How does the CPI report impact average Americans?

Chuck Zodda and Marc Fandetti react to the March CPI report that came in hotter than expected and sent markets down. What is happening in the bond market post CPI release? Todd Lutsky joins the show to share his opinion on how to build a successful gifting strategy in an estate plan. Todd also takes calls from the audience about their person retirement plans.

Episode Transcript

(00:00):
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(01:02):
five K Boston is presented by VeteransDevelopment Corporation faces The Financial Exchange with Chuck
Zada and Mark Fandetti, Chuck,Mark and Tucker with you today, and
it is CPI Day here at theFinancial Exchange, is actually CPI Day everywhere.

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We just happened to be some ofthe biggest celebigrants of CPI Day.
The Consumer Price Index from the Bureauof Labor Statistics was released at eight thirty
am Easter this morning, and whatwe saw was that the headline inflation number
came in at point four percent forthe month of March. The core number
came in at point four percent forthe month of March. Both of those

(01:48):
zero point one percent higher than expectationsof point three for the month. And
so what this does is this nowtakes headline CPI including food and fuel and
all those other things, up tothree point five percent over the last twelve
months, while core CPI remains atthree point eight percent. Both of those

(02:09):
numbers are obviously well in excess ofthe two percent target that the FED has
for inflation. And as I've beensaying for a while now, you might
not have noticed, but CPI effectivelybottomed last June. It got down to
three percent over the last twelve months, and it has not been back there,
and this is something that is problematic, not because two percent inflation is

(02:31):
inherently good. I don't think anyof us know, like what the right
rate of inflation is. It's justkind of a dumb thought to even think
that you would know what that is. But I think what we do know
is that higher inflation tends to bemore volatile inflation. And that's why bottoming
out around three percent and subsequently startingto see inflation rising again is caused for

(02:53):
concern for policymakers because the very simplefact is that the only conclusive reason that
we have as to why inflation isbad is that people don't like it.
And there's a good psychological reason forthat. If you are making fifty thousand
dollars a year and you get afive percent raise and you're like, oh,

(03:15):
gee, I'm making fifty two tofive. Now I'm getting, you
know, a nice little bump,And then you sit there and inflation runs
five percent and you're like, hey, I get paid all this extra money.
I got an extra twenty five hundredbucks this year, couldn't buy anything
extra? What gives like this?This is not what it's supposed to be.
It feels bad and that's why policymakersgenerally try to stamp out inflation as

(03:38):
quickly as possible. Is because hey, people don't like it. And it's
one thing to say, Okay,I don't like you know, four or
five percent inflation. But it's whenyou get to higher levels. You know
that nine, ten and eleven,you know we saw nine earlier. That's
where you start to have people beinglike, really uncomfortable. Yeah, it's
symptomatic of bad management, among otherproblems. Economists typically scratch their heads when

(04:00):
they find out people don't like inflation. Well, they've known this, but
there are actual studies done as towhy people don't like inflation. That was
a paper presented at a big conferencelast week on this subject, and the
bottom line is that we don't likeuncertainty. Our wages don't grow with inflation
every week or month. They're indexedtypically only annually. Some people may get

(04:21):
a cola, some people might geta little less, a little more.
It makes long term planning harder.I don't have to give you the reasons
why inflation may have adverse consequences becausewe all experience it. Policy Makers have
decided that two percent is a reasonablegoal for inflation. They think that that
is a level at which it justoperates in the background, just does enough

(04:45):
to grease the wheels of the labormarket. We could talk about what that
means later if there's interest. Anythingmore than that is likely to be viewed
as disruptive. So far this decade, inflation's averaged four and a half percent.
This is the twenty twenties. Sofar this decade. I just had
to make sure I remember, yeah, what decade in the last decade changes
every ten years. In the lastdecade that number was one point seven percent,

(05:09):
so it's a shocking leap. Decadebefore that, nineteen twenty, the
twenty knots, the two thousands,whatever you want to call it, two
point six percent was the average,and if you're curious, in the nineties,
it was two point nine. Inthe eighties, when we were coming
off the very inflationary nineteen seventies,it was five point one. So this
is the highest so far on averagedecade for a year over year change in

(05:30):
CPI that we've experienced since the nineteeneighties, and the nineteen eighties are typically
not remembered as a high inflation decadebecause we were coming off the much higher
inflation nearly seven percent of the nineteenseventies, So for virtually anyone alive today,
it is a bit shocking how muchprices have increased over twenty percent cumulatively
since the start of this decade,and that has to be laid squarely on

(05:54):
the doorstep of the FED. Yeah, I completely agree the upshot, And
look, this is something that we'vebeen talking about for a while is just
hey, the FED, with thatvictory lap that they took in December,
just how how much of a mistakethat was, And even beyond that,

(06:15):
when subsequently receiving two inflation prints thatwere higher than they wanted, basically hand
waving them away and saying, well, you know, this might just be
a bump in the road. Let'snot overreact to this, when hey,
it's one thing if you get thoseprints in the underlying data says yeah,
this might be a bump in aroad. But instead the underlying data was

(06:35):
saying that inflation was broadening out tonew categories and that you had more prices
within the data series rising faster thanthey were before. And now we've got
a three month trend here, Actuallyyou've got a six month trend. Quite
honestly, but it's a three monthtrend of you know, really concerning data,
but a three month trend of I'msorry, a six month trend of

(06:59):
inflation moving up. In October oflast year, inflation printed headline, CPI
printed point zero eight. It's great, let's do that. We'll have you
know, one point two percent inflation. That sounds fantastic. November printed point
one six. Still fine, that'sunder two percent annualized. December point two
three. Okay, we're getting upto like two point eight. But hey,
it's got a two in the youknow, the first digit, So

(07:20):
that's fine. Yearly January point threeone. Guys, we're uh, we're
getting a little roasty here. Youknow, we can't do you know,
point three one over and over andover. February point four to four,
guys, that annualizes to over fivepercent. We we can't do that again.
Okay, fine, March point threeeight. You get three months now

(07:42):
where again you do the math andyou look at this, and you say,
look for the for the last threemonths. Now you've got a situation
where inflation on an annualized basis,and again this is the last three months.
So I think this is you knowwhat's kind of relevant and what you

(08:03):
know what matters is the local trendthat we're seeing on this The three month
annualized trend here is now running fasterthan you'd like to Yeah, you run
on almost four percent. The sixmonth trend is running three to nine.
The twelve month is at three eighths. None of these are pointing towards inflation.
Coming down is where I'm going.So what's gone wrong here? The

(08:26):
key thing I think to keep inmind is that inflation consists of two parts.
A transitory I hate to use theword because it's become a bad word.
Sure, we'll just call it atemporary component and a more persistent component.
The temporary component is the difference betweenthe headline number and numbers that try
to strip out the stuff that canbounce around a lot from month to month.
We could call that core. Youcould call it median. That's a

(08:48):
different way of filtering out the bigshocks, So you constantly have small shocks
moving jostling headline inflation around. Youtry to keep your eye on different measures
of core inflation because they tell youwhat's going on fundamentally or structurally with the
economy. To what extent is demandtoo hot relative to the economy's production capacity.

(09:11):
To what extent that is, isthe economy bumping up against its speed
limit. I'm simplifying a little bithere because you have to buy into that
concept that output relative to potential matters, and output an excess of potential access
demand, if you like, canpush up prices. You have to buy
into that idea. So three yearsago, four years ago, when COVID
started, we've flooded people with stimulus. Monetary authorities accommodated this. Both political

(09:37):
parties were enthusiastic about it. You'vegot a lot of inflation, not a
big surprise. You pumped a lotof stimulus into a supply constrained economy.
Supply eventually loosened up, Supply chainsbecame unkinked, if that's the right verb.
Inflation came down a lot since midtwenty twenty two, it was nearly
nine percent and we were running atone point a little under two percent.
It's perked back up. Where Ithink people at that point, those who

(10:00):
we're doing a victory lap, includingsome of the FED, got it wrong.
Was that they thought that disinflation wouldcontinue. When the disinflation was do
as much to special supply chain factorsas the inflation was. They weren't focused
enough, probably on underlying inflation,which is a product of the imbalance between
overall supply and demand. And rightnow you've got an economy with three point

(10:20):
eight percent on employment, three pointssomething percent year over year GDP growth by
any measure, the economy is running. Yeah, it is crank and probably
an excess of its speed limit.So now the problem is that underlying or
persistent component of inflation. The FEDis not tamped that down, and then
you end up with this other piece, which is that markets. And granted

(10:43):
the inflation data was improving in thesecond half of last year. Like I
said in December, I said,look, if you do have this continue,
then you've got everything you want.You got inflation that's low, you've
got unemployment that's low. Like thisis what you want. But be careful
because the economy is very rarely astatic thing. It doesn't typically stay in
one place for very long. It'salways never the same economy, always moving

(11:07):
the river. And despite that,On January second of this year, the
first day of trading the Chicago MARKEANDILExchange, the FED Fund's futures market was
praising a zero percent chance that therewere no cuts by the June meeting.
It was pricing in a one hundredpercent chance that you were gonna have cuts
by the June meeting. Not justcuts. It was praising in a sixty
two percent chance you're gonna have threecuts by the June meeting, a twelve

(11:31):
percent chance we're gonna have four cutsby the June meeting, twenty three percent
chances you we're gonna have two cuts. There was only a one point five
percent chance that you were gonna haveone cut. Worth viewer, I really
don't know what those people were smokingin light of the rate of unemployment relative
to what most researchers would say isthe natural or potential rate of unemployment or
output. Look, it could havematerialized that way, but that would have

(11:52):
been a pretty bold prediction given howhot the economy appeared to be running.
I just don't get what those people, including many respected economists, we're thinking.
It's basically saying, hey, there'sno chance that inflation is going to
be persistent in the first half ofnext year. And that was a horrible
stance to take. And trust me, I'm not rooting for inflation. I

(12:16):
would rather see, you know,lower numbers. I'd rather see inflation.
Two. We all do better whenthat's the case. But it's not there
right now, and so we've gotto call a spade a spade, and
inflation is too damn high at themoment, just is. Let's take a
quick break here. When we comeback, let's talk a little bit about

(12:39):
I want to talk a little bitabout the bond market and how it's reacting,
and also what these higher inflation meetingsmean to you the people listening.
How's it going to affect your lifebeyond just you know, the higher prices
that you've seen. What does itmean for borrowers savers? We'll talk about
that when we come back. Breakingbusiness and financial news first throughout the day,

(13:01):
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visit USBI dot com. All right, let's talk a little bit about this
hot inflation report and how it impactsthe average person in America. First of
all, there is no average personin America. Like, everyone's freaking different.
You know, no one has thesame financial structures as you know,
another family and everything. So anyways, if you are someone who is going

(14:07):
to be borrowing money, I'm sorryto tell you, but if you're trying
to take out a mortgage, thatrate is probably going up. The national
average, according to mortgage used dailyfor the thirty year fixed right now,
is at seven point zero six percent. Wouldn't be surprised if that's in the
seven and quarter to seven and ahalf range over the next two to three
months. Even just after today,with the ten year treasury trading up thirteen

(14:30):
basis points to four point five percent. You're probably pushing seven point two just
after today, so mortgage rates likelymoving up over the course of the spring.
Which if you are a real estateagent or loan officer listening to the
show, I'm sorry, it's notmy fault. I didn't do it.
Next Powell, if you are someonewho has a floating rate debt that is

(14:52):
tied to the FED credit card loanor an adjustable rate mortgage or something along
those lines, this probably means thatthat rate is not coming down in the
near future. Uh. The CMEFedwatch tool right now, and I got
to talk just about where this standsright now. This is kind of wild
actually even for June. Despite this, and remember before June we get another

(15:16):
two Yeah, we're gonna have twomore pieces of inflation data that come out
before June. Even with what wehave now seen, the CEME FED Funds
futures market is still somehow pricing ina three percent chance of rate cuts because
there's someone just holding on to hopethat it's gonna happen. Now, remember
at the beginning can never be zero, so I kind of get that.
Uh, yeah, three percent isprobably accurate this far out might be low.

(15:39):
Yeah, actually, no, Sorry, that's that's May. I was
looking at the wrong one. Juneis now a nineteen percent chance of cutting.
It doesn't strike as much as Idon't think that's gonna happen. It
doesn't strike me as crazy. Fivepercent feels about right at this point in
time. By year end, themarket is now pricing in. Remember there's
this whole you know, Oh,like it's the market's in line with the

(16:00):
it's pricing in. You know,the three cuts the Feds telling us the
most likely landing spots are either oneor two cuts at thirty two and thirty
four percent, respectively. So ifyou've got an adjustable rate loan, that
it just based on where the Fedfunds rate is. Libor is no more.
That doesn't exist anymore. Now it'ssofur the uh what a sofur stand
for? Again? I can't evenremember. They changed these things all the

(16:23):
time. But the sofa rate isthe new librar. Sofur is actually the
new libar. But that is mostlikely not moving around a whole lot.
What do you got mark? Oh, I would have gotten this so wrong.
Secured overnight financing rate I knew itwas. I knew the o was
overnight. I didn't know what thes was. What would you what would
you have guessed? I'm not evensure where I would have begun had I

(16:45):
been pressed to guess. So Idon't think bar wers are going to see
much improvement, And in some cases, if you're trying to take out a
new loan, it's probably going toend up in a worse spot as far
as the rate. That's that's verypossible if you are someone who is a
saver. What we are seeing hereis, in particular, if you're someone

(17:07):
who likes buying CDs, two yearUS Treasury is up twenty basis points to
three years up twenty one basis points, the five years up nineteen basis points
two three four five year CDs,those are going to see their rates moving
up, probably by a quarter percentin the next week or so, depending
on the bank or the institution.So you're likely if you're trying to lock
in a higher rate for longer,you got some chances now, and if

(17:30):
you get more inflation prints that looksimilar to this over the next couple months,
you might see those rates move evenhigher. So if you are a
saver who likes to lock in fora three to five year period on CDs,
there's a chance that you're going tohave some better opportunities this spring than
you did in the winter. Ifyou're just someone who's looking at, hey,
I buy you know, three tosix month CDs or three to six

(17:51):
month T bills and that's what Ido, those aren't moving very much because
if you think of it this way, all that's being priced out right now
are cuts that were expected to happenin the middle of this year. If
you were buying three month T bills, they're only up two basis points right
now to five point three nine percent, because all it's being priced in is,

(18:11):
yeah, they're just gonna keep stayingthe same. There's not much changing
because of the time period that's beingimpacted, which is really the second half
of this year where you're seeing ratesmoving up. If you I guess,
those are kind of the two majorthings that we're looking at. The last
piece, If you own bonds inyour portfolio as ballast for stocks, meaning

(18:36):
hey, I've got you know,a bond fund or a bond etf or
something like that in my portfolio,days like this, you're going to see
it struggle most likely because it's probablysomething that tracks the Bloomberg US Aggregate Index,
and you're probably going to see youknow, anywhere from a half percent
to a one percent sell off inthat today. So your bonds are not
going to do well in times likethis. But this is also not why

(18:59):
you own bonds in your portfolio.You don't own them for the times when
the economy unexpectedly accelerates. You ownthem for the time when it unexpectedly decelerates.
And so if you just look atyour bonds on a day like this
and they're like, oh why doI own this? Get rid of them.
Well, don't come crying. Youknow, one, two, three,
four, have ver many years fromnow when the recession happens and yields
drop and you're like, oh,why didn't I have any bonds in my

(19:22):
portfolio? They're not for days likethis. Let's take a quick break.
We've got Wall Street Watch and AskTodd coming up next. Like us on

(19:44):
Facebook and follow us on Twitter atTFE show. Breaking business news is always
first right here on the Financial ExchangeRadio Network. Time now for Wall Stream
Watch, a complete look at what'smoving markets so far today right here on
the Financial Exchange Radio Network. Thestocks are selling off as Wellstree reacts to

(20:06):
the Consumer Price Index unveiled earlier thismorning, where consumer prices climb three point
five percent on an annual basis,hotter than estimates of a three point four
percent increase. Right now, theDow is off by three hundred and forty
points, SMP five hundred down bythree quarters of a percent, Nasdaq also
down by just over three quarters ofpercent, Russell two thousand down now over

(20:30):
two percent, Ten year Treasury willjumping thirteen basis points now at four point
five zero percent, and crude oilis mostly flat edging higher, trading at
eighty five dollars in twenty six centsa barrel. Delta Airlines reported first quarter
earnings ahead of the open this morning, beating earnings expectations but fell just short

(20:52):
of revenue forecast. The airline setit saw a continued strong demand for both
leisure and business travel, also forecastedbetter than expect earnings and revenue for the
second quarter. Delta shares currently upby two and a half percent. Meanwhile,
shares in Taiwan Semiconductor up by oneand a half percent after the chip
maker said strong demand for its AIpowering chips helped expand the company's monthly revenue

(21:17):
thirty four point three percent year overyear. In March. Elsewhere, a
Key Bank upgraded good Rx to overweighton the heels of a strong subscriber growth
forecast. That stock up by halfa percent. And Bank of America upgrade
a chemical manufacturing company Albemarle to buyon the back of increasing lithium prices and

(21:37):
also upped its price target. That'sstock currently down by one percent. I'm
Tucker Silvan, that's Wall Street Watch. This is Ask Todd on the Financial
Exchange Radio Network. If you havean existing estate plan or in the market
for one, Todd Letsky is hereto answer your questions and help you plan
for a later life. Ask Toddis presented by Cushing and Dolan, serving

(22:00):
Massachusetts and New England for more thanthirty five years, helping families with a
state and tax planning, Medicaid planning, and probate law. Visit Cushingdolan dot
com. Now here's Todd Lutsky.We are now joined by Todd Lutsky from
the law firm of Cushing and Dolan. The segment is Asked Todd, and
this is your chance to ask Toddyour questions about your estate plan. The

(22:22):
phone number here in the studio iseight eight eight to zero five two two
six three. So get all cuedup so that you have a chance to
ask Todd your question during the segment. That number again is eight eight eight
to zero five two two six three. So if you've got a question about
your state plan, maybe you don'thave one and you're trying to get it
formulated, maybe you've got, youknow, just in a state situation that

(22:45):
you're sorting through right now with afriend or family member. That phone number
again is eight eight eight to zerofive two two six three. Mister Lutsky,
how are you today? I amnever better in you? Uh do
it? Okay? Just okay.Had to tell the daughter not to play
with electricity yesterday. Yeah it's notsafe. Yeah. Well now she's grounded,
of course she is. So we'regetting there, Todd. I want

(23:07):
to talk to you a little bitmore about gifting. Last week we were
talking about some of the problems thatthe people, some of the mistakes people
making gifting assets. Yes, Iwant to turn this around a little bit
and be a little more uplifting today. Okay, how would someone build a
successful gifting strategy into their estate plan. What does that look like to you
when employing gifting is part of anestate plan? You know, I think

(23:30):
it's it's a great uh question,because the estate plan does two things,
right. One, it designs assetsin terms of how you leave the assets
to your beneficiaries. And this isone that when you die, but you're
saying, we can also structure howwe leave them to our children while we're
living. We can start putting assetsinto a gifting trust. Now, this

(23:55):
is very different than the irrevocable trust. You hear us talk about a lot
when we talk about medicaid planning.Right, there's many kinds of irrevocable trusts.
This kind is more of a giftingtrust. In other words, when
people want to give assets to theirchildren while they're living, which you can,
of course, you feel a lotbetter. You get to see it,
you get to enjoy it, whereasyou don't when you pass away.

(24:17):
And when you do that, though, you oftentimes don't want to just give
it to them. You don't wantto put it in their hands, right,
because that might not be in theirbest interest. One, it exposes
it to their own creditors. Idon't know if they're married, they might
get divorced. You don't want toexpose it to the divorce. You know.
The bottom line is, if theyown it out right, it's also

(24:38):
going to be included in their estatefor st aate tax purposes. So maybe
there's a way to not have themenjoy it but not have it taxed in
their estate when when they pass.So you set up these gifting trusts and
that way you can kind of controlit. Now, you can put the
asset in, but you can't bethe trust because if you give it away

(25:02):
and you retain the right to controlthe beneficial enjoyment of that asset by being
trustee, well then you haven't reallygiven it away, and it's going to
be included in your estate. Andremember, part of the reason you're giving
it away is because you want toreduce your own estate tax your own estate
tax liability, so you want tomake sure it's not pulled back in.
But you can put a kid onas trustee even though they don't own it,

(25:25):
and then you can retain the powerto remove and replace that child as
trustee, So you're kind of stillcontrolling the strings here a little bit.
And that's important. Talking with ToddLutsky from the law firm of Cushing and
Dolean. This segment is called AskTodd because you get to ask Todd your
questions about your estate plan phone numberhere is eight eight eight two zero five

(25:47):
two two sixty three. So callthat number and you get to ask Todd
live on air about your estate planningquestions. And it's just a fantastic opportunity
to get a little bit of knowledgeabout your specific situation. That phone number
again is eight eight eight to zerofive two two six three. One more
time eight eight eight to zero fivetwo two six three Todd. When you

(26:10):
talk about gifting larger assets, Iknow we talked a little bit about,
uh, you know, if youhave an investment account or if you have
a property or something like that,and some of the issues there. Can
we go into a little bit moredepth on property because I think we got
you know, we had to movepretty quickly last week in terms of the
problems with you know, just youknow, gifting a property to a child.
Sure, just two or three ofthe biggest things that are problems there.

(26:34):
Yeah, I think quickly just youcould bullet these right if you give
it away. One you don't controlit, you don't own it anymore,
so you gotta be ready for that. That's a big change, especially if
it's a rental property or you're collectingincome from it. You lose all that,
so that's a big issue. Two, Once it's in their hands,
it's subject to their creditors, andyou may not want that. You may
not want it subject to their creditors, their divorces, you may not want

(26:56):
it included in their estate. Sothat's a big deal. Right, and
be careful, especially if you giveaway rental property. You think you've done
a great job, even if youdon't need it anymore. You don't need
the rent and you don't mind themowning it. You've given them a huge
tax liability. You've given them allthe built in gain associated with that property
when there might have been a betterway to do it by dying owning it

(27:18):
and maybe giving away other assets andpreserving a step up in basis so that
you can eliminate that gain. Solots to think about, and those are
just like you say, maybe thetop three on the bullet list. Talking
with Todd Lutsky from the law firmof Kushing and Dolan. If you've got
a question you'd like to ask Toddabout your estate plan. The number here
is eight eight eight two zero fivetwo two six three. That number again

(27:41):
is eight eight eight two zero fivetwo two sixty three. We're going to
take a quick break, but whenwe come back, it's right to your
questions with Todd Lutsky. That phonenumber again is eight eight eight two zero
five two two sixty three. AskTodd with Todd Lutsky every day at ten
thirty only here on the Financial ExchangeRadio Network. You're listening to Ask Todd

(28:07):
with Todd Lunsky on the Financial ExchangeRadio Network. All right, let's get
right to our callers with Tom Lutsky. First up, we've got Kevin and
Dennis. Kevin, what's your questionfor Todd? Yeah, I appreciate.
So I just the wife and Ijust have one Donnis seven years ago did

(28:32):
the will, the pop attorney,the healthcare and then I wasn't going to
do a trust, but he saidwe should, So we did a revocable
trust just for a couple hundred dollarswith the donna's name on it. Now
I want to put the house intothat trust. So is that a huge
process? You might have to eliminatethe trust that I have now or just

(28:52):
at the house with her, youknow on that What did you mean that
you you put one hundred dollars,You put one hundred dollar into the trust.
Yeah, he just said, hesaid you should do it now.
So he did it with our name, and I think he's I guess where
the subtle is in the sense,you know, a couple of hundred dollars
in the TSS to start it.Okay, Yeah, so both of you

(29:14):
both, yeah, both of youare the donor of the donors of the
trust. That would be normal.Both of you are trustees. How old
are you guys? Well, Ijust turned sixty and the wife's fifty two.
Sixty and fifty two, and youhave one child. Yes, so
you know, as a rule ofthumb, I don't know what what all
your other assets are. If that'syour biggest asset and that's the only asset
you want to put in the trust, you certainly can do it. It

(29:37):
is not a big problem. You'resimply allowed to just transfer the house.
You have that same lawyer, preparea deed transferring it from your name to
your trust name. There's not agift tax, is no filing to do.
It's just retitling the account so thatthe house rather so it avoids probate
and and gets to your child theway the trust says it will get to
your child, So however you're leaving, it is dictated in that document.

(30:00):
The only other thing you might wantto think about is as you get older,
if you are concerned about nursing homes, you might want to think about
an irrevocable trust rather than irrevocable trust, although of course you always plan for
the older spouse, even though thereseems to be a big age difference between
the two of you. So justsomething to think about. But absolutely you
can transfer it, and the guywho or the lawyer whoever it was that
prepared the trust for you probably couldprepare the deed and put it in there,

(30:26):
so hopefully that helps a little.But you know what, folks,
this is exactly the kind of thingthat this guide is about, and so
Kevin, maybe this is for youas well, and for anybody who hasn't
done their planning. This guide willhelp you understand how to leave your assets
to your family. There are somany ways to do it through these trusts.
Again, whether it's a special needstrust, whether it's to a grandchild,

(30:47):
whether you want to skip a generation, whether you want to protect it
from future divorces. So many thingsto think about when you leave an asset
to a child, and trusts areusually a way to do it. This
guide will show you how to dothat. So again, if you haven't
done your planning at all, thisis a great way to get you off
the dime, get you thinking aboutwhat you might put for language in your

(31:08):
trust when you set it up.Now, if you've already done your planning,
I think check it out because youmight want to amend your document and
say, oh, wow, Ididn't think of that, or oh,
my child's married now and I'm nottoo keen on the spouse, or some
other issue has happened and you know, maybe there's a drug issue or something
that's come up and you want tomodify your document. You can do it.

(31:30):
This will give you some ideas.Call and get the guide, folks,
How to Leave Assets to Beneficiaries eightsix six eight four eight five six
nine nine or Legal Exchange Show dotcom again eight six six eight four eight
five six nine nine or Legal ExchangeShow dot com. Todd, I've got
another one for you here, let'sgo to Joe in Boston. Joe,

(31:52):
you are on with Todd Lutsky eightten oli. I thanks for taking my
call. Sure good. So thisone's more on behalf of of my mother
in law. So she owns aduplex in the city of Boston with her
brother. They own it. Herhealth is kind of in decline between probably
given a time limit less than fiveyears. She you know, utilizes Mass

(32:15):
Health Medicare stuff like that. Asa couple of caveats where she's separated but
not divorced, and there's a reversemortgage on the home as well, and
I would kind of say, isthat house or asset going to be protected
when she does pass given the factthat you know, you've got Mass Health

(32:35):
Medicare coming after their piece, andjust kind of a lot of moving parts
between not being actually divorced and withthe reverse mortgage, and just is there
a safe way for her to kindof pat that property on. Yeah,
So I think a couple of thingshere. You're saying a lot of information,
right, and that's helpful for meto answer it. So the reverse
mortgage is always going to be there, so other he and she only owns

(32:58):
half. Remember the other half isis with the brother, so only half
is at risk. You know,in terms of at least avoiding probate,
I would throw it into a revocabletrust and that way, you know,
it will avoid probat and get towho it goes to. However, the
reverse mortgage is going to remain onthere and will be called when when she
passes. Not sure if you mentionedsomething about five years, does she have

(33:20):
five years to get you know,to get this protected from the cost of
nursing home care. It doesn't soundlike that was the problem, So maybe
just getting it in a revocable trust. But arguably if you throw it into
an irrevocable trust now and there's beenno lean placed on the property yet by
mass health, might be too latelater, So that might be something to

(33:40):
think about in terms of putting itin there. But Community mass Health does
generally try to get paid back aswell for things that they've received for benefits
that were received over time. Soyeah, tough situation, but I would
never not plan so would. Iwould put that at least into a revocable
trust and just you get it toavoid probate and get it to where you

(34:01):
need it to go and that wayshe can keep collecting the income and so
forth. So tough situation, Joe, But but yeah, I would do
something, Tod. I've got onemore for you. We're gonna see if
we can get three calls done here. Let's go to Jeff in Florida.
Jeff, what is your question forTodd Lutsky? Hey Ton, thanks for
taking my call regarding the gift trust. Yes, when there's kapa realized games

(34:25):
in a given year, we haveone set up, my parts set up,
and at the end of the yeartax time, my dad will go
ahead and pay the tax on therealize games in that trust. Now,
let's say there was one hundred thousanddollars worth of games. You have four
trustees, four kids. Are thekids supposed to claim each one of them
twenty five thousand dollars as income oris that completely separate? So really,

(34:52):
you know, good question, andthis is for a lot of people right
when you're when you're out there,you got to make sure you're going to
have to go probably back to thelawyer drafted it and find out whether or
not it is a grand or trustfor income tax purposes. I know that
we draft them at Cushing and Dolanto be grant to or trusts. In
English, that means that your dador your parents, as the grand tours,

(35:15):
are treated as the owner for incometax purposes, which means even if
there is no distribution of income,interests, dividends or gains, even if
none of that is distributed out ofthe trust to your parents, and they
may not even be entitled to itif it's a gifting trust. Quite frankly

(35:36):
so, even though it's not distributedout, it's picked up on their personal
income tax return and they pay it. None of the kids they pay it
if it is not a grand tourtrust, and there's special language in there
that you need to ask your attorneyif they did it. If it's not
a grand tour trust and the distributionsdo not come out to the kids,
then the trust pays the tax,but the trust would pay the tax at

(35:59):
a much high level because they're taxat a higher rate. If it is
distributed out, then the kids willpay the tax. So check with your
with your creator on that one.Thanks so much, mister Wutsky. Thank
you so much for joining us today. Always a pleasure. This has been
asked Todd on the Financial Exchange Radionetwork Aske Todd with Todd Lutsky has been

(36:20):
presented by Cushing and Dolan, servingMassachusetts and New England for more than thirty
years, helping families with the stateand tax planning, Medicaid planning, and
probate law. Call eight hundred threenine three four thousand and one or visit
Cushingdolan dot com. The views expressedin this segment are solely those of Cushing
and Dolan. Armstrong Advisory does notprovide any legal or tax advice. Please
consult with your legal or tax advisoron such matters. Cushing and Armstrong do

(36:42):
not endorse each other and are notaffiliated. Leaving assets to your beneficiaries is
a critical piece of any estate plan. Cushion Dolan has written a new guide
that may help you avoid unnecessary mistakesthat can cost you dearly in the long
run and ensure that your assets areprotected for generations to come. An example,
the Federalist state tax exemption has increasedby nearly a million dollars from twenty
twenty three that could lead to alarger inheritance for your family members. There

(37:07):
are several strategies in this new guidethat will help you learn how to make
the right decisions about your distributions atthe right time. Cushing and Dolan have
been helping New England families for morethan thirty years. Let them help you
too. Call eight sixty six eightfour eight five six nine nine and get
their brand new guide called how toLeave Assets to Your Beneficiaries. That number
again is eight sixty six eight foureight five six nine nine, or you

(37:29):
can request the guide online by visitingLegal exchange show dot com. The proceeding
was paid for and the views expressedare solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisorymay contact you offering legal or investment services.
Cushing and Dolan in Farmstrong Advisory donot endorse each other and are not affiliated