July 31, 2024 • 37 mins
Chuck Zodda and Paul Lane share their expectations for the Fed coming out of their meeting this week. Politics doesn't go into the Fed's decisions, or does it? Microsoft finds out that their AI dreams are an expensive reality. Todd Lutsky stops by to talk about last minute medicaid eligibility and takes calls about specific estate planning needs.
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Episode Transcript
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Speaker 1 (00:00):
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(01:07):
Exchange with Chuck Zutta and Paul Lane.
Speaker 2 (01:12):
Chuck, Paul and Tucker with you here on a Federal
Reserve Wednesday today at two pm, we are going to
get the latest interest rate decision from the Federal Reserve.
The expectations or that they will not be cutting interest
rates now, but potentially laying the groundwork to begin cutting
rates in the fall, likely at their September meeting. And
(01:35):
even with some other things in the news, it's a
busy day here, this is still the biggest source of
gravity in financial markets, and as such, we're going to
talk about it before we talk about anything else.
Speaker 1 (01:47):
Paul, that sounds good.
Speaker 2 (01:48):
Let's get it going, Okay, start.
Speaker 3 (01:52):
In terms of what we're looking for for today's meeting,
the focus the Fed discuss the focus really for this afternoon,
just to reiterate for listeners out there, we likely won't
get a significant amount of commentary in terms of what
the Fed is going to do from a rate cut perspective,
the way I would view it. Chuck and interested to
hear a few agrees there's no reason for Drome Powell
(02:14):
to commit to cutting in September. Obviously, looking at the
probabilities by the CME futures, which gauges the likelihood that
there will be a cut. It seems all about a
foregone conclusion at this point that there will be some
sort of cut in September. They're now even pricing a
twelve percent chance that perhaps they could make a fifty
basis point cut half percent rather than a quarter percent cut.
(02:39):
But to me, you have a situation where there is
two jobs reports that they're going to be able to
digest before that September eighteenth meeting, and as well as
two CPI reports on the inflation front, So there is
no reason to commit one way or another. I imagine
that the language will be relatively similar from him continuing
(03:00):
to digest data. Certainly there will be a lot of
scrutiny on the FED statement that will be released in
terms of looking at any language that may differ there.
Those are really the things that will be focused on
this afternoon.
Speaker 2 (03:14):
Yeah, and as Paul mentioned, we are going to get
two more cpis. They'll barely sneak in. The July one
comes out on August fourteenth, plenty of time there. The
August one is out on September eleventh, a week before
the fed's meeting in September on the eighteenth, So you
do have two more big data points there, and obviously
these are going to be very closely watched for any
(03:35):
signs that the progress that has been made on inflation
in the last quarter after what I think now can
be characterized as a blip in Q one to the upside,
whether that progress continues, and from what I can see,
at least for the July number, the CPI that there
(03:57):
is a now cast basically a forecast that's run by
the Cleveland Fed for CPI and it takes into account,
you know, prices that they've seen over the course of
the month and they say, hey, here's where we think
CPI is going to come in. Given this, their expectation
for July as of right now on that CPI now
cast is coming in at point two four percent, core
(04:20):
at point two seven pc. They're expecting at point two
with core at point two to two and that was
updated this morning, so they're expecting point two percent on
the headline because again you generally see the rounded version
and point three on the core. That'd be a little
bit hotter on the core than you like to see.
But again this is not what CPI actually is. This
(04:41):
is just their best guess of where it's going to
be based on the data that they have now, and
sometimes they're right, sometimes they're wrong, and this is just
kind of how it ends up going. Ultimately, they have
in recent months missed to the high side, so inflation
is coming lower than they've projected, and I'm I don't
(05:03):
know that it means anything. It's just kind of where
they've been to this point. So Jay Powell today in
his press conference, this is one where I do think
it does make sense to pay a little bit closer
attention than we normally do, just because if they are
going to be signaling, hey, we think we're gonna be
cutting in September, you're gonna hear that fairly strongly now,
(05:26):
and by fairly strongly from the Fed at this point,
I don't mean that Jay's gonna come out and say, yeah,
we're gonna cut rates in September. Unless things change. It's
much more remember, and this is just how the FED
has to go about it. First, they have to talk
about talking about cutting rates, and I think that that's
what you'll hear today m hmm. In August, they don't
have a FED meeting, but they do have the Jackson
(05:48):
Hole Symposium, which is probably accompanied by a lovely feast
or two along the way. And my anticipation then is
that as long as the July data comes in in
line with expectations, they'll say, yes, we've now progressed from
talking about talking about cutting, now we're actually talking about cutting.
And then in September they can say, hey, we now
(06:08):
think it's appropriate to cut. That's the path that I
would think that you follow here if they follow their
previous template for how they like to over communicate with us, the.
Speaker 3 (06:18):
Way that some of these articles are written. Check where
they talk about the FED statement. All I can think
about is when you're just dating someone and you're getting
texts coming from this potential person that you know you're
trying to strike up a relationship with, and you're scrutinizing
every single word that comes through looking for any type
of change. You know, some of the mentions that they
have here they want to see, you know, gain greater
(06:40):
conference that inflation is moving sustainably, potentially modify to this
idea that they have further confidence that inflation is moving
in the right direction. You know, the amount of scrutiny
that will be put on all those words are similar
back to your younger days, whether you're looking at a
letter or a text, looking at every single word that's
being used and trying to parse out what that might
(07:02):
mean going forward.
Speaker 2 (07:05):
Paul, all I know is that I want you to
want to cut interest rates. Is it fine? I want
you to want to cut the interest rates. It's fine
that you didn't do the dishes. That's all I'm saying there.
So that's where we stand heading into the FED. The
question on this that everyone is going to ask is, Hey,
(07:27):
they're talking about cutting interest rates heading into a presidential election,
and obviously it puts the question in everyone's head, hey,
is this a political decision that they are making? And
the clear answers look to a certain extent, all of
us have you know, implicit biases and whatever along, you know,
(07:49):
just based on how we've lived our life, the jobs
that we have, what we do, we have, you know,
a self preservation instinct as well. It's we're human. So
the FED doesn't. They don't sit there and they're not like, hey,
we want this person to win, but they are very
much still political. They're in the middle. They're appointed by politicians?
How can you not be political at all? If you
(08:10):
are appointed by politicians, does that mean that they want
to put the thumb on the scale one way or another.
I don't think so. J Powell was.
Speaker 3 (08:18):
Appointed by who President Trump?
Speaker 2 (08:21):
President Donald Trump. He is now serving under President Joe Biden.
I don't think he's sitting there saying, Okay, I need
to do this, that and whatever. But certainly political calculations
enter their head in terms of if I do this,
is there a political impact to that? And I think
that the FED works to try to minimize even the
appearance that they are taking outright political stances in terms
(08:44):
of how they are executing their mission. This is a
long winded way of saying that, ultimately, whether you decide
to start cutting interest rates in September or not, there's
going to be someone on each side that says, gee,
are you doing this for political reasons?
Speaker 4 (09:04):
Here?
Speaker 2 (09:05):
I'll play out the string. Let's say you cut interest
rates in September. A bunch of Republicans gonna get up
and say you're cutting them to benefit the Biden administration,
aren't you? And there's not really anything that Jay Powell
can say there. Then, like hey, the data shows what
the data shows. Right, Let's say that he doesn't cut
interest rates. A bunch of Democrats get up and say, hey,
(09:25):
the economy is slowing, why don't you cutting interest rates?
But you don't think it's bad enough yet you're gonna
wait till it's worse. I'm not saying that either of
these views are right or wrong, but regardless of what
Jay Powell does, there's going to be a side that says, hey,
you're politicizing this. And this is explicitly generally why the
FED tries to not answer political questions is because no
(09:46):
matter what they do, someone's always saying, hey, you're doing this,
you know, for politics when they are making that decision.
The worst thing that they can actually do if they
care about the general good of the economy is any
of that noise into account, because if they actually think
that the economy's slowing and is in danger of heading
into recession.
Speaker 3 (10:06):
It's far more significant than political party.
Speaker 2 (10:09):
You cut anyways, because quite honestly, like four years from now,
no one's gonna remember exactly when you started cutting interest
rates or raising them or this, and that they are
gonna remember if you were wrong. And I know this
because I don't know the exact dates that you know, J.
Powell raised interest rates back in twenty twenty two and
by exactly how much. But I do know that they
(10:31):
were wrong then I do know they were too slow, right,
and and we remember that. Likewise, Hey, if there's a
recession coming and they say, now we're not gonna do
anything because you know, we don't want to take a
political stance, Okay, we're gonna we're gonna remember that. On
the other hand, if there is no recession and they
start cutting interest rates, we're gonna remember that too, because Giju,
(10:51):
let inflation come back because you wanted to cut rates
so badly. That's what we remember, not well they did this,
and here was the timing to this election or to
That's all noise, honestly, h The stuff that actually matters is, Hey,
if you're wrong, that's what we're gonna remember more than
anything else. And so there's a pretty you know, big
(11:15):
importance place on them being right. But they can't get
away from the political questions just because they're always gonna
be present there. When you are appointed by a politician,
regardless of who that politician is, it's impossible to distance
yourself fully and so they try to just you know,
not even have the appearance of making politically motivated decisions.
(11:36):
But sometimes you end up with a FED meeting six
weeks before an election. And what are you gonna do?
To take a quick break here, and when we come back,
talk a little bit about Microsoft. They reported earnings after
the bell yesterday. We'll tell you how they did.
Speaker 1 (11:50):
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Speaker 5 (12:18):
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Speaker 2 (12:45):
Paul. Microsoft reported after the bell yesterday they're now one
of the few tech stocks that is down in trading today,
really the only major one. What's going on with Bill
Gates's former company.
Speaker 3 (13:04):
Basically what we're seeing here, Chuck. And to be clear,
they're only down one percent. They were off about six
or seven percent to post their earnings report at the
close of market yesterday, so not as significant as one
would have expected there.
Speaker 2 (13:17):
But the crux of the slightly.
Speaker 3 (13:19):
Negative performance for Microsoft today ties into AI, and specifically
it's their Azure cloud business unit, which saw revenue grow
twenty nine percent over this past quarter. That was below
thirty one percent revenue growth in this space in the
prior quarter and under analysts expectations of thirty percent. The
reason that there is so much focus on this cloud
(13:41):
business revenue is because the AI operations that we talk
about so frequently are part of this particular unit. Microsoft
is spending boatloads of money, like many of its peers
are in the AI space, to spend on data centers
and chips and everything that goes in servers, everything that
goes into the investment in that space. Some of these
(14:03):
numbers are just absolutely staggering in terms of expenses, nineteen
billion of cap X is being allocated in the past
quarter to buying equipment as well as other capital expenditures.
So there continues to be a ton of scrutiny on
what type of revenue growth investors can expect from AI.
(14:23):
And what we were just talking about Chuck off Air
is that it seems as if we've reached a point
where the hype and conjecture around AI has plateaued a
bit in the sense that the investors are now looking
for returns that quite frankly, are going to take much
longer to realize than what they would likely.
Speaker 2 (14:46):
Prefer when we talk about the AI space. What I'm
really struggling to figure out is still, hey.
Speaker 1 (14:56):
What.
Speaker 2 (14:58):
Let me rephrase that, actually, because I talked about this
a little bit a couple of weeks ago, what's what's
new in AI right now? And when I when I
say new, I don't mean hey, you know chat GPT,
Like chat GPT has been around almost two years right now,
and ultimately I really kind of wonder what's the path
to like long term large scale monetization of chat GPT.
(15:22):
Because I'm someone I use it on a regular basis,
I have like the upgraded version that's like twenty bucks
a month, because I actually, you know, get that kind
of value out of it. But the average person isn't
sitting there like, hey, I'm gonna have a bunch of
conversations with chat GPT because I just don't know that
that's how life really works. And you know, these searches
(15:44):
are expensive, and look, it's nice that I can generate
an image of, you know, a cat wearing a suit
and tie. That's that's great, But how much money is
going to be made doing that is the question? Like
it's it's been a year and a half right now,
and while we're seeing you know, these new large language
models that are coming out that you know, oh, they
(16:05):
provide better answers, and they they're smarter than they were before.
It's just iterative now. It's not that wow moment that
we had when it first came out. And so I
think where I'm going with this is, hey, what's the
path to you know, really proving that you can make
money off of this, not just make something that's fun
(16:27):
or cool, because fun and cool eventually goes away. It's
no longer the new thing, and you've got to prove
that you can make money off it, and I can't
see companies continuing to pour tens of billions of dollars
into building out these data centers if they can't actually
generate the returns from it.
Speaker 3 (16:45):
I agree with you. I'm going to highlight two use
cases that to be clear, I'm not saying that these
are a pathway to profitability, so I'm not trying to
counter the point you're making, but to try and inform
listeners that, yes, there are the fun cans of writing
a haiku or breaking out a paper that chat TPT
can do, but in terms of base case uses just
(17:06):
too that I've stumbled into sort of listening to things
out there. Morgan Stanley, for example, is going to UH
roll out AI capabilities through the client advisory meetings, where
basically for note taking and reporting purposes, they will use
AI to generate a summary of meeting notes, something that
would have been a manual process by an advisor on
(17:27):
their own end, summarizing the to dos and action items
from a meeting. Again, I'm not saying that leads to
iminent profitability, just trying to show a base case use.
Another podcast I was listened to recently, But what.
Speaker 2 (17:38):
Are they gonna pay for that is my like, that's
the thing is, Hey, this is fine if they're gonna
pay X dollars per user, but how like how much
meat is actually there? It's Morgan Stanley's is not gonna say, well,
normally we'd have to have someone in the room that
we're paying forty thousand dollars. So we're willing to pay
thirty thousand dollars if you're not gonna pay thirty thousand
(17:59):
dollars a year for note taking.
Speaker 3 (18:01):
I'm with you.
Speaker 2 (18:01):
I'm with you.
Speaker 3 (18:02):
And that's that's why I wanted to preface those points
by saying, I'm not saying that this is the gold
you know, the gold rush to a ton of revenue
from this. And then another one was Axon, which is
a company that provides a lot of resources to police
forces out there, so basically incorporating the body cam technology
that many police officers now wear and reports that police
officers have to drive. Again, it's a productivity enhancement. But
(18:25):
to chuck to your point those two cases that I've highlighted,
it's to improve productivity, which is significant, but not necessarily
a huge revenue generation. It's fascinating technology that can save
a police officer or an advisor a lot of time.
And perhaps Morgan Stanley is making the argument, oh, that
gives them more time to spend on prospecting for new assets.
(18:47):
But it's not a pure just rush of money coming
in to furtherier point, But I just want to at
least put those two base case uses out there as
some more examples.
Speaker 2 (18:57):
So and you know, I've talked to people in very
technical fields that have, you know, looked at some of
this stuff and smart people who like are on like
the cutting edge of new technology, and their general response
has been, yeah, this can do some of the stuff
that you know I need to do, But it's not
(19:17):
the game changer that people think it is because it
still requires so much oversight to make sure that it's
not doing something wrong like that. There's still work to
be done there, and I'm not sure how big the
actual business is for the ENDAI use at this point.
Let's take a quick break. When we come back, We're
joined by Todd Lutsky for Ask Todd.
Speaker 1 (19:42):
Like us on Facebook and follow us on Twitter. Act
TFE show Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving market so
far today right here on the Financial Exchange Radio network.
Speaker 5 (20:03):
Markets aren't positive territory, led by a strong rally in
the tech sector. As Wall Street awaits the conclusion to
the FEDS July meeting. While interest rates are expected to
remain unchanged today, investors will be sifting for hints to
a likely rate cut in September. FED Chairman Jerome Powell
will hold a press conference at two thirty this afternoon.
(20:24):
Right now, the Dow is up by about half a percent,
or one hundred and seventy five points, SMP five hundreds
up by one and two thirds of percent or ninety points,
and the Nasdaq surging two and a half percent higher.
Russell two thousand is up by about a quarter percent,
ten year Treasure reeled down by four basis points at
four point zero nine percent, and crude oil seeing a
(20:47):
jump today of over three percent, trading just above seventy
seven dollars a barrel. Boeing has named Robert Kelly Ortberg
as its new CEO to replace Dave Calhoun. Ort Burg
is an aerospace vet veran who ran one of Boeing's
big suppliers. Rockwell Collins, which later became Collins Aerospace, which
is now a unit of RTX. Outside of its big announcement,
(21:10):
Boeing saw another big loss in the second quarter as
both its commercial airplane and defense programs continued to struggle.
Boeing shares, however, up by one percent. Elsewhere, AMD shares
jumping by over seven percent after the chip maker hiked
its full year forecast for revenue from graphics processing units
for AI data centers. Outside of AMD earnings, several chip
(21:32):
makers are seeing gains after Reuters reported that the US
is considering expanding a rule that could restrict the exports
of semiconductored related equipment from foreign companies to China, but
that allies including Japan, the Netherlands in South Korea could
be excluded more than that. In the next hour, Starbucks
up by over three percent after the coffee chain reported
(21:55):
lower revenue and profit in the previous quarter. However, executives
did say their face to turn around the company. We're
starting to yield results, and after today's closing bell, we'll
see more second quarter earnings when Meta and Qualcom posts
their results. I'm Tucker Silvan, that's Wall Street Watch.
Speaker 1 (22:15):
This is Ask Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts and New
England for more than thirty five years, helping families with
estate and tax planning, medicaid planning, and probate law. Visit
(22:36):
Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:41):
As promised, We're joined now by Todd Lutsky for Ask Todd.
It's your opportunity to ask Todd your estate planning questions
live on the air right now. We've got the phone
lines open at eight eight eight two zero five two
two sixty three. That is the number to call to
ask Todd your questions about your estate plan or maybe
about what your estate plans should look like again eight
(23:03):
eight eight two zero five two two sixty three. We
usually get through a few calls, so make sure that
you get calling so that you have uh, well, you
got the opportunity to speak to Todd. Then, because hey,
you snooze, you'll lose I guess again eight eight eight
two zero five two two six three is the phone
number here, and we'll be taking your calls all during
(23:24):
the segment. Again, it's eight eight eight two zero five
two two six three. Mister Lotsky, How are you today?
Speaker 4 (23:31):
I'm never better? How are you not great? It's always
something with you.
Speaker 2 (23:36):
I accidentally took my cat's medication.
Speaker 4 (23:38):
Cat's medication. That doesn't sound good.
Speaker 2 (23:40):
Don't ask me how. Let's talk a little bit about
last minute planning as it relates to beneficiaries. I know
that's not often where we go, but I guess what
I'm wondering is when it comes to, you know, let's
say that you haven't done the estate planning that you
need and you're in a situation where there's a long
(24:01):
term care, you know, situation that's imminent. Yeah, is there
anything that should be done when it comes to adjusting beneficiaries,
be it on life insurance policies, financial accounts, anything like that,
just to make sure that everything's tied up and buttoned
up there as far as how beneficiaries should go. Or
does that not really play into the equation.
Speaker 4 (24:19):
I think that probably doesn't play into the equation as
much as if the question was asked and I get
this a lot too, where people say she's todd you
know you've done some planning for me, or even if
you haven't in the past, you've done some planning, and
or if you haven't, but you know, my spouse is dying.
My spouse has you know, terminal cancer or some disease
(24:40):
or something that is that is causing them to know
that they're that their days are numbered. Should we do
anything more than we've done? Yes, in that regard, I
would say, Chuck, you're right on. You should run around
and I say, look, just double check. Make sure is
anything in the trust already? If you've done your planning.
I'll first say, have you retitled stuff to the try
(25:00):
are there any bank accounts kicking around that are still
in his name alone if he's the one passing, and
make sure you put them in the trust or at
a bare minimum, just if you're a healthy spouse situation,
add the spouse as a joint owner to at least
avoid probate. Make sure the beneficiaries on your life insurance
are tucked away, meaning either you have one or if
(25:22):
it's to the spouse, maybe name it to the trust
so that the money gets in the trust. When you
pass away. Therefore it'll shelter more assets for a state
taxes as well as avoid probate. So I think your
comment is very well taken for people who might be
passing not necessarily going into the nursing home right away,
(25:43):
and that is critical. Even if you've done your planning,
make sure you don't have that stray account kicking around
that's going to send you into probate.
Speaker 2 (25:52):
Talking with Todd Lutsky from the law firm of Cushing
and Dolan. Again, the segment's called Ask Todd, and this
is your chance to ask Todd your question. You can
call eight eight eight two zero five two two sixty three.
That is the studio number here to speak with Todd
live on air about your estate plan. Still a couple
spaces open again eight eight eight two zero five two
(26:15):
two sixty three is the number to speak with Todd.
Todd when we talk about beneficiaries in general, any any
guidelines that you typically give just in terms of coordinating
beneficiary planning with that estate plan, as far as you
know who to name beneficiaries, how to properly title you know,
contingent beneficiaries, and things like that. How does all that
(26:37):
fit in yeah.
Speaker 4 (26:38):
Absolutely, So when you're doing your estate plan, make sure
you put like on a life insurance policy. Change it
from each other. Let's say a married couple situation. Right,
if it's each other, that's not helping from an estate
planning standpoint, it'll avoid probate, but it won't shelter any
assets for estate taxes. So you want to make sure
that you name the spouse. Want to make sure that
(27:00):
the primary beneficiary is the trust that you're putting together
instead of the spouse. Okay, that's key, so that way
it's getting into your trust. Make sure you're iras four
oh one k's. Those are other major assets that always
have beneficiaries on those. Typically, if you're married, you still
(27:21):
want the primary beneficiary to be the spouse. It's the
best from an estate and income tax standpoint. It's the
contingent beneficiary that you might want to name the trust
depending on what you're saying in your trust, depending on
how you're leaving your assets ultimately to your family. If
(27:42):
it's outright, you might not just name the kids. If
trust says hold the assets in trust for the benefit
of the children, then maybe you want the beneficiary of
the era to be the trust. So those are the
two items that really require beneficiaries. The rest of your
sets just titled directly to the trust.
Speaker 2 (28:04):
Talking with Todd Ltsky from the law firm of Cushing
and Dolan. Segment. Again, it's called Ask Todd because it's
your opportunity to ask Todd your estate planning questions. Eight
eight eight to zero five two two sixty three. That's
the phone number to call to speak with Todd right
now again eight eight eight to zero five two two
sixty three. We're gonna take a quick break, but then
(28:25):
it's right to your questions with Todd after this again
eight eight eight to zero five two two sixty three.
Speaker 1 (28:32):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (28:52):
All right, we're still joined by Todd Lotsky from the
law firm of Cushing and Dolan. Here, let's go now
to your calls and your questions for Todd. First in
the queue, we got Tom in Portland. Tom, what is
your question for Todd Lutski?
Speaker 6 (29:07):
Good morning? What is your trigger for a recommendation to
get to create a trust. So net worth is you know, yeah, yeah.
Speaker 4 (29:16):
Yeah, no, And stay on the line because I'm gonna
ask you a couple of questions, like how old are you?
Sixty sixty? Are you married?
Speaker 6 (29:25):
Yeah?
Speaker 4 (29:25):
Kids?
Speaker 6 (29:28):
Yeah, but grown adults.
Speaker 4 (29:29):
Oh, they're still your kids though they never go away.
So any grandkids yet or not yet?
Speaker 2 (29:35):
No?
Speaker 4 (29:36):
Okay, So here this is part of the answer, right,
this is for everybody. I just was asking it this
way so that everybody can see that when you come in,
these are some of the things that help us decide
whether we do an estate plan for you or not. Right,
just because you come in doesn't mean you need an
estate plan. So I ask people you know, name, address,
phone number. We learn about how old you are, We
(29:57):
learn about your family dynamics, do you have do you
have grandkids? You know, we want to know if everybody
gets along reasonably well or is there a lot of
fighting going on in intra family? And then we ask
about assets, Right, how much are you worth? What kind
of assets do you have? Home vacation, home rental properties, eras,
(30:21):
investment accounts, you know, and all of that matters. It's
not just the dollar amount, but it's the type of
assets you have, like, am I heavyweighted in retirement accounts?
Am I heavyweighted in rental properties?
Speaker 6 (30:36):
You know?
Speaker 4 (30:36):
So all that makes a difference. So these are all
the piece parts that come together to make up that decision.
And then how do we decide which way you go?
Once we know your age, I'd say sixty and over,
I'm going to ask also about protecting assets from the
nursing home that may be an objective, reducing estate taxes,
avoiding probate, providing a bloodline plan to your face family.
(31:01):
Those are usually the questions that direct us as to
where to go once I get the background information. So
in your case, I would have asked all of those questions.
And then the finally the last piece is the size
of your estate. So if you're like three three and
a half million, four million or below, and you're sixty
(31:23):
and over and you want to do nursing home planning,
we'll probably be talking about two irrevocable trusts. If, on
the other hand, you're worth well over that and regardless
of your age, we'll probably be talking about revocable trusts.
So that kind of guides us as to where we
want to go. And I don't want to forget young people. Right,
(31:44):
what if you're recently married, have some young children. You
might not have the asset level yet, but now it's
becomes even more important, right because now you're planning in
case you die to take care of minor children who
cannot own anything, so the trust will do that. So
there's a little bit about what to think about when
you do your estate plan And since we are at
(32:05):
the end of the month, folks, last chance to get
this guide for the month called last minute Planning for
Medicaid Eligibility, which is not necessarily what to think about
when you're doing your planning, but what to think about
when you're faced with nursing home planning, our nursing home admission.
Excuse me, and you have not done planning, or you're
(32:26):
faced with nursing home admission and have done planning. But
there's still assets outside the estate, outside the trust, right,
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Speaker 2 (33:12):
Todd, I've got another caller for you here. Let's go
to Jeff in Florida. Jeff, you are on with Todd Lotski.
Speaker 6 (33:19):
Thank you, thanks for taking my call. Todd I called
a couple of months ago about a grant Tour irrevocable
trust in the power of substitution in order to get
the cost basis of the securities in the Grand Tour
Irrevocable Trust higher. Okay, now we do have that clause
(33:41):
in our irrevocable trust. My question is is if you're
taking securities from let's say my parents trust and we're
swapping them with the kids trust, which is the Grand
Tour Irrevocable Trust, we have to fill out paperwork, sends
it through our financial house, and they're going to make
the swap. Now, it's basically impossible to get it to
(34:03):
even out to the dollar because depend upon when they're
going to switch the securities is that going to be
a problem if it's a little bit off.
Speaker 4 (34:11):
So first let me ask you this, are these irrevocable
trust you're talking about medicaid irrevocable trusts, or are they
where you've made a completed gift and the assets are
out of the estate for state tax purposes.
Speaker 6 (34:23):
The latter it's out of the estate.
Speaker 4 (34:25):
Okay, you're right, so you do need the power. The
power of substitution in and of itself is not what
gets you a step up and basis, but what it
does allow you to do is say, hey, wait, stuff
I gave away, I'm dying now, and I want to
now get that out so that it's low basis into
my estate and put something of equal value back. I
have never heard of whether or not exact you know,
(34:49):
whether the security went up or down before you made
the change, is ultimately going to matter, right. The bottom
line is that you're trying to do it with a
fiduciary capacity to put something of equal value back into
the estate or back into the trust while taking out
low basis assets and putting them back into the estate.
(35:11):
So for everybody else's edification, that means when you die
with those low basis assets they will get a step
up in basis, eliminating the built in gain, whereas hopefully
you moved assets into the trust that are high basis
so you don't have to worry about losing the step
up because they're already high basis. I think overall, Jeff,
(35:34):
that if it's a little bit off here or there,
I don't think it's going to disqualify the entire transaction.
In other words, at the end of the day, if
you end up dying with those assets in the estate
of the decendent, I can't imagine the government's going to say, yeah,
that's not part of your estate, so they're gonna be included,
(35:56):
even though the amount you put in might not be
exact question, and I don't know that there's an actual
law or an answer directly for that to give you
a complete answer.
Speaker 2 (36:07):
Mister Watski, thank you so much for the time today.
Speaker 4 (36:09):
Always a pleasure.
Speaker 2 (36:10):
Thank you.
Speaker 1 (36:12):
This has been Asked Todd on the Financial Exchange Radio network.
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning
Medicaid Planning and Probate Law call eight hundred and three
nine three four thousand and one or visit Cushing Doolan
dot com. The views expressed in this segment are solely
(36:32):
those of Cushing and Dolan Armstrong advisor. He does not
provide any legal or tax advice. Please consult with your
legal or tax advisor on such matters. Cushing and Armstrong
do not endorse each other and are not affiliated. Changes
to Medicaid occur almost every year, and if you're not informed,
your assets could be at risk, especially if you or
your spouse need nursing home care. Cushing and Dolan are
experts and held your law and their new guide is
(36:52):
called Last Minute Medicaid Eligibility. It'll help you understand the
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It could be your primary home, a vacation home, or
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(37:12):
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Or you can request it online by visiting legal exchainshow
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(37:33):
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The Financial Exchanges produced by Money Matters Radio and is
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(00:21):
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(01:07):
Exchange with Chuck Zutta and Paul Lane.
Speaker 2 (01:12):
Chuck, Paul and Tucker with you here on a Federal
Reserve Wednesday today at two pm, we are going to
get the latest interest rate decision from the Federal Reserve.
The expectations or that they will not be cutting interest
rates now, but potentially laying the groundwork to begin cutting
rates in the fall, likely at their September meeting. And
(01:35):
even with some other things in the news, it's a
busy day here, this is still the biggest source of
gravity in financial markets, and as such, we're going to
talk about it before we talk about anything else.
Speaker 1 (01:47):
Paul, that sounds good.
Speaker 2 (01:48):
Let's get it going, Okay, start.
Speaker 3 (01:52):
In terms of what we're looking for for today's meeting,
the focus the Fed discuss the focus really for this afternoon,
just to reiterate for listeners out there, we likely won't
get a significant amount of commentary in terms of what
the Fed is going to do from a rate cut perspective,
the way I would view it. Chuck and interested to
hear a few agrees there's no reason for Drome Powell
(02:14):
to commit to cutting in September. Obviously, looking at the
probabilities by the CME futures, which gauges the likelihood that
there will be a cut. It seems all about a
foregone conclusion at this point that there will be some
sort of cut in September. They're now even pricing a
twelve percent chance that perhaps they could make a fifty
basis point cut half percent rather than a quarter percent cut.
(02:39):
But to me, you have a situation where there is
two jobs reports that they're going to be able to
digest before that September eighteenth meeting, and as well as
two CPI reports on the inflation front, So there is
no reason to commit one way or another. I imagine
that the language will be relatively similar from him continuing
(03:00):
to digest data. Certainly there will be a lot of
scrutiny on the FED statement that will be released in
terms of looking at any language that may differ there.
Those are really the things that will be focused on
this afternoon.
Speaker 2 (03:14):
Yeah, and as Paul mentioned, we are going to get
two more cpis. They'll barely sneak in. The July one
comes out on August fourteenth, plenty of time there. The
August one is out on September eleventh, a week before
the fed's meeting in September on the eighteenth, So you
do have two more big data points there, and obviously
these are going to be very closely watched for any
(03:35):
signs that the progress that has been made on inflation
in the last quarter after what I think now can
be characterized as a blip in Q one to the upside,
whether that progress continues, and from what I can see,
at least for the July number, the CPI that there
(03:57):
is a now cast basically a forecast that's run by
the Cleveland Fed for CPI and it takes into account,
you know, prices that they've seen over the course of
the month and they say, hey, here's where we think
CPI is going to come in. Given this, their expectation
for July as of right now on that CPI now
cast is coming in at point two four percent, core
(04:20):
at point two seven pc. They're expecting at point two
with core at point two to two and that was
updated this morning, so they're expecting point two percent on
the headline because again you generally see the rounded version
and point three on the core. That'd be a little
bit hotter on the core than you like to see.
But again this is not what CPI actually is. This
(04:41):
is just their best guess of where it's going to
be based on the data that they have now, and
sometimes they're right, sometimes they're wrong, and this is just
kind of how it ends up going. Ultimately, they have
in recent months missed to the high side, so inflation
is coming lower than they've projected, and I'm I don't
(05:03):
know that it means anything. It's just kind of where
they've been to this point. So Jay Powell today in
his press conference, this is one where I do think
it does make sense to pay a little bit closer
attention than we normally do, just because if they are
going to be signaling, hey, we think we're gonna be
cutting in September, you're gonna hear that fairly strongly now,
(05:26):
and by fairly strongly from the Fed at this point,
I don't mean that Jay's gonna come out and say, yeah,
we're gonna cut rates in September. Unless things change. It's
much more remember, and this is just how the FED
has to go about it. First, they have to talk
about talking about cutting rates, and I think that that's
what you'll hear today m hmm. In August, they don't
have a FED meeting, but they do have the Jackson
(05:48):
Hole Symposium, which is probably accompanied by a lovely feast
or two along the way. And my anticipation then is
that as long as the July data comes in in
line with expectations, they'll say, yes, we've now progressed from
talking about talking about cutting, now we're actually talking about cutting.
And then in September they can say, hey, we now
(06:08):
think it's appropriate to cut. That's the path that I
would think that you follow here if they follow their
previous template for how they like to over communicate with us, the.
Speaker 3 (06:18):
Way that some of these articles are written. Check where
they talk about the FED statement. All I can think
about is when you're just dating someone and you're getting
texts coming from this potential person that you know you're
trying to strike up a relationship with, and you're scrutinizing
every single word that comes through looking for any type
of change. You know, some of the mentions that they
have here they want to see, you know, gain greater
(06:40):
conference that inflation is moving sustainably, potentially modify to this
idea that they have further confidence that inflation is moving
in the right direction. You know, the amount of scrutiny
that will be put on all those words are similar
back to your younger days, whether you're looking at a
letter or a text, looking at every single word that's
being used and trying to parse out what that might
(07:02):
mean going forward.
Speaker 2 (07:05):
Paul, all I know is that I want you to
want to cut interest rates. Is it fine? I want
you to want to cut the interest rates. It's fine
that you didn't do the dishes. That's all I'm saying there.
So that's where we stand heading into the FED. The
question on this that everyone is going to ask is, Hey,
(07:27):
they're talking about cutting interest rates heading into a presidential election,
and obviously it puts the question in everyone's head, hey,
is this a political decision that they are making? And
the clear answers look to a certain extent, all of
us have you know, implicit biases and whatever along, you know,
(07:49):
just based on how we've lived our life, the jobs
that we have, what we do, we have, you know,
a self preservation instinct as well. It's we're human. So
the FED doesn't. They don't sit there and they're not like, hey,
we want this person to win, but they are very
much still political. They're in the middle. They're appointed by politicians?
How can you not be political at all? If you
(08:10):
are appointed by politicians, does that mean that they want
to put the thumb on the scale one way or another.
I don't think so. J Powell was.
Speaker 3 (08:18):
Appointed by who President Trump?
Speaker 2 (08:21):
President Donald Trump. He is now serving under President Joe Biden.
I don't think he's sitting there saying, Okay, I need
to do this, that and whatever. But certainly political calculations
enter their head in terms of if I do this,
is there a political impact to that? And I think
that the FED works to try to minimize even the
appearance that they are taking outright political stances in terms
(08:44):
of how they are executing their mission. This is a
long winded way of saying that, ultimately, whether you decide
to start cutting interest rates in September or not, there's
going to be someone on each side that says, gee,
are you doing this for political reasons?
Speaker 4 (09:04):
Here?
Speaker 2 (09:05):
I'll play out the string. Let's say you cut interest
rates in September. A bunch of Republicans gonna get up
and say you're cutting them to benefit the Biden administration,
aren't you? And there's not really anything that Jay Powell
can say there. Then, like hey, the data shows what
the data shows. Right, Let's say that he doesn't cut
interest rates. A bunch of Democrats get up and say, hey,
(09:25):
the economy is slowing, why don't you cutting interest rates?
But you don't think it's bad enough yet you're gonna
wait till it's worse. I'm not saying that either of
these views are right or wrong, but regardless of what
Jay Powell does, there's going to be a side that says, hey,
you're politicizing this. And this is explicitly generally why the
FED tries to not answer political questions is because no
(09:46):
matter what they do, someone's always saying, hey, you're doing this,
you know, for politics when they are making that decision.
The worst thing that they can actually do if they
care about the general good of the economy is any
of that noise into account, because if they actually think
that the economy's slowing and is in danger of heading
into recession.
Speaker 3 (10:06):
It's far more significant than political party.
Speaker 2 (10:09):
You cut anyways, because quite honestly, like four years from now,
no one's gonna remember exactly when you started cutting interest
rates or raising them or this, and that they are
gonna remember if you were wrong. And I know this
because I don't know the exact dates that you know, J.
Powell raised interest rates back in twenty twenty two and
by exactly how much. But I do know that they
(10:31):
were wrong then I do know they were too slow, right,
and and we remember that. Likewise, Hey, if there's a
recession coming and they say, now we're not gonna do
anything because you know, we don't want to take a
political stance, Okay, we're gonna we're gonna remember that. On
the other hand, if there is no recession and they
start cutting interest rates, we're gonna remember that too, because Giju,
(10:51):
let inflation come back because you wanted to cut rates
so badly. That's what we remember, not well they did this,
and here was the timing to this election or to
That's all noise, honestly, h The stuff that actually matters is, Hey,
if you're wrong, that's what we're gonna remember more than
anything else. And so there's a pretty you know, big
(11:15):
importance place on them being right. But they can't get
away from the political questions just because they're always gonna
be present there. When you are appointed by a politician,
regardless of who that politician is, it's impossible to distance
yourself fully and so they try to just you know,
not even have the appearance of making politically motivated decisions.
(11:36):
But sometimes you end up with a FED meeting six
weeks before an election. And what are you gonna do?
To take a quick break here, and when we come back,
talk a little bit about Microsoft. They reported earnings after
the bell yesterday. We'll tell you how they did.
Speaker 1 (11:50):
The latest news on inflation, the FED, the economy, and
how the markets are reacting. Every morning right here on
the Financial Exchange Radio Network. Get up to the minute
market updates with Wall Street Watch week days at ten
thirty only here on the Financial Exchange Radio Network.
Speaker 5 (12:18):
This segment of the Financial Exchange is brought to in
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Speaker 2 (12:45):
Paul. Microsoft reported after the bell yesterday they're now one
of the few tech stocks that is down in trading today,
really the only major one. What's going on with Bill
Gates's former company.
Speaker 3 (13:04):
Basically what we're seeing here, Chuck. And to be clear,
they're only down one percent. They were off about six
or seven percent to post their earnings report at the
close of market yesterday, so not as significant as one
would have expected there.
Speaker 2 (13:17):
But the crux of the slightly.
Speaker 3 (13:19):
Negative performance for Microsoft today ties into AI, and specifically
it's their Azure cloud business unit, which saw revenue grow
twenty nine percent over this past quarter. That was below
thirty one percent revenue growth in this space in the
prior quarter and under analysts expectations of thirty percent. The
reason that there is so much focus on this cloud
(13:41):
business revenue is because the AI operations that we talk
about so frequently are part of this particular unit. Microsoft
is spending boatloads of money, like many of its peers
are in the AI space, to spend on data centers
and chips and everything that goes in servers, everything that
goes into the investment in that space. Some of these
(14:03):
numbers are just absolutely staggering in terms of expenses, nineteen
billion of cap X is being allocated in the past
quarter to buying equipment as well as other capital expenditures.
So there continues to be a ton of scrutiny on
what type of revenue growth investors can expect from AI.
(14:23):
And what we were just talking about Chuck off Air
is that it seems as if we've reached a point
where the hype and conjecture around AI has plateaued a
bit in the sense that the investors are now looking
for returns that quite frankly, are going to take much
longer to realize than what they would likely.
Speaker 2 (14:46):
Prefer when we talk about the AI space. What I'm
really struggling to figure out is still, hey.
Speaker 1 (14:56):
What.
Speaker 2 (14:58):
Let me rephrase that, actually, because I talked about this
a little bit a couple of weeks ago, what's what's
new in AI right now? And when I when I
say new, I don't mean hey, you know chat GPT,
Like chat GPT has been around almost two years right now,
and ultimately I really kind of wonder what's the path
to like long term large scale monetization of chat GPT.
(15:22):
Because I'm someone I use it on a regular basis,
I have like the upgraded version that's like twenty bucks
a month, because I actually, you know, get that kind
of value out of it. But the average person isn't
sitting there like, hey, I'm gonna have a bunch of
conversations with chat GPT because I just don't know that
that's how life really works. And you know, these searches
(15:44):
are expensive, and look, it's nice that I can generate
an image of, you know, a cat wearing a suit
and tie. That's that's great, But how much money is
going to be made doing that is the question? Like
it's it's been a year and a half right now,
and while we're seeing you know, these new large language
models that are coming out that you know, oh, they
(16:05):
provide better answers, and they they're smarter than they were before.
It's just iterative now. It's not that wow moment that
we had when it first came out. And so I
think where I'm going with this is, hey, what's the
path to you know, really proving that you can make
money off of this, not just make something that's fun
(16:27):
or cool, because fun and cool eventually goes away. It's
no longer the new thing, and you've got to prove
that you can make money off it, and I can't
see companies continuing to pour tens of billions of dollars
into building out these data centers if they can't actually
generate the returns from it.
Speaker 3 (16:45):
I agree with you. I'm going to highlight two use
cases that to be clear, I'm not saying that these
are a pathway to profitability, so I'm not trying to
counter the point you're making, but to try and inform
listeners that, yes, there are the fun cans of writing
a haiku or breaking out a paper that chat TPT
can do, but in terms of base case uses just
(17:06):
too that I've stumbled into sort of listening to things
out there. Morgan Stanley, for example, is going to UH
roll out AI capabilities through the client advisory meetings, where
basically for note taking and reporting purposes, they will use
AI to generate a summary of meeting notes, something that
would have been a manual process by an advisor on
(17:27):
their own end, summarizing the to dos and action items
from a meeting. Again, I'm not saying that leads to
iminent profitability, just trying to show a base case use.
Another podcast I was listened to recently, But what.
Speaker 2 (17:38):
Are they gonna pay for that is my like, that's
the thing is, Hey, this is fine if they're gonna
pay X dollars per user, but how like how much
meat is actually there? It's Morgan Stanley's is not gonna say, well,
normally we'd have to have someone in the room that
we're paying forty thousand dollars. So we're willing to pay
thirty thousand dollars if you're not gonna pay thirty thousand
(17:59):
dollars a year for note taking.
Speaker 3 (18:01):
I'm with you.
Speaker 2 (18:01):
I'm with you.
Speaker 3 (18:02):
And that's that's why I wanted to preface those points
by saying, I'm not saying that this is the gold
you know, the gold rush to a ton of revenue
from this. And then another one was Axon, which is
a company that provides a lot of resources to police
forces out there, so basically incorporating the body cam technology
that many police officers now wear and reports that police
officers have to drive. Again, it's a productivity enhancement. But
(18:25):
to chuck to your point those two cases that I've highlighted,
it's to improve productivity, which is significant, but not necessarily
a huge revenue generation. It's fascinating technology that can save
a police officer or an advisor a lot of time.
And perhaps Morgan Stanley is making the argument, oh, that
gives them more time to spend on prospecting for new assets.
(18:47):
But it's not a pure just rush of money coming
in to furtherier point, But I just want to at
least put those two base case uses out there as
some more examples.
Speaker 2 (18:57):
So and you know, I've talked to people in very
technical fields that have, you know, looked at some of
this stuff and smart people who like are on like
the cutting edge of new technology, and their general response
has been, yeah, this can do some of the stuff
that you know I need to do, But it's not
(19:17):
the game changer that people think it is because it
still requires so much oversight to make sure that it's
not doing something wrong like that. There's still work to
be done there, and I'm not sure how big the
actual business is for the ENDAI use at this point.
Let's take a quick break. When we come back, We're
joined by Todd Lutsky for Ask Todd.
Speaker 1 (19:42):
Like us on Facebook and follow us on Twitter. Act
TFE show Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving market so
far today right here on the Financial Exchange Radio network.
Speaker 5 (20:03):
Markets aren't positive territory, led by a strong rally in
the tech sector. As Wall Street awaits the conclusion to
the FEDS July meeting. While interest rates are expected to
remain unchanged today, investors will be sifting for hints to
a likely rate cut in September. FED Chairman Jerome Powell
will hold a press conference at two thirty this afternoon.
(20:24):
Right now, the Dow is up by about half a percent,
or one hundred and seventy five points, SMP five hundreds
up by one and two thirds of percent or ninety points,
and the Nasdaq surging two and a half percent higher.
Russell two thousand is up by about a quarter percent,
ten year Treasure reeled down by four basis points at
four point zero nine percent, and crude oil seeing a
(20:47):
jump today of over three percent, trading just above seventy
seven dollars a barrel. Boeing has named Robert Kelly Ortberg
as its new CEO to replace Dave Calhoun. Ort Burg
is an aerospace vet veran who ran one of Boeing's
big suppliers. Rockwell Collins, which later became Collins Aerospace, which
is now a unit of RTX. Outside of its big announcement,
(21:10):
Boeing saw another big loss in the second quarter as
both its commercial airplane and defense programs continued to struggle.
Boeing shares, however, up by one percent. Elsewhere, AMD shares
jumping by over seven percent after the chip maker hiked
its full year forecast for revenue from graphics processing units
for AI data centers. Outside of AMD earnings, several chip
(21:32):
makers are seeing gains after Reuters reported that the US
is considering expanding a rule that could restrict the exports
of semiconductored related equipment from foreign companies to China, but
that allies including Japan, the Netherlands in South Korea could
be excluded more than that. In the next hour, Starbucks
up by over three percent after the coffee chain reported
(21:55):
lower revenue and profit in the previous quarter. However, executives
did say their face to turn around the company. We're
starting to yield results, and after today's closing bell, we'll
see more second quarter earnings when Meta and Qualcom posts
their results. I'm Tucker Silvan, that's Wall Street Watch.
Speaker 1 (22:15):
This is Ask Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts and New
England for more than thirty five years, helping families with
estate and tax planning, medicaid planning, and probate law. Visit
(22:36):
Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:41):
As promised, We're joined now by Todd Lutsky for Ask Todd.
It's your opportunity to ask Todd your estate planning questions
live on the air right now. We've got the phone
lines open at eight eight eight two zero five two
two sixty three. That is the number to call to
ask Todd your questions about your estate plan or maybe
about what your estate plans should look like again eight
(23:03):
eight eight two zero five two two sixty three. We
usually get through a few calls, so make sure that
you get calling so that you have uh, well, you
got the opportunity to speak to Todd. Then, because hey,
you snooze, you'll lose I guess again eight eight eight
two zero five two two six three is the phone
number here, and we'll be taking your calls all during
(23:24):
the segment. Again, it's eight eight eight two zero five
two two six three. Mister Lotsky, How are you today?
Speaker 4 (23:31):
I'm never better? How are you not great? It's always
something with you.
Speaker 2 (23:36):
I accidentally took my cat's medication.
Speaker 4 (23:38):
Cat's medication. That doesn't sound good.
Speaker 2 (23:40):
Don't ask me how. Let's talk a little bit about
last minute planning as it relates to beneficiaries. I know
that's not often where we go, but I guess what
I'm wondering is when it comes to, you know, let's
say that you haven't done the estate planning that you
need and you're in a situation where there's a long
(24:01):
term care, you know, situation that's imminent. Yeah, is there
anything that should be done when it comes to adjusting beneficiaries,
be it on life insurance policies, financial accounts, anything like that,
just to make sure that everything's tied up and buttoned
up there as far as how beneficiaries should go. Or
does that not really play into the equation.
Speaker 4 (24:19):
I think that probably doesn't play into the equation as
much as if the question was asked and I get
this a lot too, where people say she's todd you
know you've done some planning for me, or even if
you haven't in the past, you've done some planning, and
or if you haven't, but you know, my spouse is dying.
My spouse has you know, terminal cancer or some disease
(24:40):
or something that is that is causing them to know
that they're that their days are numbered. Should we do
anything more than we've done? Yes, in that regard, I
would say, Chuck, you're right on. You should run around
and I say, look, just double check. Make sure is
anything in the trust already? If you've done your planning.
I'll first say, have you retitled stuff to the try
(25:00):
are there any bank accounts kicking around that are still
in his name alone if he's the one passing, and
make sure you put them in the trust or at
a bare minimum, just if you're a healthy spouse situation,
add the spouse as a joint owner to at least
avoid probate. Make sure the beneficiaries on your life insurance
are tucked away, meaning either you have one or if
(25:22):
it's to the spouse, maybe name it to the trust
so that the money gets in the trust. When you
pass away. Therefore it'll shelter more assets for a state
taxes as well as avoid probate. So I think your
comment is very well taken for people who might be
passing not necessarily going into the nursing home right away,
(25:43):
and that is critical. Even if you've done your planning,
make sure you don't have that stray account kicking around
that's going to send you into probate.
Speaker 2 (25:52):
Talking with Todd Lutsky from the law firm of Cushing
and Dolan. Again, the segment's called Ask Todd, and this
is your chance to ask Todd your question. You can
call eight eight eight two zero five two two sixty three.
That is the studio number here to speak with Todd
live on air about your estate plan. Still a couple
spaces open again eight eight eight two zero five two
(26:15):
two sixty three is the number to speak with Todd.
Todd when we talk about beneficiaries in general, any any
guidelines that you typically give just in terms of coordinating
beneficiary planning with that estate plan, as far as you
know who to name beneficiaries, how to properly title you know,
contingent beneficiaries, and things like that. How does all that
(26:37):
fit in yeah.
Speaker 4 (26:38):
Absolutely, So when you're doing your estate plan, make sure
you put like on a life insurance policy. Change it
from each other. Let's say a married couple situation. Right,
if it's each other, that's not helping from an estate
planning standpoint, it'll avoid probate, but it won't shelter any
assets for estate taxes. So you want to make sure
that you name the spouse. Want to make sure that
(27:00):
the primary beneficiary is the trust that you're putting together
instead of the spouse. Okay, that's key, so that way
it's getting into your trust. Make sure you're iras four
oh one k's. Those are other major assets that always
have beneficiaries on those. Typically, if you're married, you still
(27:21):
want the primary beneficiary to be the spouse. It's the
best from an estate and income tax standpoint. It's the
contingent beneficiary that you might want to name the trust
depending on what you're saying in your trust, depending on
how you're leaving your assets ultimately to your family. If
(27:42):
it's outright, you might not just name the kids. If
trust says hold the assets in trust for the benefit
of the children, then maybe you want the beneficiary of
the era to be the trust. So those are the
two items that really require beneficiaries. The rest of your
sets just titled directly to the trust.
Speaker 2 (28:04):
Talking with Todd Ltsky from the law firm of Cushing
and Dolan. Segment. Again, it's called Ask Todd because it's
your opportunity to ask Todd your estate planning questions. Eight
eight eight to zero five two two sixty three. That's
the phone number to call to speak with Todd right
now again eight eight eight to zero five two two
sixty three. We're gonna take a quick break, but then
(28:25):
it's right to your questions with Todd after this again
eight eight eight to zero five two two sixty three.
Speaker 1 (28:32):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (28:52):
All right, we're still joined by Todd Lotsky from the
law firm of Cushing and Dolan. Here, let's go now
to your calls and your questions for Todd. First in
the queue, we got Tom in Portland. Tom, what is
your question for Todd Lutski?
Speaker 6 (29:07):
Good morning? What is your trigger for a recommendation to
get to create a trust. So net worth is you know, yeah, yeah.
Speaker 4 (29:16):
Yeah, no, And stay on the line because I'm gonna
ask you a couple of questions, like how old are you?
Sixty sixty? Are you married?
Speaker 6 (29:25):
Yeah?
Speaker 4 (29:25):
Kids?
Speaker 6 (29:28):
Yeah, but grown adults.
Speaker 4 (29:29):
Oh, they're still your kids though they never go away.
So any grandkids yet or not yet?
Speaker 2 (29:35):
No?
Speaker 4 (29:36):
Okay, So here this is part of the answer, right,
this is for everybody. I just was asking it this
way so that everybody can see that when you come in,
these are some of the things that help us decide
whether we do an estate plan for you or not. Right,
just because you come in doesn't mean you need an
estate plan. So I ask people you know, name, address,
phone number. We learn about how old you are, We
(29:57):
learn about your family dynamics, do you have do you
have grandkids? You know, we want to know if everybody
gets along reasonably well or is there a lot of
fighting going on in intra family? And then we ask
about assets, Right, how much are you worth? What kind
of assets do you have? Home vacation, home rental properties, eras,
(30:21):
investment accounts, you know, and all of that matters. It's
not just the dollar amount, but it's the type of
assets you have, like, am I heavyweighted in retirement accounts?
Am I heavyweighted in rental properties?
Speaker 6 (30:36):
You know?
Speaker 4 (30:36):
So all that makes a difference. So these are all
the piece parts that come together to make up that decision.
And then how do we decide which way you go?
Once we know your age, I'd say sixty and over,
I'm going to ask also about protecting assets from the
nursing home that may be an objective, reducing estate taxes,
avoiding probate, providing a bloodline plan to your face family.
(31:01):
Those are usually the questions that direct us as to
where to go once I get the background information. So
in your case, I would have asked all of those questions.
And then the finally the last piece is the size
of your estate. So if you're like three three and
a half million, four million or below, and you're sixty
(31:23):
and over and you want to do nursing home planning,
we'll probably be talking about two irrevocable trusts. If, on
the other hand, you're worth well over that and regardless
of your age, we'll probably be talking about revocable trusts.
So that kind of guides us as to where we
want to go. And I don't want to forget young people. Right,
(31:44):
what if you're recently married, have some young children. You
might not have the asset level yet, but now it's
becomes even more important, right because now you're planning in
case you die to take care of minor children who
cannot own anything, so the trust will do that. So
there's a little bit about what to think about when
you do your estate plan And since we are at
(32:05):
the end of the month, folks, last chance to get
this guide for the month called last minute Planning for
Medicaid Eligibility, which is not necessarily what to think about
when you're doing your planning, but what to think about
when you're faced with nursing home planning, our nursing home admission.
Excuse me, and you have not done planning, or you're
(32:26):
faced with nursing home admission and have done planning. But
there's still assets outside the estate, outside the trust, right,
there's always assets that need to be protected. This guide
will show you how not to just write the check
to the nursing home, but will show you how to
convert countable assets to non countable assets. Last minute houses,
(32:47):
rental properties, iras, and they're different for single people versus
married couples. Both are addressed in the guide. Last Chance
to get at Folks eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.
One Last Time eight sixty six eight four eight five
(33:08):
six nine nine or Legal Exchange Show dot com.
Speaker 2 (33:12):
Todd, I've got another caller for you here. Let's go
to Jeff in Florida. Jeff, you are on with Todd Lotski.
Speaker 6 (33:19):
Thank you, thanks for taking my call. Todd I called
a couple of months ago about a grant Tour irrevocable
trust in the power of substitution in order to get
the cost basis of the securities in the Grand Tour
Irrevocable Trust higher. Okay, now we do have that clause
(33:41):
in our irrevocable trust. My question is is if you're
taking securities from let's say my parents trust and we're
swapping them with the kids trust, which is the Grand
Tour Irrevocable Trust, we have to fill out paperwork, sends
it through our financial house, and they're going to make
the swap. Now, it's basically impossible to get it to
(34:03):
even out to the dollar because depend upon when they're
going to switch the securities is that going to be
a problem if it's a little bit off.
Speaker 4 (34:11):
So first let me ask you this, are these irrevocable
trust you're talking about medicaid irrevocable trusts, or are they
where you've made a completed gift and the assets are
out of the estate for state tax purposes.
Speaker 6 (34:23):
The latter it's out of the estate.
Speaker 4 (34:25):
Okay, you're right, so you do need the power. The
power of substitution in and of itself is not what
gets you a step up and basis, but what it
does allow you to do is say, hey, wait, stuff
I gave away, I'm dying now, and I want to
now get that out so that it's low basis into
my estate and put something of equal value back. I
have never heard of whether or not exact you know,
(34:49):
whether the security went up or down before you made
the change, is ultimately going to matter, right. The bottom
line is that you're trying to do it with a
fiduciary capacity to put something of equal value back into
the estate or back into the trust while taking out
low basis assets and putting them back into the estate.
(35:11):
So for everybody else's edification, that means when you die
with those low basis assets they will get a step
up in basis, eliminating the built in gain, whereas hopefully
you moved assets into the trust that are high basis
so you don't have to worry about losing the step
up because they're already high basis. I think overall, Jeff,
(35:34):
that if it's a little bit off here or there,
I don't think it's going to disqualify the entire transaction.
In other words, at the end of the day, if
you end up dying with those assets in the estate
of the decendent, I can't imagine the government's going to say, yeah,
that's not part of your estate, so they're gonna be included,
(35:56):
even though the amount you put in might not be
exact question, and I don't know that there's an actual
law or an answer directly for that to give you
a complete answer.
Speaker 2 (36:07):
Mister Watski, thank you so much for the time today.
Speaker 4 (36:09):
Always a pleasure.
Speaker 2 (36:10):
Thank you.
Speaker 1 (36:12):
This has been Asked Todd on the Financial Exchange Radio network.
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning
Medicaid Planning and Probate Law call eight hundred and three
nine three four thousand and one or visit Cushing Doolan
dot com. The views expressed in this segment are solely
(36:32):
those of Cushing and Dolan Armstrong advisor. He does not
provide any legal or tax advice. Please consult with your
legal or tax advisor on such matters. Cushing and Armstrong
do not endorse each other and are not affiliated. Changes
to Medicaid occur almost every year, and if you're not informed,
your assets could be at risk, especially if you or
your spouse need nursing home care. Cushing and Dolan are
experts and held your law and their new guide is
(36:52):
called Last Minute Medicaid Eligibility. It'll help you understand the
Medicaid process, which is critically important if you're retired or
getting close to retiring. The guide has important information regarding
numerous strategies that can protect your assets from the nursing home.
It could be your primary home, a vacation home, or
any rental property you may own. You've worked hard to
achieve wealth, so don't take chances when it comes to
(37:12):
protecting it. Get your copy of Cushing and Dolan's brand
new guide called Last Minute Medicaid Eligibility Call Rate now
eight six six eight four eight five six ninety nine.
That's eight six six eight four eight five six nine nine.
Or you can request it online by visiting legal exchainshow
dot com. That's legal exchainshow dot com. The proceeding with
paid for in the views expressed are sole lead those
(37:33):
of Cushing and Dolan. Cushing and Dolan d or Armstrong
Advisory may contact you offering legal or investment services. Cushing
and Dolan in Armstrong Advisory do not endorse each other
in or not affiliated
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