April 12, 2026 • 29 mins
The Laws of your Money with Ann-Margaret Episode 48.
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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. 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 (00:25):
Hello, and welcome to the Laws of your Money. This
is a program dedicated to protecting you and your families
from legal and financial mayhem. When it comes to personal finance,
I think the most important thing is protecting yourself legally,
(00:47):
because what does it matter how brilliantly I invest in,
how diligently I save if there is a greater than
forty percent chance of losing assets to a law, long
term illness, and expensive divorce taxes. This can be capital
gains taxes or estate taxes, not to mention ordinary lawsuits.
(01:13):
We are living in the most litigious society known to mankind,
so it is incumbent upon all of us to learn
how to protect ourselves, to build a financial wall around ourselves.
(01:34):
I think we all have lurking legal land minds in
our lives. Whether we're in a second marriage concerned about
blended family warfare. Later on, do we have an elderly
relative and we're concerned about a nursing home taking their property.
So we're going to talk about ways to help you, logical,
(01:59):
common sense ways that you can protect yourselves from the
crazies out there. I am asset protection attorney and former
New York State legislator and Margaret Carosa, joined today by
my esteemed co host, colleague and friend, the Reverend Paul Slatkis.
(02:22):
Welcome back, Paul, Hello mare So. I encourage you folks.
If you have specific questions, issues, comments, shoot me a
DM on Instagram. I check it through the show and
my Instagram is at my lawyer an So, Paul, I
(02:45):
have a compliment for you.
Speaker 3 (02:46):
Boy.
Speaker 2 (02:47):
I actually got a call in my office this past
week by a woman who identified herself as a listener
of the show, and I was all excited. I thought
she's calling to book an appointment to come in, and
she was calling to find out your eligibility status, your
(03:09):
your your voice seduced.
Speaker 3 (03:11):
Her and she didn't see my picture. Oh no, she
saw the picture.
Speaker 2 (03:16):
No no, no, no, yeah, go on my Instagram there's
a picture of us, Paul, you look great in the picture.
Speaker 3 (03:24):
Makeup. No, no, well.
Speaker 2 (03:26):
I have a compliment for you.
Speaker 3 (03:28):
Oh my god.
Speaker 2 (03:29):
We ran into each other this morning on the street
right outside of the iHeart studio, and before I recognized
who you were, my first thought was, oh, there was
a handsome, well dressed man.
Speaker 3 (03:45):
That's because I was taking a picture of Anne's books.
Speaker 2 (03:51):
Noils, you're you're reminding me of a tiny tim song.
But I will spare the listener's toe tiptoe through the
tool of Yeah, so reach out to us if you
have any questions during the show. I want to start
off with we are in peak real estate sale season
(04:14):
right people are listing their homes, and some people are
making the decision not to list their homes based on
the prospect of paying a ton of capital gains taxes.
And I think there's some misinformation out there about selling
your home and what capital gains applies. So I'm not
(04:38):
putting you on the spot, but I am just to
see what a person of above average intelligence what you
know about the capital gains If you bought a house
for fifty thousand dollars and you sell it for five
hundred and fifty thousand dollars. What are you pay paying
(05:00):
capital gains taxes on?
Speaker 3 (05:02):
Well, first, I think you can apply, well, the fixed
our up your things towards. So it's a five hundred
thousand dollars increase from five to fifty to fifty five
hundred thousand, I would say I fixed it up for
seventeen billion dollars. Yeah, anything, But the point is I
think it's the five hundred if I didn't do anything.
Speaker 2 (05:22):
Okay, So if it is your primary residence for two
out of the last five years prior to the sale,
you get to deduct two hundred and fifty thousand. So
you take your purchase price, you're correct, you add capital improvements.
It would be lovely if you can document the capital improvements.
(05:45):
If you can't, then the rule of thumb is don't
be piggish about what you choose to deduct. You don't
want to be audited. And then on top of that number,
you get to add two hundred and fifty. If your
a couple and both names are on the deed, you
(06:07):
get to deduct five hundred thousand. Gone is the old
roll over to ask, Yeah, they must have done some
bang up education job in the nineteen eighties, because a
lot of people think this is still the law that
if you sell your primary residence and year yeah, within
(06:28):
I think it was eighteen months, and roll it over
into a new primary residence, you got to defer the
gain that has gone by the wayside. The only rollover
that exists today is for investment property. So if I
sell a commercial mixed use or a multifamily and I
(06:50):
roll the proceeds over into another investment property, I get
to defer all of the gain. Okay, The real confusion
occurs when we're dealing with real estate and someone has died.
So if I am a widow and my husband and
(07:14):
I bought the home after January first of nineteen seventy seven,
upon the death of my husband, we got his entire
one half of the house, all of the gains eliminated,
so there was a full step up in basis on
(07:36):
the first decedents one half of the house. However, there's
a special rule that may apply if you are a
widow and you and your late husband bought the home
prior to January first of nineteen seventy seven, you may
(07:59):
have got a one hundred percent step up in basis
upon the first spouse's passing. This is known as the
Gallon Steam rule. And if you need more information, reach
out to me at my Lawyer Ann or call me
(08:19):
at the office seven one eight two two four four
seven four six, or visit me on my website my
Lawyerann dot com for more information about that. Now, what
happens if you put the home in your children's names
(08:41):
prior to sale? And the answer is you're totally screwed
with capital gains attacked. I never a smart thing to do.
They could be the nicest kids in the world. But
if the home is in their name and you sell it,
no one gets a two hundred fifty thousand dollars exemption.
(09:01):
So you're looking at a bloodbath in terms of capital gains.
What happens if you sell your primary residence from a
trust and there is a ton of scuttle but out
there right now, because about three years ago, there was
(09:27):
a high level attorney, formerly with a white shoe firm
in Manhattan who was conducting seminars and he claimed that
you could get appreciated assets out of your gross taxable estate,
yet you would somehow still get a step up in
(09:49):
basis upon death and when it comes to estate taxes
and capital gains taxes. We can imagine that we're at
a carnival playing whack a mole. You kind of have
to pick your poison. You can't at a certain level
of wealth, you can't get away from all of the taxes.
So faced with a forty percent to state tax and
(10:14):
a twenty two percent combined state federal capital gains, people
would typically opt for the capital gains taxes. So anyway,
this guy was saying, you can do away with all
of the taxes. So in response to this individual conducting seminars,
(10:38):
there was a revenue ruling that the IRS put out
that says, if you transfer appreciated property to an irrevocable trust,
you do not get the capital gains eliminated upon death.
You do not get a full step up in basis
(10:59):
at death. So what I want everyone to know is,
if you have a revocable trust, all revocable trusts will
give you this magical step up in basis for capital
gains taxes at death. All purely irrevocable trusts will say
(11:26):
that the property goes to the named beneficiaries with so
called carryover basis for capital gains purposes meaning that mom's
original purchase price in the real estate or appreciated stock
is what the new beneficiaries tax basis is. Those two
(11:49):
things are true. Okay, So again, revocable trust you always
get the step up at death. Purely irrevocable trust you
never get the step up. In between those two types
of trusts lives My favorite category, and that is hybrid trust.
(12:11):
A revocable trust is very appealing psychologically. I can be
my own trustee. I can put the assets in, I
can take the assets out. But if I can freely
get my hot little hands on the assets in the
trust whenever I want, so can my creditors. Right, So,
(12:32):
we do want to think about a slightly stronger trust
if in addition to avoiding probate, we also want to
protect the assets from liability such as long term care
or trip and fall liabilities. If we have a secondary property,
(12:54):
a weekend or vacation property that we don't occupy all
the time, and we're concerned about someone hurting themselves on
the property and then suing us, we want to have
a little bit of a stronger trust. So when you're
in the hybrid category of trust, you must appoint someone
(13:15):
else to be the trustee. But if the trust is
drafted properly, that trustee can't do anything without your written
permission during your life. Number one. Number two, you want
to retain the ability to remove and replace that trustee
if they look at you cock guide, or if they
(13:37):
move across the country. You need to retain the ability
to make changes if in addition to those changes, you
also retain all of the income rights to the property.
Let's say you put a multifamily property into the trust.
The trust should say that you retain all of the
(13:58):
rental income. When you retain all of those powers, I
promise you that at death that property will go to
your named beneficiaries, free of probate, free of nursing home leans,
provided it had been in there for the federal five
(14:19):
year baking period, and it will go to them free
of all capital gains taxes. So putting the real estate
in this hybrid type asset protection trust, in my humble opinion,
is a no brainer. There's nothing you can't do. There
(14:44):
may be different dance steps involved, but you have total
freedom with total flexibility. That being said, I would only
put the real estate into start. So when we think
about as protection, I want everyone to think in terms
of three categories of assets. You have retirement accounts A
(15:09):
TDA and IRA four one K A four H three B.
Whatever your retirement account is. The principle of that has
federal ARISSA protection, so that is the best place to
have your assets. Once you do the Wroth conversion, you've
(15:31):
lost your asset protection. There still may be tax advantages.
I'm not telling you not to do a Wroth conversion,
but definitely speak with your attorney, your accountant about the particulars.
So we have the retirement that's already beautiful. You have
your real estate, which should be in an asset protection
(15:53):
trust to render that beautiful. Which leaves you with your
third category of as sets your non retirement savings, your
money market, your CD your non retirement brokerage account, your
life insurance. For most of us, we want to keep
these assets in our own names because to the extent
(16:19):
that we're not going to feel the difference with the
real estate in the trust. I very much would feel
the difference if I put my last five dollars in
the trust and now I have to go to Paul
as my trustee for money to go get my hair
done or go out to lunch. It's just not a
fun way to live. So don't let the perfect be
(16:40):
the enemy of the good. Protect your real estate, keep
your savings in your own name, but appoint someone as
your power of attorney that if you become sick, then
they can throw your liquid assets in the trust. Do
we have a far year problem, Yes, but the vast
(17:04):
majority of us don't want to go to a nursing home.
You only have a five year baking issue with nursing
home medical assistance applications. New York State where I practice,
is the last state in the United States that currently
has no lookback period if we are applying for a
(17:28):
home care program. So a lot to unpack there. But
remember the three categories of assets. There's more information about
that on my website, my lawyeran dot com. If you
want to come into the office and bring your documents
(17:49):
and we'll look through what you've done already with a
pack of post it notes, I'll send you home labeling
the post it notes and we give a check mark
this document is okay. This document should be updated. And
(18:10):
when you call the office, I did get a DM asking.
If I call your office, am I going to be
shuttled off to another attorney, or do I get to
meet with you? And the answer is, if you ask
to meet with me, you get to meet with me.
I'm not a solo practitioner. There are other attorneys in
(18:34):
the firm, but it would be up to you who
you meet with.
Speaker 3 (18:38):
Well, when I called, and initially I asked for Anne,
I got Anne, and I got all those post it notes.
Speaker 2 (18:45):
You've got the post it I asked.
Speaker 3 (18:47):
The audience one question, and I want you to raise
your hand. Okay, I don't see you, but I want
to raise your hand. How many people have a trust?
That's my question. Think about it. If you're raising your hand,
and just think about what and just said.
Speaker 2 (19:02):
I think it's easy to put off right. It's like
a dental appointment. It's something that we know we should
do at some point. But it's very easy to say, Okay,
I'll get around to that in a couple of months
or whatever. But yeah, when you called to make the appointment,
(19:23):
at least come in get some information about it. I
am generally available in beautiful Albany on Mondays most Fridays
are in the Port Jefferson office and in between is
the Bayside office, beautiful Bayside.
Speaker 3 (19:44):
You have three beautiful places from the.
Speaker 2 (19:46):
Fictional home of Archie Bunker right, and you work done
all in the family.
Speaker 3 (19:51):
That was my beginning way back in the seventies with
Norman Lear. Yep.
Speaker 2 (19:55):
Love it. Yeah, so be super careful at you know
what city you book the appointment. In all of these years,
we only had one snaffoo. But I was in Albany
getting ready to meet with new clients and I see
(20:16):
the Bayside office number on my cell phone and I
just thought, uh oh, So these clients were in Bayside
ready to meet with me, and I was in Albany
ready to meet with them. But you know what we did.
We did FaceTime on the cell phones and we had
a lovely meeting. But that receptionist is no longer with us,
(20:40):
and this is a true story. She was drinking during
the day. Now do you remember being in my conference
room which is a very beautiful conference Yes, wood burning
fireplace and there are built in liquor cabinets. Now, this
(21:00):
office was an attorney's office going back decades, and back
in the sixties you would actually offer your client across
from you, you know, a little shot. And now I
think it's just charming to have all of these liquor bottles.
(21:23):
It's a conversation piece. But this receptionist was, you know,
doing more than looking at the liquor bottles. And one
day she came in to the office to witness a
will and when she walked into the conference room, she
just smelled like a distillery. Yeah. So so that and
(21:45):
screwing up the Albany appointment, she's no longer there. Okay,
let's switch gears and talk about Mayor Mom Donnie's tax
proposals that are are causing a lot of indigestion, and
a lot of people are coming in they want to
update their documents based on the mayor's proposal that New
(22:11):
York State lower the estate tax threshold to seven hundred
and fifty thousand dollars with a top rate. The top
New York state a state tax rate is currently sixteen percent.
The mayor would like to raise that to fifty percent,
so you would be looking at paying fifty percent of
(22:35):
every dollar over seven hundred and fifty thousand dollars. And
that is just one of his proposals. He is also
proposing raising corporate taxes and this past week Jamie Diamond,
in his annual letter to shareholders, without calling the mayor
(22:57):
out by name, took aim at a lot of these
tax proposals, and Jamie Diamond says that in the past year,
six thousand jobs at JP Morgan Chase have moved from
(23:18):
New York to Texas. That is sobering. This is one
employer moved six thousand high paying jobs out of New
York City. It's just very, very sobering. So to my
clients and friends who were going nuts about this proposal.
(23:43):
And the question is, how can the mayor affect statewide legislation.
Anything having to do with taxes has to go through
the New York State legislature, and so far Governor Hockel
has indicated that she's not on board with these proposals.
But I would think at the very least it gives
(24:05):
my former colleagues in Albany cover to do something with
the taxes, right saying we didn't go as far as
the mayor wanted to go. So all of that being said,
the single most important thing that any of us can
do to be able to react to changing legislation is
(24:26):
to build flexibility into the documents. You should never do
a totally irrevocable trust. Things happen, relationships change, beneficiaries have problems.
You need to be able to put your hands back
(24:48):
in there and tweak it. So, you know, what can
New York City do? Short of raising a lot of
taxes to cover the looming budget deficit? What can New
York City do?
Speaker 3 (25:04):
You ask me, Well, I thought i've here.
Speaker 2 (25:08):
I think you know, we talked a little bit about
this couple of shows ago. We need to look at
these the liability crisis. You know, New York City has
paid out two billion dollars so that covers payouts and insurance.
(25:30):
Two billion dollars goes a long way to meeting a
five billion dollar budget gap. Right And this past week,
FedEx filed suit against a small law firm in Brooklyn,
and the suit is brought under the Rico legislation, which
(25:53):
is usually reserved for mobsters, saying that this law law
firm is involved in scams and staged accidents. So one
of the cases that the lawsuit highlights is a FedEx
driver tapped the bumper of the car in front of them.
(26:17):
The driver had an open cup of coffee in the car.
The coffee did not spill Okay, to give you an
idea of how gentle this tap was, they got out
of the car, no first responders were called, and lo
and behold. In the days following this little tap, somehow
(26:40):
the person who was tapped retained this law firm, and
this law firm loaned the person money for all of
the healthcare expenses that they suddenly needed. They needed a
lot of chiropractic care, and they also needed three surgeries.
(27:03):
So who is going through a surgery for money. It's
just a very sad turn of events. But it's just
super coincidental, and you know, hopefully this does something to
curb the spate of staged accidents that that costs all
(27:27):
of us money.
Speaker 3 (27:28):
And so then they sued fed X to get lots
of money.
Speaker 2 (27:33):
Yeah yeah, yeah, yeah, yeah yeah. Of course they sued
FedEx for a bunch. And you know, companies historically just
viewed this as a cost of doing business and you
could get a settlement. And that's what a lot of
these nefarious attorneys banked on. You bring a lawsuit, they'll
(27:56):
throw a little money at you to go away, and
they don't even have to go to trial. So I
think more and more defendants are going to trial and
hoping they have a right thinking.
Speaker 3 (28:09):
Trury and they don't take If this is so, I
don't know that I've heard about this. I've never used it.
But and they don't take any money the law firm,
and they only take a percentage of what they bring in.
Speaker 2 (28:19):
Yeah, so the contingents twenty.
Speaker 3 (28:21):
Thirty percent of whatever they sue them for.
Speaker 2 (28:24):
Yeah, either thirty percent or one third of the recovery.
Speaker 3 (28:28):
Yeah, the work for win.
Speaker 2 (28:31):
And they get to reimburse themselves for all of the
money for the.
Speaker 3 (28:35):
Commercials on television commercials.
Speaker 2 (28:38):
Yeah, you turn so, Paul, you have something exciting coming up,
I do tell.
Speaker 3 (28:44):
You all right. Well, earth Day April twenty second has
been around since nineteen seventy. We are partnering with the
founders of earth Day, as well as the New York
City Controller Mark Levine, who's supportive of us for a while.
And come down to Times Square on April twenty second,
(29:06):
two to seven pm and or watch us on YouTube
dot com slash Good News Broadcast. We have a five
hour live worldwide podcast with that.
Speaker 2 (29:16):
Everyone. Thank you so much for joining us, and I
hope you visit me on Instagram at my lawyer and
where you can check out my book, This Smart Woman's
Guide to Building and Protecting Wealth. Have a great day, everyone.
Speaker 1 (29:42):
The preceding program was sponsored by New York Priority Medical Care.
The preceeding 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. 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 (00:25):
Hello, and welcome to the Laws of your Money. This
is a program dedicated to protecting you and your families
from legal and financial mayhem. When it comes to personal finance,
I think the most important thing is protecting yourself legally,
(00:47):
because what does it matter how brilliantly I invest in,
how diligently I save if there is a greater than
forty percent chance of losing assets to a law, long
term illness, and expensive divorce taxes. This can be capital
gains taxes or estate taxes, not to mention ordinary lawsuits.
(01:13):
We are living in the most litigious society known to mankind,
so it is incumbent upon all of us to learn
how to protect ourselves, to build a financial wall around ourselves.
(01:34):
I think we all have lurking legal land minds in
our lives. Whether we're in a second marriage concerned about
blended family warfare. Later on, do we have an elderly
relative and we're concerned about a nursing home taking their property.
So we're going to talk about ways to help you, logical,
(01:59):
common sense ways that you can protect yourselves from the
crazies out there. I am asset protection attorney and former
New York State legislator and Margaret Carosa, joined today by
my esteemed co host, colleague and friend, the Reverend Paul Slatkis.
(02:22):
Welcome back, Paul, Hello mare So. I encourage you folks.
If you have specific questions, issues, comments, shoot me a
DM on Instagram. I check it through the show and
my Instagram is at my lawyer an So, Paul, I
(02:45):
have a compliment for you.
Speaker 3 (02:46):
Boy.
Speaker 2 (02:47):
I actually got a call in my office this past
week by a woman who identified herself as a listener
of the show, and I was all excited. I thought
she's calling to book an appointment to come in, and
she was calling to find out your eligibility status, your
(03:09):
your your voice seduced.
Speaker 3 (03:11):
Her and she didn't see my picture. Oh no, she
saw the picture.
Speaker 2 (03:16):
No no, no, no, yeah, go on my Instagram there's
a picture of us, Paul, you look great in the picture.
Speaker 3 (03:24):
Makeup. No, no, well.
Speaker 2 (03:26):
I have a compliment for you.
Speaker 3 (03:28):
Oh my god.
Speaker 2 (03:29):
We ran into each other this morning on the street
right outside of the iHeart studio, and before I recognized
who you were, my first thought was, oh, there was
a handsome, well dressed man.
Speaker 3 (03:45):
That's because I was taking a picture of Anne's books.
Speaker 2 (03:51):
Noils, you're you're reminding me of a tiny tim song.
But I will spare the listener's toe tiptoe through the
tool of Yeah, so reach out to us if you
have any questions during the show. I want to start
off with we are in peak real estate sale season
(04:14):
right people are listing their homes, and some people are
making the decision not to list their homes based on
the prospect of paying a ton of capital gains taxes.
And I think there's some misinformation out there about selling
your home and what capital gains applies. So I'm not
(04:38):
putting you on the spot, but I am just to
see what a person of above average intelligence what you
know about the capital gains If you bought a house
for fifty thousand dollars and you sell it for five
hundred and fifty thousand dollars. What are you pay paying
(05:00):
capital gains taxes on?
Speaker 3 (05:02):
Well, first, I think you can apply, well, the fixed
our up your things towards. So it's a five hundred
thousand dollars increase from five to fifty to fifty five
hundred thousand, I would say I fixed it up for
seventeen billion dollars. Yeah, anything, But the point is I
think it's the five hundred if I didn't do anything.
Speaker 2 (05:22):
Okay, So if it is your primary residence for two
out of the last five years prior to the sale,
you get to deduct two hundred and fifty thousand. So
you take your purchase price, you're correct, you add capital improvements.
It would be lovely if you can document the capital improvements.
(05:45):
If you can't, then the rule of thumb is don't
be piggish about what you choose to deduct. You don't
want to be audited. And then on top of that number,
you get to add two hundred and fifty. If your
a couple and both names are on the deed, you
(06:07):
get to deduct five hundred thousand. Gone is the old
roll over to ask, Yeah, they must have done some
bang up education job in the nineteen eighties, because a
lot of people think this is still the law that
if you sell your primary residence and year yeah, within
(06:28):
I think it was eighteen months, and roll it over
into a new primary residence, you got to defer the
gain that has gone by the wayside. The only rollover
that exists today is for investment property. So if I
sell a commercial mixed use or a multifamily and I
(06:50):
roll the proceeds over into another investment property, I get
to defer all of the gain. Okay, The real confusion
occurs when we're dealing with real estate and someone has died.
So if I am a widow and my husband and
(07:14):
I bought the home after January first of nineteen seventy seven,
upon the death of my husband, we got his entire
one half of the house, all of the gains eliminated,
so there was a full step up in basis on
(07:36):
the first decedents one half of the house. However, there's
a special rule that may apply if you are a
widow and you and your late husband bought the home
prior to January first of nineteen seventy seven, you may
(07:59):
have got a one hundred percent step up in basis
upon the first spouse's passing. This is known as the
Gallon Steam rule. And if you need more information, reach
out to me at my Lawyer Ann or call me
(08:19):
at the office seven one eight two two four four
seven four six, or visit me on my website my
Lawyerann dot com for more information about that. Now, what
happens if you put the home in your children's names
(08:41):
prior to sale? And the answer is you're totally screwed
with capital gains attacked. I never a smart thing to do.
They could be the nicest kids in the world. But
if the home is in their name and you sell it,
no one gets a two hundred fifty thousand dollars exemption.
(09:01):
So you're looking at a bloodbath in terms of capital gains.
What happens if you sell your primary residence from a
trust and there is a ton of scuttle but out
there right now, because about three years ago, there was
(09:27):
a high level attorney, formerly with a white shoe firm
in Manhattan who was conducting seminars and he claimed that
you could get appreciated assets out of your gross taxable estate,
yet you would somehow still get a step up in
(09:49):
basis upon death and when it comes to estate taxes
and capital gains taxes. We can imagine that we're at
a carnival playing whack a mole. You kind of have
to pick your poison. You can't at a certain level
of wealth, you can't get away from all of the taxes.
So faced with a forty percent to state tax and
(10:14):
a twenty two percent combined state federal capital gains, people
would typically opt for the capital gains taxes. So anyway,
this guy was saying, you can do away with all
of the taxes. So in response to this individual conducting seminars,
(10:38):
there was a revenue ruling that the IRS put out
that says, if you transfer appreciated property to an irrevocable trust,
you do not get the capital gains eliminated upon death.
You do not get a full step up in basis
(10:59):
at death. So what I want everyone to know is,
if you have a revocable trust, all revocable trusts will
give you this magical step up in basis for capital
gains taxes at death. All purely irrevocable trusts will say
(11:26):
that the property goes to the named beneficiaries with so
called carryover basis for capital gains purposes meaning that mom's
original purchase price in the real estate or appreciated stock
is what the new beneficiaries tax basis is. Those two
(11:49):
things are true. Okay, So again, revocable trust you always
get the step up at death. Purely irrevocable trust you
never get the step up. In between those two types
of trusts lives My favorite category, and that is hybrid trust.
(12:11):
A revocable trust is very appealing psychologically. I can be
my own trustee. I can put the assets in, I
can take the assets out. But if I can freely
get my hot little hands on the assets in the
trust whenever I want, so can my creditors. Right, So,
(12:32):
we do want to think about a slightly stronger trust
if in addition to avoiding probate, we also want to
protect the assets from liability such as long term care
or trip and fall liabilities. If we have a secondary property,
(12:54):
a weekend or vacation property that we don't occupy all
the time, and we're concerned about someone hurting themselves on
the property and then suing us, we want to have
a little bit of a stronger trust. So when you're
in the hybrid category of trust, you must appoint someone
(13:15):
else to be the trustee. But if the trust is
drafted properly, that trustee can't do anything without your written
permission during your life. Number one. Number two, you want
to retain the ability to remove and replace that trustee
if they look at you cock guide, or if they
(13:37):
move across the country. You need to retain the ability
to make changes if in addition to those changes, you
also retain all of the income rights to the property.
Let's say you put a multifamily property into the trust.
The trust should say that you retain all of the
(13:58):
rental income. When you retain all of those powers, I
promise you that at death that property will go to
your named beneficiaries, free of probate, free of nursing home leans,
provided it had been in there for the federal five
(14:19):
year baking period, and it will go to them free
of all capital gains taxes. So putting the real estate
in this hybrid type asset protection trust, in my humble opinion,
is a no brainer. There's nothing you can't do. There
(14:44):
may be different dance steps involved, but you have total
freedom with total flexibility. That being said, I would only
put the real estate into start. So when we think
about as protection, I want everyone to think in terms
of three categories of assets. You have retirement accounts A
(15:09):
TDA and IRA four one K A four H three B.
Whatever your retirement account is. The principle of that has
federal ARISSA protection, so that is the best place to
have your assets. Once you do the Wroth conversion, you've
(15:31):
lost your asset protection. There still may be tax advantages.
I'm not telling you not to do a Wroth conversion,
but definitely speak with your attorney, your accountant about the particulars.
So we have the retirement that's already beautiful. You have
your real estate, which should be in an asset protection
(15:53):
trust to render that beautiful. Which leaves you with your
third category of as sets your non retirement savings, your
money market, your CD your non retirement brokerage account, your
life insurance. For most of us, we want to keep
these assets in our own names because to the extent
(16:19):
that we're not going to feel the difference with the
real estate in the trust. I very much would feel
the difference if I put my last five dollars in
the trust and now I have to go to Paul
as my trustee for money to go get my hair
done or go out to lunch. It's just not a
fun way to live. So don't let the perfect be
(16:40):
the enemy of the good. Protect your real estate, keep
your savings in your own name, but appoint someone as
your power of attorney that if you become sick, then
they can throw your liquid assets in the trust. Do
we have a far year problem, Yes, but the vast
(17:04):
majority of us don't want to go to a nursing home.
You only have a five year baking issue with nursing
home medical assistance applications. New York State where I practice,
is the last state in the United States that currently
has no lookback period if we are applying for a
(17:28):
home care program. So a lot to unpack there. But
remember the three categories of assets. There's more information about
that on my website, my lawyeran dot com. If you
want to come into the office and bring your documents
(17:49):
and we'll look through what you've done already with a
pack of post it notes, I'll send you home labeling
the post it notes and we give a check mark
this document is okay. This document should be updated. And
(18:10):
when you call the office, I did get a DM asking.
If I call your office, am I going to be
shuttled off to another attorney, or do I get to
meet with you? And the answer is, if you ask
to meet with me, you get to meet with me.
I'm not a solo practitioner. There are other attorneys in
(18:34):
the firm, but it would be up to you who
you meet with.
Speaker 3 (18:38):
Well, when I called, and initially I asked for Anne,
I got Anne, and I got all those post it notes.
Speaker 2 (18:45):
You've got the post it I asked.
Speaker 3 (18:47):
The audience one question, and I want you to raise
your hand. Okay, I don't see you, but I want
to raise your hand. How many people have a trust?
That's my question. Think about it. If you're raising your hand,
and just think about what and just said.
Speaker 2 (19:02):
I think it's easy to put off right. It's like
a dental appointment. It's something that we know we should
do at some point. But it's very easy to say, Okay,
I'll get around to that in a couple of months
or whatever. But yeah, when you called to make the appointment,
(19:23):
at least come in get some information about it. I
am generally available in beautiful Albany on Mondays most Fridays
are in the Port Jefferson office and in between is
the Bayside office, beautiful Bayside.
Speaker 3 (19:44):
You have three beautiful places from the.
Speaker 2 (19:46):
Fictional home of Archie Bunker right, and you work done
all in the family.
Speaker 3 (19:51):
That was my beginning way back in the seventies with
Norman Lear. Yep.
Speaker 2 (19:55):
Love it. Yeah, so be super careful at you know
what city you book the appointment. In all of these years,
we only had one snaffoo. But I was in Albany
getting ready to meet with new clients and I see
(20:16):
the Bayside office number on my cell phone and I
just thought, uh oh, So these clients were in Bayside
ready to meet with me, and I was in Albany
ready to meet with them. But you know what we did.
We did FaceTime on the cell phones and we had
a lovely meeting. But that receptionist is no longer with us,
(20:40):
and this is a true story. She was drinking during
the day. Now do you remember being in my conference
room which is a very beautiful conference Yes, wood burning
fireplace and there are built in liquor cabinets. Now, this
(21:00):
office was an attorney's office going back decades, and back
in the sixties you would actually offer your client across
from you, you know, a little shot. And now I
think it's just charming to have all of these liquor bottles.
(21:23):
It's a conversation piece. But this receptionist was, you know,
doing more than looking at the liquor bottles. And one
day she came in to the office to witness a
will and when she walked into the conference room, she
just smelled like a distillery. Yeah. So so that and
(21:45):
screwing up the Albany appointment, she's no longer there. Okay,
let's switch gears and talk about Mayor Mom Donnie's tax
proposals that are are causing a lot of indigestion, and
a lot of people are coming in they want to
update their documents based on the mayor's proposal that New
(22:11):
York State lower the estate tax threshold to seven hundred
and fifty thousand dollars with a top rate. The top
New York state a state tax rate is currently sixteen percent.
The mayor would like to raise that to fifty percent,
so you would be looking at paying fifty percent of
(22:35):
every dollar over seven hundred and fifty thousand dollars. And
that is just one of his proposals. He is also
proposing raising corporate taxes and this past week Jamie Diamond,
in his annual letter to shareholders, without calling the mayor
(22:57):
out by name, took aim at a lot of these
tax proposals, and Jamie Diamond says that in the past year,
six thousand jobs at JP Morgan Chase have moved from
(23:18):
New York to Texas. That is sobering. This is one
employer moved six thousand high paying jobs out of New
York City. It's just very, very sobering. So to my
clients and friends who were going nuts about this proposal.
(23:43):
And the question is, how can the mayor affect statewide legislation.
Anything having to do with taxes has to go through
the New York State legislature, and so far Governor Hockel
has indicated that she's not on board with these proposals.
But I would think at the very least it gives
(24:05):
my former colleagues in Albany cover to do something with
the taxes, right saying we didn't go as far as
the mayor wanted to go. So all of that being said,
the single most important thing that any of us can
do to be able to react to changing legislation is
(24:26):
to build flexibility into the documents. You should never do
a totally irrevocable trust. Things happen, relationships change, beneficiaries have problems.
You need to be able to put your hands back
(24:48):
in there and tweak it. So, you know, what can
New York City do? Short of raising a lot of
taxes to cover the looming budget deficit? What can New
York City do?
Speaker 3 (25:04):
You ask me, Well, I thought i've here.
Speaker 2 (25:08):
I think you know, we talked a little bit about
this couple of shows ago. We need to look at
these the liability crisis. You know, New York City has
paid out two billion dollars so that covers payouts and insurance.
(25:30):
Two billion dollars goes a long way to meeting a
five billion dollar budget gap. Right And this past week,
FedEx filed suit against a small law firm in Brooklyn,
and the suit is brought under the Rico legislation, which
(25:53):
is usually reserved for mobsters, saying that this law law
firm is involved in scams and staged accidents. So one
of the cases that the lawsuit highlights is a FedEx
driver tapped the bumper of the car in front of them.
(26:17):
The driver had an open cup of coffee in the car.
The coffee did not spill Okay, to give you an
idea of how gentle this tap was, they got out
of the car, no first responders were called, and lo
and behold. In the days following this little tap, somehow
(26:40):
the person who was tapped retained this law firm, and
this law firm loaned the person money for all of
the healthcare expenses that they suddenly needed. They needed a
lot of chiropractic care, and they also needed three surgeries.
(27:03):
So who is going through a surgery for money. It's
just a very sad turn of events. But it's just
super coincidental, and you know, hopefully this does something to
curb the spate of staged accidents that that costs all
(27:27):
of us money.
Speaker 3 (27:28):
And so then they sued fed X to get lots
of money.
Speaker 2 (27:33):
Yeah yeah, yeah, yeah, yeah yeah. Of course they sued
FedEx for a bunch. And you know, companies historically just
viewed this as a cost of doing business and you
could get a settlement. And that's what a lot of
these nefarious attorneys banked on. You bring a lawsuit, they'll
(27:56):
throw a little money at you to go away, and
they don't even have to go to trial. So I
think more and more defendants are going to trial and
hoping they have a right thinking.
Speaker 3 (28:09):
Trury and they don't take If this is so, I
don't know that I've heard about this. I've never used it.
But and they don't take any money the law firm,
and they only take a percentage of what they bring in.
Speaker 2 (28:19):
Yeah, so the contingents twenty.
Speaker 3 (28:21):
Thirty percent of whatever they sue them for.
Speaker 2 (28:24):
Yeah, either thirty percent or one third of the recovery.
Speaker 3 (28:28):
Yeah, the work for win.
Speaker 2 (28:31):
And they get to reimburse themselves for all of the
money for the.
Speaker 3 (28:35):
Commercials on television commercials.
Speaker 2 (28:38):
Yeah, you turn so, Paul, you have something exciting coming up,
I do tell.
Speaker 3 (28:44):
You all right. Well, earth Day April twenty second has
been around since nineteen seventy. We are partnering with the
founders of earth Day, as well as the New York
City Controller Mark Levine, who's supportive of us for a while.
And come down to Times Square on April twenty second,
(29:06):
two to seven pm and or watch us on YouTube
dot com slash Good News Broadcast. We have a five
hour live worldwide podcast with that.
Speaker 2 (29:16):
Everyone. Thank you so much for joining us, and I
hope you visit me on Instagram at my lawyer and
where you can check out my book, This Smart Woman's
Guide to Building and Protecting Wealth. Have a great day, everyone.
Speaker 1 (29:42):
The preceding program was sponsored by New York Priority Medical Care.
The preceeding 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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