August 21, 2024 • 37 mins
Chuck Zodda and Marc Fandetti discuss the looming revisions to the yearly jobs report and why it might throw the Fed off current rate cut plans. Are most signs pointing to no recession in the near furure? Todd Lutsky joins the show for his weekly segment, Ask Todd. This week, Todd explains the five-year lookback period and why it is very important to understand when planning your retirement.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:21):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is The Financial Exchange,
with Chuck Zada and Mark Vandetti, your exclusive look at
business and financial news affecting your day, your city, your world.
(00:44):
Stay informed and up to date about economic and market trends,
plus breaking business news every day. The Financial Exchange is
a proud partner of the Disabled American Veterans Department of Massachusetts.
Help us support our great American heroes by visiting DAV
FIVEK dot Boston and making a donation today. The DAV
five K Boston is presented by Veterans Development Corporation. Face
(01:08):
is the Financial Exchange with Chuck Zada and Mark Vanbetti.
Speaker 2 (01:13):
Chuck, Mark and Tucker with you here.
Speaker 3 (01:15):
We continue to We got the wagons heading west towards
Jackson Hole. It's gonna take us all a week to
get there, but we are broadcasting live from the Oregon
Trail as we make our way out to ce J.
Speaker 2 (01:28):
Powell.
Speaker 3 (01:29):
We're actually not broadcasting from the Oregon Trail. Jackson Ole
wasn't really even on the Oregon Trail. It's a little
bit north of where it passes through there. But in
any case, Mark, all eyes are focused on the FED
this week, mostly because quite honestly, there's not much else
of much interest this week in terms of either economic
data or earnings. But we did get an index report
(01:51):
this morning from Target that follows Walmart in painting a
stronger picture of consumer spending. Then maybe we thought we
had a couple of weeks ago your thoughts, uh, we're
seeing that.
Speaker 4 (02:05):
I was wonder how much you can generalize from this
stuff because targets results. It seems to me I'm not
a consumer discretionary stock analyst, but my sort of armchair
reading of it is that measures that they took to
increase foot traffic, including very publicly asserting that they want
to lower prices and doing so conspicuously, they seem to
(02:27):
have worked, but average spending didn't go up, although you know,
year over year, I guess results were fine for existing stories.
So overall, would you call would you call this report?
I have, I'll finish. I'll finish the thought. But am
I safe in calling this an okay report?
Speaker 2 (02:43):
Yeah?
Speaker 3 (02:44):
I think that it's it's quite fine. I mean, look,
investors think it's better than fine. The stocks up thirteen
percent after the report for the worst maybe the big
reason why they raised their guidance. You know, they're not
talking down their guidance and saying, hey, we've got you know,
we're not going to be as profitable as we thought. Instead,
it's no, we can actually raise our profit guidance for
(03:06):
the rest of the fiscal year. And that's not something
that you typically see retailers doing immediately on the eve
of recession. It's just not what you would typically see. Now, Mark,
I have a question for you, and I don't know
that if you have any of this offhand or not,
because this is literally the first time i've mentioned it
to you.
Speaker 2 (03:26):
Great, is there? I know, no.
Speaker 4 (03:29):
I welcome.
Speaker 3 (03:29):
This is the beauty of a live show, is you know,
we just get to throw things at each other and
see what happens.
Speaker 2 (03:35):
Sometimes it's beautiful, you know.
Speaker 3 (03:38):
Is there any type of correlation between what we see
from retail sales and GDP as a whole.
Speaker 4 (03:47):
I would assume so, because retail sales and spending are
obviously highly correlated, they tend to move together, and spending is,
in an accounting sense, the vast majority, about seventy percent
of GDP. So I haven't looked at that in particular.
I don't think maybe I have at some point, but
a priori, as they like to say, I would suspect
(04:08):
that that would be the case.
Speaker 3 (04:09):
So in my opinion, even though there still are some
other weak spots, I mean, housing, earlier this year looked
like it was ready to be a nice little growth engine,
and since its stalled out and now is creating some drag.
Speaker 2 (04:21):
But the last month.
Speaker 3 (04:22):
Or two, you know, the retail data has started to
look better, and so's it's tough to look at that
picture and say, yeah, there's a real problem that's developing here.
So I think that anytime that you are talking about, Hey,
there's gonna be a recession, you know, happening, you know,
right now or in the next couple months. You have
to say, Okay, what are you know four or five
(04:44):
data points that we can point to and say these
are evidence that that recession is coming. In a month ago,
there were a few where you could say, yeah, these
are things we need to watch. The employment picture was one,
Housing was another, Retail sales consumers spending was another one.
We haven't really seen any weakness on the industrial production side, correct, mark.
Speaker 4 (05:07):
Yeah, the typical measures there industrial production capacity utilization that
the FED produces monthly are I'll just sum them up
by saying, fine, So.
Speaker 3 (05:16):
You had a few that were out there in the
last couple of weeks now, and again, it's not enough
to put the recession talk to bed. I do want
to emphasize that, hey, if things can start to look
better in a couple weeks, they can also start to
look worse. But the employment picture looks different now than
it did a couple of weeks ago because weekly jobless
claims have improved meaningfully over that time period. Again, it
(05:39):
doesn't mean that everything's fine just because you get a
couple weeks of good jobless claims, but things look better there,
and we've gotten a retail sales report for the month
of July, plus quarterly earnings for Walmart and Target that
both were better than expected. And so now you have Okay,
we've got housing that's lagging and employment still has some
work to do. But that's not enough to say, yeah,
(06:03):
there's a recession that's either coming or happening imminently in
my opinion, your thoughts.
Speaker 4 (06:10):
Yeah, Look, you never really know. Sometimes recessions are the
result of changes within the economy and within the business cycle.
Sometimes they're a result of outside forces or shocks. So
the latter are not foreseeable almost by definition. That's why
we call them shocks. You could just call them surprises too.
(06:33):
Growth ebbs and flows. Even during expansion, sometimes it slows
down to the point where it looks like we're going
to lose the patient. The pulse gets really faint, and
then it picks back up again, and the proximate cause
might not be easily identified. So I don't want to
say where in the clear. I'm not in the business
(06:55):
of doing short term you know, economic forecast. Nobody should
be arguably, but yeah, there's no evidence, Chuck, I think
is what you're saying of an immediate, say, cause of
a broad downturn that typically meets the definition of recession.
Speaker 3 (07:13):
I think we're at a point now where more data
is needed in either direction to prove either things are
fine or no. We actually are heading towards recession. It's
just not now. It might be a few months later.
Speaker 4 (07:25):
I mean, arguably you're always heading toward recession. I think
there are some would disc that's.
Speaker 2 (07:30):
Like saying that that ultimately mark you know, like listen,
I get it, Yeah, I like it. Yeah, yeah, I don't.
Speaker 3 (07:36):
Like all economies, like analogy, all matter ten towards tends
towards entropy, all you know, people tend towards death, and
all economies tend towards recession.
Speaker 2 (07:44):
Right, is that that's where.
Speaker 4 (07:46):
We're I think some researchers would disagree. They don't think
recessions are inevitable. Some would famously said twenty five or
so years ago, recessions don't occur. Or I think with
they said was expansions don't die of natural causes. There's
a culprit, there's a murderer. That murderer is the FED
(08:06):
I'm not sure I agree with that for what my
two cents is worth. So not everybody agrees that recessions
are inevitable, but I think the vast majority of economists
who specialize in this area would say, well, it's self
evident that they are because they happen despite our best efforts.
But that doesn't mean that some people won't try to
temper the business cycle or to prevent recessions altogether. I'm
(08:28):
not sure that you can.
Speaker 3 (08:30):
So that's what we have in terms of kind of
where the economic data is stacking up at the moment.
Let's take a quick break here when we come back.
There have been some headlines.
Speaker 2 (08:41):
That are.
Speaker 3 (08:44):
Perturbing me, I think is the nice way of putting it, specifically,
regarding these revisions that are going to be happening towards
the job's numbers for the last twelve months.
Speaker 2 (08:58):
So we're going to take a quick break here and
we come back.
Speaker 3 (09:01):
We're gonna discuss whether or not a million jobs are
suddenly going to vanish as a result of Bureau of
Labor Statistics revisions that are happening We're supposed to happen
fifteen minutes ago, but for some reason have not yet
been published, but we'll talk about what exactly is going
on here and why it does or does not matter
(09:21):
to the health of the US economy.
Speaker 2 (09:23):
That's coming up right after this.
Speaker 1 (09:26):
Get up to the minute market updates with Wall Street.
Watch Weight Days at ten thirty only here on the
Financial Exchange Radio Network. Miss any of the show. The
Financial Exchange Show podcast is available on Apple, Spotify, and iHeartRadio.
Hit the subscribe button and leave us a five star review.
This is the Financial Exchange Radio Network.
Speaker 5 (09:49):
This segment of The Financial Exchange is brought to you
in part by the US Virgin Islands Department of Tourism.
The US Virgin Islands are Saint Croix, Saint Thomas, Saint
John enjoy perfect other world class dining, incredible beaches in
a vibrant nightlife. Had to visit USVII dot com and
book your trip today. No passport is needed and there's
no money to exchange. Take your next vacation in America's
(10:11):
Caribbean paradise the United States Virgin Islands. Go to visit
USVII dot com to book your trip. That's visit USVII
dot com mark.
Speaker 3 (10:21):
So there's there's pieces all over the Internet talking about
how the Bureau of Labor Statistics is going to be
revising jobs numbers for the last year, with a million
jobs potentially being revised downward in those jobs not being added.
Is this something that's really nefarious or just really boring?
Speaker 4 (10:44):
Actually, well, you know, when you and and and Mike,
as you are here most of the time, report on
US government economic releases, you call them statistics. You call
them that for a reason that the word statistic refers
to the fact that it's an s of an underlying
value that we don't know for sure. When we say
(11:04):
one hundred and what was it fourteen thousand? I just
looked at it yesterday, so it should.
Speaker 2 (11:07):
Be yea one hundred fourteen Okay.
Speaker 4 (11:08):
So we picked up one hundred and four According to
the so called establishment survey that you and Mike reported
on earlier this month, one hundred and fourteen thousand jobs
were created. Is that the right number? Well, no, it's
a sample of about what is it, sixty thousand businesses?
Speaker 2 (11:23):
I think?
Speaker 4 (11:24):
Okay, Okay, So it's a sample, which means the true
number is somewhere between. As it turns out, we do
know the interval in which it lies plus or minus
one hundred and thirty thousand. I'm laughing uncomfortably a little bit,
because that means the actual number could have been negative
or it could have been very very healthy.
Speaker 1 (11:42):
We just don't know.
Speaker 4 (11:44):
So you get revisions almost immediately after the fact the
following month, because you and Mike Armstrong report on those,
and then once a year or so. As I understand it,
not something I paid too much attention to historically.
Speaker 2 (11:55):
No one pays attention to it historically.
Speaker 4 (11:58):
Okay, so I'm not alone, but it's a big deal
this year because it intersects with these concerns about an
uncomfortable amount of slack opening up in the labor market.
Taking things at face value, we know that some slack
has opened up. Labor market conditions, said differently, have loosened.
Everybody knows this. You know, unemployment's gone up. You can sense,
(12:19):
even if you're not tracking in your mind past payroll changes,
that the pace has slowed a bit. The big question is,
is it slowed even more the pace of job editions
according to the Establishment Survey than we thought it had,
in which case the FED might indeed be a little
bit behind the curve in terms of loosening monetary policy
lowering interest rates, so it's hitting at a very sensitive time.
(12:41):
Thus the attention and some of the eye popping too
estimates of revisions from Goldman, Sachs and others with swarms
of PhD economists who ought to have a good sense
for this.
Speaker 3 (12:51):
And here's what the BLS does is twice a year
they do it in August, that they do a preliminary
one in August, and then a final revision in March
of the following year. They do every year. By the way,
this is not something that's say one off. I literally
went and pulled the data this morning when I knew
we were gonna be talking about this, because I knew
that it was gonna be heated, because I've been on
(13:12):
Twitter for like the last two days now and all
I'm reading about is, oh, the BOS has been making
up the numbers and now they got caught and you know,
blah blah blah.
Speaker 5 (13:21):
You should see Twitter now, Chuck, should I twenty two
minutes late? You know, you can imagine what it looks like.
Speaker 3 (13:29):
Yes, But in any case, like people are like, oh,
like they finally got caught in there, like having to
like tuck tail. No, they literally do this every year
in August, every year in August, and every year in March.
And the reason why is when the Bureau of Labor
Statistics puts out their monthly jobs numbers, they use what
they call a birth death estimate for the number of
(13:51):
businesses that are out there. Effectively, they don't know how
many businesses actually exist at any one time. It gets
at what Mark talks about in terms of this being
a statistic that they're estimating. So what they do is
they estimate how many businesses are being created in a
month and how many are being closed down because they
don't know that there's no way to know what that
(14:11):
is in real time. And so what they do after
they get more data, specifically the jobless claims data, the
weekly jobless claims data that they get, they effectively mesh
that with the numbers that they have and then say, okay,
our estimates on the number of businesses added or removed
was off in this direction, and here's how we're revising
(14:33):
the numbers as we need to. So if you go
back and look at the last three and I'm just
gonna use the last three just because again they're fresh,
and this has been something that you know, is happening.
You know, every year, the last three revisions that we've seen.
You go back and look at them. Last year, the
(14:55):
revision was fifty thousand fewer jobs created than thought.
Speaker 2 (14:59):
Okay, it's not a big shift.
Speaker 3 (15:01):
The year before was eight hundred thousand more jobs created
than initially thought. They revised the numbers up by eight
hundred thousand. Remember that was twenty twenty two, twenty twenty one,
a million more jobs created than they thought. They revised
the number up by a million. So the idea that, hey,
they might be revising the numbers down by a million,
and this is some huge conspiracy. No, they do these
(15:22):
revisions every year, every single year.
Speaker 2 (15:27):
They do them.
Speaker 3 (15:28):
This year, it appears that the estimates were likely far
too rosy in terms of the number of businesses being
created versus those shuttering in previous years. They were far
too pessimistic about those numbers, and so they had big
upward revisions. It's very possible that the big downward revision
now is because they had such big upward revisions before
(15:49):
that they changed the methodology to try to minimize errors
in that direction and maybe ended up producing one in
the other direction. But I also see people pointing to
this as well, this is evidence that this is, you know, politicized,
and they've been inflating these numbers. Let me ask you this,
if if the federal government were inflating the numbers, specifically,
(16:10):
if the Biden administration were inflating the numbers, would they
go and admit it right before an election?
Speaker 2 (16:20):
No?
Speaker 4 (16:20):
I know that was rhetorical, but I feel compelled to answer.
Speaker 3 (16:22):
No, if you're making the numbers up, you don't just say, well,
there's an election coming up.
Speaker 2 (16:26):
Got to come clean. No, Like, we can't. This is
not how this works.
Speaker 4 (16:30):
Do we have to do? We have to dignify these
We do?
Speaker 3 (16:32):
We do because like it's it, because it's pervasive, it's
it's people.
Speaker 4 (16:37):
And the people making these assertions know nothing about the process.
They've never been in government, never mind worked for the BLS,
where you have professional, lifetime PhD economists who couldn't be
more They had their political biases, but they couldn't be
more professional. They served through various administrations, They have thirty
(16:58):
forty year careers. These people don't turnover with changes in
presidential administration, will party so the idea that look, they
freely admit that these estimates have high have wide error
bands if you like, associated with them. Thus the revisions,
there's no bias in the revisions based on incumbent party.
(17:20):
There are no people have looked at this, and there
are no biases in the revisions. They're effectively random, so
there's no evidence for that. And I'm not even sure
I'm again dignifying these. I'llors call them conspiracy theories. With
an explanation to me just perpetuates the conversation. But I guess,
like you said, it's in the news, we have to address.
Speaker 2 (17:41):
It, Tucker. I'm still looking.
Speaker 3 (17:43):
I'm still trying to see if we have no It
looks like we do have numbers out now.
Speaker 5 (17:47):
Bloomberg just came out that looks like the BLS just
published it.
Speaker 2 (17:52):
Do you know what they published? I still can't find
the actual number is.
Speaker 5 (17:55):
And this is according to the Bloomberg ticker. I just
saw here BLS US employment rose one point three percent
in year through March twenty twenty four.
Speaker 3 (18:05):
Okay, so the ballpark just eyeballing it right now. It
is about a million job edition reduction. So that takes
job growth over that time period from call it two
hundred and forty thousand down two about one sixty thousand
a month. So that's what you're you're looking at on this.
Speaker 4 (18:23):
Okay, So doesn't that BLI the idea that this is
somehow politically influenced. Why would you do that to yourself
if you were the incumbent administration.
Speaker 2 (18:34):
That's the question that you would ask.
Speaker 3 (18:35):
I mean, look, if you really want made up numbers,
you go to like North Korea, where they just published
one number. They probably don't even publish a number in
North Korea. Look at Chinese GDP, they just they publish
it and and like that's it. Or they just stop
publishing data that they don't want you to see, like
the youth unemployment rate. When they stopped that, was it
twelve or eighteen months ago? Yeah, Like that's what you do.
(18:58):
You don't say no, we were wrong. It was actually worse.
So this again, it happens every year that they do
these revisions. It's not that the BLS suddenly got caught
fudging numbers.
Speaker 2 (19:09):
It's no.
Speaker 3 (19:10):
They revise these numbers every year to try to make
them more accurate, and some years they miss high like
this year where they had to revise the number of
jobs created down by a million. Some years like twenty
twenty one and twenty two they miss loan after revise
them up by almost a million.
Speaker 2 (19:25):
Let's take a quick break here.
Speaker 3 (19:26):
When we come back, we've got Wall Street Watch, and
then you're joined by Todd Lutsky from Cushing and Dolan.
Speaker 2 (19:32):
Right after this.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
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 and what's moving market so
far today right here on the financi Shall Exchange Radio Network.
Speaker 5 (20:04):
Well, markets are in positive territory narrowly, as Wall Street
is sifting through the annual jobs revision posted just minutes ago.
A lot to digest there, in addition to more retailer
earnings unveiled this morning. Right now, the Dow is up
by nine points, SMP five hundreds up by about a
quarter percent, and the Nasdaq is up by a third
(20:26):
of a percent. Of Russell two thousand also up by
a third of a percent.
Speaker 2 (20:30):
Ten year treasure.
Speaker 5 (20:31):
Yield is flat a three point eight one percent, and
crude oil up about half a percent, trating its seventy
three dollars in fifty three cents a Barrel Target shares
are jumping fourteen percent after the retail giant handily beat
second quarter earnings and revenue expectations and also hiked its
annual earnings guidance. However, the company maintained a caution's outlook
(20:54):
for the full year. Macy's, on the other hand, slash
its full year sales forecast at his can tending with
selective shoppers in more promotions. As for the second quarter
of the struggling retailer beat earnings expectations but did miss
on revenue, that stock down by fourteen percent. The parent
company to TJ Max and Marshall's TJX companies posted another
(21:16):
quarter of sales growth and upped its annual profit forecasts,
sending that stock up by six percent. Meanwhile, breaking news
from Ford this morning, where the Detroit carmaker canceled its
plans for a large electric suv and expects to take
a one point nine billion dollar hit related to special
charges in write downs. Ford continues to adjust its ev
(21:39):
plans as a result of softer than expected demand on
that front. That stock, however, up by one and a
half percent, and after today's closing or excuse me and
later today later this afternoon at about two pm, Wall
Street will be sifting through meeting minutes from the fed's
July meeting. I'm Tucker Silva and that's Wall Street.
Speaker 2 (21:58):
Watch.
Speaker 1 (22:00):
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
a state and tax planning, Medicaid planning, and probate law.
(22:22):
Visit Cushingdolan dot com. Now here's Todd Lutsky and.
Speaker 3 (22:27):
We are now joined by Todd Lutsky from the law
firm of Cushing and Dolan. We call the segment Ask
Todd cause you get to ask Todd your questions. We've
got the studio lines open at eight eight eight two
zero five two two six three. Todd Lutsky is here,
and so again this is your chance to ask him
your questions about your estate plan or maybe your lack thereof.
(22:51):
And hey, how do you get moving in the right direction?
That phone number again is eight eight eight two zero
five two two six three. Almost got through everyone last week,
but didn't quite so again, if you do have a question,
get calling to make sure that you get an early
spot in line.
Speaker 2 (23:06):
Here. That phone number again.
Speaker 3 (23:08):
Is eight eight eight two zero five two two sixty three,
and we'll get to your calls in just a little bit.
Mister Latsky, how are you today? I am never better
in you.
Speaker 2 (23:19):
Uh, things are looking up actually good.
Speaker 3 (23:22):
I found a book yesterday and it's it's called How
to Solve Fifty Percent of Life's Problems.
Speaker 6 (23:28):
Oh yeah, I bought two that'll help you. You're all set.
Speaker 2 (23:32):
I thought I figured i'd be good.
Speaker 3 (23:33):
So Todd, I want to talk a little bit about
Medicaid irrevocable trusts and people hear the idea of hey,
there's this five year look back. A couple questions on that.
Can you just define that term for people who aren't
familiar with it? And the second question is when does
that look back period actually start?
Speaker 6 (23:53):
Yeah? Great point. A couple of things on the on
the five year rule. Many people I know you mentioned
it in connection with the trust, Chuck, But I just
want to clarify one thing before I define it that
some people think that Oh, well, if it's five years,
if I put my assets into this irrevocable trust, I'll
just give it to my kids instead. Well, the five
year rule applies regardless of who you give it to.
(24:17):
You could give it to your kids, which nothing good
comes from that. Never mind the fact that it takes
five years to protect it from the nursing home. There's
a lot of other negatives. But whether you give it
to a child, whether you give it to a trust,
whether the answer is that any time you take an
asset and dispose of it and receive less than fair
(24:37):
market value in exchange for what you did, then you
made a disqualifying transfer. And that is the definition of
what triggers the five year waiting period. So that's a
disqualifying transfer.
Speaker 2 (24:51):
What is it?
Speaker 6 (24:52):
It means that if you've transferred that asset and received
less than fair market value in exchange for that, the
when you get sick in the next five years and
go to a nursing home, you'll be denied Medicaid benefits.
It's that simple. It's a hard and fast stop. So
if you're going to do your planning, try to think
about That's why we do it now, right, we do
(25:14):
it when we're feeling good, not when we're not feeling good,
and we can make the transfer and get beyond our
five year waiting period. Has nothing to do with any
other part of your estate plan. Your trust will still
avoid probate, reduce the state taxes, provide a bloodline plan.
You could die the next day. I jokingly you say,
the dying part isn't the problem that works immediately. It's
(25:34):
only the nursing home that takes five years in order
to get there. When does it start? It starts the
day you create the trust. Let's say the day you
make the disqualifying transfer. But since I'm talking more about
a state planning, let's focus on the trust. A client
comes in and says, let's do medicaid planning. Fine, I
(25:56):
explain the whole process, we get started. They leaving the meeting,
they'll say, okay, so did the five year clock start
to run?
Speaker 2 (26:02):
Yet?
Speaker 6 (26:03):
No, when does it start to run. It starts to
run the day they come back in. After we review
the documents and actually transfer the asset into the trust.
They need to sign the document and fund the document.
It's the funding of the trust that triggers the five
(26:24):
year waiting period. And the clock beginning to run. So
hopefully that was a good definition all the way around.
Speaker 3 (26:31):
Talk with Todd Letski from the law firm of Cushing
and Dolan. If you've got a question for Todd, this
is your chance to ask him. Studio lines are open
at eight eight eight two zero five two two sixty three.
Still got space from maybe one or two more people
at most again eight eight eight two zero five two
two six three. We're gonna take a quick break here,
(26:52):
but when we come back, it's right to your questions
with Todd. Then that phone number again is eight eight
eight to zero five two two six three, and we're
taking your calls when we return.
Speaker 1 (27:05):
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 3 (27:24):
All right, we got some questions for you, Todd. Let's
go first to Eric in Long Meadow. Eric, what's your
question for Todd Lutsky.
Speaker 5 (27:32):
Goring and gentlemen, My question is I'm in charge of
the family members trust, on.
Speaker 1 (27:37):
The trustee of his trust. Now I pay his bills.
Speaker 5 (27:41):
This credit card and whatnot?
Speaker 2 (27:46):
Uh?
Speaker 6 (27:46):
Oh, I do I think we can hear him?
Speaker 3 (27:51):
So yeah, Tucker, why don't we put Eric on hold
for a second and see if we can get him back?
And why don't we go instead to let's go to Nancy?
Nor would just while we get Eric back on the line. There, Nancy,
what's your question for? Todd Lutsky?
Speaker 7 (28:05):
Good morning, Thank you for taking my call. Fifteen years ago,
my father died and a year later my mother signed
the house over to me. We lived together. I've been
taking care of her, but I have three other siblings.
What happens to the house when she passes away?
Speaker 6 (28:21):
Well, you said, if I understand this, Nancy, you said
that after your dad died, your mom gifted the entire
house to you. Is that correct?
Speaker 7 (28:31):
Right?
Speaker 6 (28:32):
So only your name is on the deed?
Speaker 7 (28:34):
Correct?
Speaker 2 (28:35):
All right?
Speaker 6 (28:35):
So when you say what happens to the house after
she dies? Nothing, because she doesn't own it. Her estate
doesn't own it. It's not part of her estate. It's
a completed gift that she made to you years ago.
I'm guessing she probably didn't file a gift tax return,
not that it necessarily would have mattered you. Now are
the fee simple title holder of the property, so if
(28:57):
it's been more than five years ago, it's protected from
the nursing home. Unfortunately, you lost the step up in
basis because she won't die owning it, and ultimately you
have no obligation to do anything with it when your
mom dies. Now, if your mom's wishes are I'd like
to leave this to three all three of my children then,
(29:19):
or however many children she has, then the answer is
that's not going to happen unless you decide you wanted
to honor that wish. But if you do, you simply
will have to prepare a deed transferring the property to
the other siblings, which will ultimately be a gift by
you to them, And so technically it'll be a taxable
(29:39):
gift because I'm sure it's going to exceed eighteen thousand
dollars per year per person, So in that case you
would need to file a gift tax return. But the
good news is you have a thirteen million dollar gift
tax exemption. Thirteen point six million dollar gift tax exemption,
so it shouldn't really matter from a state tax standpoint
for you. I don't think, I don't know the numbers,
(30:02):
but it will eat into your Massachusetts two million dollar
estate tax exemption a little. So I don't love the
idea that she gave it away, but she did so
it is what it is. And unfortunately she does run
the risk of potentially disinheriting her other children, as well
as exposing it to your creditors, and of course not
even having the right to live there. But I know
(30:23):
you'll take care of her and you won't kick her out.
But these are all issues for the bigger listening audience, right,
These are things that I don't love. I don't love
it when houses are given away to children during life.
It's I don't think anything good really comes from it.
This is just a little example of it. But hope
that helps Nancy and folks. One of the things you
can do to prevent giving away your house, or instead
(30:45):
of giving away your house while you're living, is learn
about these Medicaid irrevocable trusts. The guide we're giving away
is unlocking the power of Medicaid irrevocable trusts in a
very simple question and answer format. It will explain to
you all the dos and don'ts of these trusts. And
if you've ever thought these weren't right for you, or
(31:07):
you weren't sure about how they work, or you're afraid
of them. This guide will clear that up for you.
I mean it answers everything from what can I put
in the trust? What are the gift tax consequences? Can
I sell my house? Can I buy another one? What
are the taxes if I sell my house? What? What
can I live off the income? Can I manage my money?
Speaker 2 (31:26):
Folks?
Speaker 6 (31:26):
On and on. All the questions are answered in that
question and answer format. Get the guide eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com again eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
and do that rather than give away your house when
(31:49):
you're living.
Speaker 2 (31:50):
Let's go back to Eric and Longman.
Speaker 3 (31:52):
I think we got some better sound now, Eric, what's
your question for Todd?
Speaker 2 (31:56):
Hi you doing?
Speaker 5 (31:58):
I'm in My father passed and he put me in
charge of the state and on the trustee of another
family member.
Speaker 1 (32:04):
Okay, and Charger that I pays all his bills and whatnot.
Now when the money runs out.
Speaker 5 (32:11):
And if he has any debt, if I on the
hook for that.
Speaker 6 (32:15):
So let me ask you this. You're saying your dad died.
There's a trust in place, and there's a share inside
dad's trust of which you control that money for the
benefit of your sibling. Correct, Yes, and you actually use
that money to pay some of his bills, to make
distributions to him as he needs it. Correct Correct, So
(32:36):
he never owns this money. He doesn't own this, this share,
this share that's inside Dad's Now your late father's trust
isn't owned by him, so it's not even subject to
his creditors. So if he has creditors, these assets are
not subject to those creditors because this isn't his money.
(32:58):
And no, you're absolutely not on the hook because it's
not your money either. So and it's not your it's
not you're not subject to his creditors. You're just trustee
of a bucket of money that really it's to take
care of him, but he doesn't own it. So the
quick answer is, no, you're not on the hook as
trustee of that trust if in fact this money runs
(33:21):
out and he runs up creditor problems and bill problems.
Not not your your worry.
Speaker 3 (33:28):
Todd, We've got another caller for you here. Let's go
to Clyde in New Hampshire. Clyde.
Speaker 2 (33:33):
You are on with Todd Lutsky.
Speaker 6 (33:36):
Hey, how you doing?
Speaker 2 (33:36):
God good? Quick question?
Speaker 7 (33:39):
Do a house have to be paid for before you
put it into a truck?
Speaker 6 (33:45):
So you're saying, if you have a home and it's encumbered,
you have a mortgage on it, or or a home
equity line or something correct.
Speaker 2 (33:51):
Correct.
Speaker 6 (33:52):
So if it's your primary residence and you have an
equity line or a mortgage still outstanding on your home home,
when you want to put it into a medicaid I'm
guessing one of these medicaid irrevocable trusts. So I'll answer
it both ways. One if you want to put it
into a revocable trust, because that's the kind of planning
you want to do. It does not matter. It's a
(34:15):
revocable trust. You can put encumbered property in there anytime
you want and it will not trigger the duon sale clause.
And that's what we're worried about, right, We're worried about
transferring property and triggering the duon sale or the duon
transfer clause that I'm gonna venture to say exists in
every mortgage, Okay, because remember they lent the money to you,
(34:36):
not to who you're giving it to okay, so revocable
trust no problem. Irrevocable trusts. If you want to transfer
your primary residence to an irrevocable medicaid trust and you
have either a helock or you have a regular mortgage outstanding,
(34:56):
you can still do it. But you need to reserve
what is called a life estate. Now many of you
heard this term tossed around many times. A life of
state is simply in the deed, it'll say I hereby
reserve a legal life estate in the property. What that
means is you kept the little nugget of ownership. That
(35:18):
nugget of ownership means you have the right to live
there the rest of your life. You're entitled to collect
all the income that that property pays, and you got
to pay the expenses. Hooray, right, that's part of being owner.
You're still deemed the present owner of the property because
of that little nugget of ownership that you kept, and thereby,
(35:39):
when you transfer it to the trust, you cannot trigger
the do on sale clause because you did not transfer it. Right,
you kept a nugget that allows you to continue to
live there. That nugget will also preserve that home equity
line or that mortgage. So long winded answer to yes,
(36:00):
you can still do Medicaid planning even though your house
has a mortgage on it.
Speaker 2 (36:05):
Mister Watski, thank you so much for joining us today.
Speaker 6 (36:08):
We appreciate it always pleasure. Thank you.
Speaker 1 (36:11):
This has been asked Odd 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
ninety three four thousand and one or visit Cushing Doolan
dot com. The views expressed in this segment are solely
(36:31):
those of Cushing and Dolan. Armstrong Advisory 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 Elmer. Life
planning can be overwhelming, so make sure you're prepared or
you can make costly mistakes that affect your overall plan.
Irrevocable trusts are the most common type of trust that
folks use for financial protection. And while they can be
(36:53):
complicated to create, they help keep your assets safe because
they contain specific protections that many of us need. The
possibility of eliminating your estate taxes. Cushing and Dolan are
experts in elder lawn taxation, and they can devise a
plane that covers you in every area where issues can rise.
Their new guide is called Unlocking the Power of Irrevocable
Medicaid Trusts. Learn more about how these trusts can benefit
(37:16):
your family by calling eight sixty six eight four eight
five six ninety nine right now. That's eight six six
eight four eight five six nine nine, or you can
request the guide right now by visiting legal exchange show
dot com. The proceeding was paid for and the views
expressed are solely those of Cushing and Dolan. Cushing and
Dolan and or Armstrong Advisory may contact you offering legal
or investment services. Cushing and Dolan and Armstrong Advisory do
(37:38):
not endorse each other and are not affiliated
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:21):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is The Financial Exchange,
with Chuck Zada and Mark Vandetti, your exclusive look at
business and financial news affecting your day, your city, your world.
(00:44):
Stay informed and up to date about economic and market trends,
plus breaking business news every day. The Financial Exchange is
a proud partner of the Disabled American Veterans Department of Massachusetts.
Help us support our great American heroes by visiting DAV
FIVEK dot Boston and making a donation today. The DAV
five K Boston is presented by Veterans Development Corporation. Face
(01:08):
is the Financial Exchange with Chuck Zada and Mark Vanbetti.
Speaker 2 (01:13):
Chuck, Mark and Tucker with you here.
Speaker 3 (01:15):
We continue to We got the wagons heading west towards
Jackson Hole. It's gonna take us all a week to
get there, but we are broadcasting live from the Oregon
Trail as we make our way out to ce J.
Speaker 2 (01:28):
Powell.
Speaker 3 (01:29):
We're actually not broadcasting from the Oregon Trail. Jackson Ole
wasn't really even on the Oregon Trail. It's a little
bit north of where it passes through there. But in
any case, Mark, all eyes are focused on the FED
this week, mostly because quite honestly, there's not much else
of much interest this week in terms of either economic
data or earnings. But we did get an index report
(01:51):
this morning from Target that follows Walmart in painting a
stronger picture of consumer spending. Then maybe we thought we
had a couple of weeks ago your thoughts, uh, we're
seeing that.
Speaker 4 (02:05):
I was wonder how much you can generalize from this
stuff because targets results. It seems to me I'm not
a consumer discretionary stock analyst, but my sort of armchair
reading of it is that measures that they took to
increase foot traffic, including very publicly asserting that they want
to lower prices and doing so conspicuously, they seem to
(02:27):
have worked, but average spending didn't go up, although you know,
year over year, I guess results were fine for existing stories.
So overall, would you call would you call this report?
I have, I'll finish. I'll finish the thought. But am
I safe in calling this an okay report?
Speaker 2 (02:43):
Yeah?
Speaker 3 (02:44):
I think that it's it's quite fine. I mean, look,
investors think it's better than fine. The stocks up thirteen
percent after the report for the worst maybe the big
reason why they raised their guidance. You know, they're not
talking down their guidance and saying, hey, we've got you know,
we're not going to be as profitable as we thought. Instead,
it's no, we can actually raise our profit guidance for
(03:06):
the rest of the fiscal year. And that's not something
that you typically see retailers doing immediately on the eve
of recession. It's just not what you would typically see. Now, Mark,
I have a question for you, and I don't know
that if you have any of this offhand or not,
because this is literally the first time i've mentioned it
to you.
Speaker 2 (03:26):
Great, is there? I know, no.
Speaker 4 (03:29):
I welcome.
Speaker 3 (03:29):
This is the beauty of a live show, is you know,
we just get to throw things at each other and
see what happens.
Speaker 2 (03:35):
Sometimes it's beautiful, you know.
Speaker 3 (03:38):
Is there any type of correlation between what we see
from retail sales and GDP as a whole.
Speaker 4 (03:47):
I would assume so, because retail sales and spending are
obviously highly correlated, they tend to move together, and spending is,
in an accounting sense, the vast majority, about seventy percent
of GDP. So I haven't looked at that in particular.
I don't think maybe I have at some point, but
a priori, as they like to say, I would suspect
(04:08):
that that would be the case.
Speaker 3 (04:09):
So in my opinion, even though there still are some
other weak spots, I mean, housing, earlier this year looked
like it was ready to be a nice little growth engine,
and since its stalled out and now is creating some drag.
Speaker 2 (04:21):
But the last month.
Speaker 3 (04:22):
Or two, you know, the retail data has started to
look better, and so's it's tough to look at that
picture and say, yeah, there's a real problem that's developing here.
So I think that anytime that you are talking about, Hey,
there's gonna be a recession, you know, happening, you know,
right now or in the next couple months. You have
to say, Okay, what are you know four or five
(04:44):
data points that we can point to and say these
are evidence that that recession is coming. In a month ago,
there were a few where you could say, yeah, these
are things we need to watch. The employment picture was one,
Housing was another, Retail sales consumers spending was another one.
We haven't really seen any weakness on the industrial production side, correct, mark.
Speaker 4 (05:07):
Yeah, the typical measures there industrial production capacity utilization that
the FED produces monthly are I'll just sum them up
by saying, fine, So.
Speaker 3 (05:16):
You had a few that were out there in the
last couple of weeks now, and again, it's not enough
to put the recession talk to bed. I do want
to emphasize that, hey, if things can start to look
better in a couple weeks, they can also start to
look worse. But the employment picture looks different now than
it did a couple of weeks ago because weekly jobless
claims have improved meaningfully over that time period. Again, it
(05:39):
doesn't mean that everything's fine just because you get a
couple weeks of good jobless claims, but things look better there,
and we've gotten a retail sales report for the month
of July, plus quarterly earnings for Walmart and Target that
both were better than expected. And so now you have Okay,
we've got housing that's lagging and employment still has some
work to do. But that's not enough to say, yeah,
(06:03):
there's a recession that's either coming or happening imminently in
my opinion, your thoughts.
Speaker 4 (06:10):
Yeah, Look, you never really know. Sometimes recessions are the
result of changes within the economy and within the business cycle.
Sometimes they're a result of outside forces or shocks. So
the latter are not foreseeable almost by definition. That's why
we call them shocks. You could just call them surprises too.
(06:33):
Growth ebbs and flows. Even during expansion, sometimes it slows
down to the point where it looks like we're going
to lose the patient. The pulse gets really faint, and
then it picks back up again, and the proximate cause
might not be easily identified. So I don't want to
say where in the clear. I'm not in the business
(06:55):
of doing short term you know, economic forecast. Nobody should
be arguably, but yeah, there's no evidence, Chuck, I think
is what you're saying of an immediate, say, cause of
a broad downturn that typically meets the definition of recession.
Speaker 3 (07:13):
I think we're at a point now where more data
is needed in either direction to prove either things are
fine or no. We actually are heading towards recession. It's
just not now. It might be a few months later.
Speaker 4 (07:25):
I mean, arguably you're always heading toward recession. I think
there are some would disc that's.
Speaker 2 (07:30):
Like saying that that ultimately mark you know, like listen,
I get it, Yeah, I like it. Yeah, yeah, I don't.
Speaker 3 (07:36):
Like all economies, like analogy, all matter ten towards tends
towards entropy, all you know, people tend towards death, and
all economies tend towards recession.
Speaker 2 (07:44):
Right, is that that's where.
Speaker 4 (07:46):
We're I think some researchers would disagree. They don't think
recessions are inevitable. Some would famously said twenty five or
so years ago, recessions don't occur. Or I think with
they said was expansions don't die of natural causes. There's
a culprit, there's a murderer. That murderer is the FED
(08:06):
I'm not sure I agree with that for what my
two cents is worth. So not everybody agrees that recessions
are inevitable, but I think the vast majority of economists
who specialize in this area would say, well, it's self
evident that they are because they happen despite our best efforts.
But that doesn't mean that some people won't try to
temper the business cycle or to prevent recessions altogether. I'm
(08:28):
not sure that you can.
Speaker 3 (08:30):
So that's what we have in terms of kind of
where the economic data is stacking up at the moment.
Let's take a quick break here when we come back.
There have been some headlines.
Speaker 2 (08:41):
That are.
Speaker 3 (08:44):
Perturbing me, I think is the nice way of putting it, specifically,
regarding these revisions that are going to be happening towards
the job's numbers for the last twelve months.
Speaker 2 (08:58):
So we're going to take a quick break here and
we come back.
Speaker 3 (09:01):
We're gonna discuss whether or not a million jobs are
suddenly going to vanish as a result of Bureau of
Labor Statistics revisions that are happening We're supposed to happen
fifteen minutes ago, but for some reason have not yet
been published, but we'll talk about what exactly is going
on here and why it does or does not matter
(09:21):
to the health of the US economy.
Speaker 2 (09:23):
That's coming up right after this.
Speaker 1 (09:26):
Get up to the minute market updates with Wall Street.
Watch Weight Days at ten thirty only here on the
Financial Exchange Radio Network. Miss any of the show. The
Financial Exchange Show podcast is available on Apple, Spotify, and iHeartRadio.
Hit the subscribe button and leave us a five star review.
This is the Financial Exchange Radio Network.
Speaker 5 (09:49):
This segment of The Financial Exchange is brought to you
in part by the US Virgin Islands Department of Tourism.
The US Virgin Islands are Saint Croix, Saint Thomas, Saint
John enjoy perfect other world class dining, incredible beaches in
a vibrant nightlife. Had to visit USVII dot com and
book your trip today. No passport is needed and there's
no money to exchange. Take your next vacation in America's
(10:11):
Caribbean paradise the United States Virgin Islands. Go to visit
USVII dot com to book your trip. That's visit USVII
dot com mark.
Speaker 3 (10:21):
So there's there's pieces all over the Internet talking about
how the Bureau of Labor Statistics is going to be
revising jobs numbers for the last year, with a million
jobs potentially being revised downward in those jobs not being added.
Is this something that's really nefarious or just really boring?
Speaker 4 (10:44):
Actually, well, you know, when you and and and Mike,
as you are here most of the time, report on
US government economic releases, you call them statistics. You call
them that for a reason that the word statistic refers
to the fact that it's an s of an underlying
value that we don't know for sure. When we say
(11:04):
one hundred and what was it fourteen thousand? I just
looked at it yesterday, so it should.
Speaker 2 (11:07):
Be yea one hundred fourteen Okay.
Speaker 4 (11:08):
So we picked up one hundred and four According to
the so called establishment survey that you and Mike reported
on earlier this month, one hundred and fourteen thousand jobs
were created. Is that the right number? Well, no, it's
a sample of about what is it, sixty thousand businesses?
Speaker 2 (11:23):
I think?
Speaker 4 (11:24):
Okay, Okay, So it's a sample, which means the true
number is somewhere between. As it turns out, we do
know the interval in which it lies plus or minus
one hundred and thirty thousand. I'm laughing uncomfortably a little bit,
because that means the actual number could have been negative
or it could have been very very healthy.
Speaker 1 (11:42):
We just don't know.
Speaker 4 (11:44):
So you get revisions almost immediately after the fact the
following month, because you and Mike Armstrong report on those,
and then once a year or so. As I understand it,
not something I paid too much attention to historically.
Speaker 2 (11:55):
No one pays attention to it historically.
Speaker 4 (11:58):
Okay, so I'm not alone, but it's a big deal
this year because it intersects with these concerns about an
uncomfortable amount of slack opening up in the labor market.
Taking things at face value, we know that some slack
has opened up. Labor market conditions, said differently, have loosened.
Everybody knows this. You know, unemployment's gone up. You can sense,
(12:19):
even if you're not tracking in your mind past payroll changes,
that the pace has slowed a bit. The big question is,
is it slowed even more the pace of job editions
according to the Establishment Survey than we thought it had,
in which case the FED might indeed be a little
bit behind the curve in terms of loosening monetary policy
lowering interest rates, so it's hitting at a very sensitive time.
(12:41):
Thus the attention and some of the eye popping too
estimates of revisions from Goldman, Sachs and others with swarms
of PhD economists who ought to have a good sense
for this.
Speaker 3 (12:51):
And here's what the BLS does is twice a year
they do it in August, that they do a preliminary
one in August, and then a final revision in March
of the following year. They do every year. By the way,
this is not something that's say one off. I literally
went and pulled the data this morning when I knew
we were gonna be talking about this, because I knew
that it was gonna be heated, because I've been on
(13:12):
Twitter for like the last two days now and all
I'm reading about is, oh, the BOS has been making
up the numbers and now they got caught and you know,
blah blah blah.
Speaker 5 (13:21):
You should see Twitter now, Chuck, should I twenty two
minutes late? You know, you can imagine what it looks like.
Speaker 3 (13:29):
Yes, But in any case, like people are like, oh,
like they finally got caught in there, like having to
like tuck tail. No, they literally do this every year
in August, every year in August, and every year in March.
And the reason why is when the Bureau of Labor
Statistics puts out their monthly jobs numbers, they use what
they call a birth death estimate for the number of
(13:51):
businesses that are out there. Effectively, they don't know how
many businesses actually exist at any one time. It gets
at what Mark talks about in terms of this being
a statistic that they're estimating. So what they do is
they estimate how many businesses are being created in a
month and how many are being closed down because they
don't know that there's no way to know what that
(14:11):
is in real time. And so what they do after
they get more data, specifically the jobless claims data, the
weekly jobless claims data that they get, they effectively mesh
that with the numbers that they have and then say, okay,
our estimates on the number of businesses added or removed
was off in this direction, and here's how we're revising
(14:33):
the numbers as we need to. So if you go
back and look at the last three and I'm just
gonna use the last three just because again they're fresh,
and this has been something that you know, is happening.
You know, every year, the last three revisions that we've seen.
You go back and look at them. Last year, the
(14:55):
revision was fifty thousand fewer jobs created than thought.
Speaker 2 (14:59):
Okay, it's not a big shift.
Speaker 3 (15:01):
The year before was eight hundred thousand more jobs created
than initially thought. They revised the numbers up by eight
hundred thousand. Remember that was twenty twenty two, twenty twenty one,
a million more jobs created than they thought. They revised
the number up by a million. So the idea that, hey,
they might be revising the numbers down by a million,
and this is some huge conspiracy. No, they do these
(15:22):
revisions every year, every single year.
Speaker 2 (15:27):
They do them.
Speaker 3 (15:28):
This year, it appears that the estimates were likely far
too rosy in terms of the number of businesses being
created versus those shuttering in previous years. They were far
too pessimistic about those numbers, and so they had big
upward revisions. It's very possible that the big downward revision
now is because they had such big upward revisions before
(15:49):
that they changed the methodology to try to minimize errors
in that direction and maybe ended up producing one in
the other direction. But I also see people pointing to
this as well, this is evidence that this is, you know, politicized,
and they've been inflating these numbers. Let me ask you this,
if if the federal government were inflating the numbers, specifically,
(16:10):
if the Biden administration were inflating the numbers, would they
go and admit it right before an election?
Speaker 2 (16:20):
No?
Speaker 4 (16:20):
I know that was rhetorical, but I feel compelled to answer.
Speaker 3 (16:22):
No, if you're making the numbers up, you don't just say, well,
there's an election coming up.
Speaker 2 (16:26):
Got to come clean. No, Like, we can't. This is
not how this works.
Speaker 4 (16:30):
Do we have to do? We have to dignify these
We do?
Speaker 3 (16:32):
We do because like it's it, because it's pervasive, it's
it's people.
Speaker 4 (16:37):
And the people making these assertions know nothing about the process.
They've never been in government, never mind worked for the BLS,
where you have professional, lifetime PhD economists who couldn't be
more They had their political biases, but they couldn't be
more professional. They served through various administrations, They have thirty
(16:58):
forty year careers. These people don't turnover with changes in
presidential administration, will party so the idea that look, they
freely admit that these estimates have high have wide error
bands if you like, associated with them. Thus the revisions,
there's no bias in the revisions based on incumbent party.
(17:20):
There are no people have looked at this, and there
are no biases in the revisions. They're effectively random, so
there's no evidence for that. And I'm not even sure
I'm again dignifying these. I'llors call them conspiracy theories. With
an explanation to me just perpetuates the conversation. But I guess,
like you said, it's in the news, we have to address.
Speaker 2 (17:41):
It, Tucker. I'm still looking.
Speaker 3 (17:43):
I'm still trying to see if we have no It
looks like we do have numbers out now.
Speaker 5 (17:47):
Bloomberg just came out that looks like the BLS just
published it.
Speaker 2 (17:52):
Do you know what they published? I still can't find
the actual number is.
Speaker 5 (17:55):
And this is according to the Bloomberg ticker. I just
saw here BLS US employment rose one point three percent
in year through March twenty twenty four.
Speaker 3 (18:05):
Okay, so the ballpark just eyeballing it right now. It
is about a million job edition reduction. So that takes
job growth over that time period from call it two
hundred and forty thousand down two about one sixty thousand
a month. So that's what you're you're looking at on this.
Speaker 4 (18:23):
Okay, So doesn't that BLI the idea that this is
somehow politically influenced. Why would you do that to yourself
if you were the incumbent administration.
Speaker 2 (18:34):
That's the question that you would ask.
Speaker 3 (18:35):
I mean, look, if you really want made up numbers,
you go to like North Korea, where they just published
one number. They probably don't even publish a number in
North Korea. Look at Chinese GDP, they just they publish
it and and like that's it. Or they just stop
publishing data that they don't want you to see, like
the youth unemployment rate. When they stopped that, was it
twelve or eighteen months ago? Yeah, Like that's what you do.
(18:58):
You don't say no, we were wrong. It was actually worse.
So this again, it happens every year that they do
these revisions. It's not that the BLS suddenly got caught
fudging numbers.
Speaker 2 (19:09):
It's no.
Speaker 3 (19:10):
They revise these numbers every year to try to make
them more accurate, and some years they miss high like
this year where they had to revise the number of
jobs created down by a million. Some years like twenty
twenty one and twenty two they miss loan after revise
them up by almost a million.
Speaker 2 (19:25):
Let's take a quick break here.
Speaker 3 (19:26):
When we come back, we've got Wall Street Watch, and
then you're joined by Todd Lutsky from Cushing and Dolan.
Speaker 2 (19:32):
Right after this.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
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 and what's moving market so
far today right here on the financi Shall Exchange Radio Network.
Speaker 5 (20:04):
Well, markets are in positive territory narrowly, as Wall Street
is sifting through the annual jobs revision posted just minutes ago.
A lot to digest there, in addition to more retailer
earnings unveiled this morning. Right now, the Dow is up
by nine points, SMP five hundreds up by about a
quarter percent, and the Nasdaq is up by a third
(20:26):
of a percent. Of Russell two thousand also up by
a third of a percent.
Speaker 2 (20:30):
Ten year treasure.
Speaker 5 (20:31):
Yield is flat a three point eight one percent, and
crude oil up about half a percent, trating its seventy
three dollars in fifty three cents a Barrel Target shares
are jumping fourteen percent after the retail giant handily beat
second quarter earnings and revenue expectations and also hiked its
annual earnings guidance. However, the company maintained a caution's outlook
(20:54):
for the full year. Macy's, on the other hand, slash
its full year sales forecast at his can tending with
selective shoppers in more promotions. As for the second quarter
of the struggling retailer beat earnings expectations but did miss
on revenue, that stock down by fourteen percent. The parent
company to TJ Max and Marshall's TJX companies posted another
(21:16):
quarter of sales growth and upped its annual profit forecasts,
sending that stock up by six percent. Meanwhile, breaking news
from Ford this morning, where the Detroit carmaker canceled its
plans for a large electric suv and expects to take
a one point nine billion dollar hit related to special
charges in write downs. Ford continues to adjust its ev
(21:39):
plans as a result of softer than expected demand on
that front. That stock, however, up by one and a
half percent, and after today's closing or excuse me and
later today later this afternoon at about two pm, Wall
Street will be sifting through meeting minutes from the fed's
July meeting. I'm Tucker Silva and that's Wall Street.
Speaker 2 (21:58):
Watch.
Speaker 1 (22:00):
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
a state and tax planning, Medicaid planning, and probate law.
(22:22):
Visit Cushingdolan dot com. Now here's Todd Lutsky and.
Speaker 3 (22:27):
We are now joined by Todd Lutsky from the law
firm of Cushing and Dolan. We call the segment Ask
Todd cause you get to ask Todd your questions. We've
got the studio lines open at eight eight eight two
zero five two two six three. Todd Lutsky is here,
and so again this is your chance to ask him
your questions about your estate plan or maybe your lack thereof.
(22:51):
And hey, how do you get moving in the right direction?
That phone number again is eight eight eight two zero
five two two six three. Almost got through everyone last week,
but didn't quite so again, if you do have a question,
get calling to make sure that you get an early
spot in line.
Speaker 2 (23:06):
Here. That phone number again.
Speaker 3 (23:08):
Is eight eight eight two zero five two two sixty three,
and we'll get to your calls in just a little bit.
Mister Latsky, how are you today? I am never better
in you.
Speaker 2 (23:19):
Uh, things are looking up actually good.
Speaker 3 (23:22):
I found a book yesterday and it's it's called How
to Solve Fifty Percent of Life's Problems.
Speaker 6 (23:28):
Oh yeah, I bought two that'll help you. You're all set.
Speaker 2 (23:32):
I thought I figured i'd be good.
Speaker 3 (23:33):
So Todd, I want to talk a little bit about
Medicaid irrevocable trusts and people hear the idea of hey,
there's this five year look back. A couple questions on that.
Can you just define that term for people who aren't
familiar with it? And the second question is when does
that look back period actually start?
Speaker 6 (23:53):
Yeah? Great point. A couple of things on the on
the five year rule. Many people I know you mentioned
it in connection with the trust, Chuck, But I just
want to clarify one thing before I define it that
some people think that Oh, well, if it's five years,
if I put my assets into this irrevocable trust, I'll
just give it to my kids instead. Well, the five
year rule applies regardless of who you give it to.
(24:17):
You could give it to your kids, which nothing good
comes from that. Never mind the fact that it takes
five years to protect it from the nursing home. There's
a lot of other negatives. But whether you give it
to a child, whether you give it to a trust,
whether the answer is that any time you take an
asset and dispose of it and receive less than fair
(24:37):
market value in exchange for what you did, then you
made a disqualifying transfer. And that is the definition of
what triggers the five year waiting period. So that's a
disqualifying transfer.
Speaker 2 (24:51):
What is it?
Speaker 6 (24:52):
It means that if you've transferred that asset and received
less than fair market value in exchange for that, the
when you get sick in the next five years and
go to a nursing home, you'll be denied Medicaid benefits.
It's that simple. It's a hard and fast stop. So
if you're going to do your planning, try to think
about That's why we do it now, right, we do
(25:14):
it when we're feeling good, not when we're not feeling good,
and we can make the transfer and get beyond our
five year waiting period. Has nothing to do with any
other part of your estate plan. Your trust will still
avoid probate, reduce the state taxes, provide a bloodline plan.
You could die the next day. I jokingly you say,
the dying part isn't the problem that works immediately. It's
(25:34):
only the nursing home that takes five years in order
to get there. When does it start? It starts the
day you create the trust. Let's say the day you
make the disqualifying transfer. But since I'm talking more about
a state planning, let's focus on the trust. A client
comes in and says, let's do medicaid planning. Fine, I
(25:56):
explain the whole process, we get started. They leaving the meeting,
they'll say, okay, so did the five year clock start
to run?
Speaker 2 (26:02):
Yet?
Speaker 6 (26:03):
No, when does it start to run. It starts to
run the day they come back in. After we review
the documents and actually transfer the asset into the trust.
They need to sign the document and fund the document.
It's the funding of the trust that triggers the five
(26:24):
year waiting period. And the clock beginning to run. So
hopefully that was a good definition all the way around.
Speaker 3 (26:31):
Talk with Todd Letski from the law firm of Cushing
and Dolan. If you've got a question for Todd, this
is your chance to ask him. Studio lines are open
at eight eight eight two zero five two two sixty three.
Still got space from maybe one or two more people
at most again eight eight eight two zero five two
two six three. We're gonna take a quick break here,
(26:52):
but when we come back, it's right to your questions
with Todd. Then that phone number again is eight eight
eight to zero five two two six three, and we're
taking your calls when we return.
Speaker 1 (27:05):
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 3 (27:24):
All right, we got some questions for you, Todd. Let's
go first to Eric in Long Meadow. Eric, what's your
question for Todd Lutsky.
Speaker 5 (27:32):
Goring and gentlemen, My question is I'm in charge of
the family members trust, on.
Speaker 1 (27:37):
The trustee of his trust. Now I pay his bills.
Speaker 5 (27:41):
This credit card and whatnot?
Speaker 2 (27:46):
Uh?
Speaker 6 (27:46):
Oh, I do I think we can hear him?
Speaker 3 (27:51):
So yeah, Tucker, why don't we put Eric on hold
for a second and see if we can get him back?
And why don't we go instead to let's go to Nancy?
Nor would just while we get Eric back on the line. There, Nancy,
what's your question for? Todd Lutsky?
Speaker 7 (28:05):
Good morning, Thank you for taking my call. Fifteen years ago,
my father died and a year later my mother signed
the house over to me. We lived together. I've been
taking care of her, but I have three other siblings.
What happens to the house when she passes away?
Speaker 6 (28:21):
Well, you said, if I understand this, Nancy, you said
that after your dad died, your mom gifted the entire
house to you. Is that correct?
Speaker 7 (28:31):
Right?
Speaker 6 (28:32):
So only your name is on the deed?
Speaker 7 (28:34):
Correct?
Speaker 2 (28:35):
All right?
Speaker 6 (28:35):
So when you say what happens to the house after
she dies? Nothing, because she doesn't own it. Her estate
doesn't own it. It's not part of her estate. It's
a completed gift that she made to you years ago.
I'm guessing she probably didn't file a gift tax return,
not that it necessarily would have mattered you. Now are
the fee simple title holder of the property, so if
(28:57):
it's been more than five years ago, it's protected from
the nursing home. Unfortunately, you lost the step up in
basis because she won't die owning it, and ultimately you
have no obligation to do anything with it when your
mom dies. Now, if your mom's wishes are I'd like
to leave this to three all three of my children then,
(29:19):
or however many children she has, then the answer is
that's not going to happen unless you decide you wanted
to honor that wish. But if you do, you simply
will have to prepare a deed transferring the property to
the other siblings, which will ultimately be a gift by
you to them, And so technically it'll be a taxable
(29:39):
gift because I'm sure it's going to exceed eighteen thousand
dollars per year per person, So in that case you
would need to file a gift tax return. But the
good news is you have a thirteen million dollar gift
tax exemption. Thirteen point six million dollar gift tax exemption,
so it shouldn't really matter from a state tax standpoint
for you. I don't think, I don't know the numbers,
(30:02):
but it will eat into your Massachusetts two million dollar
estate tax exemption a little. So I don't love the
idea that she gave it away, but she did so
it is what it is. And unfortunately she does run
the risk of potentially disinheriting her other children, as well
as exposing it to your creditors, and of course not
even having the right to live there. But I know
(30:23):
you'll take care of her and you won't kick her out.
But these are all issues for the bigger listening audience, right,
These are things that I don't love. I don't love
it when houses are given away to children during life.
It's I don't think anything good really comes from it.
This is just a little example of it. But hope
that helps Nancy and folks. One of the things you
can do to prevent giving away your house, or instead
(30:45):
of giving away your house while you're living, is learn
about these Medicaid irrevocable trusts. The guide we're giving away
is unlocking the power of Medicaid irrevocable trusts in a
very simple question and answer format. It will explain to
you all the dos and don'ts of these trusts. And
if you've ever thought these weren't right for you, or
(31:07):
you weren't sure about how they work, or you're afraid
of them. This guide will clear that up for you.
I mean it answers everything from what can I put
in the trust? What are the gift tax consequences? Can
I sell my house? Can I buy another one? What
are the taxes if I sell my house? What? What
can I live off the income? Can I manage my money?
Speaker 2 (31:26):
Folks?
Speaker 6 (31:26):
On and on. All the questions are answered in that
question and answer format. Get the guide eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com again eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
and do that rather than give away your house when
(31:49):
you're living.
Speaker 2 (31:50):
Let's go back to Eric and Longman.
Speaker 3 (31:52):
I think we got some better sound now, Eric, what's
your question for Todd?
Speaker 2 (31:56):
Hi you doing?
Speaker 5 (31:58):
I'm in My father passed and he put me in
charge of the state and on the trustee of another
family member.
Speaker 1 (32:04):
Okay, and Charger that I pays all his bills and whatnot.
Now when the money runs out.
Speaker 5 (32:11):
And if he has any debt, if I on the
hook for that.
Speaker 6 (32:15):
So let me ask you this. You're saying your dad died.
There's a trust in place, and there's a share inside
dad's trust of which you control that money for the
benefit of your sibling. Correct, Yes, and you actually use
that money to pay some of his bills, to make
distributions to him as he needs it. Correct Correct, So
(32:36):
he never owns this money. He doesn't own this, this share,
this share that's inside Dad's Now your late father's trust
isn't owned by him, so it's not even subject to
his creditors. So if he has creditors, these assets are
not subject to those creditors because this isn't his money.
(32:58):
And no, you're absolutely not on the hook because it's
not your money either. So and it's not your it's
not you're not subject to his creditors. You're just trustee
of a bucket of money that really it's to take
care of him, but he doesn't own it. So the
quick answer is, no, you're not on the hook as
trustee of that trust if in fact this money runs
(33:21):
out and he runs up creditor problems and bill problems.
Not not your your worry.
Speaker 3 (33:28):
Todd, We've got another caller for you here. Let's go
to Clyde in New Hampshire. Clyde.
Speaker 2 (33:33):
You are on with Todd Lutsky.
Speaker 6 (33:36):
Hey, how you doing?
Speaker 2 (33:36):
God good? Quick question?
Speaker 7 (33:39):
Do a house have to be paid for before you
put it into a truck?
Speaker 6 (33:45):
So you're saying, if you have a home and it's encumbered,
you have a mortgage on it, or or a home
equity line or something correct.
Speaker 2 (33:51):
Correct.
Speaker 6 (33:52):
So if it's your primary residence and you have an
equity line or a mortgage still outstanding on your home home,
when you want to put it into a medicaid I'm
guessing one of these medicaid irrevocable trusts. So I'll answer
it both ways. One if you want to put it
into a revocable trust, because that's the kind of planning
you want to do. It does not matter. It's a
(34:15):
revocable trust. You can put encumbered property in there anytime
you want and it will not trigger the duon sale clause.
And that's what we're worried about, right, We're worried about
transferring property and triggering the duon sale or the duon
transfer clause that I'm gonna venture to say exists in
every mortgage, Okay, because remember they lent the money to you,
(34:36):
not to who you're giving it to okay, so revocable
trust no problem. Irrevocable trusts. If you want to transfer
your primary residence to an irrevocable medicaid trust and you
have either a helock or you have a regular mortgage outstanding,
(34:56):
you can still do it. But you need to reserve
what is called a life estate. Now many of you
heard this term tossed around many times. A life of
state is simply in the deed, it'll say I hereby
reserve a legal life estate in the property. What that
means is you kept the little nugget of ownership. That
(35:18):
nugget of ownership means you have the right to live
there the rest of your life. You're entitled to collect
all the income that that property pays, and you got
to pay the expenses. Hooray, right, that's part of being owner.
You're still deemed the present owner of the property because
of that little nugget of ownership that you kept, and thereby,
(35:39):
when you transfer it to the trust, you cannot trigger
the do on sale clause because you did not transfer it. Right,
you kept a nugget that allows you to continue to
live there. That nugget will also preserve that home equity
line or that mortgage. So long winded answer to yes,
(36:00):
you can still do Medicaid planning even though your house
has a mortgage on it.
Speaker 2 (36:05):
Mister Watski, thank you so much for joining us today.
Speaker 6 (36:08):
We appreciate it always pleasure. Thank you.
Speaker 1 (36:11):
This has been asked Odd 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
ninety three four thousand and one or visit Cushing Doolan
dot com. The views expressed in this segment are solely
(36:31):
those of Cushing and Dolan. Armstrong Advisory 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 Elmer. Life
planning can be overwhelming, so make sure you're prepared or
you can make costly mistakes that affect your overall plan.
Irrevocable trusts are the most common type of trust that
folks use for financial protection. And while they can be
(36:53):
complicated to create, they help keep your assets safe because
they contain specific protections that many of us need. The
possibility of eliminating your estate taxes. Cushing and Dolan are
experts in elder lawn taxation, and they can devise a
plane that covers you in every area where issues can rise.
Their new guide is called Unlocking the Power of Irrevocable
Medicaid Trusts. Learn more about how these trusts can benefit
(37:16):
your family by calling eight sixty six eight four eight
five six ninety nine right now. That's eight six six
eight four eight five six nine nine, or you can
request the guide right now by visiting legal exchange show
dot com. The proceeding was paid for and the views
expressed are solely those of Cushing and Dolan. Cushing and
Dolan and or Armstrong Advisory may contact you offering legal
or investment services. Cushing and Dolan and Armstrong Advisory do
(37:38):
not endorse each other and are not affiliated
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
My Favorite Murder with Karen Kilgariff and Georgia Hardstark
My Favorite Murder is a true crime comedy podcast hosted by Karen Kilgariff and Georgia Hardstark. Each week, Karen and Georgia share compelling true crimes and hometown stories from friends and listeners. Since MFM launched in January of 2016, Karen and Georgia have shared their lifelong interest in true crime and have covered stories of infamous serial killers like the Night Stalker, mysterious cold cases, captivating cults, incredible survivor stories and important events from history like the Tulsa race massacre of 1921. My Favorite Murder is part of the Exactly Right podcast network that provides a platform for bold, creative voices to bring to life provocative, entertaining and relatable stories for audiences everywhere. The Exactly Right roster of podcasts covers a variety of topics including historic true crime, comedic interviews and news, science, pop culture and more. Podcasts on the network include Buried Bones with Kate Winkler Dawson and Paul Holes, That's Messed Up: An SVU Podcast, This Podcast Will Kill You, Bananas and more.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com