control
do I have over that? Igot none. I mean I got to
rely on them to pretty much doeverything. Not to mention the fact that,
you know, let's say I gavemy rental property away, technically I

(14:56):
can't sell it. I can't doanything without the children doing it. And
what you've forget is that children thenwould be entitled to all the rent Well
you gave away your rental income.You know what about if a child gets
a divorce and you gave them aninvestment portfolio to hold on to, Well,
that money would all be subject totheir divorce or any of their creditors.
Plus it all gets picked up ontheir income tax return. Folks,
you give away assets, you loseall control and create lots of adverse income

(15:20):
tax and gift tax consequences. You'reway better off setting up an irrevocable trust
to protect your assets from the costof long term care. Educate yourself about
the implications of gifting your assets away. Request your free copy of Todd's brand
new guide called Making the Most ofGifting Assets right now by calling eight six
six eight four eight five six ninenine, or you can request a copy

(15:43):
from Legal Exchange Show dot com onceagain eight six six eight four eight five
six nine nine, or you canrequest it from their website Legal Exchange Show
dot com. The proceeding was paidfor and the views expressed are solely those
of Cushing and Dolan. Cushing andDolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushingand Armstrong do not endorse each other and

(16:03):
are not affiliated. This is AskTodd on the Financial Exchange Radio Network.
If you have an existing estate planor in the market for one, Todd
Lutsky is here to answer your questionsand help you plan for later life.
Ask Todd is presented by Cushing andDolan, serving Massachusetts and New England for
more than thirty five years, helpingfamilies with a state and tax planning,

(16:25):
Medicaid planning, and probate law.Visit Cushingdolan dot com. Now here's Todd
Lutsky. As promised, we arenow joined by mister Todd Lutsky from the
law firm of Cushing and Dolan.The segments called ask Todd because well,
you get to ask Todd your questionsabout your state plan or maybe maybe if

(16:48):
you're lack of in a state plan, you're just trying to get started and
figure out where do I begin.So the studio line here to ask Todd
your questions right here on the airis eight eight eight two zero five two
six three. That number again iseight eight eight two zero five two two
six three. Last couple of weeks, Uh, we have not been able
to get to everyone. So ifyou do want to make sure we get

(17:10):
to your question, get calling earlyagain. That number is eight eight eight
two zero five two two six three. One more time eight eight eight two
zero five two two six three.Mister Lutsky, how are you? I
am doing well and you I'm good. I was out yesterday. I'm trying
to buy a new, uh newsofa. Oh yeah, and I'm are

(17:32):
now well. So the guy says, look this sofa. It'll seat five
people without any problems. And Isay, oh, that's interesting. But
where am I going to find fivepeople without any problems? That's a problem.
I just I don't know what todo. Todd, Let's talk a
little bit about gifting. Since we'renow we're twenty eight days away from Christmas.

(17:52):
We are I think seventeen days awayfrom han I know, fourteen I
believe, but who's counting? We'regetting close. Yeah, when we talk
about gifting, not just for theholidays, but when we talk about gifting
as a strategy for estate planning,why would someone consider a gifting strategy as

(18:14):
part of their long term estate plan. So gifting is driven by a lot
of things, mostly, and Iwould say maybe most importantly is taxes.
All Right, So taxes tend todrive your ability to gift or not gift.
So first thing is if you lookat your estate and you say,
I'm going to be over even intwenty twenty six when the federal exemption falls

(18:40):
down, right, I'm going tobe over thirteen million, Well, then
I want a gift because I wantto use my exemption before I lose it.
And the only way to do thatis either die, which is not
helpful or not ideal, not ideal, or gift. And so one of
the things to gift is, hey, if I can save death taxes by

(19:00):
getting assets out of my estate today, not just today, but don't forget
about all the future appreciation, whichis really why we make the gift we
gifted today. Yeah, it's out, but we also have all the future
appreciation that we want to get outof the estate. And if that's going
to save me a state taxes,then I might consider it. And now,
again, not every state has adeath tax. I know only about

(19:22):
fifteen states in the entire country havinga state tax, So it's not all
enough Columbia. Yeah, right,it's not always driven by state death tax,
so much more biased by federal Butwhat I think people need to be
aware of is, even if I'mgoing to do that, I got to
figure how much am I saving versuswhat I'm giving away. Because when I

(19:45):
give away certain assets, I giveaway the cost basis. So what if
I have an investment portfolio that hasgrown significantly over time, Well there's a
lot of gain built in. Orwhat if I've got that rental property that
has been depreciated to zero on thebasis of my renting it over the last
twenty or so years and I givethat away, Well, then it's all

(20:08):
gain. Right if I got amillion dollar property and I give that away
with no basis it's all gain.Well, then I'm trapping a million dollars
of capital gain at at least thirtypercent give or take depreciation recapture, and
you're stuck with a three hundred thousanddollars tax bill. Well, I better
make sure that whatever I'm saving onthe estate tax front is more than three

(20:33):
hundred thousand dollars, or maybe thisisn't worth it, because if I can
keep it and die owning it,I get a step up in basis for
my beneficiaries thereby eliminating that three hundredthousand dollars liability on the gain front capital
gain front. And yes, Ipay estate taxes, but if it's less,

(20:56):
you know, pick your poison,right, which one do you want?
And you know, quite frankly,giving away assets outright might not be
the best thing to do either.Consider an irrevocable gifting trust when you do
find out that gifting makes sense foryou, so that you can control it
from the grave and maybe even getit as state tax free to grandchildren so

(21:21):
you skip a generation protect it fromcreditors. I mean, there's so much
to think about it, and wecan certainly explore that talking with Todd Lutsky
from the law firm of Cushing andDolan. If you've got a question that
you want to ask about your estateplan, this is your opportunity. It's
why we call the segment. AskedTodd. The studio line is eight eight

(21:42):
eight to zero five two two sixtythree. That number again is eight eight
eight two zero five two two sixtythree. We're gonna go to break,
but when we come back, it'sgonna be right to your questions with mister
Lutsky. So get all cued up, get dialed in eight eight eight two
zero five two two sixty three.Quick break than your calls. Ask Todd

(22:07):
with Todd Lutsky every Wednesday at tenthirty only here on the Financial Exchange Radio
Network. If you're looking for anincredible vacation filled with sun, fun and
no need for a passport, lookno further than the United States Virgin Islands.
Saint Croix, Saint Thomas, andSaint John were voted the number one
vacation destination to visit this December,according to US News and World Report.

(22:30):
December is the start of the dryseason in the islands, so you can
expect perfect temperatures, beautiful beaches,a wide variety of water sports, world
class cuisine, and a vibrant nightlife. From the moment you arrive, you'll
fall naturally in rhythm with the heartbeatof the islands. There's no money to
exchange, and travel from New Englandcould not be easier. Make your plans

(22:51):
now before old man Winter comes calling. Had to visit USVII dot com learn
about all three islands and plan theideal vacation for you and your family.
America's Caribbean paradise is waiting for you, So had to visit usv IN dot
com for more information and to reserveyour trip today. That's visit USVIN dot
com. Veterans Development Corporation is aproud partner of the DAV five K Boston.

(23:18):
Let's meet their CEO, Mark Vunner. I enlisted in the Marine Corps
when I was eighteen years old,joining a long line of family members who
also served Dot Country. After myservice, I connected with the VA Healthcare
Systems, where I attended meetings withdisabled veterans and learned for the first time
about the dav I was so impressedwith the work they do to help millions
of veterans, including providing necessary serviceslike transportation, education, and financial opportunities.

(23:45):
Today I stand a proud partner ofthe DAV and the twenty twenty three
DAV five K. My company,Veterans Development Corporation, is a general contracting
firm working with many disabled veterans,and I hope that by sharing my story,
many other disabled veterans will be ableto reach their goals and stay include
dis Service. Veterans Development Corporation isproudly partnered with the Disabled American Veterans Department
of Massachusetts and the presenting sponsor ofthe DAV five K Boston. If you'd

(24:08):
like to help our great American heroesby making a donation, visit DAV FIVEK
dot Boston. This is Tarker Silva, the Financial Exchange, and I'm joined
today by a state planning attorney,Todd Lutsky, a partner with the law
firm of Pushing and Dolan with amaster's in taxation. And today we're talking
about the implications of gifting your assetsaway. Todd, what happens if you

(24:30):
give your home to your child inan effort to protect it from the nursing
home, and later on you decideyou want to sell it. Yeah,
that's just one of the problems ofgiving away your house. But let's explore
it. If you give your houseto your child, thinking, okay,
that was easy, but now youdon't own it, so now you really
have no right to live there,and of course no right to sell it.

(24:51):
Right now, if you happen tohave kids that are really nice and
you ask their permission, which Idon't ever want my clients to have to
do, to say please sell thehouse, you've also given them a huge
tax liability because all the proceeds wouldgo to them. Now you don't have
the money you need to buy yournew house. And plus, if they
don't live with you, then theydon't get this capital gains exclusion that goes

(25:12):
around along with selling your primary residence. So you're creating an adverse capital gains
tax bill for them to pay.And then in addition to that, if
they are nice after they pay thetax, then they have to give you
the money back, which could createa gift tax problem for them and impact
their estate planning efforts. Finally,you get the money back and then you
can go ahead and buy another house. Folks, don't go through that set

(25:34):
up. An irrevocable trust to protectyour assets from the cost of long term
care. Educate yourself about the implicationsof gifting your assets away. Request your
free copy of Todd's brand new guidecalled Making the Most of Gifting Assets right
Now by calling eight six six eightfour eight five six nine nine. That's

(25:55):
eight six six eight four eight fivesix nine nine, or you can request
a cop be from their website LegalExchange show dot com. The proceeding was
paid for and the views expressed aresolely those of Cushing and Dolan. Cushing
and Dolan and or Armstrong Advisory maycontact you offering legal or investment services.
Cushing and Armstrong did not endorse eachother and are not affiliated. You're listening

(26:15):
to Ask Todd with Todd Lutsky onthe Financial Exchange Radio Network. All right,
continuing with mister Tom Lutsky again.If you have a question you'd like
to ask him about your estate plan. The studio line here is eight eight
eight two zero five two two sixthree. That's eight eight eight two zero

(26:38):
five two two six three. Stillhave room for maybe one or two more
calls. Let's go first to Jasonin Lynn. Jason, you are on
with mister tod Lutsky, thank youfor taking my call. Sure, Happy
Thanksgiving. Happy Thanksgiving to you aswell. My sister passed away this past

(26:59):
summer. She was never married,at kids or anything like that. She
didn't own real estate. She doeshave about two hundred and fifty thousand dollars
worth of money that I'm going toend up dispersing in three ways. I
just want to know the best wayto do that without incurring some kind of
I don't know if they'd be atax burden or anything else. I've no

(27:19):
idea. So let me ask you. Let me ask you this. So
did she die with I assume withjust a will? She had She had
a will, It was never anofficial will. She had written it down
what she wanted. She's already gonethrough probate and all that. Oh okay,
So that was my point. SoI'm just waiting for pension money from

(27:41):
the state on top of the moneythat she had in the bank. All
right, So at least you hadsome direction. So I get it that
it went to probate because there wasno will, and you went through that,
and you've got some direction that it'ssupposed to go three ways? Right
now? Are you appointed as apersonal representative by the probate court. Correct,
Okay, great, And so thismoney is sitting in some kind of

(28:03):
a probate estate. In other words, you opened up a bank account in
the name of the estate of yourlate sister. Correct. I have not
done that yet. It's still inher accounts. I haven't taken anything out
of her accounts at all. SoI think you'll probably need to be directed
to that idea. So you'll haveto get an estate account and open it

(28:23):
up and then deposit the money intothat estate account. Because you have the
authority, you're the you're the pr. So once, once you do that,
right, then you can cut thesechecks, you know, one third,
one third, one third to whoeveryou're writing the check to. Now,
why am I telling you to takethis extra step, Not that it

(28:44):
might ever be a big problem,but one, there is no death tax
due here, right, So inMassachusetts the exemption, the new exemption is
now two million dollars. So shedied well under the two million dollar exemption.
So no filing requirement and no deathtax due to mass So that's fine.
What you worry about if it's notdone this way is there's a gift

(29:06):
tax right, So as long asyou're the pr personal representative and you open
up that account and deposit it inthere, then you can write a check
from that account with an ID numberthat you'll get from the IRS for that
for that new bank account. Thenwhen you cut those checks, those are
considered distributions from the estate of yoursister, not gifts by you. Where

(29:33):
if, on the other hand,you let's just say your sister just had
you as a joint owner on theaccount, you know, because it was
convenient and you were helping her,and she didn't mean it all to go
to you, and you knew shewanted it to go three ways, but
it was a joint ownership account andyou just got all the money. Well,
now it's in your name. Youavoided probate. That's nice, But
you would own all the assets individually. And if you were a nice person

(29:56):
and said, well, you knowwhat, I want to honor my sister's
request or in here my sisters wishes, and I'm going to cut these three
checks anyway, those would be taxablegifts by you to those people, even
though you're trying to do the rightthing because you're the owner. This way,
if you do it through thees state, and you do it as a

(30:17):
pr a personal representative, then it'sa distribution from the estate and not a
gift by you. And you couldwipe your brow. So there you go.
Hopefully that was helpful and you canmake that call and get these checks
out. And it's a good timetoo, because it's Thanksgiving. It's gifting
time, folks, and that's whatthis guide is all about. We are

(30:38):
approaching the end of the month here, so it will go away. So
if you want to get the gift, if you want to get the guide,
excuse me. Making the most ofgifting assets. We talked a little
bit about it at the top ofthe show, at the top of the
segment. But gifting sounds easy,but it's not so easy, right.
You really need to think think aboutwhat asset you're giving, whether that asset

(31:03):
has a low basis or a highbasis, because if you give away low
basis assets, then you incur ortrap I should say, capital gains tax
liability for the beneficiaries you're giving itto. Yes, in essence, you're
giving somebody a tax bill, eventhough you feel good because you're giving away
the assets. So be careful onhow to do that. Also decide whether

(31:26):
or not gifting even makes sense.Am I saving a state taxes? Am
I incurring income taxes? If I'mgoing to gift because I have a higher
net worth situation, gift it toa trust maybe that you can control and
protect from future you know, generationskipping tax, benefits to grandkids, and
protection from divorces. Learn how bestto make use of your gifting. Get

(31:48):
the guide Making the Most of GiftingAssets eight six six eight four eight five
six nine nine or Legal Exchange Showdot com again six eight four eight five
six ninety nine or Legal Exchange Showdot Com. So question that I have
just when we talk about the structureof people who gift charitably. Yes,

(32:14):
when someone has a highly appreciated assetthat they give to a charity, how
does that work for the charity froma tax perspective? And how can that
inform you know, maybe what you'regifting to who or to what charity?
Yeah, so giving to charity isa completely different animal, really, and
there's many ways you can do that. So there are there are ways where

(32:36):
you could set up, you know, if you're doing an estate plan and
you want, you know, acharitable remainder trust is a wonderful way to
do it. Why you can giveaway like a building that has a lot
of gain in it, sell thebuilding, defer the gain, invest all
the money, and then you cantake a stream of income from that over
your lifetime, and then when youdie, the balance goes to charity.

(32:57):
So that's a great estate tax benefitbecause whatever goes to charity you get a
deduction on and while you're living youstill get you know, a nice cash
flow. So that's a great ideaof doing that. And if you're going
to make outright gifts to charity.The other way to think about it is
you know, when you give capitalgain assets, there are limits on what

(33:19):
you can deduct, right, Soif you give away a lot of assets
in one day, you might notbe able to take the entire deduction on
your income tax return in that year. So be mindful that if you if
you make a gift and there's abig capital gain, I believe you're limited
to thirty percent of your agi forthe first period that for that deduction.

(33:43):
So the good news is that's themost you can take in that given year,
But then you have another five yearsafter that to continue to take the
balance of that capital gains or ofthat charitable contribution as a deduction. So
year of gift you get a deduction, and then five more years to try
and soak up the rest of thatas deductions. But it doesn't all occur

(34:06):
in one year, so a littlebit a little tougher when you think about
charities. I think, mister Lutsky, thank you so much for joining us
today. We appreciate it, andI hope you have a great Thanksgiving as
well. Well. It's always apleasure. Thank you, and thank everyone
for listening, and I want towish them all a very happy Thanksgiving as
well. The views expressed in thissegment are solely those of Cushing and Dolan.
Armstrong Advisory does not provide any legalor tax advice. Please consult with

(34:30):
your illegal or tax advisor on suchmatters. Cushing and Armstrong do not endorse
each other and are not affiliated.This has been asked Odd on the Financial
Exchange radio network Ask Todd with Todd. Lutsky has been presented by Cushing and
Dolan, serving Massachusetts and New Englandfor more than thirty years, helping families
with the state and tax planning.Medicaid planning and probate law. Call eight
hundred three nine three four thousand andone or visit Cushingdolan dot com. Legacy

(34:55):
planning is incredibly important if you wantto make sure you keep your assets in
your family, but if it isn'tdone properly, you can create significant problems.
Gifting assets to your children is admirable, but may not always be the
best course of action, especially ifthey're financial difficulties or a divorce proceeding.
Learn how to protect yourself and yourfamily by calling Cushing and Dolan and asking

(35:15):
for their brand new guide called Makingthe Most of Gifting Assets. In it,
you'll learn about information related to thegifting process, what tax issues may
arise from a major gift like ahome or vacation property, and what happens
to the asset if a child hascreditor issues. Call eight sixty six eight
four eight five six ninety nine.That's eight sixty six eight four eight five
six nine nine, or requested onlinefrom their website Legal Exchange Show dot com.

(35:43):
Veterans Development Corporation is a proud partnerof the dav five K Boston.
Let's meet their CEO, Mark Varner. I'm no stranger to the military community.
My late uncle Albert Warner, Sir. Probably in the First Marine Division
in World War Two and gave theultimate sacrifice for the country. I am
surrounded by a family of disabled veterans, including my father Victor and brother Timothy.

(36:06):
I am a veteran and I havededicated my business and my life to
helping veterans. My company, VeteransDevelopment Corporation, works to help disable veterans
every day, and it's one ofthe key reasons why I'm such a big
supporter of Dan Stack and the DisabledAmerican Veterans Department of Massachusetts. I am
so thrilled to be proudly partnered withthis year's DAV five K. Veterans Development

(36:29):
Corporation is proudly partnered with the DisabledAmerican Veterans Department of Massachusetts and the presenting
sponsor of the DAV five K Boston. If you'd like to help our great
American heroes by making a donation,visit DAV FIVEK dot Boston. If you're
looking for an incredible vacation filled withsun, fun and no need for a
passport, look no further than theUnited States Virgin Islands, Saint Croix Saint

(36:52):
Thomas and Saint John were voted thenumber one vacation destination to visit this December.
According to US News and World Report, December is the start of the
dry season in the islands, soyou can expect perfect temperatures, beautiful beaches,
a wide variety of watersports, worldclass cuisine, and a vibrant nightlife.
From the moment you arrive, you'llfall naturally in rhythm with the heartbeat

(37:14):
of the islands. There's no moneyto exchange, and travel from New England
could not be easier. Make yourplans now before Old Man Winter comes calling.
Had to visit USVII dot com learnabout all three islands and plan the
ideal vacation for you and your family. America's Caribbean paradise is waiting for you,
so had to visit USVII dot comfor more information and to reserve your

(37:37):
trip today. That's visit USVII dotcom. Securing your family's financial future is
one of the most important elements ofestate planning. Leaving assets to your children
can be very beneficial. However,gifting these assets can pose major problems.
If you gift your home to yourkids and they suddenly decide to sell it.

(37:57):
Your gift could create massive capital gainstax problems. Cushing and Dolan are
experts in elder law. Let themhelp with your legacy planning by calling eight
six six eight four eight five,six nine nine ask for their new guide
called Making the Most of Gifting Assets. Whether you're deep into the planning process
or just starting out, this guidecontains the information you'll need to make the
right decisions for your overall plan.Call today eight six six eight four eight

(38:21):
five six nine nine and get thisnew guide, Making the Most of Gifting
Assets. That's eight six six eightfour eight five six nine nine, or
requested online at Legal Exchange show dotcom. The proceeding was paid for in
The views expressed are solely those ofCushing and Dolan. Cushing and Dolin in
or I'm Strong Advisory may contact youoffering legal or investment services. Cushing and
Dolan and arms Strong Advisory do notendorse each other. In are not affiliated.

(38:43):
This is Talker Silva of the FinancialExchange and I'm joined today by state
planning attorney Todd Lutsky, a partnerwith the law firm of Cushing and Dolan
with a master's in taxation, andtoday we're talking about the implications of gifting
assets away. Todd If you're tryingto protect your assets from the cost of
long term care expenses, what arethe risks in giving your assets to a
child rather than transferring them to anirrevocable trust. Yeah, that's a great

(39:06):
question. So many people feel like, oh my gosh, it's an irrevocable
trust. I've lost all control.I've given up the ability to do just
about anything. You know, youhear that all the time. But you
know what, think about it ifI instead gave my investment portfolio to my
children, right, or my rentalproperty to my children. I mean,
how much control do I have overthat? I got none. I mean
I got to rely on them topretty much do everything. Not to mention

(39:29):
the fact that, you know,let's say I gave my rental property away.
Technically I can't sell it. Ican't do anything without the children doing
it. And what you forget isthe children then would be entitled to all
the rent Well, you gave awayyour rental income. You know what about
if a child gets a divorce andyou gave them an investment portfolio to hold
on to, Well, that moneywould all be subject to their divorce or
any of their creditors. Plus itall gets picked up on their income tax

(39:51):
return. Folks, you give awayassets, you lose all control and create
lots of adverse income tax and gifttax consequences. Way better off setting up
an irrevocable trust to protect your assetsfrom the cost of long term care.
Educate yourself about the implications of giftingyour assets away. Request your free copy
of Todd's brand new guide called Makingthe Most of Gifting Assets right now by

(40:15):
calling eight six six eight four eightfive six nine nine, or you can
request a copy from Legal exchange Showdot com once again eight six six eight
four eight five six nine nine,or you can request it from their website
Legal exchange show dot com. Theproceeding was paid for and the views expressed
are solely those of Cushing and Dolan. Cushing and Dolan and or Armstrong Advisory

(40:37):
may contact you offering legal or investmentservices. Cushing and Armstrong do not endorse
each other and are not affiliated.Your tune to the Legal Exchange with Todd
Lutsky. If you were a lovedone needs a nursing homestay, call Todd
right now at eight six six eightfour eight five six nine nine and let
him make sure your assets are protected. That's eight six six eight four eight
five six nine nine, or visithim online at Legal Exchange show dot com.

(41:01):
Welcome back into the Legal Exchange withTodd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong AdvisoryGroup, and I'm joined, of course
by Todd Lutsky, a partner withthe law firm of Cushing and Dolan with
a master's in taxation. So,Todd, we're talking about gifting assets this
month. And you mentioned earlier inthis show the gentleman who owned a corporation,

(41:23):
owned a company and he did agifting trust. These gifting trusts can
be a very valuable tool as partof higher net worth estate planning process.
Sure, what level of net worthdo you have to have before you should
consider this kind of planning. Ithink it's really driven by the federal estate

(41:46):
tax exemption for two reasons. One, not every state even has an estate
tax. Remember there's only about fifteenstates that even have an estate tax.
Luck, yes, and mass weare the leaders of the pack and so
so that's one reason. And thefederal and Two, the federal estate tax

(42:07):
is forty percent of the amount overyour exemption, So we want to make
sure that we have that all covered. And so let's start with that premise.
So what is the federal exemption?Well, let's not think so.
Well, two things you have tothink about. One what is it today?
And two what's it going to bein twenty twenty six Today, So

(42:29):
let's go to twenty twenty six.First, twenty twenty six, let's say
it falls to roughly six and ahalf million. If you're married, that's
thirteen million. So I'm thinking Ican do basic estate planning and if I'm
worth today or thinking where I'm goingto be in twenty twenty six around thirteen
million or less, gifting takes onanother idea of maybe maybe I don't need

(42:52):
to gift. Yep, maybe Itake a second closer look at this and
not gift. Look closer. Ohokay, Todd, what if I'm worth
twenty or thirty million today? Saytwenty million even right? And up?
Well, if I don't do anything, I'm only going to be able to
shelter with basic estate planning in twentytwenty six thirteen million. So that means

(43:15):
I have seven million dollars at fortypercent, that's two point eight million dollars
in tax that I will owe automatically. If I don't grow this a penny
and I die after twenty twenty six, maybe I should use those exemptions before
I lose them. So this wouldmean hurry up? Yeah, right?

(43:36):
And how do you use exemptions beforeyou lose them? There's only two ways
one die. That's not very helpfuladvice. That's really not going to be
anybody's first option, especially not thistime of year. So what else gift?
So you can gift and eat upyour exemption without paying a gift tax

(43:58):
by making these gifts to your point? That was that point with the high
net worth climb out of business?Can you only do this with business assets?
Could you do it with like investmentsor real estate or something like that
home? You sure can. Soyou have to think about what kind of
item you want to gift. That'sa whole other part of gifting. So
once you've made this determination that yes, I'm in the gifting world, then

(44:23):
you have to step back and say, what is it that I'm going to
gift real estate or business or investment? Portfolios? And folks that's where we're
at with you today. You needto decide whether or not gifting makes sense
for you and the new guide itis the last chance to get It's not
new, it's the last chance giftmaking the most of gifting assets because you

(44:45):
need to think about whether or notit's going to create an adverse capital gains
tax to your family by giving away, as we said earlier, very low
basis assets creating gain later, howmuch does it actually save me on the
estate tax fronts, which you know, you got to pick your poison,
which one is better? Uh?And then when you are high net worth

(45:06):
and you want to give assets away, don't just give them to the kids.
By putting it into a gifting trust, you not only are getting it
out of your estate, but youcould possibly be getting it out of their
estate, skipping in a state forgeneration, skipping tax purposes, and protecting
it from the kids' future divorces andcreditors. Get the guide Learn how best

(45:27):
to gift in your situation eight sixsix eight four eight five six nine nine
or Legal Exchange Show dot com OneMore time eight six six eight four eight
five six nine nine or Legal ExchangeShow dot Com. So I know,
you have told all of us manytimes you're not an advocate of actually giving
away your assets. So you're notgoing to just transfer these assets to your

(45:52):
kids. They're going to go insome kind of a trust. Probably Yeah,
yeah, you don't know my kids. Okay, So they go into
this gifting trust. How does thatoperate? Is it different than like the
medicaid trust we talk about the revocabletrust that we talk about. Yeah.
Yeah, these gifting trusts are arevery different than the medicaid trust. So

(46:15):
the Medicaid trust, I you know, not only just with a medicaid trust,
is it an incomplete gift for gifttax purposes, the giver you can
actually remain an income beneficiary a beneficiaryof the trust. I'll be an income
only beneficiary, but still a beneficiaryof the trust. So that's good,
and you keep a lot of controlover it. Like we've talked about living

(46:37):
there, selling houses, doing things. With a gifting trust, it's a
little different. You're making a completedgift, meaning you've cut the string.
You're no longer a beneficiary of thattrust. Income or principle, income or
principle. You've got to make surethat you cut that string so that it

(47:00):
doesn't get pulled back into your estate. In order to do that, you
need to not be a beneficiary andnot really be able to directly control the
beneficial enjoyment of the property. Okay, but as I said in my story,
you can still keep a lot ofcontrol over removing and replacing the trustee,
making sure you have independent trustees thatare not the kids. You can,

(47:21):
you know, so you you stillget to ensure and the kids are
not owners yep of the assets.So yeah, so you're still so what
do you how much control you're actuallygiving up? I know you're saying it
you can't control directly, but it'skind of hard to quantify it in this
case. But you know the factthat you're not a beneficiary is you know,
you got to say, this isn'tmine anymore. Right, it may

(47:44):
never come back to me. Coulda kid get it and give it back?
I guess they could, but notimplicated to in your mind that this
is stuff that I've that I've actuallygiven away and that I'm not actually controlling
anymore. Now, mind you,with a business, when we give it
away, we only give in tothat business non voting shares, So it

(48:04):
might be great that the company isowned by this irrevocable trust that I don't
own anymore. But guess what Ikept, all the voting shares of the
underlying business. Of the underlying business. Remember, non voting shares. They
can't sell the business, they can'tmake any managerial decisions, they can't make
a distribution from the business to theshareholders. They can't complain about not getting

(48:29):
income distribution. Ruse. Clearly,the man at the voting shareholder runs the
show. So and you could giveaway, and we do it lots of
times. You could give away ninetypercent of the business, all non voting
out of my estate growing outside myestate, beautiful. I kept ten percent

(48:52):
all voting. I'm running the show. Can you give us an example,
Todd of what kind of money you'retalking about being able to save, Like
if you show one of those giftingtrusts. Yeah, I actually have a
real life story. Oh excellent.So it's an older one, but it's
won back when the same thing washappening. So back in twenty twelve,
we had this thing called the fiscalcliff, that's what they were talking about.

(49:15):
And the exemption back then was fivemillion dollars. And this younger couple
walks in in there. I don'tknow if they were in their late thirties.
They had started a business and theythey were worth. The business was
worth about four million, and thathouse worth a million. They didn't have
a lot of other assets, butthat's five million, and it was going

(49:36):
to go down to one million theexemption. And so they said, well,
we don't want to lose four milliondollars of our exemption. What do
we do? So we did theircompany into voting and non voting shares,
gave away ninety percent to spousal lifetimeaccess trusts, which are actually different than
outright gifting trusts because they can eachenjoy what's in that trust for the other

(49:57):
one, Oh, espousal lifetime accessbuy it back. I'll scratch yours,
so they can still enjoy what's inthat ninety percent piece. They kept ten
percent to run the business. Yeah. Then when Biden got in office and
they were worried the exemption was goingto fall, they came in. We
said, what's going on here?Their business was now worth forty million dollars.
Good for them, We had giftedaway ninety percent of forty million dollars.

(50:22):
Ten twelve years ago, and thattranslates into a savings of seventeen million
dollars in tax because all that growthoccurred outside the estate. Folks in that
in that espousal lifetime access trusts.Learn how to make the most of your
gifting eight six six eight four eightfive six ninety nine or Legal Exchange show

(50:44):
dot Com. Todd Lutsky from thelaw firm of Cushing and Dolan, thank
you so much. Thank you,Susan. Always a pleasure. I'm Susan
Powers, a financial advisor with theArmstrong Advisory Group. We thank you for
listening and we'll be back again nextweek on the Legal Exchange with Todd l
Legacy planning is incredibly important if youwant to make sure you keep your assets

(51:06):
in your family, but if itisn't done properly, you can create significant
problems. Gifting assets to your childrenis admirable, but may not always be
the best course of action, especiallyif they're financial difficulties or a divorce proceeding.
Learn how to protect yourself and yourfamily by calling Cushing and Dolan and
asking for their brand new guide calledMaking the Most of Gifting Assets. In
it, you'll learn about information relatedto the gifting process, what tax issues

(51:30):
may arise from a major gift likea home or vacation property, and what
happens to the asset. If achild has creditor issues, call eight sixty
six eight four eight five six ninetynine. That's eight sixty six eight four
eight five six nine nine, orrequested online from their website Legal exchange show
dot com. The proceeding was paidfor and the views expressed are solely those

(51:52):
of Cushing and Dolan. Cushing andDolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushingand Armstrong do not endorse each other and
are not affiliated. If you're lookingfor an incredible vacation filled with sun,
fun and no need for a passport, look no further than the United States
Virgin Islands. Saint Croix, SaintThomas, and Saint John were voted the
number one vacation destination to visit thisDecember, according to US News and World

(52:15):
Report. December is the start ofthe dry season in the Islands, so
you can expect perfect temperatures, beautifulbeaches, a wide variety of water sports,
world class cuisine, and a vibrantnightlife from the moment you arrive,
you'll fall naturally in rhythm with theheartbeat of the islands. There's no money
to exchange, and travel from NewEngland could not be easier. Make your

(52:36):
plans now before old man Winter comescalling. Had to visit USVII dot com
learn about all three islands and planthe ideal vacation for you and your family.
America's Caribbean paradise is waiting for you. So had to visit USVII dot
com for more information and to reserveyour trip today. That's visit USVII dot
com. The Veterans Development Corporation isa proud partner of the dav five K

(53:02):
Boston. Let's meet their CEO,Mark Vunner. I'm no stranger to the
military community. My late uncle AlbertWarner, Sir, probably in the First
Marine Division in World War Two andgave the ultimate sacrifice for his country.
I am surrounded by a family ofdisabled veterans, including my father Victor and
brother Timothy. I am a veteranand I have dedicated my business in my

(53:25):
life to helping veterans. My company, Veterans Development Corporation, works to help
disable veterans every day and It's oneof the key reasons why I'm such a
big supporter of Dan Stack and theDisabled American Veterans Department of Massachusetts. I
am so thrilled to be proudly partneredwith this year's DAV five K. Veterans

(53:45):
Development Corporation is proudly partnered with theDisabled American Veterans Department of Massachusetts and the
presenting sponsor of the DAV five KBoston. If you'd like to help our
great American heroes by making a donation, visit DAV fivek dot Boston.