The Legal Exchange: Sunday Edition - Sunday, June 30, 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 including estateplanning, how to avoid probate, and
protecting your money from a nursing home. If you need assistance in any of
these areas, or have a questionabout another issue that may affect your future,

(00:21):
call eight sixty six eight four eightfive six ninety nine to make an
appointment. That's eight six six eightfour eight five six ninety nine. Operators
are standing by. Now Here areyour hosts, Tod Lutsky and Susan Powers.
Welcome into the Legal Exchange with ToddLutsky. I'm Susan Power, the
financial advisor with the Armstrong Advisory Group, and I'm joined by Todd Lutsky,

(00:45):
a partner with the law firm ofCushing and Dolan with a master's in taxation.
Welcome Todd. How are you?I'll never better in you? I
am great? Thank you. Whathe have for us today? Well,
I've got a We're going to goto Whisks Constant. We have an appellate
court case there with deals with planningfor disabled children and special needs trusts.

(01:06):
But it's it's kind of an interestingspin on what was done and really more
importantly, what wasn't done. Andyou'll see what happens here as we go
through this. So there was adelay in getting stuff done and it caused
a big problem. So I'll showyou that. But the thing I'm really
excited about is this real life,classic example of not funding trusts I have

(01:26):
that I want to share with you. So the second part of the program
is going to deal with this reallife story where last week I met a
couple who came in had done planningand now twenty years ago maybe, but
they never funded the trust. Ohthey did with half a house each,
but the half a house was onlyworth one hundred and fifty thousand dollars.

(01:47):
Combined, they're worth over five million. Wow, this is going to result.
You're going to see what happens herewhen you don't fund. But we're
also going to show you what kindof can be done post mortem. You
don't think about post mortem planning alot, but it can be done if
you get somebody who knows you knowwhat to do. There's some things that
can be done even post mortem.Not saying that's the way we should plan.

(02:08):
Not ideal, but you know itcan happen. So I preach,
we preach susan about funding and howimportant it is in this case. Just
really struck me as wow, ifyou had just funded the trust, because
if you don't, they're useless.Yeah. In fact, I met somebody
just the other day who do theirplanning only a year ago, but wanted

(02:32):
to review it, and the firstthing I noticed was nothing was in the
trust wild So needless to say wherewe're going to help them out. But
folks, whether it's a trust,is revocable or irrevocable, and it is
the last chance we are at theend of the month to get the biggest
question that's asked to me all thetime, what's the differences between revocable and

(02:53):
irrevocable trusts? This guide will giveit to you. It tells us not
only the tax differences, it tellsus how it operates. It tells us
how we can leave assets to eachother. It tells us what can go
in the trust. Folks, ifyou haven't got your estate plan under way
yet, get this guide and learnwhich way might be right. For you,

(03:15):
or if you have done it,maybe learn that an irrevocable trust isn't
as scary as you think, andyou might be able to switch if you've
done your planning years ago and wantto look it over eight six six eight
four eight five six nine nine orLegal Exchange Show dot Com again eight sixty
six eight four eight five six ninenine or Legal Exchange Show dot Com Back

(03:39):
to Wisconsin. So here are thefacts. In twenty eighteen, Lauren was
found to be incompetent due to somedevelopmental disabilities, and a guardian was appointed
for her. In twenty nineteen,she got evicted from her apartment and was
involuntary committed. Well, while shewas committed, she managed to leave,

(04:04):
get back to her old apartment andfind her way to Chicago. Okay,
well that tells me she might kindof know what she's doing. But nevertheless,
in April of twenty nineteen, shewas returned to the mental facility.
In twenty twenty one, the statepetitioned to have Lauren protectively placed. Well,

(04:25):
a couple of people testified for thisperson. Kim Luke, who was
a worker, testified that if Laurenis left, you know without guidance she
would voluntarily she would be vulnerable toabuse by other people. Then they had
a doctor testify that said if she'snot placed, she might stop taking her
meds, and then you know,her mental health symptoms will reappear. I

(04:48):
heard a lot of words like woodcould might maybe in those testimonies, so
keep that in mind. Lauren saidif she would keep taking Look, Larren,
the person who's being said she wouldkeep taking her meds. She has
family support now and has no problemwith this situation. So even she doesn't
want to live in the mental healthfacility, right, Okay, anxious,

(05:11):
But the court decided to enter anorder to protectively place her. Well,
as you might imagine, Lauren pealed. On appeal, it was reversed,
which I think is the right decisionhere. The reason it was reversed is
because there's a standard called clear andconvincing evidence standard, and not wasn't met.
In order to meet the clear andconvincing evidence standard, you got to

(05:33):
show that there is a serious threatto personal harm or harm to others.
Speculation as to somebody's difficulties that theymay have encounter after they're released is not
enough to place somebody. You've gotto have specific threats of foreseeable and serious

(05:54):
harm. We didn't have that here, and therefore she's allowed to go home
with her family, which I believemakes sense, right, I mean when
you let's look at this, thismere speculation and would and could and maybe
things would happen is not really uha, you know, it's not really
a reason to commit somebody. Sointeresting, But what do we learn from

(06:19):
this? I mean, it's ait's an interesting case just because of the
facts. But let's talk about it. Whether you have a revocable or an
irrevocable trust, you know, whenyou have a special needs child of some
kind of disability or some kind oflearning problem, whatever, that's sort of
a red flag for planning, Iwould think. Now, I get it.

(06:40):
Taxes and probate, you know,they're important, but the family behind
the plan is really is really kindof key here. And so in this
case, remember, trusts live onafter someone dies, and it provides the
family with the ability to take careof a disabled individual, and they probably
want to you know, a bigconcern for a lot of families, todd

(07:00):
is they want to make sure thatthey're not going to lose their benefits.
They might be receiving for governmental benefitsby doing the wrong thing. Right,
That's exactly right. That's one ofthe main reasons you do this. You
know the trust is going to liveon, so you know you want to
take care of it. But thenthat brings me those susan to this other
idea of Okay, well, thewhole guide is about revocable versus irrevocable trusts,

(07:24):
and you know which one is rightfor me? Should I use one?
How do they work? I getall that, But what about a
case like this, Right, whichone would be better for that? Yeah?
Sometimes the facts of your family situationand the size of your state,
obviously, but the facts of yourfamily situation can sort of help dictate what

(07:44):
kind of trust you need. SoI would think that if I've got a
disabled child, I might be leaningtowards an irrevocable trust just so that I
can ensure that the assets I wantto get to my child are available to
get there because they're not at riskfor your nursing home stake. Right,

(08:05):
if I end up going to thenursing home or my spouse goes and we
both go in, at some point, these assets might be gone or significantly
reduced and so I think with adisabled child, again, depending on the
size of your estate, you mightwant to think about starting your estate plan
the parents with an irrevocable trust.Okay, now that said, remember and

(08:28):
you mentioned it, Susan, thegovernmental benefits. Whether I start out with
the irrevocable trust or the revocable trustdoesn't matter because when I die, it
becomes irrevocable. So irrevocable becomes irrevocablebecause you're the only one that can revoke
it. That's exactly right. Sowhat I'm driving at is, regardless of

(08:50):
which side you come down on,the how you leave it to the family
part is the same, the samething, And so you're likely going to
say whether it's equally to the kids, are not equally to the kids?
You know, then you got toshare. Set up the shares for the
perhaps non disabled children or children thatdon't have any you know, are pretty
good at everything they do. Youmight just leave them the asset outright if

(09:15):
you want. But the child thathas the special needs, you're going to
put language in there that says,and it's usually sole discretionary language that says,
hold it in trust for the benefitof and allow the trustee, and
usually the trustee is a child,a sibling rather someone who knows this child
has, understands the disability and theneeds, and it'll say in the trustees

(09:39):
sole discretion distributions can be made forthe for this child. Sole discretion means
the special needs child doesn't own it. To your point, Susan, governmental
benefits are not affected and the moneycan be used to make that child's life
better in some way. So,folks, red flag if you do have

(10:00):
and don't get into this fact pattern, do your planning, figure out what's
right for you, and in yourcase, do your planning and decide which
trust is right for you. Asit is the end of the month,
last time you're going to figure outwhat the differences are between revocable and irrevocable
trusts eight sixty six eight four eightfive six nine nine or Legal Exchange show

(10:22):
dot com. You've been listening toTodd Lutsky, a partner with the law
firm of Cushing and Dolan. I'mSusan Powers, a financial advice with the
Armstrong Advisory Group. We've got muchmore to come when we return to the
Legal Exchange with Todd Lutsky. Revocableand irrevocable trusts are commonly used to protect
your assets, but there are significantdifferences between the two. Don't take chances

(10:43):
secure in your future. Call Cushingand Dolan right now at eight six six
eight four eight five six ninety nineand get their brand new guide called the
Differences between Revocable and Irrevocable Trusts.Cushing and Dolan are experts in elder life
planning and they can answer critical questionsthat you may have as you determine which
trust may be best for you andyour family. The guide contains crucial information
about a variety of topics, includingthe income tax effects of both trusts,

(11:07):
ways to leave assets to your children, as well as many other factors you
should consider in the estate planning process, such as your networks, your age,
and your marital status. Cult todayeight six six eight four eight five
six nine nine that's eight sixty sixeight four eight five six nine nine,
or request the guide online from theirwebsite legal exchainshow dot com. The proceeding
was paid for in the views expressedare sole leaders of Cushing and Dolan.

(11:30):
Cushing and Dolan ind or Armstrong Advisorymay contact you are offering legal or investment
services. Kushing and Armstrong do notendorse each other and are not affiliated.
Inheriting an IRA was a straightforward processuntil the passage of the Secure Act in
twenty nineteen and the more recent changesthat have made things a bit more complicated.
Hi, this is Mike Armstrong fromthe Armstrong Advisory Group, and it's
really important that you develop a strategyto deal with these changes to the law,

(11:52):
or you and your family could facesignificant tax consequences in the future.
If you've inherited money from your spouse, the process remains relatively simple, but
if you're inheriting an IRA from someoneother than your spouse, there are numerous
issues that you'll want to beware of. To protect those assets, call us
right now at eight hundred three ninethree four zero zero one and ask for
your copy of our new guide calledthe Complexities of Inherited Iras. That number

(12:16):
again is eight hundred three nine threefour zero zero one, or you can
also request it online from our websiteArmstrong Advisory dot com. The proceeding was
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 into stateplanning advisors before making any investment decisions.
Armstrong may contact you to offer investmentadvisory services. Hi, Am Lisa Hughes.

(12:37):
This Veterans Day weekend, help honorall who've served our country and join
WBZ for the annual DAV five k, a run or walk to support disabled
vets here in Massachusetts with housing,transportation, and other critical support, Saturday,
November ninth at DCR's Castle Island inSouth Boston. Let's thank all who
have sacrificed for our freedom and helpour heroes on their own to recovery.

(13:00):
Visit DAV fivek dot Boston to registeror donate today. The DAV five K
Boston is presented by Veterans Development Corporation. Are you looking to volunteer for an
amazing nonprofit organization that helps our veterans. The DAV Department of Massachusetts Transportation Network
needs volunteers right now. This networkprovides free transportation to and from any VA
medical appointment for veterans of all eras. To become a volunteer driver, you

(13:24):
do not need to be a veteranor a DAV member. You just need
to have the willingness to help ourveterans and have a valid driver's license.
Sign up now at DAVMA dot org. That's DAVMA dot org. This is
Tucker Silva the Financial Exchange Show,and I'm joined today by a state planning
attorney, Todd. Let's key withthe law firm of Cushing and Dolan with

(13:45):
your financial exchange quick tip of theday, and today we're talking about the
differences between revocable and irrevocable trust.Todd, is there a difference in the
taxation of a revocable trust versus anirrevocable trust, and any difference in how
you would file your income taxes?So surprisingly, a lot of you might
say, well, yeah, thereshould be a difference, and there is,

(14:07):
but there really isn't. So letme explain. With a revocable trust,
everything that you've put in it isgoing to be titled under your Social
Security number, like bank accounts andbrokerage accounts, et cetera. Whereas items
that you put into an irrevocable trust, like bank accounts and brokerage accounts or
rental properties, those accounts would beset up under a tax ID number for

(14:28):
the trust. So the trust nowdoes need to file its own tax return.
It's called a Form ten forty one. However, these Medicaid trusts are
designed by US to make them granttour trusts for income tax purposes, which
means you are the owner for incometax purposes, and all the income and
gain gets reported on your personal return. So while you're filing a separate return

(14:50):
for the irrevocable trust, you're payingexactly the same tax at your own rate,
just like you did before the trust, and just like you would with
a rev vocable trust. Well,the estate planning experts at Cushing and Dolan,
I've written a brand new guide thatwill help you answer the most common
questions you have about the differences betweenrevocable and irrevocable trusts. You can request

(15:11):
this brand new guide by calling eightsix six eight four eight five six nine
nine. That's eight six six eightfour eight five six nine nine, or
you can also request it from theirwebsite legal exchange show dot com. The
proceeding was paid for and the viewsexpressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisorymay contact you offering legal or investment

(15:31):
services. Cushing and Armstrong do notendorse each other and are not affiliated.
This is Asked Todd on the FinancialExchange Radio Network. If you have an
existing estate plan or in the marketfor one, Todd Letskey is here to
answer your questions and help you planfor later life. Ask Todd is presented
by Cushing and Dolan, serving Massachusettsand New England for more than thirty five

(15:52):
years, helping families with the stateand tax planning, Medicaid planning, and
probate law. Visit Cushingdolan dot com. No, here's Todd Lunsky. Yea.
As we do every single Wednesday,we are joined by Todd Lutsky from
Cushian Dolan. If you listeners outthere have any questions regarding your state plan

(16:14):
or Medicaid protection irrevocable versus irrevocable trust, you can give our our studio line
a call at eight eight eight twozero five two to two sixty three.
Again, that studio online number forany of your questions for Todd Lutsky from
Cushian Dolan is eight eight eight twozero five two to six' three.
Todd. How we doing today?I'm never better in you. I'm doing

(16:36):
great. The weather is fantastic.Summer is officially here. I'm going to
kick us off with a question thatI have for you. What are some
of the considerations or or traits thatlisteners should be thinking about out there if
they're trying to determine what is betterfor them a revocable trust or irrevocable What
are some of the typical characteristics thatyou would ask people to think about when

(17:00):
preparing to go down either one ofthose roads. Yeah, so this is
I always like to say, thisis the most frequently asked question I get,
probably in the estate planning world,is what's the difference? That's what
in essence, what you're saying iswhat's the difference? Why would I want
one over the other? And isthere you know, a problem with one
versus another? Couple of just regularthings to think about. I would say

(17:25):
size of your estate matters. Imean, if you're self insured for a
nursing home, then you really don'tneed the irrevocable trust. You know,
if you have tons of long termcare insurance, you probably don't need the
earvocable trust. You know, Youngerpeople that have minor children that are probably
in their you know, forties,fifties, they might not need any irrevocable

(17:45):
trust. Yet doesn't mean we don'trevisit our estate plan as we get older.
I can't help but think of thisclient I met recently who who did
planning in nineteen ninety eight. Oneof them had died in twenty twenty one
one. The other one is eightyseven, and they never revisited their documents.
The kids came in and so theynever revisited them to change them,

(18:07):
and they never funded them, soit was completely wasted. It was like,
Wow, what a disaster just happenedthe other week. So you know,
I would say age matters, sizeof the estate matters, But you
know, in general, I wantpeople the one thing I want them to
take away from your question is Ithink they have to learn. So if

(18:29):
they've decided that they want any irrevocabletrust, or if they've decided they don't
want one because they think they're toorestrictive, I want them to learn that
that's not always the case. Ithink that the guide we're given away is
going to help them answer that questionas to perhaps not so much how they're
different, but how they're similar thesekinds of trust. Right now, remember,

(18:53):
folks, I want to be veryclear that there are many kinds of
irrevocable trusts out there. There arekinds of trusts that sort of wealthier people
who want to make assets go outsideof their estate for state tax purposes,
in other words, a completed giftfor gift tax purposes. Those trusts will

(19:18):
likely be more restrictive than the irrevocabletrust we're mentioning in this guide. This
isn't the differences between revocable and allirrevocable trusts. This is the differences between
irrevocable. Between revocable trusts and thesemedicaid irrevocable trusts. These kind you keep
the control you want, like,you can put your house in there and

(19:41):
live there. You can pay yourbills, you can sell your house,
you can buy another house. Theseare all things that you can do today.
These are all things that you cando with the revocable trusts. Even
the income taxes are no different.You pay income taxes on assets in your
revocable trust at your raise, yourown personal rate. These medicaid irrevocable trusts

(20:03):
are also grant toward trust, whichmeans they are taxed and at your personal
rate. So even though you're filingan extra return, you're not paying extra
taxes, so folks, more similaritiesthan differences in these trusts a lot to
consider here. If you have anyquestions for Todd Lutsky here, you can

(20:25):
give our studio line of call ateighty eight two zero five two two sixty
three. Whether it pertains to trustor anything in the estate planning world,
give our studio line of call again. That number is eighty eight eight two
zero five two to two six three. We're going to take a quick break
here, but when we come back, we'll have your questions with Todd Lutsky
from Cushion Dolan right after this AskTodd with Todd Lutsky Every Wednesday at ten

(20:49):
thirty only here on the Financial ExchangeRadio Network. Hi, Am Lisa Hues.
This Veterans Day weekend, help honorall who've served our country and join
WBZ for the annual DAV five k, a run or walk to support disabled
vets here in Massachusetts with housing,transportation and other critical support, Saturday,

(21:10):
November ninth at DCR's Castle Island inSouth Boston. Let's thank all who have
sacrificed for our freedom and help ourheroes on their road to recovery. Visit
DAV five k dot Boston to registeror donate today. The DAV five K
Boston is presented by Veterans Development Corporation. Are you looking a volunteer for an
amazing nonprofit organization that helps our veterans. The dav Department of Massachusetts Transportation Network

(21:33):
needs volunteers right now. This networkprovides free transportation to and from any VA
medical appointment for veterans of all eras. To become a volunteer driver, you
do not need to be a veteranor a dav member. You just need
to have the willingness to help ourveterans and have a valid driver's license.
Sign up now at DAVMA dot org. That's DAVMA dot org. There's no

(21:56):
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for you, so head to visitUSVII dot com for more information and to
reserve your trip today go to visitUSVII dot com. That's visit USVII dot
com. Hi, this is Chuckand Mike from the Armstrong Advisory Group.
We have a this month titled theComplexities of Inherited Iras. Mike with how

(23:04):
the inherited IRA picture has changed inthe last few years. One of the
things that a lot of people needto consider is how to minimize taxation not
just across their own lifetime, buton a multi generational basis once they're gone.
Yeah, and quite frankly, priorto these changes, iras were often
used, especially roth irays, asa kind of multi generational inheritance plan,

(23:29):
and these new rules have completely changedthat. Like I said for most beneficiaries
of retirement accounts, and so alot of the planning that was done prior
to twenty twenty, if not haven'tbeen looked at again, just might run
contrary to your entire thoughts of whatyou did before these changes. It seems
to me that it makes sense nowyou've got to consider the tax situation,
age, and other characteristics of yourbeneficiaries who might not be spouse's when figuring

(23:53):
out who to name on your iras. And not only that, and a
lot of that stuff was considered priortoo, But maybe you've got too kids
with vastly different income situations. Doyou consider naming one the traditional versus the
other the rothbneficiary in order to minimizetotal taxation across generations. These are complicated
issues that I know it might soundlike just applies to a small subset of

(24:15):
Americans, but most people these dayshave a retirement account. Our guide this
month again, it's titled the Complexitiesof Inherited iras, and the two ways
to request are by phone or online. Website is Armstrong Advisory dot com or
you can call eight hundred three ninethree for zero zero one. That website
again is Armstrong Advisory dot Com orthe phone number is eight hundred three nine

(24:38):
three for zero zero one. Theproceeding was paid for by Armstrong Advisory Group,
a registered investment advisor. Nothing inthe ad or in any Armstrong guide
a specific financial, legal or taxadvice. Consult your own financial tax into
state planning advisors before making any investmentdecisions. Armstrong make contact you to offer
investment advisory services. You're listening toAsk Todd with Todd Ludskey on the Financial

(25:00):
Exchange Radio Network. We are backin studio with Todd Lusky from Crishiane Dolan.
If you have any questions in theestate planning realm, whether it be
regarding estate taxes, trusts, orbeneficiary designations, anything of that nature,

(25:22):
give our studio line a call iteight eight eight two zero five two two
sixty three Again eight eight eight twozero five two two sixty three for any
of your questions in the estate planningrealm for Todd Lusky. Todd, we
were talking before in the segment regardingirrevocable and revocable trusts, and you had
mentioned that there are several similarities betweenthe two. But my question for you

(25:45):
is on the irrevocable trust side ofthings, how does it offer protection for
those people who are looking for itfrom the nursing home. I know you
can get really into the weeds here, but just from a real thirty thousand
foot view, how does it providethat protection aspect? So with an irrevocable
trust, as much as you havea lot of control over it, there

(26:06):
has to be language in it thatsays what you cannot do. Although it's
very very few things you cannot do. You can, like I say,
live there, collect the income,you can manage the investments, but there's
special language that says you cannot havedirect access to the principle. So if

(26:26):
you cannot get it, the nursinghome cannot get it. Now. I
say that, but the nurse takesfive years. So you've got to make
sure you set up the trust withthat language in it, and then five
years later that's the protection you getnow. Of course, my saying that
you can't get it directly doesn't meanyou can't get it indirectly, And again

(26:49):
from a thirty thousand foot view,that's what you have to go through and
figure out how to do that.But folks, I think the big thing
here is, and that what Iwant to really stress for you is that
this situation is we allow you toget you know, this new guide right
which is the differences between revocable andirrevocable trusts. It's we're getting close to

(27:14):
the end of the month, butthis is the most frequently asked questions.
Not only does it have in therehow they work from an income and and
a state tax question, it alsohas in there how they operate day to
day, which is what you weredriving at just a moment ago, Paul.
It's going to help us figure outwhat the dos and don'ts are with
the revocable and the irrevocable. SoI think it will explain more similarities than

(27:37):
differences. I think if you've notdone your planning and you're trying to figure
out which way is right for you, this is going to give you those
answers. And I also think thatif you've done your planning and are thinking
now it's time to shift and maybeI need to learn more about irrevocable because
I want to protect from the nursinghome. When I was younger, I
didn't care. This guide will doit. Call and get it eight six

(28:00):
six eight four eight five six ninenine or Legal Exchange Show dot com again
eight six six eight four eight fivesix nine nine or Legal Exchange Show dot
com. We're gonna go to thephones here. We've got Brian on in
Chelmsford. Brian, you're on withTodd Ltskey. Hey Todd, how you

(28:22):
doing? Listen? I just gota question for you. I have a
corporation I have to pay every year? Do you have to pay every year?
Now? Have a night trust?So is your corporate You mean you
have like a like a five hundreddollars a year that you pay the state
that kind of thing. Yeah,one hundred, right, you gotta pay
the minimum and all that, andthen yeah, you gotta fill out a
you know, the the behind andtwenty five dollars thing for the you know,

(28:44):
for the state that we get whatit's called. But anyway, Yeah,
so that's a fair question, andI think I can answer it for
you, both on the revocable sideand the irrevocable side. So these trusts
are not re corded anywhere. Somany people come in and say, well,
you know, I feel like soand so did a trust for me,
but I think that they didn't doit right. Because it's not recorded

(29:07):
anywhere, and doesn't it have tobe recorded? And I think of recording,
I think of fees, right,whenever you record things in the state,
you think of fees that you gotto pay, so and maybe that's
what you're driving at here, Brian. So the answer is that these are
not recorded anywhere, so they arenot There is no filing fee. There's
no annual filing fee. So let'stalk about other fees. Are there other

(29:33):
expenses associated with it? Now thatwe know there's no annual filing fee,
what about You know, a revocabletrust, does it have to file a
separate income tax return? Well,no, it doesn't. It's revocable.
Everything in the revocable trust is recordedunder your social Security number. So if

(29:55):
you put your your bank account inor your brokerage account in, you're going
to list it under the name ofthe trust. So let's say it's the
Lutzky Family Trust, it would beunder my social So the ten ninety nine's
come to me. I simply filemy ten forty just like I always do,
and I report the income taxes rightthere, so I don't even need

(30:18):
to pay the accountant to do aseparate tax return if I can do it
myself. What about the irrevocable trust, again, not recorded, no annual
fee whatsoever, no legal annual fee, that's for sure, at least on
my part when I do it.But how are the taxes treated? Is
that going to create us with anykind of an additional expense? Well,

(30:38):
it's possible if the irrevocable trust hasjust a house in it, just a
vacation home, something in which weare not renting. So I'm driving at
the fact that it has no income, and that's not uncommon folks. Generally
people put their home in their vacationhome, and they're their biggest assets and

(31:02):
they want to protect them. Soif that's all that's in this medicaid irrevocable
trust, then there is no IDnumber that I would obtain for the trust.
There's no reason for the IRS toknow that you have this trust because
there is no income. So ifthere is no income, then there's no
need to file. So I don'teven have a separate bill to pay the

(31:25):
accountant to file the ten forty oneincome tax return for the trust. However,
as many of you know, that'snot all we put in these trusts.
A lot of our clients say,you know, we want to protect
our investment portfolio as well, solet's retitle the you know, five hundred
thousand dollars investment portfolio to the trustas well. Well. That's going to

(31:49):
generate interest and dividends. And bythe way, in order for me to
put it into the irrevocable trust,we would need to get you a tax
ID number. So now the IRSknows that you have this trust. That's
the Social Security number for the irrevocabletrust. So it's going to be expecting

(32:09):
a tax return. And if itgenerates I believe it's some small number more
than one hundred or more than threehundred dollars in income, you need to
file. You need to file.However, we create these trusts as grant
or trusts for income tax purposes.So while you need to file, and
the form you file is a Formten forty one, a little different than

(32:32):
our ten forty but very similar.You got to file the ten forty one.
The interest, the dividends, thecapital gains that are generated from that
ten ninety nine that's going to comeout from the investment portfolio to the name
of the trust will be picked upon the trust However, this trust pays

(32:52):
no tax. Now don't get tooexcited about that, because it doesn't pay
the tax, but it kicks outa K one form or what they call
a grant or letter that generates toyou the donor telling you, here's what
was earned by this trust. Interest, dividends, gains. Yes, it

(33:15):
retains its same character to you,and you pick it up on your personal
ten forty. Why that's important isbecause you are still paying the same income
tax that you are paying as arevocable trust holder. You don't pay any
more or any less. You paythe same. Again, more similarities than

(33:37):
differences with these trust folks. Andlastly, the only additional cost would be
yeah, you might have to filehave an accountant prepare that tax return,
so we'll see. But I thinkpart of this point is, folks,
that these differences that there are probablymore similarities than differences between these revocable and

(34:00):
revocable trusts. A lot of greatinformation that we went over today. Todd,
thanks so much for your time today. We really appreciate it. Always
a pleasure. This has been AskTodd on the Financial Exchange Radio network.
Ask Todd with Todd Lutsky has beenpresented by Cushing and Dolan, serving Massachusetts
and New England for more than thirtyyears, helping families with the state and

(34:20):
tax planning, Medicaid planning, andprobate law. Call eight hundred three nine
three four thousand and one or visitCushingdolan dot com. The views expressed in
this segment are solely those of Cushingand Dolan. Armstrong Advisory does not provide
any legal or tax advice. Pleaseconsult with your illegal or tax advisor on
such matters. Cushing and Armstrong donot endorse each other and are not affiliated.
Revocable and irrevocable trusts are commonly usedto protect your assets, but there

(34:42):
are significant differences between the two.Don't take chances secure in your future.
Call Cushing and Dolan right now ateight six six eight four eight five six
niney nine and get their brand newguide called the Differences between Revocable and Irrevocable
Trusts. Cushing and Dolan are expertsin elder life planning, and they can
answer critical questions that you may haveas you determine which trust may be best
for you and your family. Theguide contains crucial information about a variety of

(35:06):
topics including the income tax effects ofboth trusts, ways to leave assets to
your children, as well as manyother factors you should consider in the estate
planning process, such as your network, your age, and your marital status.
Called today eight six six eight foureight five six nine nine that's eight
sixty six eight four eight five sixnine nine, or request the guide online
from their website legal exchainshow dot com. The proceeding was paid for in the

(35:30):
views expressed are sole lead those ofCushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you're offeringlegal or investment services. Cushing and Armstrong
do not endorse each other and arenot affiliated. Hi am Lisa Hughes.
This Veterans Day weekend, help honorall who've served our country and join WBZ
for the annual DAV five k,a run or walk to support disabled vets
here in Massachusetts with housing, transportationand other critical support, Saturday, November

(35:53):
ninth at DCR's Castle Island in SouthBoston. Let's thank all who have sacrificed
for our rereadom and help our heroeson their road to recovery. Visit DAV
fivek dot Boston to register or donatetoday. The DAV five K Boston is
presented by Veterans Development Corporation. Areyou looking to volunteer for an amazing nonprofit
organization that helps our veterans. Thedav Department of Massachusetts Transportation Network needs volunteers

(36:19):
right now. This network provides freetransportation to and from any VA medical appointment
for veterans of all eras. Tobecome a volunteer driver, you do not
need to be a veteran or adav member. You just need to have
the willingness to help our veterans andhave a valid driver's license. Sign up
now at DAVMA dot org. That'sDAVMA dot org. There's no better place

(36:40):
to vacation than the United States.Virgin Islands. Saint Croix, Saint Thomas,
and Saint John have everything you needto enjoy a spectacular romance to get
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(37:25):
you, so head to visit USVIIdot com for more information and to reserve
your trip today. Go to visitUSVII dot com. That's visit USVII dot
com. The rules regarding inherited Irays changed a few years back with the
passing of the Secure Act, andwith the law being updated again in twenty

(37:45):
twenty two, it's even more importantto develop a strategy to help you make
the right decisions regarding your retirement accounts. HI. This is Chuck Zauta from
the Armstrong Advisory Group. Inheriting moneyfrom a spouse is common and will likely
be a painless process for you.However, your airs could be objected to
lofty tax bills if the distribution ofyour accounts are not coordinated properly, especially
if you're inheriting one from someone otherthan your spouse. Don't let this happen

(38:08):
to you. Call the Armstrong AdvisoryGroup at eight hundred three nine three for
zero zero one and request our newguide called the Complexities of Inherited Iras.
That's eight hundred three nine three forzero zero one, or you can request
it online at Armstrong Advisory dot com. The proceeding was paid for by Armstrong
Advisory Group, a registered investment advisor. Nothing in the ad or in any

(38:29):
Armstrong guide a specific financial, legalor tax advice. Consult your own financial
tax into state planning advisors before makingany investment decisions. Armstrong may contact you
to offer investment advisory services. Thisis Tarkersolvo of the Financial Exchange Show,
and I'm joined today by a stateplanning attorney, Todd. Let's key with
the law firm of Cushing and Dolanwith your Financial exchange quick tip of the
day, and today we're talking aboutthe differences between revocable and irrevocable trust.

(38:53):
Todd, is there a difference inthe taxation of a revocable trust versus an
irrevocable trust? And any difference inhow you would file your income taxes?
So surprisingly, a lot of youmight say, well, yeah, there
should be a difference, and thereis, but there really isn't. So
let me explain. With a revocabletrust, everything that you've put in it

(39:15):
is going to be titled under yourSocial Security number, like bank accounts and
brokerage accounts, et cetera. Whereasitems that you put into an irrevocable trust,
like bank accounts and brokerage accounts orrental properties, those accounts would be
set up under a tax ID numberfor the trust. So the trust now
does need to file its own taxreturn. It's called a Form ten forty

(39:36):
one. However, these Medicaid trustsare designed by US to make them grant
tour trusts for income tax purposes,which means you are the owner for income
tax purposes and all the income andgain gets reported on your personal return.
So while you're filing a separate returnfor the irrevocable trust, you're paying exactly
the same tax at your own rate, just like you did before the trust,

(39:59):
and just like you would with arevocable trust. Well, the estate
planning experts at Cushing and Dolan havewritten a brand new guide that will help
you answer the most common questions youhave about the differences between revocable and irrevocable
trusts. You can request this brandnew guide by calling eight six six eight
four eight five six nine nine.That's eight six six eight four eight five

(40:22):
six nine nine, or you canalso request it from their website Legal exchange
show dot com. The proceeding waspaid for and the views expressed are solely
those of Cushingan 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. Your tune tothe Legal Exchange with Todd Lutsky. If
you are a loved one needs anursing homestay, call Todd right now at

(40:45):
eight sixty six eight four eight fivesix ninet nine and let him make sure
your assets are protected. That's eightsix six eight four eight five six nine
nine, or visit him online atLegal exchange show dot com. Welcome back
into the Legal Exchange with Todd Lne. I'm Susan Powers, a financial advisor
with the Armstrong Advisory Group, andI'm joined by Todd Lutsky, a partner

(41:06):
with the law firm of Cushing andDolan with a master's in taxation, Todd,
I wanted to finish up our conversationwe were having last week about when
you need to revisit your estate plan, you know, the real life story
about not funding. I mean,they sure sure needed a revisit of their
plan, for sure. I thinkit was actually nineteen ninety eight was the

(41:27):
date of the trust, you know, and that's just too long to not
doesn't mean they had the change,just just dust it off and take a
peek at it, you know.So let's say you start doing your planning
when you're a little bit younger,and you have your revocable trust going,
and over the course of the years, you've increased your net worth, whether
it's substantially or over you know,state exemption and limits. When do you

(41:54):
need to revisit because your net worthchanges for revocable or irrevocal. Yeah,
either one, either one, eitherone. Okay, you know you got
to think about the federal exemption first, because remember only fifteen states have a
state death tax. Oh we're solucky here, yeah we are. We're
like the best, We're like numberone. And so you've got to first

(42:19):
consider the federal estate tax. Sofederally thinking about twenty twenty six, which
we can't ignore. Say the exemptionends up after the indexing for inflation to
call it seven million. If you'vegot a trust now like thirteen million or

(42:39):
so thirteen six, so you knowit's going to fall significantly. And so
if you sit back and say,well, we're worth about twelve million,
well fourteen million, we can stillshelter with our existing document. That's a
way of looking at it. Probablybe okay federally, right, because even

(43:02):
in twenty twenty six, I,yeah, my estate grew from eight million
to ten million, but I'm stillokay. Or eight million to twelve million,
I'm still okay federally. Yeah,if you live in Massachusetts, you
got to think about it, right, I mean, I guess if I
now can only shelter two million timestwo four million for a married couple,

(43:24):
I'm way over. So you know, there's several million reasons to what move.
I get it, but but ormaybe do more sophisticated planning might be
worth a phone call. Can't sayfor sure that you will. When I
say more sophisticated planning, it wouldprobably involve, you know, some form
of gifting, getting assets out ofthe estate, maybe into some kind of

(43:46):
a gifting trust in which either theycan continue to enjoy and control or outright
to the kids in a gifting trust. So that's a function, but I
don't know that I want to dothat. The problem when you're dealing with
just Massachusetts or just your state estatetax yep, and not federal is basis,

(44:09):
right, Because now if I wantto move a few million dollars out
of the estate into a say espousallifetime access trust, well, I'm trapping
capital gain if I transfer low basisassets. Oh, because you don't get
a step up in those assets whenyou die, right, those will be

(44:29):
out of your estate, hooray.But the capital gain is built in because
there's a carryover basis. So atthis point you have to run the numbers
and say, all right, ifI move You know, if I died
with eight million dollars and I'm ableto shelter for the tax on four million

(44:50):
in Massachusetts is about four hundred thousanddollars, give or take. Well,
if I moved four million dollars outof my estate, but I trapped two
million dollars of gain, yep.When that gets sold at you know,
almost thirty percent right, you knowfour times three, that's one point two

(45:13):
million in tax. Do you haveto do the math? Or two million
in gain would be about six eighthundred thousand in tax. Now you got
to do the math, right.I might be better off paying taxes in
you know what when we die bystate taxes versus capital gains taxes later.

(45:35):
The only downside is that taxes doimmediately. Capital gains tax you can play
with, folks, lots to thinkabout when you're doing your planning. And
again, I don't know that thatmatters between revocable or irrevocable trusts, but
certainly understanding how your trust's work isvery important and funding them is important.
And this is the end of themonth, last chance to get the guide,

(45:58):
folks. The big question asked tome, what's the differences between revocable
and irrevocable trusts? This guide answersthose questions and will help you decide which
one's right for you. Or,as you said, Susan, if you're
looking over your trust, maybe youdid revocable trust, but you're older now

(46:19):
and maybe we want to switch toan irrevocable Don't be afraid learn how they
work. It might be right forYou eight six six eight four eight five
six nine nine or Legal Exchange Showdot com once again eight six six eight
four eight five six nine nine orLegal Exchange Show dot com. Jod I

(46:42):
get a call from one of myclients this past week and they said,
Hey, great news. We're sellingour house and we're going to move to
New Hampshire. So they're currently inMassachusetts. Great, now they're saving to
state taxes maybe maybe Yeah, they'reactually going to be closer to the children
that live up in New YMP that'sin Goageing. Yeah, so that's a
good reason. So she wanted toknow, she said, Now, we

(47:07):
did our trust with Todd, she'sone of your clients and mutual clients.
Oh, they did irrevocable trust planning. Okay, so but they did it
here in Massachusetts, and she wantsto know what she needs to do because
they're going to be relocating to anotherstate. Yeah. I agree, when
you move, and I can't stressit enough. It's so funny because I

(47:30):
did a seminar recently and it wasentitled, so you think you've changed your
domicile. Maybe you haven't, yeah, or maybe you haven't done enough to
change your domicile. So when youmove, folks, great reason to review
your plan. I don't care ifit's a revocable or an irrevocable trust.

(47:52):
I know this question is an irrevocabletrust. But when you move, one
of the first things you want todo is say, I got to update
my state plan. Right, Well, you don't have to update the trust,
okay, right, So the irrevocabletrust or the revocable trust can remain
in place. Right, You don'thave to reset a clock, starting it

(48:13):
over, not starting it over.The trust can just remain governed by the
laws of Massachusetts. That's all.Okay. Now you are allowed to change
the sitis on the trust, andmean means now it's going to say,
governed by the laws of New Hampshire, Vermont or wherever you might go.
I don't not required. But theimportant thing is the trust itself didn't change,

(48:37):
still the same name, still funded. You didn't restart a clock or
anything like that. Not restarting aclock, none of that stuff. So
yes, you don't have to changethe heavy lifting documents. But your basic
documents, your will, your healthcare proxy, your power of attorney,
these are kind of state driven.They all have their own little nuances and

(49:00):
language that they want in it fortheir state. I mean, let's face
it, some states have assisted suicides, some don't. So you've got to
govern. You know how that works. So change those But at the end
of the day, folks, alsochange your driver's license, change your voter
registration, make sure you file yourincome tax returns using the new state,

(49:22):
et cetera. So Todd if theywere moving to Hampshire and going to keep
their home in Massachusetts and just buya second home which would become their new
primary yeah, and kept their masshome as essentially a vacation home. Yeah,
let's say property a Yeah, whatwould they have to do anything special
for that? Or are they goodto go? See again that same seminar
we did, right, so youthink you changed your dumb side, Well,

(49:43):
what do we need to do inMassachusetts? Interestingly enough, the new
statute as well as the old statute, says if you are a non resident,
which they're going to try to becomebased on all the things we just
said for them to do, ifyou're a non resident but own Massachusetts property,

(50:04):
they will tax you in Massachusetts onthe Massachusetts property as a percentage of
the entire estate. So even thoughthey live in New Hampshire, numerators the
property in mass denominators the whole estate. Calculate the tax and to fix that,
put it in an LLC in Massachusetts. That will create an intangible it

(50:25):
won't be considered real estate and you'llavoid the tax. And mass folks last
chance. End of the month.Get the guide Differences between Revocable and Irrevocable
Trusts eight six six eight four eightfive six nine nine or Legal Exchange show
dot com. Todd Lutsky from thelaw firm of Cushing in Dolan, thank
you so much. Thank you,Susan, always a pleasure. I'm Susan

(50:49):
Powers, a financial advisor with theArmstrong Advisory Group. Thank you for joining
us and we'll be back again nextweek on the Legal Exchange with Todd Lutsky.
Revocable and irrevocable trust are commonly usedto protect your assets, but there
are significant differences between the two.Don't take chances secure in your future.
Call Cushing and Dolan right now ateight sixty six eight four eight five six

(51:09):
nine nine and get their brand newguide called the Differences between Revocable and Irrevocable
Trusts. Cushing and Dolan are expertsin elder life planning, and they can
answer critical questions that you may haveas you determine which trust may be best
for you and your family. Theguide contains crucial information about a variety of
topics, including the income tax effectsof both trusts, ways to leave assets

(51:30):
to your children, as well asmany other factors you should consider in the
estate planning process, such as yournetwork, your age, and your marital
status. Call today eight six sixeight four eight five six nine nine,
that's eight sixty six eight four eightfive six nine nine, or request the
guide online from their website legal exchainshowdot com. The proceeding was paid for
in The views expressed are sole leadthose of Cushing and Dolan. Cushing and

(51:52):
Dolan and or Armstrong Advisory may contactyou are offering legal or investment services.
Cushing and Armstrong do not endorse eachother and are not affiliated. The rules
regarding inherited iry has changed a fewyears back with the passing of the Secure
Act, and with the law beingupdated again in twenty twenty two, it's
even more important to develop a strategyto help you make the right decisions regarding
your retirement Accounts. Hi, Thisis Chuck's outa from the Armstrong Advisory Group.

(52:13):
Inheriting money from a spouse is commonand will likely be a painless process
for you. However, your errorscould be subjected to lofty tax bills if
the distribution of your accounts are notcoordinated properly, especially if you're inheriting one
from someone other than your spouse.Don't let this happen to you. Call
the Armstrong Advisory Group at eight hundredthree nine three for zero zero one and
request our new guide called the Complexitiesof Inherited iras. That's eight hundred three

(52:37):
nine three for zero zero one,or he can request it online at Armstrong
Advisory dot com. The proceeding waspaid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in thead or in any Armstrong guide a specific
financial, legal or tax advice.Consult your own financial tax and to state
planning advisors before making any investment decisions. Armstrong make contact you to offer investment
advisory services. High on lisas thisVeteran's weekend. Help honor all who've served

(53:01):
our country and join WBZ for theannual DAV five k a run or walk
to support disabled vets here in Massachusettswith housing, transportation, and other critical
support. Saturday, November ninth atDCR's Castle Island in South Boston. Let's
thank all who have sacrificed for ourfreedom and help our heroes on their road

(53:21):
to recovery. Visit DAV five kdot Boston to register or donate today.
The DAV five K Boston is presentedby Veterans Development Corporation. Are you looking
to volunteer for an amazing nonprofit organizationthat helps our veterans? The dav Department
of Massachusetts Transportation Network needs volunteers rightnow. This network provides free transportation to
and from any VA medical appointment forveterans of all eras. To become a

(53:45):
volunteer driver, you do not needto be a veteran or a DAV member.
You just need to have the willingnessto help our veterans and have a
valid driver's license. Sign up nowat DAVMA dot org. That's DAVMA dot org.