The Laws of your Money with Ann-Margaret Episode 13

Episode Transcript

Speaker 1 (00:00):
The following is a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed. The following program is sponsored by New
York Priority Medical Care. Now it's time for the Laws
of Your Money, a weekly call in show with legal

(00:20):
tips to help you protect your money. Here's your host
and Margaret Caroza.

Speaker 2 (00:26):
Hello, and welcome to the Laws of your Money. This
is a show dedicated to protecting you from legal and
financial mayhem. I view legal protections as the lynch pin
of all personal finance, because what does it matter how

(00:47):
diligently I save and invest if there's a greater than
forty percent chance of losing assets to a long term illness,
an expensive divorce taxes. This could be capital gains taxes,
estate taxes, or ordinary lawsuits. We all know we're living

(01:10):
in a very litigious society, but do you know you're
more likely to be involved in a court battle with
a former loved one than with a stranger. I think
we all have potential legal landminds in our lives. Are
you concerned about an elderly relative losing a home to

(01:33):
a nursing home? Are you in a second marriage thinking
about the possibility of blended family warfare later, do you
have a special needs child or someone in your life
who spends money like a drunken sailor. I am asset
protection attorney and Margaret Carosa joined today again by my

(01:56):
esteemed colleague and co host pauls. Welcome, Paul, Hello, and
so I encourage everyone to join the conversation by calling
us at eight hundred three to one zero seven ten.
Let's jump right in and get right to it. Last

(02:18):
week we ended the show talking about this was our
pre Valentine's Day show, and we talked about the topic
of prenuptial agreements.

Speaker 3 (02:31):
I remember and you.

Speaker 2 (02:33):
Had a question as we ended the show.

Speaker 3 (02:37):
It's interesting prenupts and then Valentine's Day.

Speaker 2 (02:40):
But well, that's because so many people get engaged around.

Speaker 3 (02:46):
That men that day and even marriages during this period
of time, the new year, a new start, so on.

Speaker 2 (02:53):
Absolutely, you know, it's funny ninety five percent of us
who own homes have fire insurance, yet less than five
percent of us thankfully will have a house fire. When
we look at the statistics for prenuptial agreements, the numbers

(03:16):
are reversed. We have a forty three percent chance of divorce,
yet only three percent of us have prenuptial agreements. You know,
it's really bonkers. But what I am seeing in my practice.
Do you know the age cohort most likely to have

(03:40):
a prenup? Today? People no, No, people in their twenties.
They are asking for prenups. And I think it makes
sense when we look at this generation. They are used
to customizing everything. What kind of water do you want?

(04:02):
Everything is customized. And I give them credit because they're
not willing to let someone else script the rules of
a divorce.

Speaker 3 (04:16):
And they might have seen their you know, their parents
or their parents' parents divorced, and they have lived that
life and they've been in the middle of that situation,
which has not been a comfortable situation. So they might
feel I'm not going to let.

Speaker 1 (04:34):
You know.

Speaker 2 (04:34):
The old refrain is it's very unromantic. I don't want
to script the rules of the breakup before the marriage
has even begun. But the reality is those rules already exist.
They were however, written by someone else. They were written

(04:58):
by your state legislators.

Speaker 3 (05:01):
And you know a lot about that.

Speaker 2 (05:03):
I know a lot about that, And so much of
lawmaking is designed to fill the breach where people don't
make their own plans.

Speaker 3 (05:15):
Had fourteen years I did yes.

Speaker 2 (05:17):
My misspent youth in the state legislature, trying to come
up with stop gap measures for folks who say they're
going to get around to things. If we don't have
a will, your state of residence has one for you. Right.
You may or may not like the people that it

(05:40):
spelled out for you within what we call intest state laws.
But if I die without a will New York State,
my state of residence has a formula for who gets
my stuff when I die. So, you know, part of
what we talk about here every week is in encouraging

(06:00):
people to take matters into their own hands and script
protections that make sense for your specific family.

Speaker 3 (06:11):
So for a way to you know, approach a prenup
is to have some education like what you're speaking about
that if we don't have a prenup, it's going to
things are going to happen without our decisions predecisions, the
state will get involved and other things will happen. Is
that sort of similar?

Speaker 2 (06:32):
Yeah, one hundred percent. If we don't have the rule
scripted ahead of time, we're going to be in court
fighting about it.

Speaker 3 (06:42):
And divorces are serious business.

Speaker 2 (06:47):
One hundred percent. And before today's show I knew that
we were going to be talking about prenups. I reached
out via text to a matrimonial judge who I am
long time, I'm friends with, and asked what can people
expect to pay in legal fees during a contested divorce

(07:11):
And the answer was the sky's the limit and he
is not prone to exaggeration and told me he has
seen million dollar legal bills.

Speaker 3 (07:23):
In the end, you both lose almost in most situations
unless you together work the arrangement out yourselves and feel
comfortable as much as you can if it's a real
I've been divorced twice. They haven't been the worst things,
but they they've had, they come with aggravation, well health.

Speaker 2 (07:44):
I think you know, the dialogue going forward is not
going to be whether or not you have a prenup.
It should be what is in your prenup? Right?

Speaker 3 (07:58):
Right?

Speaker 2 (07:58):
Legal do the prenuptual agreement a little more expansively. Historically
it was about the rich person trying to, you know,
lock up and safeguard their assets and keep it away
from this gold digger who had no assets to speak of,

(08:19):
And I think that's the wrong way to look at it.
If we have a prenup and you have all of
the money, Paul and I have no money. Then if
the prenup says that upon our split, you get to
keep everything and I get nothing, that prenup is not

(08:42):
worth the paper that it's written on. You know, the
best way to approach doing a prenup is to start
with what can invalidate a prenup? So a prenup that
is done too close to the wedding will fail. So
I get calls at my office all the time I

(09:05):
want to make an appointment to come in and do
a prenup, and the office staff is trained to ask
when is the wedding And if the wedding is not
a couple of months out, I don't even take that client.
That's going to be malpractice on my part.

Speaker 3 (09:23):
Really.

Speaker 2 (09:23):
Yeah, a prenup done let's say the week before the wedding.
That is a text book case of a prenup that
could be thrown out later because of duress. Interesting, the
law assumes that with the wedding a week away, the

(09:43):
invitations have already gone out and you now present me
with this document, I may feel browbeaten into signing it,
so it can be invalidated if it's too close to
the wedding. It can also be invalidated if we haven't

(10:04):
given a full disclosure of our assets and our debt.
So I think this is a great inflection point for
a couple about to embark on their future together. And
you know, one of the huge areas of life are
our finances. Right when money is a problem, everything is

(10:29):
a problem. And you know, it makes me crazy that
so many young people start their married lives not only
without a prenup, which can be a blueprint for your
financial future, but they start their married lives in debt

(10:49):
because their wedding cost in excess of twenty four thousand dollars.
That is the average cost of a wedding in the
United States States. And before the show, you shared the
story of your parents and how they saved some money
on their wedding.

Speaker 3 (11:07):
They did, and it was on George Washington's birthday way
back when my mother and father had a duo wedding
with her brother and his wife. So they had two
marriages at the same time, in the same place and
the same party.

Speaker 2 (11:25):
Okay, for half the price half the.

Speaker 3 (11:26):
Price, and they split it. They were loving brother and sister,
and I think there was a darn good idea.

Speaker 2 (11:34):
Absolutely. Now, you, as an interfaith minister are legally able
to marry people, and you do attact marry people. So
maybe you need to organize some big group wedding.

Speaker 3 (11:48):
I'm okay, even in our Times Square event, which we'll
get to later, only because I think that marriage is
a beautiful thing and to find a loved one and
it's all great, positive, good news. So I'm open to
marry everybody who knows. We pray that that works out.

(12:09):
There are statistics that you know, we talked about, and
I would suggest they get a prenup.

Speaker 2 (12:14):
But you know what, I have a fun statistic, and
it's true. I have been doing prenups for close to
twenty years. Oh wow, and I've never had one of
the couples call saying they're getting divorced.

Speaker 3 (12:32):
Really yeah.

Speaker 2 (12:34):
I think if you wrestle these issues into submission on
the front end, I believe you're less likely to have
a problem later. The number one reason for divorce money
problems fighting over money. And I think if we get
it all out there on a table, on the front

(12:56):
end and air our dirty laundry. To speak, I will,
you know, show all of my horrible credit card statements,
and you know, roll up our sleeves and think about
how we're going to tackle this as a couple. But
if you're about to marry someone whose credit score is

(13:17):
in the toilet, this is going to affect you because
the interest rate on a mortgage is going to be higher,
the combined household credit score is going to be lower.
So we really want to get this out on the
front end and with a prenup. The most important piece

(13:39):
of advice I can give anyone is if you bring
the topic up and the other party says, oh great,
you know, I'll sign whatever you want me to sign.
I don't need my own lawyer. I trust you. I'm
going to sign whatever you want me to sign. You

(14:01):
should run, not walk away from that situation because maybe
the person is naive or they could be playing you.
Because a textbook way to get out of a prenup
is to not be represented by your own attorney. So
if I sign the document blindly and I am not

(14:24):
represented by my own attorney, even if in the document
I say I wave my right to my own attorney.
You can't wave that right, so that prenup is not
worth the paper that it's written on.

Speaker 3 (14:39):
So here you go, you need to legal info.

Speaker 2 (14:42):
Yeah, so you know, with the prenup, I encourage people
to integrate their their spending goals, their financial goals. What
do we want our financial lives as a couple to
look like? Do we aspire to having a vacation property

(15:03):
that we can rent out and generate a little bit
of income. So we put these goals in writing, and
putting something in writing guards against faulty recollections and faulty expectations.
We get out of the whole loop. Well you said this,

(15:26):
I did not say this. We can pull out this document,
which I think it's a little bit romantic. It's like
a mission statement. What are our goals? What are our
spending parameters? If you collect sports memorabilia, and early on

(15:48):
in our dating life, I thought that was fun and quirky.
And now that we're on the brink of setting up
a common household and life together and it turns out
that you're spent hundreds of thousands of dollars on this
sports memorabilia, maybe let's put in writing what the limits

(16:09):
of the spending.

Speaker 3 (16:10):
Are try to get out as much as you can
of communications so you have a smoother.

Speaker 2 (16:15):
Life together at one hundred percent. You know, do you
does your fiance spend money like a drunken salor? Does
she have you know, thirty pairs of Manolo Blonic shoes
And that may be cute and quirky on the front end,
but it could lead to financial pain later on. Now

(16:40):
you know I've shared the story with you, Paul. I
used to be a financial train wreck. All of my
credit cards were maxed out and I would, you know,
in law school, I would be in bed at night thinking, oh,
there might be you know, thirty dollars open on that

(17:01):
master card. So definitely I have to go to Bloomingdale's
tomorrow and get some new item. My clothes were much
better then, but now I am totally debt free. And
you know, one of the pieces of advice that I
give to people, and this is I think especially true

(17:23):
for women. We become like the five people that we
spend the most time with. And as women, if the
people you surround yourself with are spend a Holics and
shop a Halics, it's just not a good situation. So

(17:46):
I encourage you to take the lead and ask your
friends what are some ways that we can all save money?
And maybe we do like a lit informal swap meet. Right,
I have clothes in my closet that are are perfectly lovely.

(18:07):
I just don't like them anymore. And maybe you know,
we share with other people. It's environmentally responsible. It will
help us save money, and it will help shift the tone.
And we're starting to see movements dedicated around saving money.

(18:28):
My sister lives in Park Slope and when I go
to visit her, you see on the steps outside where
people leave items that are too good to be put
in the trash, but they don't have a need or
use for them anymore. And it's like this moneyless economy

(18:49):
and it's really a lovely thing.

Speaker 3 (18:51):
Even some apps I know next door we have up
there on the Upper West Side, and we also have
books on the street and records on it. If I
thought I'm in a furn terms from the streets, if not,
a lot of it, and artwork. Thursday night's the big night, now,
is that right? That's for sure. I'm a west I'm
an environmentalist. That's all around. People are happy to share

(19:13):
that way and you can also, you know, donate to
the Salvation Army, good Will. These are these are all
good ways. My wife the way she returns shoes at DSW.

Speaker 2 (19:25):
After wearing them to a party.

Speaker 3 (19:27):
I hope now she donates them to they have a
charity box and she gets them from her friends and
then she gets a discount on buying more shoes and stuff.

Speaker 2 (19:39):
Will listen. I encourage everyone save your receipts. I have
a folder every year for clothing and I save all
of the receipts and when I donate them down the road,
I have a basis for a text deduction by far Yeah. Okay,

(20:00):
So anyone who has money saving tips to share with us,
please give us a call eight hundred three to two
one zero seven ten. Email me during the week my
Asset Protectionattorney dot com. That's the website and you can
jump onto my email. Let's switch gears for a minute

(20:26):
and talk about you know, we mentioned protecting the house
all the time. What is it that we're trying to
protect the house and other real estate from. We're trying
to protect it from having to go through probate. Right,
all of the other assets that we have we can

(20:48):
avoid probate by naming beneficiaries my life insurance, my CDs,
my brokerage account. We can name beneficiaries, but to a
large extent, we cannot name beneficiaries on the home. So
we want the next generation to avoid being stuck in

(21:12):
court for the eight months to a year that the
average probate takes. We also want to protect the real
estate from nursing home claims. Medicare and the Medicare Supplement
only cover the first hundred days of rehab following a hospitalization.

Speaker 3 (21:40):
Can you take out your talking about protecting yourself? One
way that people do that is with insurance. Is there
a long term care insurance or something? How to deal
with that situation?

Speaker 2 (21:51):
So, as an asset protection attorney, as an elder law attorney,
I think there's this school of thought that we're telling everyone,
you know, lock up your assets so that you can
qualify for the state medicaid program. Because again, Medicare and

(22:12):
the Medicare Supplement only cover the first hundred days of rehab,
and if you're lucky enough to have never been in rehab,
you may not know that the cost is sixteen thousand
a month and that meter starts running the moment that

(22:32):
Medicare conks out. So, yes, long term care insurance is
critically important for all of us to educate ourselves about.
Is it expensive, Yes, it's very expensive. But I think
the writing is on the wall with the Medicaid program.

(22:55):
It cannot exist in its current form for the indefinite future.
In terms of a percentage of the state budget. Medicaid
has an eclipsed education in New York State as a
percentage of the budget. This can't continue. So when we

(23:18):
say on the federal level that there's this so called
five year lookback period, you need to do your planning
with the real estate and other assets at least five
years before applying for the program. That cooling off or
baking period, if you will, used to be three years,

(23:39):
and in six it moved to five. There are bills
in Congress to make it go to seven or ten years.
So the writing is on the wall. It's going to
be much harder to qualify for the Medicaid program in
years to come, So you need to roll up your
sleeves and educate yourselves about long term care insurance options.

(24:06):
That being said, if you cannot afford the long term
care insurance premiums, which can be high. You need to
educate yourselves about Medicaid eligibility. And in New York State,
it is illegal for a nursing home or rehab to

(24:28):
differentiate the care between the two of us because I'm
on Medicaid and your private pay. In New York State,
the care is one hundred percent, even Stephen. And that's
true whether we're in a nursing facility or in our
own homes and we're applying for community Medicaid. New York

(24:54):
State still has no look back period in advance of
applying for community Medicaid. So I can create my trust,
put my home in the trust, and then the following
month I can apply for community Medicaid and not have

(25:18):
to worry about the house. Yeah, no, it's huge. So
I encourage people to think in terms of three categories
of assets. Your retirement accounts, whether that's an ira A
four to oh one k our retired teachers who have

(25:38):
a TDA. Those retirement accounts under current law happen to
be invisible when we apply for Medicaid, so we're good
to go there. The house is a very interesting situation.
And if you remember nothing from today's show, oh I

(26:00):
hope you will remember the following. The house is exempt
for purposes of Medicaid eligibility. So on the front end,
I can sign up for Medicaid without having to worry
about the house. But with that they've given me enough

(26:22):
rope to hang myself because it is not exempt from
so called Medicaid recovery upon my death. So if I
listen to the lovely social worker who says, and you
don't have to worry about the house, I will sign
you up for Medicaid. You should walk, not run, to

(26:45):
my office in Bayside. I will help you protect the house,
and we do that with a flexible trust designed for
the home and other real estate to be out of
reach for Medicaid purposes, but you can retain the ownership rights.

(27:09):
And then we have our third category of assets, our
regular savings, our non retirement brokerage accounts, which Kennon should
remain in our own names. But we want to make
sure that someone has power of attorney so that we
can very quickly transfer those assets into the trust. And

(27:34):
the trust is preferable to simply putting the house in
my child's name. If I do that, I will saddle
that child with capital gains taxes, they will take the
property with whatever my original cost was, so they have
what's called carryover basis and they go to sell it

(27:58):
later and it's a catastrophe.

Speaker 3 (28:01):
So you bought the house for say one hundred thousand,
now it's worth five hundred thousand, and the kid would
have to pay four hundred thousand dollars worth of.

Speaker 2 (28:09):
They would pay taxes on that four hundred of games. Okay,
so we're almost out of time. Before we sign off
for today, I want to ask you, Paul, what you
are working on for Earth Day and how can people
get involved?

Speaker 3 (28:24):
Well, great, thanks Anne so much. Times Square, partnership with
Boro President Mark Levine, partnership with earth Day dot org
who created earth Day, and other organizations, sustainable companies, organizations,
home a y Young Global Ambassador SDGs. So how to

(28:45):
get in touch with us? We have a website called
Pause the World for Peace dot org and are just
call me to one two six four seven one two
one two. We really need that. Love to have more volunteers,
love to have more new partners, Lets get involved, corporations
that care about what they call esg and so on.

Speaker 2 (29:05):
So great stuff, Paul, and I want to thank all
of you for listening, and I hope you join us
next week ten thirty am Sunday morning on wor seven
ten am, or anywhere on the free iHeart app. Have
a great day everyone.

Speaker 1 (29:36):
The preceding program was sponsored by New York Priority Medical Care.
The preceding was a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed.