The Legal Exchange: Sunday Edition - Sunday, May 12, 2024

Episode Transcript

(00:00):
This is the Legal Exchange with ToddLutsky from the law firm of Cushing and
Dolan and Susan Powers of the ArmstrongAdvisory Group. Each week, Todd and
Susan will discuss many topics, includingestate planning, how to avoid probate,
and protecting your money from a nursinghome. If you need assistance in any
of these areas, or have aquestion about another issue that may affect your
future, call eight sixty six eightfour eight five six ninety nine to make

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

(00:46):
a partner with the law firm ofCushing and Dolan with a master's in
taxation. Welcome Todd. How areyou today? I'm never better in you?
I'm great? Thank you? Whatdhe have for us this week?
A couple of interesting cases, oneout of Idaho where we're going to talk
about you know gifts, deeds weregifted without consideration. Again, we never

(01:07):
like putting. And there's a divorceinvolved too. And then they ended up
giving away their respective interest and apiece of property to grandkids. And it
says for valuable consideration, but nomoney listed. Does that gift? Is
it allowed to be set aside?When they end up going in a nursing
home for medicaid purposes? Set asidethe whole gift, the whole transaction interesting

(01:30):
again as state specific, folks,Every state has their own statute. But
we're gonna learn a lot about givingaway assets to kids. Never a good
idea anyways, it supports our theory. Then we're gonna head over to Illinois
where we have a Supreme Court decisionand it basically deals with a person getting
married under a guardianship. So areyou really married? Is it avoidable marriage?

(01:57):
How does that work? And whyis it so important? Right?
Because of course death occurs shortly afterthe marriage. And is that person entitled
to benefits under the intestate succession statuteor not if you're not a true spouse.
Lots of stuff to think about itin any of these cases. Certainly

(02:20):
planning is important and the guide thismonth, which is a new guide for
the month. Estate planning potholes toavoid, certainly not planning as a pothole
to avoid. Maybe get your ducksin a row. But for all of
you that have planned and those ofyou who have not, learn about what
you can do to fix your planor how to avoid problems before you create

(02:42):
them, Like don't rely on awill, get more planning, don't rely
on a nominee realty trust thinking you'reall set if you did planning. Don't
think your trust is funded without checkingto see if it's funded. Make sure
you know what to do after aspouse dies. Folks, this guide is
going to help you either get startedor fix your existing plan. Call and

(03:04):
get the guide State Planning Potholes toAvoid eight sixty six eight four eight five
six nine nine or legal exchange showdot com. You can download it there
again eight sixty six eight four eightfive six nine nine or Legal exchange show
dot com. Let's take a peekIdaho Supreme Court. By the way,

(03:28):
what happened? Robert owned property andhe deeded half to his wife, Juanita
in nineteen ninety. Well, theyget divorced in two thousand and five,
at which time they prepared two respectivedeeds transferring their respective interests their haves to

(03:49):
the five grandkids for valuable consideration.So they had two separate deeds and they've
transferred their respective interests to themselves andto the five kids. So I'm getting
the impression that they are joint ownerswith the grandkids. Five grandkids. Wow,
yeah, that's kind of what I'mwhat a nightmare. It's not clear
from the facts it whether they gaveit away completely or it sounds like to

(04:12):
themselves and to the five grandkids.So I think that boiler alert. Either
way, it's a nightmare. Yeah, yeah, So what happens? What
could go wrong? Oh? Icould go wrong with that lovely plan?
So Onanita. Then Wanita then getson Medicaid, so in nineteen ninety six

(04:32):
to twenty fifteen, she runs upone hundred and thirty seven thousand dollars Medicaid
bill and the state wants paid.Shocker. And Robert gets on Medicaid from
two thousand and six to two thousandand eight, so both entered a nursing
home, but he only ran upa four thousand dollar bill all the state
wants paid. So the state filesclaimed saying, hey, have these deeds

(04:54):
set aside so that we can goafter the property because they were transferred with
out valuable consideration to the kids.And there's apparently a state statute that says
that if it's transferred without valuable considerationthat it can be set aside. So
that means less than fair market value. Right, yes, so it's a
state statute. I won'tly know forsure what that means. And interesting enough

(05:17):
that all the defendants agreed that itwas transferred for no consideration. So interesting.
I still scratch my head. Whycan't I give away something if I
want to give away something? No, ways, I haven't read the statute,
so I'm not sure. But theseare the facts. The trial court
said, grant summary judgment in favorof the state. The deeds are to

(05:41):
be set aside. Went up tothe Supreme Court. The Supreme Court agreed
that there was there was a timelyfiling issue. Did they file the claim
timely? That's why the dates wereso important? And interestingly enough, the
Supreme Court agreed with the trial courtthat it was timely filed, but only
because it was caught by a fouryear catch all provision. It did not

(06:03):
satisfy the ten year statute of limitations, so they still ended up setting aside
the deed. Okay, so I'mnot happy with the result at all,
But I think we need to understandthe big problems that exist when you add
children's or grandchildren's names to deeds.Anybody, anybody, spouse, anybody that's

(06:30):
not your spouse. You know,why would we would we do that?
Now, let's run through some ofthe problems, right, So, the
general rule is that when you hearthey put kids or other kids on a
deed, it's a completed gift asa general rule, so you've made a
half interest of a completed gift atthat moment. Now, oftentimes you'll see

(06:57):
this done for like a dollar.Well, that's not a sale. It's
a gift, right because it's fora dollar. Here's a gray area though,
because they said we did it forvaluable consideration, but no money was
listed. I still think it's agift. Yeah, okay, what's the
lesson if you put your kid's nameon a deed. Let's run through some
of the problems that jump out atme. On In this case, they

(07:19):
put five grandkids' names on there,which means they have potentially five spouses,
five divorces they could happen. Soyou've increased your risk of exposure to a
divorce of a child or a grandchild. Yeah, ten times. Yeah,
say you want to sell the property, right, Well, you know,

(07:42):
and I get it here that therewas another half that the other spouse gave
away, and that would create itsown problems. But just think about just
if you just did it and putfive names on it, right, you
now need five other people to signoff, give you permission on that sale
and give you the money back.Well, that's the other problem then,
and then even if they get permission, you know you're going to get you

(08:05):
know, your percentage ownership interests ofthe proceeds and they're going to get theirs.
And there's also tax problems. Yeah, to go with this, right,
So if the grandkids don't live inthe house, but you're still living
there, you would get the primaryresidence exemption, which is two fifty if
you're single in this case, orfive hundred if they were still married.

(08:30):
The kids are grandkids, whoever's onthe deed, they don't get that,
no, unless they still live athome, which hopefully they've moved out,
so you know, you have thatthat concern, and then another gift tax,
another tax which is a gift tax. If you want the money back,
how do you get it. Yougot to get permission right after they
take the haircut of the taxes off. You're not getting it all back.

(08:54):
And even from a medicaid perspective,if you're still a half owner on the
property, only half the properties pertecfrom the nursing home. In this case,
they're trying to set it all aside, But I don't know how you
could set it all aside. Myfeeling is if I made a completed gift
and I filed my gift tax returnand I gave away half the property,
even though all these bad reasons whyI would never do that, You've really

(09:16):
only accomplished protecting half. Those othergrandkids are kids would have to come up
with money to buy out the otherhalf if they wanted to save the property.
In the event either of the grandparentsgot sick and went to the nursing
home, they have to buy outthe interest of the one who got sick.
What a nightmare. So it's reallynot protecting your asset from the nursing

(09:41):
home. And I'm not even sureit's I guess it would avoid probate,
but it's not helpful all the wayaround. You exactly what my last point
was it you know. A potholeto avoid here is rather than do this,
they should have just set up setup your own irrevocable trust, Put
your assets in it, put theYou can direct it to the grand kids

(10:01):
if you want. That's fine.The trust will do that, but it'll
also protect it and preserve it forthem with better tax benefits. Get the
guide, folks, how to avoidestate planning Potholes eight six six eight four,
eight five six nine nine, orgo to our website Legal Exchange show
dot com and download it right there. You've been listening to Todd Lutsky,

(10:24):
a partner with the law firm ofCushing in Dolan. I'm Susan Powers,
a financial advisor with the Armstrong AdvisoryGroup. We've got much more to come
when we return to the Legal Exchangewith Todd Lutsky. Creating the right estate
plan to help secure your future takeseffort. There are plenty of mistakes that
you can make, any one ofwhich could have a dramatic and damaging effect

(10:45):
on your financial strategy. Cushing andDolan are experts in estate planning. Their
brand new guide is called Detour aHead Estate Planning Blunders to Avoid. In
it, you'll learn about these criticallayers so that you can make the right
decisions to always protect your assets.As an example, if you've created a
trust more than ten years ago andhaven't updated it, since, you're setting
yourself up for problems. Cushingan Dolan'snew guide will help you address issues like

(11:07):
this. So call right now eightsix six eight four eight five six nine
nine and ask for your copy ofour new free guide called Detour Head Estate
Planning Blunders to Avoid. That's eightsixty six eight four eight five six nine
nine, or requested online from theirwebsite Legal exchange show dot com. That's
Legal exchange show dot com. Theproceeding was paid for and the views expressed

(11:28):
are solely those of Cushing and Dolan. Cushingan Dolan and or Armstrong Advisory may
contact you offering legal or investment services. Cushing and Armstrong do not endorse each
other and are not affiliated. TheUS Virgin Islands is the perfect destination for
your next vacation. Visit Saint Croix, Saint Thomas or Saint John and experience
incredible weather, iconic history, ChristineBeach's world class cuisine, and a vibrant

(11:50):
nightlife. Book now and you mightjust make it in time for the Saint
Croix Mango Melee on July seventh.The family friendly event offers food demonstrations and
taste, cultural dance performances, andthe ever popular mango eating contest. From
the moment you arrive, you'll fallnaturally in rhythm with the heartbeat of the
islands. There's no money to exchange, no passport required, and travel from

(12:13):
New England could not be easier.Make your plans now by going to visit
USVII dot com. Learn about allthree islands and plan the ideal vacation for
you and your family. America's Caribbeanparadise is waiting for you, so head
to visit USVII dot com for moreinformation and to reserve your trip today.
That's visit USVII dot com. Arecent report from law depot dot com says

(12:39):
that only three out of every tenadults in the US have taken the time
to create in a state plan.Don't be a member of that group.
Hi, this is Mike Armstrong fromthe Armstrong Advisory Group, a sound estate
plan can give you control over yourassets and peace of mind as you enter
your retirement years. Our new guideis called Leaving a Financial Legacy, and
in it we look at a stateplanning from a financial perspective. It's important

(13:00):
to have a strategy that addresses yourinvestment portfolio and all of your holdings,
including real estate. We'll also focuson other issues, such as how to
manage long term care expenses that mayaffect you down the road. Get your
guide today by calling eight hundred threenine three four zero zero one. That
number again is eight hundred three ninethree four zero zero one, or you
can also request the guide online atArmstrong Advisory dot com. The proceeding was

(13:22):
paid for by Armstrong Advisory Group,a registered investment advisor. Nothing in the
ad or in any Armstrong Guide aspecific financial, legal, or tax advice.
Consult your own financial, tax,and estate planning advisors before making any
investment decisions. Armstrong may contact youto offer investment advisory services. A legal
exchange with Todd Lunsky, an expertin elder life planning and taxation. Need
help with your estate plan, comTodd right now and make an appointment eight

(13:45):
sixty six eight four eight five sixninety nine. That's eight sixty six eight
four eight five six ninety nine.Welcome back into the legal exchange with Todd
Lutsky. I'm Susan Powers, afinancial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Lay,a partner with the law firm of Cushing
and Dolan with a master's in taxation. Where are we headed now, John,

(14:07):
let's see, let's head over tothe Supreme Court of Illinois. Wow,
a Supreme Court case. Yeah,are you married? If you're married
under a guardianship? Married under aguardianship? We're going to need that spelled
out for me. We are.This isn't easy. So here's what happens.
Sean is guardian for his brother John, May thirtieth, twenty seventeen.

(14:35):
John fights the guardianship. John says, you know, says that we don't
need a guardianship. So Sean isthe guardian for the brother John. But
the brother John fighting the guardianship,says, I don't want a guardianship,
and so they appoint an attorney.The court appoints an attorney Anthony, to
help John with the fight to terminatethe guardianship. Twenty seventeen John and Elizabeth.

(15:03):
So May thirtieth, twenty seventeen,we get to July of twenty seventeen,
John and Elizabeth get married. Remember, the guardianship fight is going on,
so he still has a guardianship overhim, I guess. So they
get married, and they never tellAnthony, the attorney who's supposed to be
helping terminate the guardianship. Anthony,however, on several occasions, had told

(15:26):
Elizabeth not to get married because theymust have talked about it, because the
marriage would be voidable under the guardianship, so don't do it. Anthony the
attorney tells the Elizabeth. They getmarried anyway, and Elizabeth doesn't tell Anthony.
Keep that in mind. December eleventh, twenty seventeen, not much like

(15:50):
July twenty seventeen. They got married. December twenty seventeen. John dies shocker,
and of course the fight starts overwho gets what because there's no will,
right, you can't make these factsup. And then the brother.
So you've got a probate situation,right. He died without a will,
So the intestate succession statute applies,and John's parents and his siblings are the

(16:15):
only living heirs, and they arguethat they are the only living heirs because
the marriage is void abinetio meaning itnever existed. Wow, and John lacks
capacity to consent to the marriage.The trial court agreed, no marriage existed
intestate succession statute applies. Well,they weren't happy with that, so the

(16:41):
appellate court and the Supreme Court.Ready, the appellate court reversed, and
then the Supreme Court reversed back hmthe appellate court. Basically, the arguments
that came out was this punitive spouseargument. If you go through a ceremony

(17:02):
and you live with a person andyou have good faith belief that you are
married, then you're a punitive spouseuntil knowledge comes otherwise. And that was
what the appella court. No,they i didn't even get into the appellate
court. I'm just telling you theultimate argument. Okay, the ultimate argument
was. It got all the wayto the Supreme Court, and this was

(17:22):
the argument Supreme Court, and theSupreme Court said, well, that's true
in this case. Anthony, theattorney told Elizabeth several times before they got
married, uh huh, don't doit because it's avoidable marriage. And she
did it anyway, so she reallycould never have known or had good faith

(17:45):
belief that she was married, soshe doesn't fit the punitive statute bill.
Wow exciting, this was good stuff. Wow. I mean this is about
as good as it gets from alawyer standpoint. And I think the answer
is that's right, and so goaway a spouse, get ready for intestate
succession statue, not spouse, goaway not spouse. But I don't know

(18:07):
what kind of a gold digger orsomething. I don't know what to say,
but that didn't work out, folks, that's a huge pothole. The
pothole here is a boy. Ifyou're getting older, please do your planning
number one, number two. Look, in this case, you have a
guardianship situation, right, don't waitfor that. Get your planning in order.
And if you are going to getmarried, set up a plan.

(18:27):
Especially second marriages is a reason tolook at your plan again. Right,
age is a reason to look atyour plan. These are potholes to avoid.
Make sure a plan you have inplace is funded. Don't think your
state's too small. It doesn't matter. I don't need to do planning.
You know you change residency. Whatdo you have to do if you change
residency. This gives you so manyideas about how to get started on your

(18:49):
estate plan by thinking about it andwhat not to do. And if you've
done your plan, look at itand get the guide and see if there's
things you can do to make itbetter. Bet her call and get the
guide. Avoiding estate planning potholes eightsix six eight four eight five six nine
nine or Legal Exchange Show dot comagain eight six six eight four eight five

(19:14):
six nine nine or Legal Exchange Showdot com, so you can avoid the
estate planning potholes. What do welearn from this one? Todd? What
didn't we learn? Please go doyour planning. We learned that not planning
is a big pothole. That's whatwe learned. You know, waiting to
tell people, you know, waitingtill you have questionable capacity to do planning

(19:37):
is never a good idea. Andthat's what happened here. You know,
I have questionable capacity, and nowI'm going to do an estate plan.
Please don't now if you're now,why is it important here? Because if
she turns out that she's married,truly married, she she's probably gonna win
because under the intestate succession statute.I think the first in line is generally

(20:03):
a spouse or a spouse and kidsin some way, neither of which exist
here. So in this case,she would probably get everything under the intestate
succession statute. But here, ifshe's out, then you know the parents
and the siblings are going to probablyshare in some manner based on state law.

(20:26):
Wow, so you see why she'sso motivated to do this. Now,
I want to talk about a willfor a minute, because even though
they didn't do any planning, ifthey had at least done a will,
a will's a won't I get it. You know. The will is,
you know, not going to avoidprobate. It's not going to reduce the
state taxes. It's not going toprotect your assets from a nursing home.

(20:48):
I get all of that. Butif you're going to do nothing else,
at least do a will. It'sat least going to direct where your assets
go, so you stay out ofthis intestate succession statue. And if he
wanted the assets to go to Elizabeth, he could have put that in the
will. Doesn't matter if she's aspouse or not. You can leave your
assets to whoever you want. That'sexactly Although they'd probably fight and say,

(21:11):
oh, no, he didn't havecapacity to do it. Well, yeah
they would. I'm sure that thatthat could come up as well. Again,
whenever it's late in the game,you're always worried about a capacity argument,
whether it's from a sibling, aniece, a child, yeah yeah,
a spouse, an ex spouse,you know, whatever it is.
So you know, obviously my pointis to make sure that you that you

(21:33):
do your planning. But let's pausefor a minute and just say, you
know, if nothing else, let'stalk about getting remarried. In this case,
Let's say there was capacity and theydid get remarried, and we're not
worried at all about about the person'scapacity. Boy, is that not a
red flag? Is that not apot? I say, it's a pothole
avoid remarrying is not necessarily the potholeto avoid, but although it maybe could

(21:59):
be, it's not a estate planningpott But when you do get remarried,
the estate planning pothole to avoid isnot stepping up to the plate and not
doing something and doing new planning right. When you get divorced, you immediately
have to adjust your plan to getrid of the ex spouse from being on
or a part of your plan atall. And then if you get remarried,
you must get together and say,how are we going to take care

(22:22):
of both sides of the family,which is really what's going on here.
How can we ensure that I thatI provide for my spouse and then also
ensure that if my spouse outlives me, he or she doesn't disinherit your children,
children from my marriage in favor ofchildren from potentially her marriage. Right

(22:48):
right, We want to we wantto make sure that that that that protection
is there, and again the trustwill do all of that for you.
But not planning is a problem.And then of course the trust can provide
exactly how these assets are going toget to those to those family members.
Folks, call and get the guide. This is about avoiding estate planning potholes.

(23:10):
Don't rely on old documents, lookabout what red flags might pop up
as to how you have to plan. It'll help you get your planning started
if you haven't done it, andit will certainly help you improve the plan
that you do have by seeing whatcould go wrong eight six six eight four
eight five six nine to nine orlegal exchange show dot com and you can

(23:33):
download the guide. Right there,you've been listening to Todd Lutsky, a
partner with a law firm of Pushingand 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 legalexchange with Todd Lutsky. Creating the right
estate plan to help secure your futuretakes effort. There are plenty of mistakes

(23:56):
that you can make, any oneof which could have a dramatic and damaging
effect on your financial strategy. Cushingand Dolan are experts in estate planning.
Their brand new guide is called DetourAhead Estate Planning Blunders to Avoid. In
it, you'll learn about these criticalleryrors so that you can make the right
decisions to always protect your assets.As an example, if you've created a
trust more than ten years ago andhaven't updated it since, you're setting yourself

(24:18):
up for problems. Cushing and Dolan'snew guide will help you address issues like
this. So call right now eightsix six eight four, eight five six
nine nine and ask for your copyof our new free guide called Detour a
Head Estate Planning Blunders to Avoid.That's eight six six eight, four,
eight, five, six nine nine, or requested online from their website Legal
exchange show dot com. That's legalexchange show dot com. The proceeding was

(24:41):
paid for and the views expressed aresolely those of Cushing and Dolin. Cushing
and Dolan and or Armstrong Advisory maycontact you offering legal or investment services.
Cushing and Armstrong do not endorse eachother and are not affiliated. A twenty
twenty three report from law depot dotcom shows that seventy three percent of US
adults don't have a documented a stateplan. HI, this is Mike Armstrong
from the Armstrong Advisory Group. Youdon't want to be a member of that

(25:03):
group. Proper estate planning is acritical element to you being able to pass
along your assets to your family intoenjoying your retirement years. If you want
to avoid making mistakes that could preventyour family from benefiting from your financial success,
then call our office today and askfor a copy of our new guide
called Leaving a Financial Legacy. Wetackle critical estate planning topics such as long
term care costs, estate taxes,and more, all from a financial standpoint.

(25:27):
Call today at eight hundred three ninethree for zero zero one and get
your copy of this free guide eighthundred three nine three for zero zero one,
or you can request it online fromour website Armstrong Advisory dot com.
The proceeding was paid for by ArmstrongAdvisory Group, a registered investment advisor.
Nothing in the ad or in anyArmstrong Guide a specific financial, legal,
or tax advice. Consult your ownfinancial tax into state planning advisors before making

(25:48):
any investment decisions. Armstrong make contactyou to offer investment advisory services. Are
you looking to volunteer for an amazingnonprofit organization that helps our veterans? The
dav Department of Massachusetts Transportation Network needsvolunteers right now. This network provides free
transportation to and from any VA medicalappointment for veterans of all eras. To
become a volunteer driver, you donot need to be a veteran or a

(26:11):
dav member. You just need tohave the willingness to help our veterans and
have a valid driver's license. Signup now at DAVM dot org. That's
DAVM dot org. There are crucialmistakes you can make during the estate planning
process that may have a damaging effecton your financial strategy. Cushing and Dolan's
new guide is called Detour Head estatePlanning Blunders. To avoid get yours today

(26:32):
and make the right decisions to protectyour assets, call eight six six eight
four eight five six ninety nine.That's eight six six eight four eight five
six nine nine, or request itonline at Legal Exchange show dot com.
The proceeding was paid for and theviews expressed are solely those of Cushing and
Dolan. Cushing and Dolan and orArmstrong Advisory may contact you're offering legal or
investment services. Cushing and Armstrong donot endorse each other and are not affiliated.

(26:52):
You're listening to the Legal Exchange andit's time for Ask Todd, the
segment where Todd will answer your questionsabout any and everything that's included in the
estate planning process. Once again,here's Todd, Lutsky and Susan Powers.
Welcome back, Todd. I havea few questions from listeners. First question
comes from John in Wood Mass andJohn writes, my wife and I created

(27:18):
irrevocable trusts and our house has beentransferred into it. Most of our remaining
assets are an annuities, some weare taking income from and some are deferred
annuities that we aren't withdrawing from.Can these be transferred into our ere evocable
trust? Can we still receive theincome? This is one of those quandaries

(27:40):
that I face in the estate planningworld, folks. First of all,
it's regarding funding a trust, whichis very important. Right. It's definitely
an estate planning pothole. We can'tnot fund our trust. That's crazy.
So yes, the house is inslam dunk. I love it. I
want to put money in do uhand investment accounts can go in and bank

(28:03):
accounts can go in. There's noissue I know it to be that the
deferred annuities anyway, I might stayaway from annuities that are paying out.
Now, let me start with them. Annuities that are in regular what we
call payout mode, tend to payout both income and principle. Yes,

(28:26):
and it's very hard to distinguish whichis which. And so the Medicaid irrevocable
trust does not allow for principle tocome out to the beneficiary. And so
if I put a new an annuityin there that is in the payout mode,

(28:48):
it's going to cause a problem.Yep. So no to those to
leave those out and live on themyou're getting income or get spent out hard
stop on defer annuities, on annuitiesthat are paying out deferred annuities. On
the other hand, where you havenot yet taken anything out and you may
not ever have to write, youcan let the annuity run his course and

(29:11):
terminate the annuity and invest in somethingentirely different. Yeah, okay, so
you may never actually have to takethose out. Now, those annuities you
legally can put in. Okay,However, to do that, there's a
code, Section seventy two U ofthe Internal Revenue Code. I'm sure you're

(29:32):
all very familiar with that said,Oh yeah, it's my favorite. One
does permit the transfer of an annuityto a grant or trust, which is
what these are, because that meansyou're still really the owner for income tax
purposes, So the income tax personhasn't really changed even though you're changing the

(29:55):
ID number on the annuity, thetax ID number. The tax ID number
on the annuity will be changing froma Social Security number to a trust tax
ID number. Even though that happensbecause it's a grant to or trust,
you're still considered the owner. Sothe tax basis, if you will tax

(30:18):
person hasn't changed. Okay, Nevertheless, almost I won't say almost all,
but a ton of annuity companies willwill say that triggers a taxable event,
and all the deferred income that hasbeen grown up in that trust I mean,
in that annuity is now taxable andyou're going to get a nasty ten

(30:40):
ninety nine at the end of theyear. No one likes that. Now
I can tell you that that isnot the law, and they they cannot
create a tax where one doesn't exist, right, So that's a wrong ten
ninety nine. They'd have to issuea new one. But it's a fight.
So what we do is we sendall this in information to the annuity
company and explain to them seventy twoU says we can do this, right,

(31:06):
And as long as they send usback in email saying we will not
issue a ten ninety nine, thenI tell the client it's okay to do
it. Then you can fund it, and if they do, you at
least have that email. Yep,but you're still gonna have to fight it.
You're still gonna have to get anew ten ninety nine issue so the
IRS doesn't tax you. So that'sa tough situation, folks. But I

(31:26):
think the point of this is makesure your trusts are funded. Right.
You might have done your estate planningand you think you funded them, but
maybe they're empty. Not helpful.I want you to know that if you're
sitting around saying I've done my estateplanning because I have a nominee realty trust
in place, you haven't. Iwant you to know that. If you
say I've got a will and that'sall I need my estate plans in order,

(31:48):
No it's not right. I've donemy estate planned ten years ago.
I'm all set. No you're not. Maybe you're not right. I don't
know. You need to check right. These are all reasons someone died and
I don't have to do anything withmy surviving spouses trust or my deceased spouses
trust. No, that's not right. Folks. Call and learn what to

(32:10):
do and what not to do inyour estate planning world. Avoid the potholes,
help yourself get started with the stateplanning or upgrade the one you have
eight six six eight four eight fivesix nine nine or legal exchange show dot
com. You can download it thereagain eight sixty six eight four eight five

(32:30):
six nine nine or legal exchange showdot com todd. Our last question comes
from down in Harwich. Mask Donwrites, my wife and I will soon
be meeting with an attorney to creatinga state plan, likely revocable trust,
as we have plenty of assets aswell as long term care insurance and we're
not concerned about the nursing home.Amen. My question is this, what

(32:52):
is the best way to ensure ourtwo children keep our family beach house in
the family without ending up enemies.Is there any way to protect the property
from their creditors? So yes toall of that, although you can never
really prevent people from being mad ateach other, so I'll put a little

(33:12):
caveat in there on that one.But yeah, I think at the end
of the day, certainly a potholewould be not planning. If you just
leave this to chance, I thinkyou're running a much greater risk of none
of this happening, keeping the beachhouse, protecting it from creditors, preventing
fighting. You don't have any ofthat. So the first thing I would
do is, you know, ifwe want to treat the family equally,

(33:35):
I assume they do. You know, I would allow these I would allow
the two children to have two separatebuckets created inside the trust, one for
each kid. Now they are separate, so they cannot rob Peter to pay
Paul. They don't have to fightover it. But funding those buckets is
important, and that's one way toprevent fighting. You talk about fighting right

(34:00):
at the end of the day,no matter how much you talk to your
family about this lovely beach house andhow in your mind you want their kids
to enjoy it, you want themto enjoy together, and everybody's going to
be this happy beaver Cleaver family.Well maybe maybe not right on the date
of your death. You don't knowwhere their head is at. You don't
know where they are in life.You don't know if one has moved far

(34:22):
away. You don't know any ofthat, right, and so you just
simply put language in there that sayswe're treating the kids equally, and we're
filling their buckets equally. That meansdividing the house in half. Yes,
but put language in that says theproperty will be sold unless they both want

(34:43):
it. Mm hmm. Okay,now you've resolved that. Ask them,
do you both want it? Yes? Yes, Boom eat it into their
trust. But if yes, soif you get a yes no, then
you have language in there that saysthe one who says yes has the right
to buy out the one who saysknow. And you put language in about
fair market value, price, abouttiming. You can't sit around forever.

(35:07):
You have deadlines. And that way, the one who wants it and will
care for it got it and theone who didn't got an equal value of
money. So the trust shares arestill equal, but have different kinds of
assets in them. Yep. Andso the kids have no reason to be

(35:29):
mad at each other. Yes,you're still happy. There's a lot of
people out there that have this idealsituation in their mind. But it's very
different having a property owned by momand dad together or having a property owned
by two married couples siblings. Youknow, you've got four adults to deal
with them. And well, Ithink that leads you to the next question.

(35:50):
Right, the creditor piece. Sonow that you've got the buckets funded
the way you want them funded equally, and the family's happy we didn't give
it to them, right, holdit back in trust. Put the language
we've spoken about many times, thatsole discretionary distribution language by the independent trustee

(36:10):
in there. So if they don'town it, but they can enjoy it,
they can get it. But bynot owning it, if they get
divorced from that spouse down the road, then the asset's still protected. Folks,
call and get the guide learn howto make your estate plan better avoid

(36:32):
potholes eight sixty six eight four eightfive six nine nine or Legal Exchange Show
dot com. If you have aquestion you would like to ask Todd,
visit his website Legal Exchange Show dotcom and click on the ask Tod tab.
Maybe I'll be able to read yourquestion on the air, and hopefully
his answer will stop you from becomingone of his next real life stories.

(36:54):
You've been listening to Todd Lutsky,a partner with the law firm of Cushing
and Dolan. I'm Susan Powers,a financial advisor with the Armstrong Advisory Group.
We'll be back with more after thisquick break on the Legal Exchange with
Todd Lutsky. Creating the right estateplan to help secure your future takes effort.
There are plenty of mistakes that youcan make, any one of which

(37:15):
could have a dramatic and damaging effecton your financial strategy. Cushing and Dolan
are experts in estate planning. Theirbrand new guide is called Detour Ahead Estate
Planning Blunders to Avoid. In it, you'll learn about these critical leryrors so
that you can make the right decisionsto always protect your assets. As an
example, if you've created a trustmore than ten years ago and haven't updated

(37:36):
it, since, you're setting yourselfup for problems. Cushing and Dolan's new
guide will help you address issues likethis. So call right now eight six
six eight four eight five six ninenine and ask for your copy of our
new free guide called Detour Head EstatePlanning Blunders to Avoid. That's eight six
six eight four eight five six ninenine, or requested online from their website,
Legal exchange show dot com. That'sLegal exchange show dot com. The

(38:00):
proceeding was paid for and the viewsexpressed are solely those of Cushing and Dolin.
Cushing and Dolan and or Armstrong Advisorymay contact you offering legal or investment
services. Cushing and Armstrong do notendorse each other and are not affiliated.
The US Virgin Islands is the perfectdestination for your next vacation. Visit Saint
Croix, Saint Thomas, or SaintJohn and experience incredible weather, iconic history,

(38:20):
Christine Beach's world class cuisine, anda vibrant nightlife. Book now and
you might just make it in timefor the Saint Croix Mango may Lay on
July seventh. The family friendly eventoffers food demonstrations and tastings, cultural dance
performances, and the ever popular mangoeating contest. From the moment you arrive,
you'll fall naturally in rhythm with theheartbeat of the islands. There's no

(38:43):
money to exchange, no passport required, and travel from New England could not
be easier. Make your plans nowby going to visit USVII dot com.
Learn about all three islands and planthe ideal vacation for you and your family.
America's Caribbean paradise is waiting for you, so head to visit USVII dot
com for more information and to reserveyour trip today. That's visit USVII dot

(39:07):
com. Are you looking to volunteerfor an amazing nonprofit organization that helps our
veterans. The dav Department of MassachusettsTransportation Network needs volunteers right now. This
network provides free transportation to and fromany VA medical appointment for veterans of all
eras. To become a volunteer driver, you do not need to be a

(39:28):
veteran or a dav member. Youjust need to have the willingness to help
our veterans and have a valid driver'slicense. Sign up now at DAVMA dot
org. That's DAVMA dot org.Building a solid financial strategy is a core
element to enjoying your retirement years.That's why you need advice that you can
count on. At the Armstrong AdvisoryGroup, we understand the challenges of positioning

(39:51):
your assets to help you maintain yourwealth over time. Our goal is to
offer advice that is both suitable andin your best interest. When you hire
one of us, you hire allof us, so you can be comfortable
knowing that every advisor in our firmis dedicated to helping you create a realistic
plan for your later years. Visitus today at Armstrong Advisory dot com and
sign up for a free, noobligation planning session. Click the get started

(40:15):
button at the top right corner ofthe homepage and you can select the day
and time that works best for you. Go to Armstrong Advisory dot com and
let us help you secure your financialfuture. That's Armstrong Advisory dot Com.
The proceeding was paid for by ArmstrongAdvisory Group, a registered investment advisor.
Nothing in the ad or in anyArmstrong guide a specific financial, legal,
or tax advice. Consult your ownfinancial, tax, intestate planning advisors before

(40:36):
making any investment decisions. Armstrong maycontact you to offer investment advisory services.
A legal exchange with Todd Lutsky.If you are a loved one needs a
nursing homestay, call Todd right nowat eight sixty six eight four eight five
six ninet nine and let him makesure your assets are protected. That's eight
six six eight four eight five sixnine nine, or visit him online at
Legal Exchange show dot com. Welcomeback into the legal Exchange with Todd Lutsky.

(41:01):
I'm Susan Powers, the financial advicewith the Armstrong Advisory Group, and
I'm joined, of course by ToddLutsky, a partner with the law firm
of Cushing and Dolan with a master'sin taxation. So, Todd, you've
spoken a couple of times about fundingyour trust and the pothole of not funding
your trust. Sure, so howdo you actually fund your trust once you've

(41:25):
created it. Let's start with kindof the basics the real estate. Most
people have a home that they wantto put in there, so how do
you actually do that? So withthe home, you simply need to make
sure that you have signed something calleda quit claim deed. So many people
say, what is that? Whatis a quick claim deed? It's really
title to your house. When yousay I own my house, you tell

(41:46):
people, yeah, I own myhouse. You're really saying on my deed
is my name and there's no mortgage. Yeah, so I own my house.
That's title to your house. Soyou simply have to remember did I
sign at when I signed all thoseestate planning documents? Was one of the
documents I signed a quick claim deed? And that would say something like,

(42:10):
you know, I Todd Lutsky herebytransfer and convey the property located at to
Todd Lutsky trustee of the Todd LutskyFamily trust right or whatever your name is,
right, So if you remember doingthat, then it should be transferred.
And some people remember to be recorded, Yeah, don have to be

(42:30):
recorded for the transfer, but gotto be recorded, should record it.
And some people remember doing that becausethey say I don't own my house anymore
my kids own it because they're thetrustee. They own the house down.
Oh yeah, I don't know it, which is not a true statement.
Yeah, and you do get thatresponse. So so in this regard,
you know, look at the Registryof deeds. If you don't remember,

(42:51):
go to the registry and out theregistry. Look at your real estate tax
bill. If you don't remember,it should be changed. It sometimes takes
over a year, but it shouldbe changed. And if it's not,
then just it's not your fault andthere's really nothing you can do. As
long as the deed was signed,that's all that matters. But that's one
way to remind you that your taxbill comes in the name of a trust.

(43:14):
But you're right, Susan, toyour point, if it's an irrevocable
trust, Now, irrevocable trust isgoing to have your name on it as
trustee. But an irrevocable trust islikely going to have the name of a
child comma trustee of the which isthe difference. Smith family, irrevocable trust

(43:35):
or whatever you call it. Theysee that kid's name and they go,
oh, my daughter owns the house. Now they really do, And I
need you to make sure that beforeyou get upset that you think you gave
your house to your daughter, Ican assure you if you worked with us,
you don't have to worry because weknow we didn't give your house to
your daughter. But when you lookat it, look a little closer and

(43:55):
see if you see the word trusteeafter your daughter name or your son's name,
right, because that indicates it's notthem right personally, they're wearing a
hat. They're wearing a hat.Very good. Yeah, okay, so
what about your investments or your bankaccounts when it comes to when we talk

(44:17):
about funding. We're just changing theownership, not selling right. And you
tell them that I know you doright, they're right away They're like,
Okay, I want to put myinvestment portfolio into my trust, but I
don't want to trigger off taxes.I don't want to figure out what am
I going to do? Yeah,I don't want to pay taxes. I
don't want this to be a problem. We are selling nothing. We at

(44:40):
Cushing and Dolan are not financial advisors. We would never tell you how to
invest. We would simply create thehouse in which we want you to put
those investments into. That's all we'redoing. Is changing the name. Upper
left hand corner of your account,you'll see a little name that says,
you know, maybe both your nameslisted together as as a couple. The

(45:05):
next statement you get will just simplyhave the name of the trustee and the
name of the trust up there.That's all same statements, same investments,
absolutely no different, and but it'simportant you do that, folks. Funding
the trust is a pothole to avoid. If you don't fund it, you
are not helping yourself, okay,and you need to just double check.

(45:29):
Get your guide, look or getyour get the guide and look over your
estate plan right, make sure it'sfunded. Don't rely on on a on
a will, don't you know,don't forget that you need to do things
after a spouse dies to this tothe deceased spouse's trust in terms of filing
tax returns and not emptying it andcreating buckets. So there's this guy tells

(45:50):
you things you need to do whencertain events happen, and it also tells
you things that you better have doneif you've done your estate planning, and
how to avoid the post holes ofnot doing them. Call and get the
guide eight six six eight four eightfive six nine nine or Legal Exchange Show
dot com. I truly believe thisone is for people who have done their

(46:13):
planning and people who have not donetheir planning eight six six eight four eight
five six nine nine or Legal Exchangeshow dot com. What happens todd If
you've created your trust plan but you'venever funded it, you've never transferred anything
into it, is it all fornot? So it depends on who did

(46:35):
your estate planning. So like withus, we we always prepare a poor
over will. So a poorover willallows assets that you didn't put in the
trust. If they're in your ownname, that's always a wild card.
But if they're in your own nameto get into your trust through the will,

(46:58):
so they they will get They're throughprobate, but they will get there,
which is where we want them tobe first aid planning purposes. So
you're still going to have to goto probate. You'd have to go to
probate. But when we say isit all for not? Right, at
least it would not be all fornot. So whatever we could get into
the trust on the date of death, even through probate, would at least

(47:20):
be sheltered for estate taxes. Versusif you've not funded your trust and you're
married, and you left all theassets owned jointly with your spouse, yeah,
or with designated beneficiaries like IRA's yourspouse, Well, then all of
that avoids probate, so it doesn'teven get caught by the hopeful safety net

(47:45):
of the poor over will. Itdoesn't even get caught in there. It
bypasses the will because it bypassed probateand went directly to the spouse. Now
we've wasted everything, So at leastthat is a waste. That is a
complete waste. But at least ifyou've if you've ended up keeping assets for

(48:07):
some reason in your own name andthey weren't joint with your spouse and you
died, the will would put itthere, and then we're not with you
every day. You might open accountslater, yeah, to go buy CD
or something like that that aren't inSo if you have done irrevocable trust planning,
then you have bigger problems if youhaven't funded it. Right. Oh
yeah, so let's compare the two. Right, with a revocable trust,

(48:30):
if you've not funded it, worstcase scenario, I guess everything passes to
a spouse and you don't shelter assetsfor a state tax purposes. There's really
no harm, no foul on thefirst death. I mean there will be
on the second death. There'll beyou know, painful taxes to pay and
perhaps a bloodline plan that is notgoing the way you wished it would go

(48:52):
because you didn't do your planning.So those are negatives, yes, and
probate of course, but with anirrevocable trust, if you don't fund it,
yes, you still have all theproblems of probate and painful estate tax
problems on the second death, andand you know, bloodline planning problems if
there's no plan in place. Soall that is still a problem. But

(49:15):
the bigger problem is by not fundingan irrevocable trust, you've never created the
five year waiting period. You've neverstarted that clock running, so that if
you you know, get sick beforeyou die and you thought at least we've
avoided that pothole, we didn't.Yeah, and you're going to find out

(49:36):
the hard way, clocked it andrun. So when you talk about funding,
Todd, does that also include nottruly funding but updating beneficiaries. Well
not, I mean to me,it's part part of your estate implementation.
Yeah, it's part of your overallestate plan. Because if I've got a
trust in place and I have anIRA, we know the IRA is not

(49:57):
going in the trust, not rightnow. But as part of the estate
plan, you should figure out whereyou do want it to go. Maybe
that's what you're saying. Do Iwant it to go A to my spouse
and B to my kids, ordo I want it to go A to
my spouse and B to my trustto protect it for your key later for
the kids. Yeah, so Imean you can still include it in there,

(50:17):
folks. But folks, so muchto think about when you're doing your
estate plan and so many potholes toavoid. Get the guide. It's really
going to help you if you haven'tdone your planning, and it's really going
to help you if you've done it, and modify it a little eight six
six eight four eight five six ninenine, or our website Legal exchange show
dot com. Todd Lutsky from thelaw firm of Cushing and Dolan, thank

(50:42):
you so much. Thank you,Susan. Always a pleasure. I'm Susan
Power as a financial advisor with theArmstrong Advisory Group. We thank you for
joining us, and we'll be backagain next week on the Legal Exchange with
Todd Lutsky. Creating the right estateplan to help secure your future takes effort.
There are plenty of mistakes that youcan make, any one of which
could have a dramatic and damaging effecton your financial strategy. Cushing and Dolan

(51:05):
are experts in estate planning. Theirbrand new guide is called Detour Ahead Estate
Planning Blunders to Avoid. In it, you'll learn about these critical layers so
that you can make the right decisionsto always protect your assets. As an
example, if you've created a trustmore than ten years ago and haven't updated
it since, you're setting yourself upfor problems. Cushing and Dolan's new guide
will help you address issues like this. So call right now eight six six

(51:28):
eight four eight five six nine nineand ask for your copy of our new
free guide called Detour Ahead Estate PlanningBlunders to Avoid. That's eight six six
eight four eight five six ninety nine, or requested online from their website,
Legal Exchange Show dot com. That'sLegal Exchange Show dot com. The proceeding
was paid for and the views expressedare solely those of Cushing and Dolan,
Cushing and Dolan and or Armstrong Advisorymay contact you offering legal or investment services.

(51:51):
Cushing and Armstrong do not endorse eachother and are not affiliated. Recent
report from law depot dot com saysthat only three out of every ten adults
in the US have taken in thetime to create an a state plan.
Don't be a member of that group. Hi, this is Mike Armstrong from
the Armstrong Advisory Group. A soundestate plan can give you control over your
assets and peace of mind as youenter your retirement years. Our new guide

(52:12):
is called Leaving a Financial Legacy,and in it we look at a state
planning from a financial perspective. It'simportant to have a strategy that addresses your
investment portfolio and all of your holdings, including real estate. We'll also focus
on other issues, such as howto manage long term care expenses that may
affect you down the road. Getyour guide today by calling eight hundred three
to nine three for zero zero one. That number again is eight hundred three

(52:34):
nine three for zero zero one,or you can also request the guide online
at Armstrong Advisory dot com. Theproceeding was paid for by Armstrong Advisory Group,
a registered investment advisor. Nothing inthe ad or in any Armstrong guide
a specific financial, legal, ortax advice. Consult your own financial,
tax into state planning advisors before makingany investment decisions. Armstrong may contact you
to offer investment advisory services. TheUS Virgin Islands is the perfect destination for

(52:58):
your next education visits Sane Croix,Saint Thomas or Saint John And to experience
incredible weather, iconic history, pristineBeach's world class cuisine, and a vibrant
nightlife. Book now and you mightjust make it in time for the Saint
Croix Mango Mayley on July seventh.The family friendly event offers food demonstrations and
tastings, cultural dance performances, andthe ever popular mango eating contest. From

(53:22):
the moment you arrive, you'll fallnaturally in rhythm with the heartbeat of the
islands. There's no money to exchange, no passport required, and travel from
New England could not be easier.Make your plans now by going to visit
USVII dot com, learn about allthree islands and plan the ideal vacation for
you and your family. America's Caribbeanparadise is waiting for you, so head

(53:45):
to visit USVII dot com for moreinformation and to reserve your trip today.
That's visit USVII dot com.