March 15, 2026 • 30 mins
The Laws of your Money with Ann-Margaret Episode 46.
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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.
Speaker 2 (00:14):
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 and Margaret Carosa.
Speaker 3 (00:26):
Hello, and welcome to the Laws of your Money. This
is a program dedicated to protecting you from legal and
financial mayhem when it comes to personal finance. I believe
there is nothing more important than protecting ourselves.
Speaker 4 (00:50):
Legally, because what does.
Speaker 3 (00:52):
It matter how brilliantly I save and invest if there
is a greater than four percent chance of losing assets
to a long term illness, an expensive breakup. Taxes This
can be capital gains taxes, estate taxes, not to mention
(01:17):
ordinary lawsuits. We are living in the most litigious society
that the world has ever known, so it is incumbent
upon all of us to learn how to protect ourselves
from outside forces as well as inner demons. I am
(01:43):
asset protection attorney and former New York State assemblywoman, and
Margaret Carosa joined today again by my esteemed colleague and
co host, the Reverend Paul Slatcus. Welcome to the program.
Speaker 5 (01:57):
Paul, Hello Ann, Margaret, Happy.
Speaker 4 (02:00):
Day, Happy Day.
Speaker 3 (02:02):
I believe we all have possible legal landminds in our lives,
whether we have an elderly relative and we're concerned about
them losing their home to a nursing home, or we
have a blended family situation and we're concerned about will
(02:25):
wars later on after we pass away. We might have
a special needs loved one, and there are very specific
ways that we need to protect them so that they're
not bounced off of programs.
Speaker 4 (02:42):
To which they would otherwise qualify.
Speaker 3 (02:44):
Yet we don't want to totally disinherit them.
Speaker 4 (02:48):
Right.
Speaker 5 (02:49):
Well, I'm gonna laugh just a little bit because I
watched a movie called Greedy with Kurt Douglas and Michael J. Fox,
and the entire family was arguing, fighting, almost killing each
other over Uncle Joe's potential twenty five million dollars fighting
over it.
Speaker 3 (03:07):
No, when you mix money and loved ones, the results
can be explosive. And in my office, fights with family
members are not uncommon, and my staff has had to
call nine to one one.
Speaker 4 (03:26):
When fisticuffs break out.
Speaker 3 (03:28):
So you know, sometimes keeping things simple, which is a
refrain that I hear a lot from new clients saying,
I don't want to do a trust that's too complicated.
It gives me a headache to think about it. I
just want to.
Speaker 4 (03:44):
Keep things simple.
Speaker 3 (03:46):
Well, in the case of a special needs loved one,
you can't keep it simple if one of my children
has a developmental disability, is on the autism spectrum, has
a psychiatric diagnosis, or it is just a financial train wreck.
(04:08):
If I exclude them from the estate in order to
quote unquote keep it simple and leave it up to
the other kids to take.
Speaker 4 (04:17):
Care of that person.
Speaker 3 (04:19):
I'm really just hoping for the best, and anything can happen.
So we really want to educate ourselves so that we
have a good result, so that we enjoy and protect
the money. In the first instance, this is not all
about death. This is about ensuring that the assets are
(04:41):
there for me.
Speaker 4 (04:42):
And I think, you know, we should have an.
Speaker 3 (04:45):
Official in the news segment in this show. And this
past week, you and I both read about Mickey Rourke. Okay,
I am old enough to remember when he was a
lead you know, box office title and Mickey Rourke this
(05:06):
week is being evicted from his rented apartment in California.
He has sixty thousand dollars in back rent that's due,
and one of his management team started to go fund
me campaign and very quickly raised one hundred thousand dollars,
(05:29):
which Mickey Rourke refuses to accept. So, you know, just
the question is often how do people blow through millions
and millions of dollars?
Speaker 5 (05:43):
You know, I looked up a couple people who you
would not imagine our destitute word destitute. Mark Twain Okay,
one of the most infamous writers of all times due
to his chronic poor business, a judgment and high risk investments,
most devastating failed because his moneies all basically went into
(06:05):
mechanical typesetting machinery. So the thing he loved writing, but
to make a machine that would help him write, he
bows through most of his money. Interesting, So we are
passion sometimes could be your demise.
Speaker 3 (06:23):
Well listen, I think you know, I say money alone
does not solve money problems, right, So I suspect that
mister Rorke had financial problems before coming into millions and
millions of dollars. We look at Nicholas Cage. He is
(06:47):
a poster child for blowing through over one hundred million dollars.
It said he had fifteen fully functioning properties, two of
which were castles. Right, Mickey Rourke had a gold plated
Rolls Royce. You know, there is no amount of money
(07:13):
that's limitless.
Speaker 4 (07:15):
You know.
Speaker 3 (07:15):
And my first book the title was Love and Money,
Protecting Yourself from angry ex's wacky relatives, con artists and
inner demons. So I think that both mister Orc and
mister Cage and mister Twain had some inner demons, you know,
(07:36):
spending money wildly.
Speaker 5 (07:39):
I got another one, Michael Tyson four hundred million dollars.
Speaker 4 (07:43):
He went through four hundred million.
Speaker 5 (07:46):
Yeah, what they say here, no jewelry, mansions, his lifestyle,
birthday parties, all kinds of different things.
Speaker 3 (07:55):
Well, they say Nicholas Cage spent three million dollars on
a dinosaur skull, and to make matters worse, it turned
out that it was stolen and he had to give
it back. So also in the news this week, Kathy Ireland,
(08:17):
do you know who that is?
Speaker 5 (08:18):
I do have interviewed you. She's very so my words
are going to be from what I know. Okay, what
a successful woman she is. Absolutely, We's illustrated and to
all her accomplishments.
Speaker 4 (08:32):
Millions of dollars.
Speaker 3 (08:34):
And I guess while she was busy being interviewed by you,
she wasn't really watching what her yes, I know, but
what her financial managers were up to.
Speaker 4 (08:46):
And she is suing them.
Speaker 3 (08:48):
This week for having lost tens of millions of dollars.
Now she was reportedly worth four hundred million dollars. She
has a clothing line, she has a furniture line. Really
really brilliant business woman. But she alleges in the lawsuit
(09:08):
that these two financial advisors used all of her money
for themselves. And she discovered this when she was trying
to give her son a loan for a down payment.
She realized that she had no savings, She had no
retirement savings any longer, and she's suing them. So I
(09:32):
think that obviously I don't know the details of the case.
I'm not professionally involved in it. I only know what
I read in the paper from her motion papers filing
the lawsuit. But I think you know a takeaway from
a story like that is, no matter how much you
(09:53):
trust someone, you cannot take your eyes off of your
life savings. Right, she worked with these two advisors for
over three decades, and there may have come a point
where they were upset that they weren't being paid enough
(10:14):
or whatever. The you know, the mental rationale was. It
could very well be that they didn't start off looking
to defraud her and take her money, but apparently she's
alleging that's what happened.
Speaker 5 (10:28):
Plus, you need to legalize yourself everybody. You need to
create a trust, you need to oversee, You need to
know what your financial scenario is.
Speaker 3 (10:39):
Yeah, you can't just walk away from it no matter
how much you trust someone, because that person can change.
That person that you are putting all of your trust
in has a forty percent chance of developing a cognitive disability.
Speaker 4 (10:57):
Right, So the person.
Speaker 3 (10:59):
That you're in trusting with your affairs, they may be
with Alzheimer's and you don't know it. So I guess
I have a general philosophical question for you, Paul, as
an interfaith minister and a student of human behavior, do
(11:20):
you think most people are honest or dishonest?
Speaker 5 (11:27):
I'm the Good News broadcast, so I have a kind
of thing. I definitely think most people are are kind
of giving, loving and caring. Most people, there's eight billion
people but even if you took ten percent, Richie Havens
when I did Woodstock said ten percent, that's eight hundred million.
I mean, I leave seven point two billion people.
Speaker 3 (11:48):
But let's go back to prehistoric times, right before there
was any money. And okay, you had food and I
didn't have food.
Speaker 4 (12:04):
Were my jenes more likely to be carried on?
Speaker 3 (12:09):
If I stole some of your food to eat?
Speaker 4 (12:14):
Is stealing? Not to some extent? Hardwired?
Speaker 3 (12:18):
And and what what is the uh the line here
of demarcation? You know, I was in a bank Friday
and there were pens there. Should I have asked for
permission when I took a pen? Not to put you
on the.
Speaker 5 (12:34):
Spot, Paul, I've got a lot of chase pens. I'll
tell you right now.
Speaker 3 (12:38):
You you gave me a cough drop, and you have
told me on prior occasions. This is not the same
type of cough drop you gave me two weeks ago.
But you did tell me that you have a friend
who takes them from his place of employment and gives
you some.
Speaker 5 (12:59):
I think it was Carnegie who but them to you.
I'm sorry, give them to you there?
Speaker 4 (13:10):
Really?
Speaker 5 (13:10):
Oh you got They have a whole thing for people
to have a because they don't want people coughing during
the show.
Speaker 3 (13:16):
Icy, I'm not eating purloined cough drop. Here's the word,
an essay to word. So, no matter how much we
trust someone, we need to build our own guard rails.
(13:38):
And the question of trust comes up a lot in
my office when we're talking about putting the home in
a trust to protect it from a nursing home, from
capital gains taxes, from estate taxes, as well as general
(13:58):
trip and fall liability. And the question repeatedly comes up,
why do I have to go through the exercise of
doing a trust. I have one daughter, I trust her
with my life. I'm simply going to put the house
in her name. Okay, this question comes up, I would
(14:19):
say on a weekly basis. And the little cautionary tale
that longtime listeners of the show are familiar with involved
a retired judge who wanted to keep things simple and
he put his home in his daughter's name. He trusted
(14:40):
his daughter with his life. He had no qualms that
she was going to kick him out or that anything
bad was going to happen.
Speaker 4 (14:49):
And do you remember what happened?
Speaker 5 (14:53):
Actually? I can remember.
Speaker 3 (14:55):
Okay, Okay, So maybe I'm not putting everyone driving to sleep.
If if Paul doesn't remember the upshot of the story,
he put the home in the daughter's name, he was
right to trust her. She didn't give it a second thought.
She still viewed the home as being morally her father's home.
(15:15):
And she died in a car accident. Ohoy, And what
did she not get around to doing. She was among
the fifty percent of Americans who don't have a will.
Speaker 4 (15:29):
And if you don't.
Speaker 3 (15:30):
Have a will, your state of residence has one for you,
and you might not like the result. So this young
woman in her thirties had no will. So her husband
was her heir at law. And now this retired judge's
(15:50):
home is owned by his son in law and he, yeah, no,
a true story. And he thought the son in la
law would naturally make things right and put it back
in his name. And not only did he not do that,
a couple of months after the funeral, he announced to
(16:11):
his father in law he was going to start dating
again and it was going to be very awkward bringing
women to the house, you know, with his dead wife's
father there. So there you have it. He put the
father in law out, And who did this retired judge
have to blame who probably, yes, himself, himself himself to blame,
(16:38):
you know, by profession.
Speaker 5 (16:39):
Yeah, Well, what would he have done? I mean, if
you have a substitute, if somebody so, you say, your daughter,
do you put a second person in the will?
Speaker 4 (16:53):
Will?
Speaker 5 (16:53):
I mean in the trust?
Speaker 4 (16:55):
Well, he did not put his home in a trust.
Speaker 3 (16:58):
That he did a simple quit claim deed that a
friend from the courthouse did for him as a quote
unquote courtesy. Okay, he should have done a properly drafted
trust where the home went into the trust. The daughter
was the beneficiary, but he should and could have retained
(17:24):
lifetime use and occupancy and ownership rights.
Speaker 5 (17:33):
A revocable trust no revocable. It is for the probate irrevocable.
Speaker 4 (17:41):
Okay.
Speaker 3 (17:42):
So a revocable trust allows me to put the assets
in and I can take the assets out. It's very
appealing psychologically, but a revocable trust acting alone does not
protect the home from slip and fall, liability or nursing
(18:04):
home claims. It needs to be a stronger trust, but
it does not have to.
Speaker 4 (18:09):
Be totally irrevocable.
Speaker 3 (18:12):
In the book The Smart Woman's Guide to Building and
Protecting Wealth, the laws of your money. I go through
different scenarios that you may identify with to determine which.
Speaker 4 (18:28):
Type of trust is right for you.
Speaker 3 (18:32):
So between revocable, which gives you zero asset protection, and
totally irrevocable, which is not a fun way to live.
It's as rotten as it sounds. You can't change any
of the provisions. In between those two extremes is a
trust that should work for you, that you put the
(18:55):
real estate in and it gives you one hundred percent
of the retained rental income. If it's a multifamily property,
it gives you one hundred percent of the use and
the ownership rights to your primary residence, which in turn
will allow you to retain your real estate property tax exemptions.
Speaker 4 (19:20):
Do you know how I know that? No, No, no.
Speaker 3 (19:24):
During my misspent youth in the New York.
Speaker 4 (19:27):
State legislature, I wrote that I did.
Speaker 3 (19:30):
That was my bill in nineteen ninety eight, and it
became part of the budget that was signed by then
Governor Pataki that year. And it says that if the
trust you put your primary residence into gives you one
hundred percent of the ownership and occupancy rights, you get
(19:50):
to keep your tax exemptions. Now we're at the time
of year where people are going to their accountants and.
Speaker 4 (19:57):
Tax preparers to have their tax is.
Speaker 3 (20:01):
Done, and if you sold real estate last year, you
need to be conversant with some capital gains rules. You
cannot assume that your CPA is conversant with all of
these rules. I am not a CPA, but I am
(20:24):
an accredited provider of CPA continuing education by the New
York State Education Department, so I coach CPAs on the
following law. I think everyone knows. When you sell your
primary residence, provided that it was your primary residence for
(20:47):
any two out of the five years prior to sale,
you get to exclude two hundred and fifty thousand from
the capital gains of the property. A married couple get
to exclude five hundred thousand dollars.
Speaker 4 (21:03):
From the gains.
Speaker 3 (21:04):
There's a common misperception out there that you don't have
to pay any capital gains if you roll over the
proceeds into a new home within eighteen months. That was
the old law, and they must have done a bang
up education job about that, because a lot of people
(21:25):
still think.
Speaker 4 (21:26):
That's the law. That now that rollover is.
Speaker 3 (21:30):
Only for investment property, and it's called a ten thirty
one exchange. But for the primary residence, as good as
it gets is five hundred thousand dollars. Now, what if
you are a widow or widower selling the property. What
happens to the decedans one half in terms of capital gains?
(21:56):
And this depends on the year that.
Speaker 4 (22:00):
The couple bought the house.
Speaker 3 (22:04):
If the couple bought the house in the eighties, let's
say they bought it for one hundred thousand dollars and
the husband dies and then the wife goes to sell
it for six hundred thousand dollars, you got a step
up in basis on the first decedents one half of
(22:29):
the property. So his one half got an elevator ride
up to three hundred thousand, and the surviving spouse gets
to use her two hundred and fifty thousand exemption on
her one half of the games. But if the couple
purchased the property prior to nineteen seventy seven, and this
(22:55):
is the case for a lot of my clients, and
one of them passes away, you may be able to
claim a full a one hundred percent step up in
basis on the property. Now, this is a little nuanced,
and I just want to alert you all. If you're
(23:16):
dealing with the sale of a parent's property and you
lost a parent and your folks bought the house prior
to nineteen seventy seven, please raise this with your accountant.
And the decision of the Court of Appeals case was Gallinstein,
(23:37):
and the irs has never challenged that they go along
with this. The other tax point that I want to
bring up is that a normal asset protection trust, if
it holds income producing property, does not have to do
(23:58):
its own income tax return. You want to elect what's
called grandor trust status so that the rental income or
other investment income is picked up on your human being
ten forty return and you do not have to do
(24:19):
a separate ten forty one return. The last bit of
wonky tax advice that I do want to share because
it comes up a lot, is there is a revenue
ruling out there that says the beneficiaries of an irrevocable trust.
Speaker 4 (24:43):
Do not get a step up in basis.
Speaker 3 (24:47):
Now, for most people who are doing trust planning, they
should not be doing a totally irrevocable trust. They should
be doing a trust that retains a lot of breathing room.
I want to retain the ability to remove and replace
(25:08):
my trustee. I want to retain the ability to change
my beneficiaries. Those retained powers pull it back from the
edge of the cliff into from being a totally irrevocable trust.
So this revenue ruling correctly holds that a totally irrevocable
(25:33):
trust will deprive the children of a step up and
basis later for capital gains purposes. But if you have
a properly drafted asset protection trust that gives you a
lot of retained power and control, then your beneficiaries will
(25:56):
most definitely get a full step up in basis upon
the death of the parent.
Speaker 5 (26:05):
The one thing I have to say I must say
it is that everybody should be everybody listening out there
should really think about you or family and your future
at any age because a lot of young people making
a lot of money. You're right, right, So this is
this is not a you know, sixty seventy a year
(26:26):
old decision. This is a young preoper's decision, especially they
have kids, and.
Speaker 4 (26:33):
You know it's all you know.
Speaker 3 (26:37):
I say all the time, this is our last act
as a parent, Right, do I want to leave a
tangled mess for the next generation.
Speaker 4 (26:51):
Do I want that to be their last.
Speaker 3 (26:54):
Memory of me? No, this is our last act as
a parent. And I invite everyone listening. If you live
in New York State. I'm only licensed in New York State,
come visit me at the Bayside office, the Poor Jefferson office,
or our listeners in the Capital District.
Speaker 4 (27:13):
Visit me in Albany. You can visit me on.
Speaker 3 (27:17):
Instagram at my lawyer and and during that first meeting,
we sit down with the documents you've created so far,
and in a sort of primitive fashion, with a pack
of post it notes, I will say this document is
a okay, you don't need to do anything with this,
(27:38):
and then what would your.
Speaker 4 (27:40):
Next steps be.
Speaker 3 (27:42):
You don't necessarily have to take those steps right away,
but you want to inform yourselves about what else you
should do to protect your kids from unnecessary taxes. Right,
we all need to pay taxes. That's mandatory. But over
paying taxes is what Paul stupido it. Absolutely, there's no
(28:07):
rule saying we need to pay extra taxes.
Speaker 5 (28:11):
One question, just and you can make changes if you properly.
I mean, if you do it at thirty years old,
you can make Say at forty you can make a change.
At fifty you could make a change.
Speaker 4 (28:23):
Is that right? You can and you should make changes.
Speaker 3 (28:25):
Let's say that you know I name you as my trustee,
and we have a falling out, or or you move
to another state or another country, or you develop a
cognitive impairment. Right, I may want to put my hands
(28:46):
back into the planning and move things around, and you
can most easily do that. When the document says that
I can change the trustee, I can change the original beneficiaries.
And if I can change those beneficiaries, that means that
(29:07):
the transfers into the trust are not completed gifts, so
I don't have to do a gift tax return. And
it also means that the assets in the trust are
immune from my beneficiaries liabilities. If I can pull Fred out,
then Fred's divorce does.
Speaker 4 (29:29):
Not jeopardize my assets.
Speaker 5 (29:33):
Marco.
Speaker 3 (29:34):
So with that, I encourage you hop on to Amazon
or Barnesannoble dot com and check out The Smart Woman's
Guide to Building and Protecting Wealth and visit me on
Instagram at my lawyer Ann. Have a great day everyone.
Speaker 1 (29:57):
The preceding program was sponsored by New y 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
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.
Speaker 2 (00:14):
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 and Margaret Carosa.
Speaker 3 (00:26):
Hello, and welcome to the Laws of your Money. This
is a program dedicated to protecting you from legal and
financial mayhem when it comes to personal finance. I believe
there is nothing more important than protecting ourselves.
Speaker 4 (00:50):
Legally, because what does.
Speaker 3 (00:52):
It matter how brilliantly I save and invest if there
is a greater than four percent chance of losing assets
to a long term illness, an expensive breakup. Taxes This
can be capital gains taxes, estate taxes, not to mention
(01:17):
ordinary lawsuits. We are living in the most litigious society
that the world has ever known, so it is incumbent
upon all of us to learn how to protect ourselves
from outside forces as well as inner demons. I am
(01:43):
asset protection attorney and former New York State assemblywoman, and
Margaret Carosa joined today again by my esteemed colleague and
co host, the Reverend Paul Slatcus. Welcome to the program.
Speaker 5 (01:57):
Paul, Hello Ann, Margaret, Happy.
Speaker 4 (02:00):
Day, Happy Day.
Speaker 3 (02:02):
I believe we all have possible legal landminds in our lives,
whether we have an elderly relative and we're concerned about
them losing their home to a nursing home, or we
have a blended family situation and we're concerned about will
(02:25):
wars later on after we pass away. We might have
a special needs loved one, and there are very specific
ways that we need to protect them so that they're
not bounced off of programs.
Speaker 4 (02:42):
To which they would otherwise qualify.
Speaker 3 (02:44):
Yet we don't want to totally disinherit them.
Speaker 4 (02:48):
Right.
Speaker 5 (02:49):
Well, I'm gonna laugh just a little bit because I
watched a movie called Greedy with Kurt Douglas and Michael J. Fox,
and the entire family was arguing, fighting, almost killing each
other over Uncle Joe's potential twenty five million dollars fighting
over it.
Speaker 3 (03:07):
No, when you mix money and loved ones, the results
can be explosive. And in my office, fights with family
members are not uncommon, and my staff has had to
call nine to one one.
Speaker 4 (03:26):
When fisticuffs break out.
Speaker 3 (03:28):
So you know, sometimes keeping things simple, which is a
refrain that I hear a lot from new clients saying,
I don't want to do a trust that's too complicated.
It gives me a headache to think about it. I
just want to.
Speaker 4 (03:44):
Keep things simple.
Speaker 3 (03:46):
Well, in the case of a special needs loved one,
you can't keep it simple if one of my children
has a developmental disability, is on the autism spectrum, has
a psychiatric diagnosis, or it is just a financial train wreck.
(04:08):
If I exclude them from the estate in order to
quote unquote keep it simple and leave it up to
the other kids to take.
Speaker 4 (04:17):
Care of that person.
Speaker 3 (04:19):
I'm really just hoping for the best, and anything can happen.
So we really want to educate ourselves so that we
have a good result, so that we enjoy and protect
the money. In the first instance, this is not all
about death. This is about ensuring that the assets are
(04:41):
there for me.
Speaker 4 (04:42):
And I think, you know, we should have an.
Speaker 3 (04:45):
Official in the news segment in this show. And this
past week, you and I both read about Mickey Rourke. Okay,
I am old enough to remember when he was a
lead you know, box office title and Mickey Rourke this
(05:06):
week is being evicted from his rented apartment in California.
He has sixty thousand dollars in back rent that's due,
and one of his management team started to go fund
me campaign and very quickly raised one hundred thousand dollars,
(05:29):
which Mickey Rourke refuses to accept. So, you know, just
the question is often how do people blow through millions
and millions of dollars?
Speaker 5 (05:43):
You know, I looked up a couple people who you
would not imagine our destitute word destitute. Mark Twain Okay,
one of the most infamous writers of all times due
to his chronic poor business, a judgment and high risk investments,
most devastating failed because his moneies all basically went into
(06:05):
mechanical typesetting machinery. So the thing he loved writing, but
to make a machine that would help him write, he
bows through most of his money. Interesting, So we are
passion sometimes could be your demise.
Speaker 3 (06:23):
Well listen, I think you know, I say money alone
does not solve money problems, right, So I suspect that
mister Rorke had financial problems before coming into millions and
millions of dollars. We look at Nicholas Cage. He is
(06:47):
a poster child for blowing through over one hundred million dollars.
It said he had fifteen fully functioning properties, two of
which were castles. Right, Mickey Rourke had a gold plated
Rolls Royce. You know, there is no amount of money
(07:13):
that's limitless.
Speaker 4 (07:15):
You know.
Speaker 3 (07:15):
And my first book the title was Love and Money,
Protecting Yourself from angry ex's wacky relatives, con artists and
inner demons. So I think that both mister Orc and
mister Cage and mister Twain had some inner demons, you know,
(07:36):
spending money wildly.
Speaker 5 (07:39):
I got another one, Michael Tyson four hundred million dollars.
Speaker 4 (07:43):
He went through four hundred million.
Speaker 5 (07:46):
Yeah, what they say here, no jewelry, mansions, his lifestyle,
birthday parties, all kinds of different things.
Speaker 3 (07:55):
Well, they say Nicholas Cage spent three million dollars on
a dinosaur skull, and to make matters worse, it turned
out that it was stolen and he had to give
it back. So also in the news this week, Kathy Ireland,
(08:17):
do you know who that is?
Speaker 5 (08:18):
I do have interviewed you. She's very so my words
are going to be from what I know. Okay, what
a successful woman she is. Absolutely, We's illustrated and to
all her accomplishments.
Speaker 4 (08:32):
Millions of dollars.
Speaker 3 (08:34):
And I guess while she was busy being interviewed by you,
she wasn't really watching what her yes, I know, but
what her financial managers were up to.
Speaker 4 (08:46):
And she is suing them.
Speaker 3 (08:48):
This week for having lost tens of millions of dollars.
Now she was reportedly worth four hundred million dollars. She
has a clothing line, she has a furniture line. Really
really brilliant business woman. But she alleges in the lawsuit
(09:08):
that these two financial advisors used all of her money
for themselves. And she discovered this when she was trying
to give her son a loan for a down payment.
She realized that she had no savings, She had no
retirement savings any longer, and she's suing them. So I
(09:32):
think that obviously I don't know the details of the case.
I'm not professionally involved in it. I only know what
I read in the paper from her motion papers filing
the lawsuit. But I think you know a takeaway from
a story like that is, no matter how much you
(09:53):
trust someone, you cannot take your eyes off of your
life savings. Right, she worked with these two advisors for
over three decades, and there may have come a point
where they were upset that they weren't being paid enough
(10:14):
or whatever. The you know, the mental rationale was. It
could very well be that they didn't start off looking
to defraud her and take her money, but apparently she's
alleging that's what happened.
Speaker 5 (10:28):
Plus, you need to legalize yourself everybody. You need to
create a trust, you need to oversee, You need to
know what your financial scenario is.
Speaker 3 (10:39):
Yeah, you can't just walk away from it no matter
how much you trust someone, because that person can change.
That person that you are putting all of your trust
in has a forty percent chance of developing a cognitive disability.
Speaker 4 (10:57):
Right, So the person.
Speaker 3 (10:59):
That you're in trusting with your affairs, they may be
with Alzheimer's and you don't know it. So I guess
I have a general philosophical question for you, Paul, as
an interfaith minister and a student of human behavior, do
(11:20):
you think most people are honest or dishonest?
Speaker 5 (11:27):
I'm the Good News broadcast, so I have a kind
of thing. I definitely think most people are are kind
of giving, loving and caring. Most people, there's eight billion
people but even if you took ten percent, Richie Havens
when I did Woodstock said ten percent, that's eight hundred million.
I mean, I leave seven point two billion people.
Speaker 3 (11:48):
But let's go back to prehistoric times, right before there
was any money. And okay, you had food and I
didn't have food.
Speaker 4 (12:04):
Were my jenes more likely to be carried on?
Speaker 3 (12:09):
If I stole some of your food to eat?
Speaker 4 (12:14):
Is stealing? Not to some extent? Hardwired?
Speaker 3 (12:18):
And and what what is the uh the line here
of demarcation? You know, I was in a bank Friday
and there were pens there. Should I have asked for
permission when I took a pen? Not to put you
on the.
Speaker 5 (12:34):
Spot, Paul, I've got a lot of chase pens. I'll
tell you right now.
Speaker 3 (12:38):
You you gave me a cough drop, and you have
told me on prior occasions. This is not the same
type of cough drop you gave me two weeks ago.
But you did tell me that you have a friend
who takes them from his place of employment and gives
you some.
Speaker 5 (12:59):
I think it was Carnegie who but them to you.
I'm sorry, give them to you there?
Speaker 4 (13:10):
Really?
Speaker 5 (13:10):
Oh you got They have a whole thing for people
to have a because they don't want people coughing during
the show.
Speaker 3 (13:16):
Icy, I'm not eating purloined cough drop. Here's the word,
an essay to word. So, no matter how much we
trust someone, we need to build our own guard rails.
(13:38):
And the question of trust comes up a lot in
my office when we're talking about putting the home in
a trust to protect it from a nursing home, from
capital gains taxes, from estate taxes, as well as general
(13:58):
trip and fall liability. And the question repeatedly comes up,
why do I have to go through the exercise of
doing a trust. I have one daughter, I trust her
with my life. I'm simply going to put the house
in her name. Okay, this question comes up, I would
(14:19):
say on a weekly basis. And the little cautionary tale
that longtime listeners of the show are familiar with involved
a retired judge who wanted to keep things simple and
he put his home in his daughter's name. He trusted
(14:40):
his daughter with his life. He had no qualms that
she was going to kick him out or that anything
bad was going to happen.
Speaker 4 (14:49):
And do you remember what happened?
Speaker 5 (14:53):
Actually? I can remember.
Speaker 3 (14:55):
Okay, Okay, So maybe I'm not putting everyone driving to sleep.
If if Paul doesn't remember the upshot of the story,
he put the home in the daughter's name, he was
right to trust her. She didn't give it a second thought.
She still viewed the home as being morally her father's home.
(15:15):
And she died in a car accident. Ohoy, And what
did she not get around to doing. She was among
the fifty percent of Americans who don't have a will.
Speaker 4 (15:29):
And if you don't.
Speaker 3 (15:30):
Have a will, your state of residence has one for you,
and you might not like the result. So this young
woman in her thirties had no will. So her husband
was her heir at law. And now this retired judge's
(15:50):
home is owned by his son in law and he, yeah, no,
a true story. And he thought the son in la
law would naturally make things right and put it back
in his name. And not only did he not do that,
a couple of months after the funeral, he announced to
(16:11):
his father in law he was going to start dating
again and it was going to be very awkward bringing
women to the house, you know, with his dead wife's
father there. So there you have it. He put the
father in law out, And who did this retired judge
have to blame who probably, yes, himself, himself himself to blame,
(16:38):
you know, by profession.
Speaker 5 (16:39):
Yeah, Well, what would he have done? I mean, if
you have a substitute, if somebody so, you say, your daughter,
do you put a second person in the will?
Speaker 4 (16:53):
Will?
Speaker 5 (16:53):
I mean in the trust?
Speaker 4 (16:55):
Well, he did not put his home in a trust.
Speaker 3 (16:58):
That he did a simple quit claim deed that a
friend from the courthouse did for him as a quote
unquote courtesy. Okay, he should have done a properly drafted
trust where the home went into the trust. The daughter
was the beneficiary, but he should and could have retained
(17:24):
lifetime use and occupancy and ownership rights.
Speaker 5 (17:33):
A revocable trust no revocable. It is for the probate irrevocable.
Speaker 4 (17:41):
Okay.
Speaker 3 (17:42):
So a revocable trust allows me to put the assets
in and I can take the assets out. It's very
appealing psychologically, but a revocable trust acting alone does not
protect the home from slip and fall, liability or nursing
(18:04):
home claims. It needs to be a stronger trust, but
it does not have to.
Speaker 4 (18:09):
Be totally irrevocable.
Speaker 3 (18:12):
In the book The Smart Woman's Guide to Building and
Protecting Wealth, the laws of your money. I go through
different scenarios that you may identify with to determine which.
Speaker 4 (18:28):
Type of trust is right for you.
Speaker 3 (18:32):
So between revocable, which gives you zero asset protection, and
totally irrevocable, which is not a fun way to live.
It's as rotten as it sounds. You can't change any
of the provisions. In between those two extremes is a
trust that should work for you, that you put the
(18:55):
real estate in and it gives you one hundred percent
of the retained rental income. If it's a multifamily property,
it gives you one hundred percent of the use and
the ownership rights to your primary residence, which in turn
will allow you to retain your real estate property tax exemptions.
Speaker 4 (19:20):
Do you know how I know that? No, No, no.
Speaker 3 (19:24):
During my misspent youth in the New York.
Speaker 4 (19:27):
State legislature, I wrote that I did.
Speaker 3 (19:30):
That was my bill in nineteen ninety eight, and it
became part of the budget that was signed by then
Governor Pataki that year. And it says that if the
trust you put your primary residence into gives you one
hundred percent of the ownership and occupancy rights, you get
(19:50):
to keep your tax exemptions. Now we're at the time
of year where people are going to their accountants and.
Speaker 4 (19:57):
Tax preparers to have their tax is.
Speaker 3 (20:01):
Done, and if you sold real estate last year, you
need to be conversant with some capital gains rules. You
cannot assume that your CPA is conversant with all of
these rules. I am not a CPA, but I am
(20:24):
an accredited provider of CPA continuing education by the New
York State Education Department, so I coach CPAs on the
following law. I think everyone knows. When you sell your
primary residence, provided that it was your primary residence for
(20:47):
any two out of the five years prior to sale,
you get to exclude two hundred and fifty thousand from
the capital gains of the property. A married couple get
to exclude five hundred thousand dollars.
Speaker 4 (21:03):
From the gains.
Speaker 3 (21:04):
There's a common misperception out there that you don't have
to pay any capital gains if you roll over the
proceeds into a new home within eighteen months. That was
the old law, and they must have done a bang
up education job about that, because a lot of people
(21:25):
still think.
Speaker 4 (21:26):
That's the law. That now that rollover is.
Speaker 3 (21:30):
Only for investment property, and it's called a ten thirty
one exchange. But for the primary residence, as good as
it gets is five hundred thousand dollars. Now, what if
you are a widow or widower selling the property. What
happens to the decedans one half in terms of capital gains?
(21:56):
And this depends on the year that.
Speaker 4 (22:00):
The couple bought the house.
Speaker 3 (22:04):
If the couple bought the house in the eighties, let's
say they bought it for one hundred thousand dollars and
the husband dies and then the wife goes to sell
it for six hundred thousand dollars, you got a step
up in basis on the first decedents one half of
(22:29):
the property. So his one half got an elevator ride
up to three hundred thousand, and the surviving spouse gets
to use her two hundred and fifty thousand exemption on
her one half of the games. But if the couple
purchased the property prior to nineteen seventy seven, and this
(22:55):
is the case for a lot of my clients, and
one of them passes away, you may be able to
claim a full a one hundred percent step up in
basis on the property. Now, this is a little nuanced,
and I just want to alert you all. If you're
(23:16):
dealing with the sale of a parent's property and you
lost a parent and your folks bought the house prior
to nineteen seventy seven, please raise this with your accountant.
And the decision of the Court of Appeals case was Gallinstein,
(23:37):
and the irs has never challenged that they go along
with this. The other tax point that I want to
bring up is that a normal asset protection trust, if
it holds income producing property, does not have to do
(23:58):
its own income tax return. You want to elect what's
called grandor trust status so that the rental income or
other investment income is picked up on your human being
ten forty return and you do not have to do
(24:19):
a separate ten forty one return. The last bit of
wonky tax advice that I do want to share because
it comes up a lot, is there is a revenue
ruling out there that says the beneficiaries of an irrevocable trust.
Speaker 4 (24:43):
Do not get a step up in basis.
Speaker 3 (24:47):
Now, for most people who are doing trust planning, they
should not be doing a totally irrevocable trust. They should
be doing a trust that retains a lot of breathing room.
I want to retain the ability to remove and replace
(25:08):
my trustee. I want to retain the ability to change
my beneficiaries. Those retained powers pull it back from the
edge of the cliff into from being a totally irrevocable trust.
So this revenue ruling correctly holds that a totally irrevocable
(25:33):
trust will deprive the children of a step up and
basis later for capital gains purposes. But if you have
a properly drafted asset protection trust that gives you a
lot of retained power and control, then your beneficiaries will
(25:56):
most definitely get a full step up in basis upon
the death of the parent.
Speaker 5 (26:05):
The one thing I have to say I must say
it is that everybody should be everybody listening out there
should really think about you or family and your future
at any age because a lot of young people making
a lot of money. You're right, right, So this is
this is not a you know, sixty seventy a year
(26:26):
old decision. This is a young preoper's decision, especially they
have kids, and.
Speaker 4 (26:33):
You know it's all you know.
Speaker 3 (26:37):
I say all the time, this is our last act
as a parent, Right, do I want to leave a
tangled mess for the next generation.
Speaker 4 (26:51):
Do I want that to be their last.
Speaker 3 (26:54):
Memory of me? No, this is our last act as
a parent. And I invite everyone listening. If you live
in New York State. I'm only licensed in New York State,
come visit me at the Bayside office, the Poor Jefferson office,
or our listeners in the Capital District.
Speaker 4 (27:13):
Visit me in Albany. You can visit me on.
Speaker 3 (27:17):
Instagram at my lawyer and and during that first meeting,
we sit down with the documents you've created so far,
and in a sort of primitive fashion, with a pack
of post it notes, I will say this document is
a okay, you don't need to do anything with this,
(27:38):
and then what would your.
Speaker 4 (27:40):
Next steps be.
Speaker 3 (27:42):
You don't necessarily have to take those steps right away,
but you want to inform yourselves about what else you
should do to protect your kids from unnecessary taxes. Right,
we all need to pay taxes. That's mandatory. But over
paying taxes is what Paul stupido it. Absolutely, there's no
(28:07):
rule saying we need to pay extra taxes.
Speaker 5 (28:11):
One question, just and you can make changes if you properly.
I mean, if you do it at thirty years old,
you can make Say at forty you can make a change.
At fifty you could make a change.
Speaker 4 (28:23):
Is that right? You can and you should make changes.
Speaker 3 (28:25):
Let's say that you know I name you as my trustee,
and we have a falling out, or or you move
to another state or another country, or you develop a
cognitive impairment. Right, I may want to put my hands
(28:46):
back into the planning and move things around, and you
can most easily do that. When the document says that
I can change the trustee, I can change the original beneficiaries.
And if I can change those beneficiaries, that means that
(29:07):
the transfers into the trust are not completed gifts, so
I don't have to do a gift tax return. And
it also means that the assets in the trust are
immune from my beneficiaries liabilities. If I can pull Fred out,
then Fred's divorce does.
Speaker 4 (29:29):
Not jeopardize my assets.
Speaker 5 (29:33):
Marco.
Speaker 3 (29:34):
So with that, I encourage you hop on to Amazon
or Barnesannoble dot com and check out The Smart Woman's
Guide to Building and Protecting Wealth and visit me on
Instagram at my lawyer Ann. Have a great day everyone.
Speaker 1 (29:57):
The preceding program was sponsored by New y 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
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