The Laws of your Money with Ann-Margaret Episode 30

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
tips to help you protect your money. Here's your host

(00:23):
and Margaret Caroza.

Speaker 2 (00:25):
Hello, and welcome to the Laws of your Money. This
is a show dedicated to protecting you and your family
from legal and financial mayhem when it comes to personal finance.
I think this single most important consideration is protecting ourselves legally,

(00:51):
because what does it matter how diligently we save and
how brilliantly we invest if there is a greater than
forty percent chance of losing assets to a long term illness,
an expensive divorce taxes, This can be capital gains taxes,

(01:12):
a state taxes, not to mention ordinary lawsuits. I believe
we all have legal landmines in our lives. Are we
concerned about an elderly relative losing a home to a
nursing home. Are you in a second marriage thinking about

(01:34):
the possibility of blended family warfare later? Do you have
a special needs loved one, or someone in your family
who spends money like a drunken sailor. Are we estranged
from a family member and wish to avoid a will

(01:55):
war later, We're going to tackle all of these things
on our program. I am asset protection attorney an Margaret Carosa,
and I'm thrilled to be joined today by my guest
co host, Ann Woolsey, who is an esteem journalist and
founder of Maverick River Media. Welcome back to the program, Ann.

Speaker 3 (02:19):
Thank you, am Margaret, thanks for being with us.

Speaker 2 (02:22):
And we were going to have a second guest today.
Some regular listeners may recall having Billy Duke on the
program My gen Z Son and last night I was
reading the paper and there was a little study about

(02:44):
gen Z people being lazy and self entitled, and he
wanted to come on the program and defend his gen
Z cohort and right on the money. This morning, when
I went to wake him up, he was a little
too tired to come in. So maybe next week he'll

(03:09):
be a defending chen Zi against the charge of being lazy.
Let's jump in today and talk about protecting assets from divorce.
We know that there is a statistical forty three percent

(03:31):
chance that we will be in a divorce. And I'm
thrilled to have joining the program an expert in this field.
His name is Joseph DeMarco. He is a partner at Schlissel,
Astro and Carabato, specializing in matrimonial law for more than

(03:55):
twenty years. Welcome to the program, Joe.

Speaker 4 (04:00):
Good morning, Anne. Thank you so much for having me.

Speaker 3 (04:02):
It's a pleasure.

Speaker 2 (04:03):
And you know, I have to tell you, I admire
what you do. It's so important and it's something I
couldn't do. And I remember as an undergrad talking to
my uncle, the late Jack Clabby, who is a state
Supreme Court judge, and he his part in the courthouse

(04:28):
was like sexual assault and murders and just like the
worst of the worst. And I asked him, Uncle Jack,
how can you hear about these things all day long,
every day? And you know what his response was, He said,
it is ten times better than matrimonial law. You know,

(04:52):
drop the mic. I really don't know how you do it.
Can I ask you? How did you get into the field?

Speaker 4 (05:01):
Sure? So, look, it's all I know. I've been doing
this for almost twenty five years now, and I got
into it by interning with a matrimonial judge during one
of my summers between law school years, and was directed
and referred to my first position and first job at

(05:25):
Shlissel Austro Carabados and my partners and I Jennifer rosen Krantz,
Lisa Schoenfeld and Alena Carabatos, We've all been working together
for about twenty five years. And I wouldn't know what
to do if I wasn't doing matrimonial law.

Speaker 2 (05:42):
Would you say, And I do not do matrimonial law.
A lot of people think that I do because I
do prenuptial agreements, I do post nuptial agreements. I do
the asset protection prior to a mayorg bridge enduring a marriage.
But I do not, in fact handle divorce. But from

(06:06):
my kind of tangential observation, it seems to me that
financial disputes between the couple are a leading cause of divorce.

Speaker 3 (06:21):
Would you agree with that, Joe.

Speaker 4 (06:25):
I would certainly, financial conflict and financial disagreements are a
significant cause. Although you know everyone right now, of course,
is seeing the internet blow up over the infidelity that
people witnessed at a concert, So infidelity certainly is a cause,

(06:49):
But that is you know, usually not something that comes
from you know, a lack of conflict in some other areas.

Speaker 2 (06:58):
But I want to get to that case a little
bit before we let you go today.

Speaker 4 (07:03):
Oh could we not?

Speaker 2 (07:04):
We have to get to that case. And told me
we have to get to that case. But it isn't
it ironic that financial stress and pressure between the parties
can lead us to divorce. But then the divorce process
is incredibly expensive. And I'm going to put you on

(07:27):
the spot a little bit, and I know you're going
to give me a lawyer answer, so I'm not going
to get a real answer. But what is someone looking
at in terms of legal fees for an average divorce?

Speaker 4 (07:43):
And you now sound like almost every client that comes
in for a concert, I know. And look that is
the biggest question. How long? How expensive? Is this going to.

Speaker 3 (07:56):
Be bigger than a bread box? Right Joe?

Speaker 4 (07:59):
And yeah, yeah, So look, I mean costs range you know,
from you know, a case resolving within a retainer of
ten thousand dollars to you know, several hundred thousand dollars. Okay,
and yeah, so.

Speaker 2 (08:16):
New York, as you know, since twenty ten, that was
my last year in the New York state legislature, and
I cast a vote in favor of no fault divorce.
New York, interestingly was the last state in the United

(08:36):
States to have no fault divorce and the goal, of course,
was to keep expenses down and to get away from
the old fiction where we had to claim that someone
you know, treated us cruelly and unusually and there was
a plaintiff and an aggrieved party. Do you know what

(09:00):
the first state, Joe that had no fault divorce?

Speaker 4 (09:05):
I don't.

Speaker 2 (09:06):
I don't California nineteen sixty nine.

Speaker 3 (09:11):
Did you know this, Anne, because I grew up there.

Speaker 2 (09:14):
Yeah, And it was signed into law by then Governor
Ronald Reagan. So that's our fun little jeopardy factoid for today.
But has in your experience Joe has no fault divorce
really streamlined things? And does it keep costs down? Or

(09:37):
do parties intent on attacking each other still find a
way to do it?

Speaker 3 (09:44):
Yeah?

Speaker 4 (09:44):
I mean, look that when we needed to prove grounds
for a divorce prior to October of twenty ten, it
was it was another issue that would you know, cause
people to spend money and and would potentially drag cases
out because you could have one spouse just simply not agreeing,

(10:06):
you know, the defendant in the case, simply not agreeing
to to the grounds to a divorce. So now you're
potentially litigating that issue and it could be a source
of leverage for one party. So it's certainly the the
the advent of no fault in New York has certainly helped.
But you know, as they say, where there's a will,

(10:27):
there's a way. If it's advantageous for one side to
you know, drag a case out prolong things, then there
are are ways that that ends up happening. Sometimes it
is better for one party to to avoid a resolution
because sometimes the end resolution, financially speaking, is worse than

(10:50):
the you know, the current.

Speaker 2 (10:52):
Arrangement, absolutely, and you know it's not uncommon, given the
staggering amount of legal fees that can be generated, it's
very common for a party to borrow money from their parents.
And you know, if any listeners find themselves in this

(11:14):
position and you're loaning what can be tens of thousands
of dollars to a child for the divorce, you need
to deal with how that should be reflected in the
estate plan. If I loan a child seventy thousand.

Speaker 3 (11:33):
Dollars for the divorce.

Speaker 2 (11:36):
You can be sure that her brother and sister down
the road upon my death think that the seventy thousand
should be considered and advance against her interest in the estate.
So there's no right or wrong answer here. But I
think it's critically important that we as parents look ahead

(11:59):
and I identify issues that could lead to World War
three later on. So is that a conversation show that
that you have with families.

Speaker 4 (12:13):
Occasionally? Yes, so certainly we have. You know, when it's
a younger, younger person involved, they're often getting help from
family to finance the litigation. And you know, obviously now
you've you've you've got to make a family happy more
than just just your clients, and that is certainly a concern.

(12:36):
But the family can sometimes be counterproductive in the whole process. Remember,
because outside influences and you know, friends now chat, GPT
are now guiding clients as much as the lawyers are.
So it's there has to be some sense of realistic expectation,

(13:00):
and that can certainly start with family members who are
involved in the process and may not really know no.

Speaker 2 (13:09):
Absolutely, you know, I think a related issue that I
hear in my office doing a state planning and asset protection.
Every day of the week, I have people with adult
children ask me how in this trust can I keep

(13:29):
my in laws out of the asset distribution later And
the most important thing is to retain the ability to
make changes so that can be done easily in a will,
because any day that I'm alive, I can create a
new will which legally revokes the old one. But we

(13:52):
have to be super careful when we get into trust planning,
which any regular listener of this program knows that I
strongly recommend anyone with real estate, a condo, a co
op that you have that owned in a trust to

(14:12):
avoid probate. If the trust is properly drafted, it's also
going to protect that asset from future nursing home claims.
But it's very important for the parent to retain I
think of it as a set of handcuff keys. You
want to retain the ability to make changes to it

(14:35):
in the future. I want to be able to change
my trustee, and I want to retain what's called a
special power of appointment so that I can change my beneficiaries.
So if my three children, Mary, Susie and Johnny are
my named beneficiaries, but I retain the ability to make changes.

(14:58):
What that means is that their interests are not legally
vested such that their creditors there soon to be expouses,
cannot have an interest in the trust assets.

Speaker 3 (15:16):
So, you know, I think there.

Speaker 2 (15:18):
Are some intergenerational considerations here when we're dealing with matrimonial
I want to get to great divorce and second marriages,
but before we do, I do want to know your thoughts.
Joe on the Andy Byron case, the now former CEO

(15:42):
of Astronomer. You know what, when I first saw this video,
I was telling Anne before we went on the air,
I thought it was fake. I mean, their reaction to
that camera was just so over the top. I thought
it was kind of like a stunt, And now we know,

(16:03):
you know, unfortunately it was not. How do you see
this playing out in a divorce when there is some
like over the top level of humiliation. Do you think
that this is going to alter like a property distribution?

Speaker 4 (16:25):
Well, look, it's I think it's tragic all around. Firstly,
because there are families involved. You know, this is a
fairly significant level of humiliation and exposure that we don't
usually see. As far as the issue of adultery or infidelity.

(16:48):
It does not impact under our law. It does not
impact the distribution of property, it doesn't impact the level
of support, spousal support, child support. So it is legally
really irrelevant, except that we now have a spouse who

(17:09):
is angry and upset, and that's going to make those
you know, that particular case extremely difficult to resolve. More time,
more money will be spent on a case like that
typically where there's infidelity. So it's never it's never a

(17:31):
thing that will impact the financial aspect other than we've
now got a client on one side who is looking
for blood perhaps well.

Speaker 2 (17:42):
And I think that in and of itself can result
in a bigger settlement, you know, and a lot of
it is going to depend on whether there was a prenup,
and you know, some prenups, as you know, Joe, have
an infidelity penalty clause where we say, in the event

(18:05):
of future infidelity, one party walks away with let's say
sixty percent of the assets, and that would typically go
into an agreement when we have reason to know about
the storied, checkered past of our perspective new spouse, Okay,

(18:27):
second marriages, I.

Speaker 4 (18:29):
Just watch I hate those clauses because now you're now
doing something that we try to avoid, you know, in
twenty ten, which is we don't want to be out
there proving infidelity, right, So now and how do you
define infidelity? Right? But we'll move on.

Speaker 2 (18:48):
Second marriages. The divorce rate for second and subsequent marriages
is over sixty percent. Are you seeing more late in
life divorces? We're calling them gray divorce and we've all
just read about Hugh Jackman who is officially divorced after

(19:10):
a two year process. Are you seeing more gray divorce?

Speaker 3 (19:18):
We are?

Speaker 4 (19:19):
I think the statistics spare out. That's grade divorces, which
are I think technically ARP indicated that they consider a
grade divorce anyone over fifty. I think that those are,
you know, the most common that we're seeing in long
term marriages, twenty twenty five year marriages, and they present

(19:41):
some issues that are different than younger people. Obviously, you know,
we're not going to see issues related to custody and
child support generally speaking, but there are other other challenges
with those those.

Speaker 2 (19:56):
That demographics absolutely, and if anyone listening is thinking about
taking the plunge again, I am reminded that love is
lovelier perhaps the second time around, but it is also
a lot more complicated, and I urge you to get

(20:17):
a prenup if you are entering into a second marriage.
This is critically important because we have fewer working years
ahead of us from which to financially recover from a
devastating divorce, and we want to make sure that we

(20:38):
are not on the hook for a partner's future long
term care stay. So if my new spouse who's eighty
two needs to be in a nursing facility, we all
need to remember that Medicare and the Medicare Supplement only
cover the first one hundred day. After this, we are

(21:02):
looking at sixteen thousand dollars a month for good skilled
nursing facilities in our area. So the prenup is where
we want to lay out that we both have made
long term care insurance provisions, and we want to iron
out what the living arrangements are going to be after

(21:27):
the marriage is over, whether that's because of a divorce
or because of a death. Who is going to get
the house and do we give the other one a
right of occupancy? And how do we balance the competing
needs between our adult children and our new spouse. So

(21:47):
you know, a lot of thorny issues to work out.
And I'm sure Joe, that you recommend that your senior
client's about to take the plunge again enter in to
a prenup.

Speaker 4 (22:02):
I do for the most part. Yeah, I mean, we
do a lot of prenups, and certainly second marriages is
a big area where we do it. And one thing
that you touched on the occupancy of the home that
becomes a really crucial part of the prenup.

Speaker 2 (22:19):
Absolutely because the new spouse is promising, oh, you know, honey,
I'll take care of your children. And whether they have
no intention of taking care of the children, or they
develop a dementia related illness later and they forget to
take care of my children, it's incumbent upon us to

(22:41):
deal with that.

Speaker 3 (22:42):
And I like to do it within.

Speaker 2 (22:44):
A trust and say that the house goes to my
children sub check too, not a life estate, but a
limited right of occupancy for the new spouse until the
earlier of their voluntary departure, their death, their permanent stay
in a nursing facility. And maybe I also say their

(23:07):
remarriage right. If my new spouse is getting remarried, let
them go live in her.

Speaker 3 (23:13):
House and then the children will get it.

Speaker 2 (23:16):
Listen, Joe, you have been a wealth of information, and
I have to tell you I invited you on the
program because we had occasion to speak last week about
a mutual client, and I was just so impressed with
how reasonable you were and how you were going out

(23:37):
of your way to keep legal fees down for your client.
And I've already referred you a case, and I just
think you're terrific.

Speaker 3 (23:48):
How can people reach you?

Speaker 4 (23:52):
Appreciate it? I look forward to working with you, and
I appreciate you having me on the show. Thank you.

Speaker 3 (23:56):
How can people reach you?

Speaker 4 (23:59):
Oh? I didn't hear you say that's so you can
reach me at five one six eight seven seven eight thousand,
or our website is soklaw dot com.

Speaker 3 (24:11):
Thanks so much.

Speaker 2 (24:12):
And if you're driving and you weren't able to write
down his number, reach out to me during the week
my lawyeran dot com and you can email me through
the website and I'll give you Joseph's contact info. Joseph DeMarco,
hope you will be back on the program and have
a great day.

Speaker 4 (24:32):
Sounds great, you too.

Speaker 3 (24:33):
Thanks here okay. In our few remaining minutes.

Speaker 2 (24:37):
I want to pivot to the Big Beautiful Bill, which
is now the Big Beautiful Law, and one of the
things that it does that affects a lot of my
clients is that it raised the estate tax threshold to
fifteen million per person. This bill says that it permanently

(25:03):
raises the estate tax threshold, but I think what all
of us know is that what one administration gives, a
subsequent administration can take away. So for anyone who is
below fifteen million in terms of your gross taxable estate,
this does not mean that you can tune out of

(25:26):
this conversation, because if you engaged in any type of
a state tax planning in the past twenty years, you
need to make sure that you're not inadvertently giving your
heirs a capital gains problem. So imagine back in two

(25:47):
thousand and two, when the estate tax threshold was one million.
If you had at that time one point five million
in gross estate assets, the tax planning advice would have
been to remove five hundred thousand from your gross taxable estate.

(26:10):
Right you wanted to limit the amount of your estate
to what would be covered by the then estate tax
credit of one million. But when we removed the five
hundred thousand and either gave it directly to children, which

(26:31):
I never advise people do. I recommend that you put
it into an estate tax trust. But the price, the
poison pill for getting the asset out of the estate
was carryover basis for capital gains tax purposes. So if
I bought ge stock for twenty dollars a share and

(26:55):
the basis was sixty dollars or the fair market value
rather was sixty dollars a share when I transferred it,
the airs are stuck forever more with my original cost basis.
And way back in those days, we would weigh the
capital gains rate, which historically was much lower it was

(27:19):
in the teens as opposed to the estate tax rate
which was around the order of forty percent. So we
gladly took the capital gains hit to avoid the estate
tax hit. Fast forward to twenty twenty five, we can
pull that five hundred thousand back into the estate so

(27:43):
that when it goes to the airs, preferably through a trust,
the heirs take it free of estate taxes and free
of capital gains taxes.

Speaker 3 (27:55):
We will resurrect.

Speaker 2 (27:57):
The step up in basis for capital gains tax purposes.
We also want to look at the Medicaid law, and
the administration perhaps correctly points out that seniors are going
to be unaffected by the Medicaid cuts because the cuts

(28:21):
are directed to people who don't want to work.

Speaker 3 (28:25):
And there's a new work requirement in the.

Speaker 2 (28:28):
Big Beautiful Bill that affects adults from the age of
nineteen to sixty four. How does that affect seniors? It
very clearly affects seniors because Medicaid is a shared state
federal program and the Big Beautiful Bill puts on the
state the requirement to administer the work requirement program, so

(28:55):
that cannot help but take money away from state Medicaid budget,
and that will affect seniors. So I think anyone who
can is very well advised to look into long term
care insurance. And with that, we are just about out

(29:17):
of time. I want to thank Anne Woolsey for being
with us today. Thank you for your input and shaping
the issues that we covered, and I hope that you
folks reach out to me during the week with ideas
you may have for next week. You can reach me
through Instagram, at my lawyer an or through the website

(29:41):
my lawyer and dot com.

Speaker 3 (29:44):
Thanks everyone for being with us.

Speaker 2 (29:46):
Hope you have a great day.

Speaker 1 (29:54):
The proceeding program was sponsored by New York Priority Medical Care.
The proceeding was a podcast. iHeartRadio's hosting of this podcast
constitutes neither an endorsement of the products offered or the
ideas expressed