The Laws of your Money with Ann-Margaret Episode 16

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, a
program dedicated to protecting you and your families from legal
mayhem when it comes to personal finance, I think there's
nothing more important than protecting yourself legally, because what does

(00:48):
it matter how brilliantly I invest or how diligently I
save if there is a forty three percent chance of
being wiped out with an expensive divorce, long term care.

Speaker 3 (01:03):
Costs, taxes.

Speaker 2 (01:05):
This can be capital gains taxes, estate taxes, not to
mention ordinary lawsuits. We all know we're living in a
very litigious society, but it comes as a surprise that
people are more likely to be in a court battle

(01:25):
with a former loved one than with a stranger. With
that as the backdrop, I am asset protection attorney and
Margaret Carosa joined today by my esteemed co host, the
Reverend Paul Slackus.

Speaker 3 (01:42):
Welcome to the program, Paul.

Speaker 4 (01:43):
Thank you am.

Speaker 2 (01:45):
So, before we jump in, I want to invite everyone
to a live program that I'm doing next Saturday, March
twenty second, at eleven am at the Immaculate Conception Church
in Jamaica, Queens, where we're going to have lovely refreshments

(02:07):
and camaraderie and questions and answers about all things asset protection.
If you can't make it to the live seminar, we
will also be sharing a zoom link and that's going
to be on my website, my Asset Protection Attorney dot

(02:27):
com Saturday, March twenty second at eleven am.

Speaker 3 (02:32):
Hope to see a lot of you there.

Speaker 2 (02:36):
So what we do, what Paul and I do, We
bring in various articles that we looked at over the week.
We have people who email questions. I'm always encouraging people
to join the conversation, and you're all invited to join

(02:56):
our conversation by calling us at one eight one hundred
three to one zero seventy ten. But if you're too
shy to call, then you can shoot us an email
and we'll get to your questions or comments. So I'm
looking over at Paul and the article that he has.

(03:17):
What's your article, Paul?

Speaker 4 (03:19):
Well, this article there AARP article.

Speaker 3 (03:21):
Yes, the AARP article.

Speaker 4 (03:23):
Oh an AAR prevention guide. And it's the cover of
it says a big word fraud, fraud.

Speaker 3 (03:29):
We want to protect ourselves from fraud.

Speaker 4 (03:32):
So protect your money, protect your emails, taxi voice scams,
out smart the bad guys, how crooks are using it?
Who's targeting you?

Speaker 2 (03:40):
Yes, now let's talk a little bit about fraud. Now,
I don't get AARP. Maybe it's vanity. I don't want
my mailman to think that I'm over fifty years old,
so I never I never joined AARP.

Speaker 3 (03:56):
But I'm glad you brought that article in.

Speaker 2 (03:59):
You know, when we talk about fraud and scams, we
often hear the word preceded by senior, you know, senior scams.
And I think that's a little bit insulting to seniors
because anyone can be a victim of scams and fraud.

(04:23):
And I'm going to give you an example. A couple
of months ago, I'm sitting in the dentist waiting room,
and what am I doing while I'm in the dentist
waiting room. I'm on my phone and I get a text, Wendy, one.

Speaker 3 (04:39):
Of our golfers.

Speaker 2 (04:41):
Canceled, can you join us for the foursome this afternoon. So,
instead of ignoring a text from someone that I didn't
know at all, I replied, sadly for me, I am
not Wendy, have fun with golf, okay. Then I get

(05:02):
a reply, Oh so terribly sorry that it was the
wrong number. No problem, was my reply. Now this interaction
should have ended right there, but they come back with
It's not often that I come across someone who's.

Speaker 3 (05:22):
So polite with a quick wit.

Speaker 2 (05:26):
Let me make up this inconvenience to you by buying
you coffee. And naturally I knew that we were headed
down the road of fraud, you know, but it wasn't
apparent right away. And even brilliant people can get scammed.

(05:47):
And I'll give you an example. Pall a couple of
years ago, a professional colleague of mine. She's an attorney,
and you don't want to be in on the other
side of a case. She is brilliant, she's cutthroat, she's
a shark. She was recently divorced, and everyone, including her therapist,

(06:13):
told her that it would be a healthy move to
donate or sell her wedding dress. You know, the wedding
dress costs thousands of dollars, so she was a little
strapped for cash and decided to sell it online. And
as I said, it was several thousand dollars, she decided

(06:36):
to sell it. She arrived on a purchase price of
five hundred dollars with a buyer. So the buyer was
going to send her the check, and then she was
going to send the wedding dress. Now again, she's not stupid.
She didn't send the wedding dress out upon receipt of

(06:56):
the check. She deposited the check and waited two days,
called her bank, are the funds available? The bank said, yes,
the funds are available. Okay, She takes the dress to ups,
packs it up and sends it. This was not an

(07:16):
inexpensive item to ship. And then in the mail she
gets a notice from the bank that the check bounced.
So she called wanting to rip someone's head off, saying,
you told me that the funds were there, and they
clarified and they said, we told you that the funds

(07:39):
were available and they were available against your other accounts.
We didn't tell you that the check had cleared. So
now she's out the wedding dress and out the ups charges.
You know, it's just it's crazy. There's no end to it.

(08:01):
And of course it does affect seniors as well. This
week in my Bayside office, I had a long time
client come in. She thought she had forged an online
relationship with Liam Neeson. Now again, she's an intelligent woman,

(08:24):
she's a retired professional. I'm not going to give you
the profession to further identify her. And she invaded her
retirement account to the tune of one hundred thousand dollars
and she sent it to Liam Neeson because he was

(08:46):
quote unquote stuck in Scotland. His funds were frozen, he
couldn't get in touch with his manager. And I mean
he wanted to marry her and they were going to
open a business together in Scotland. You know, really really
a sad story. And over my coffee this morning, I

(09:10):
was reading the New York Times, the Business section about
seniors being scammed. There are love scams and there's the
grandchild scam, where through AI, you know, computer generated voices,
they can have someone who sounds like your grandchild call

(09:30):
and ask for money, saying it's an emergency. And all
of the people who lost a lot of money that
were profiled in this New York Times article say that
it's a double whammy because they lost money, they feel stupid,
and now they are unable to deduct these losses from

(09:54):
their income taxes. So when you invade your retirement account EARL,
you have to pay Deferred income Tax SURE. And with
the Tax Cuts and Jobs Act of twenty seventeen, these
deductions were largely eliminated. So you know, it's incumbent upon

(10:16):
all of us to inform each other and to not
feel stupid and not feel shy about coming forward with
your story, because if you hear this story, you're going
to be sensitized to avoiding falling victim.

Speaker 4 (10:36):
I have another question, so it's not on topic, except
the AARPI says sixty one point five billion has been
frauded by seniors. That was as of twenty twenty three. No,
it is knockout.

Speaker 2 (10:50):
It's beyond sad, and it's beyond evil, and you know
we need to keep each other safe with good information.

Speaker 4 (11:00):
Well, here's here's a question for some good information. Can
we avoid estate taxes by naming beneficiaries on our accounts,
our own accounts.

Speaker 2 (11:10):
Yeah, so there's a huge misconception out there that we
avoid taxes when an asset passes automatically to named beneficiaries
upon our death. If it was that easy to avoid
estate taxes, the government would not be collecting any right.

(11:33):
We would take our very big brokerage accounts and name
beneficiaries and the government would collect no taxes. So when
we name beneficiaries on the accounts.

Speaker 3 (11:46):
We avoid what do we avoid, Paul?

Speaker 4 (11:49):
Tax payments?

Speaker 3 (11:50):
No, we don't avoid taxes.

Speaker 4 (11:53):
No, I mean we avoid paying the taxes.

Speaker 3 (11:55):
No, we don't avoid paying the taxes. We avoid probably.

Speaker 2 (12:02):
We avoid the seven month journey through the surrogates court
in the county of your residence. And it's a very
very good idea to avoid probate, and we do that
in part by naming beneficiaries. But naming beneficiaries in and

(12:22):
of itself will not prevent us from having to pay
estate taxes. Now, the current federal threshold is thirteen point
nine million, and if you say to yourselves, I'm nowhere
near that threshold, so this doesn't apply to me. You

(12:43):
need to make sure whether your state of residence has
a separate estate tax. So in the state of New
York where I practice, the current estate tax threshold is
seven million dollars. So question Paul, you get ready, Okay,

(13:03):
you need to get this one. If we have a
couple and every individual gets a seven million dollar credit,
how much can that couple shield from estate taxes?

Speaker 4 (13:20):
I believe both of them fourteen?

Speaker 3 (13:22):
Well, so the question is the question is.

Speaker 2 (13:26):
Does seven plus seven equal fourteen? And seven plus seven
does equal fourteen? Except in New York State's a state
tax system. So if I'm a single person and I
die with seven million and one dollars, the entire amount

(13:51):
will be subject to a state tax.

Speaker 3 (13:54):
We call that the cliff.

Speaker 2 (13:56):
If we have a couple and we each have a
credit of seven million dollars, without some aggressive, proactive planning,
we will.

Speaker 3 (14:09):
Lose the first credit.

Speaker 2 (14:11):
So the typical example is a couple, a married couple
who have ten million in taxable assets. The first one
dies and they have simple mom and pop wills from
twenty years ago that say everything goes to the surviving

(14:33):
spouse upon the death of the first one.

Speaker 3 (14:37):
So my spouse.

Speaker 2 (14:38):
Dies, I have the ten million, no taxes or due
because of the federal and state so called unlimited marital deduction.
Spouses can transfer unlimited amounts of assets during life or
at death to each other without taxes.

Speaker 3 (15:00):
But that is not.

Speaker 2 (15:01):
A good thing because there was no tax liability on
that first death. There was no opportunity for me to
utilize that credit. So it's like an expired Macy's gift card,
you know. We lose, We permanently lose that first credit,

(15:22):
and now I live my widowhood on interest income.

Speaker 3 (15:27):
Upon my death, when I want.

Speaker 2 (15:29):
To leave everything three ways to the kids, they only
have access to my single seven million dollar credit, leaving
three million subject to taxes, you know, and that's a
painful hit. So if you are a little bit above

(15:51):
the seven million, whether you're a single person or part
of a married couple, you need to do some trust planning.

Speaker 3 (16:00):
And for the married.

Speaker 2 (16:01):
Couple, that would be credit shelter trust planning, because we
want to shelter the use of that first credit, right,
We want to keep that on ice in case the
estate of the second spouse needs to use it later.
And we do that with a very straightforward formula, which

(16:24):
says first spouse leaves everything to the surviving spouse with
the exception of what the survivor chooses to disclaim, and
the Internal Revenue Code gives us nine months from the
date of that first death to decide what am I
going to disclaim and what am I going to keep.

(16:48):
In order for us to properly make use of this
disclaimer mechanism, we need to have already built these credit
shelter trusts in the will. We want to build it
within the will, and we also want to build it
within the asset protection trust, which should hold most of

(17:11):
the real estate.

Speaker 4 (17:12):
Let me say you and you should have a will
and you should have.

Speaker 3 (17:14):
A trust absolutely.

Speaker 4 (17:16):
You know period how you gave a percentage on how
many people don't have wills and.

Speaker 2 (17:20):
Trusts, Well, nearly half of all Americans don't have wills,
you know. And you need to do something to protect
your loved ones from taxes. Paying taxes is mandatory. Over
Paying taxes is stupid.

Speaker 4 (17:45):
Taxes and death.

Speaker 2 (17:47):
You can't avoid taxes and death, but we can greatly
minimize transfer taxes with some good planning.

Speaker 4 (17:58):
There you go. I had another question and sent to
me what is the five year look back?

Speaker 2 (18:04):
So this has to do with protecting assets from long
term care expenses. So you know, no one wakes up
one day and says, I think I'd like to go
to a nursing home. It happens because of some acute event.

Speaker 3 (18:23):
I break a hip, I have.

Speaker 2 (18:25):
A cardiac issue, I have a stroke, and we go
to the hospital. At the hospital level, Medicare and the
Medicare supplement cover everything beautifully.

Speaker 3 (18:39):
But when we go to rehab, which.

Speaker 2 (18:41):
Is where we all go, because the hospitals discharge us
quicker and sicker based on how they get reimbursed by
insurance companies and things that are above my pay grade.
But we know that compared to thirty forty years ago,
the hospitals are looking to get us out as soon

(19:02):
as we go in there. You know, I remember as
a kid, my grandmother once a year would go to
the hospital for a week for like a battery of tests.
You know, it was like the poor woman's spobagation. But
you can't do that anymore. You need to be in
tough shape to be in the hospital and for them
to keep you. So when we get discharged, we're in

(19:26):
generally no shape to come home. We go to rehab,
and it's at the rehab level of care that the
antenna should go up because Medicare and the supplement only
cover the first one hundred days. On day one hundred
and one, you're going to get a bill for sixteen

(19:49):
thousand dollars in the New York metro area. And people
are just apoplectic upon receiving this bill. And when you
run out of liquid assets in the bank to pay
these steep charges, they can and will put a lean
on your home.

Speaker 4 (20:11):
How do you protect yourself, well.

Speaker 2 (20:13):
Unless you had done something clever with your home five
years prior to.

Speaker 3 (20:23):
This bad situation.

Speaker 2 (20:26):
And what we want to do is not what people
generally do. So if folks remember nothing about what we
talk about, the number one thing is never transfer your
home or other real estate directly to your named beneficiaries.

(20:50):
They will have to pay taxes. If I bought the
house for fifty thousand dollars in nineteen eighty four and
it's now worth six hundred than fifty thousand, if I
make a direct gift to children during my life, I
will lose my star property tax exemption. I am giving

(21:12):
the kids a carryover basis problem, so that even if
they are nice and let me live out my days
in the house and they go to sell it later,
they're going to get punched in the gut with capital
gains taxes. Not to mention, if my child's name is
on the home and they're going through a divorce, now

(21:34):
my soon to be ex daughter in law would have
a perceived claim on the house. And if I have
grandchildren applying for college financial aid, all bets are off
because this is an asset of their parents. So we
never want to make an outright transfer. What we want

(21:58):
to do is put the.

Speaker 3 (22:00):
Real estate in what.

Speaker 4 (22:03):
Trust?

Speaker 3 (22:04):
A trust?

Speaker 2 (22:05):
Yeah, we want to put the real but your honor roll,
we're gonna end straw. We want to put the real
estate in a trust. What kind of trust is it?
Is it revocable or is it irrevocable? And uh the

(22:25):
answer for most people to that is no, it should
not be totally revocable. It should not be totally errevocable.
You want to be somewhere in the middle so that
you avoid probate. And you get this clock running on

(22:47):
the federal So this is all fifty states have a
five year lookback period, but you get partial credit once
you get this clock going. For example, if I create
a trust today and I transfer my home into the trust,
and I'm going along just fine for four years and

(23:12):
then I have some big catastrophe. I only have to
then privately pay that walloping sixteen thousand dollars for that
last one year. So for every month you get under
your belt with this trust is one month less on

(23:34):
the other end that you would have to privately pay. Now,
for those of you out there retired teachers, for one,
you might have catastrophic insurance. Catastrophic insurance will give you

(23:54):
coverage in addition to your Medicare and the Medicare supplement.
But depending upon the policy you have, it's going to
be between four hundred and six hundred.

Speaker 3 (24:08):
Dollars per week.

Speaker 2 (24:11):
So that's one day a week is going to be
covered with your catastrophic policy. So you definitely want to
investigate other means of protecting your assets. And you know,
a lot of elder law attorneys focus exclusively on the

(24:36):
Medicaid program. But we really can't do that, folks, because
Medicaid is buckling at it seems, you know, on the
New York state level. Many of you know, I am
a former New York state legislator, and I can tell

(24:56):
you that the Medicaid program in New York is the
best Medicaid program in the United States. You know, if
you have in your mind that if your spouse or
parent has to go on Medicaid in a nursing home
that they're going to receive a lower quality of care,

(25:19):
that is absolutely not true. You can have good facilities
out there and lousy facilities out there, but it has
nothing to do with the payment source, because Medicaid pays
these facilities a boat load of money and the care

(25:41):
is one hundred percent even.

Speaker 3 (25:43):
Stephen.

Speaker 2 (25:44):
Now, my husband happens to be a geriatric physician, and
on one of our first dates, he must have thought
I was weird. I asked him, is there any you know,
I'm a little bit cynical. Is there any secret notation
on the patient file in a nursing home saying I'm

(26:05):
on Medicaid, I'm going to get the generic bandages or
what have you. And he has assured me that the
care is one hundred percent even, Stephen. So that being said,
New York State can't afford to continue down this, you know,
very wonderful Medicaid program, So they're making it harder and

(26:29):
harder to qualify. The lookback period on the federal level
used to be three years. Now it's five. There's a
bill in Congress that would make it seven.

Speaker 3 (26:42):
So if you.

Speaker 2 (26:43):
Start your planning under the current law, you're going to
get that clock ticking. And for those of you who
can afford it, I strongly recommend that you sit down
with someone who can at least educate you about long
term care insurance because ultimately that's where we're heading.

Speaker 3 (27:07):
We're going to need.

Speaker 2 (27:08):
To self ensure because I predict that the Medicaid program
as we know it is going to disappear within ten years.
That's my prediction. So sit down with someone that sells
long term care insurance. Educate yourselves. I'm always happy to

(27:29):
talk this through with you. There are new and better
products out there. There's something modeled on a whole life
insurance policy. This is called hybrid long term care insurance,
where if you're lucky enough not to need the long
term care benefits and pass away in your sleep one day,

(27:53):
as I hope to do many years from now, your
named beneficiaries still get a death benefit.

Speaker 3 (28:03):
So it's really the best of both worlds.

Speaker 2 (28:06):
Yeah, next week we're going to be talking about a
state planning and the single person on my website, my
Asset Protection Attorney dot com. Uh, there's an article a
state Planning and the Single Girl.

Speaker 3 (28:27):
Do you know what that is?

Speaker 2 (28:28):
Based on? Paul Sex and the City No Sex and
the Single Girl. Do you remember Helen Curly Brown?

Speaker 4 (28:36):
I remember I interviewed, Hell you did?

Speaker 3 (28:39):
But okay, Well that was.

Speaker 2 (28:41):
A blockbuster title back when she released it. Because sex
and single we're not supposed to have anything to do
with each other. But uh, there are many many people
living alone, and as a woman, I have an eighty
percent chance of outliving my husband. And for many of

(29:02):
us who are divorced or choose never to get married,
I think those people live longer. Join us next week
and again think about trying to join me on March
twenty second, eleven am via zoom or at the church
in Jamaica. Thank you everyone for joining us, and hope

(29:28):
you tune in next week Sunday at ten thirty seven
ten am. Woor have a great day.

Speaker 1 (29:40):
The preceding program was sponsored by New York Priority Medical Care.
The proceeding was a paid podcast. iHeartRadio's hosting of this
podcast constitutes neither an endorsement of the products offered or
the ideas expressed,