October 16, 2024 • 16 mins
Todd Lutsky shares how you can reduce your estate taxes on your assets in retirement accounts. Todd takes questions from listeners about their estate planning needs.
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Episode Transcript
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Speaker 1 (00:01):
This is Ask Todd on the Financial Exchange Radio network.
If you have an existing estate plan or in the
market for one, Todd Letsky is here to answer your
questions and help you plan for a 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.
(00:22):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (00:28):
As promised, We're now joined by Todd Lutsky for Ask Todd.
This is the segment where you get to ask your
questions to Todd Lutsky live on air. Anything related to
your estate plan or lack thereof. This is your opportunity.
We've got the phone lines open at eight eight eight
to zero five two two six three. That is the
number to call to Ask Todd your estate planning questions
(00:50):
right now. Again, that number is eight eight eight to
zero five two two six three. Last couple weeks, we
haven't enough time to get all the way through, so oh,
get dialing I early, get in line and we'll get
to you again. Eight eight eight two zero five two
two six three is the number, mister Lutsky. How are
you today?
Speaker 3 (01:11):
I am doing wonderful and and you pretty good overall?
Oh yeah, what's going on?
Speaker 4 (01:16):
Well?
Speaker 2 (01:16):
I ate an I ate an abacus yesterday an abacus
talking to my parents and they told me that it's
really on the what's on the inside that counts, and
so I.
Speaker 3 (01:27):
Went that to one of those Yeah, yeah, yeah, everything's.
Speaker 2 (01:30):
Great, though, Todd, I want to talk to you a
little bit about retirement accounts and how they relate to
the estate tax.
Speaker 3 (01:38):
Yeah, tough, tough apples.
Speaker 2 (01:40):
Is there any way through estate planning that someone with
retirement accounts IRA four one k roth, iray, whatever it
might be, Is there any way to potentially reduce one's
estate tax burden that they might have that they might incur,
you know, through holding those retirement accounts or they kind
of stuck with it.
Speaker 3 (02:00):
Yeah. So, I guess when you're looking at IRA accounts,
there's lots of components. Right first and foremost, remember there's
an estate tax, as you're mentioning, Chuck, and an income tax.
So already right out of the gate, we have to
think about two types of taxes when you're dealing with
an IRA. So makes it a little more complicated. And
(02:23):
by the way, I'm just going to throw this out
there too. It you didn't ask about it, But a
roth ira is still an ira, and so as much
as we think in our minds, oh, it's tax free,
that's what I understand about roths that's true. So when
I'm dealing with a roth ira, I have one less
(02:43):
tax to deal with, meaning when you withdraw the money,
it's income tax free. But what people forget when they
say tax free is that there's still the estate tax
side of the equation. Sure, right, so many people right think, oh, well,
it's a roth ira, so it's tax free. I don't
have to worry about it. But it's still included in
your estate when you die, because you own it after all,
(03:07):
and therefore it is subject to the estate tax, even
though it's not subject to the income tax. So just
keep that in mind when you're doing it. Now, if
we're talking about the estate tax side, for both iras
and roth iras, to reduce the debt, to reduce your
(03:30):
estate tax, there's really only one way to do it,
right if you leave your ira to your spouse, which
most people will do, and it's okay It's a great
income tax way to leave your your IRA, no question
about it. But it's a horrible estate tax way to
(03:52):
leave your IRA. Why because if you've got a million
dollar IRA and you just leave it to your spouse,
your spouse, the state just went up by a million dollars.
It's not sheltered, so that's just adding to whatever your
spouse has in her own right follow me, So it's
subject to a state tax if you, on the other hand,
(04:15):
want to leave it the designated beneficiary to your family trust,
and inside the family trust it hits the q tip share.
I'll call it the marital share, but it's a q tip.
Then it can still come out to the beneficiary your
spouse over her lifetime, which is what you want from
(04:39):
an income tax perspective, but it's sheltered in the trust
when she dies for estate tax purposes. So at least
you're winning now on both fronts, not harming the payout
for income and sheltering it from being included in her
estate when she dies. If she has not spent a.
Speaker 2 (05:00):
Talking with Todd Lutsky from the law firm of Cushing
and Dole, and again the number to call to ask
Todd your questions about your estate plan eight eight eight
to zero five two two sixty three. That is eight
eight eight to zero five two two sixty three. Still
a little bit of room on the phone line, so
again get calling if you do have a question for Todd.
(05:23):
That number again is eight eight eight to zero five
two two six three. Todd, when when you're looking at
I guess again just sticking with kind of the the
estate tax side of things, What about other assets that
might not be retirement accounts, after tax investment accounts. Is
there a different approach that is utilized there in terms
(05:46):
of trying to minimize estate taxes?
Speaker 3 (05:49):
Yeah, I mean after tax investment accounts. Please a much
simpler answer, thankfully. Please just retitle those while you're alive
to your family revocable trust, an end or to your
irrevocable trust to the extent you want to for medicaid, nursing,
home plannings. Just put it in there, and now it
(06:11):
will be avoiding probate and sheltered first eight taxes.
Speaker 2 (06:15):
Talking with Todd Lutsky from the law firm of Cushing
and Dolan. Again, still a little bit of room on
the phone lines at eight eight eight to zero five
two two six three. That's the number to call to
ask Todd your questions live on air. We're going to
take a quick break right now, but when we come back,
it's going to be right to your questions with Todd.
(06:35):
That number one last time is eight eight eight to
zero five two two sixty three.
Speaker 1 (06:43):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. Todd Letsky
answers your questions about a state and elder life planning
every Wednesday at ten thirty, right here on the Financial
Exchange Radio Network.
Speaker 2 (07:05):
Right to your calls with Tod Letsky. First up, we
got Sal in Boston. Sal, what's your question for Todd?
Speaker 4 (07:12):
Hey, Todd, question about inherited IRA. I heard you can
turn it into a like kind IRA in your own
name and you have like ten years to the clear
the the money.
Speaker 3 (07:25):
Are you the child?
Speaker 5 (07:27):
Yes?
Speaker 3 (07:28):
Okay, so a parent died and you're the you're the beneficiary.
Speaker 4 (07:31):
Go ahead, So if you do that, does that affect
like your own IRA, you know, contributing to it or
prevent you from contributing to your own in that year?
Speaker 6 (07:42):
Or is this no?
Speaker 3 (07:45):
I think this is what I'm talking about. What we're
talking about here is not whether you're able to contribute
to your own IRA or how much you're able to
contribute to your IRA. This has no effect on that.
This simply is about you withdrawing from that. Meaning again,
how old are you.
Speaker 6 (08:05):
Eight?
Speaker 3 (08:05):
So you're fifty eight, So your iras are you don't
have to touch them, you don't have to withdraw, you
don't have to do anything with them. But this IRA
you kind of have to, right, depending on how old
your father or mother was when they passed, but likely
at worst case scenario, you have to take this out
over ten years, and you have to either a start
(08:27):
right now and minimum distributions have to come out. Probably
one tenth would make sense from an income tax standpoint,
but depending on whether or not your parent had reached
their required beginning date, you might be able to delay
the distribution and not make required minimums, but it still
has to come out over ten at the end of
the tenth year, and you'd never wait ten years to
(08:49):
take it out, because yeah, you'd have tax deferred growth
for ten years, but then you're going to get hammered
in year ten when you have to take it all out.
From an income tax standpoint, So no impact on what
you can contribute that I'm aware of to your own iras,
but you do got to focus on the withdrawing from
this IRA sooner rather than later and watch out for
any penalties if you do not. Folks, iras tough assets,
(09:14):
tricky assets to deal with. This is why we put
together a guide this month naming your estate and IRA beneficiary.
When would you do it? How do you do it?
Does it make sense to do it right? This is
a situation where if you want to now reduce estate
taxes by sheltering these for IRA purposes, you want to
not get an adverse income tax when the beneficiary takes
(09:38):
out the money that's the required minimum distributions. And at
the same time, if you have a surviving spouse, you
want the surviving spouse to be able to enjoy the
money access the money. But if they get sick even
the next day before they go into the nursing home,
not at risk for the nursing home, which is way better,
(09:59):
perhaps and just leaving it directly to the spouse, in
which case it would be at risk for the nursing
home and less to the children. Lots to think about
with an IRA folks from an estate planning and nursing
home planning perspective. Pretty new stuff here. Get the guide
eight six six eight four eight five six nine nine
(10:20):
or Legal Exchange Show dot com again eight sixty six
eight four eight five six nine nine or Legal Exchange
Show dot com.
Speaker 2 (10:29):
Todd, I got another one qu'ed up for you here.
Let's go to Bob in Wooster Bob, you are on
with Todd Lutsky.
Speaker 5 (10:36):
Hi, Tod, good morning. I'm considering putting my rental property
in a trust with a spendthrift provision that states something
to the effect that the assets shall not be subject
to sale or transfer in any manner. Is this going
to make it difficult for my beneficiaries to eventually sell
the property at some point down the road.
Speaker 3 (10:55):
Well, I think you're you're comparing apples and oranges, right.
So the trusts have language in it regarding what the
trust's powers are, the trustees powers are. I don't mind
having the spendthrift language in there. That's certainly a great
idea to put in your trust. I may suggest that
the rental property go into an LLC first, and then
(11:16):
the shares go into your trust. That way, in case
there's a lawsuit, you are going to have creditor protection
from that tenant rather than being sued personally, you would
be sued that LLC would be sued, and your other
assets would not be at risk. To your point, again,
selling when the beneficiaries get it. If the trust says, hey,
(11:39):
pay it out to your kids and let them do
what they want with it, then there's absolutely no restriction
on selling it, even if you hold the asset in trust.
Again forgetting the spendthrift language, that doesn't really impact this.
You simply have language in there that says hold it
in trust for my kids for their life, to give
them creditor protection and divorce protection. Trust would still generally
(12:01):
have the ability to sell the property or not sell
the property. So I don't think that's going to be
a problem. I hope that that helps a little ton.
I've got another one here for you. Let's go to
Lynn in Springfield, Linn. You are on with Todd Lutsky.
Speaker 6 (12:17):
Hey, Tod, good morning, Thank you for taking my call.
I have a problem. It's a very good problem, but
it's a problem done the less.
Speaker 3 (12:24):
Okay, we like problems.
Speaker 6 (12:27):
Well, here's a good one. For you to work on.
I am sixty one, almost sixty two. I'm retired. I've
been retired for a couple of years. I've been drawing
off of my four oh one K. My four oh
one K currently has about a million dollars in it,
and what I've drawn down, I've made back up because
the stock market's been doing pretty good.
Speaker 1 (12:48):
Okay.
Speaker 6 (12:50):
I have about another half million dollars in cash, a property,
a parcel of land that's worth about a half million,
and a home that's worth about another million. So I
have ample means. And this is before four oh one K,
before I mean social Security and a small pension.
Speaker 3 (13:07):
Are you single?
Speaker 6 (13:08):
I'm single, okay, and I have one child.
Speaker 3 (13:11):
Okay.
Speaker 6 (13:11):
So I have a lot of stuff, a lot of
moving pieces, and I know that as and I live
very simply, okay.
Speaker 3 (13:20):
So now try to ask the question. Just ask the question.
Speaker 6 (13:23):
I'm just trying to figure out how to best minimize
my income tax in the future when I start drawing
off of Social Security and continuing to pull out of
my four oh one K, and then minimize my state
tax for my child when I pass my assets along.
Speaker 3 (13:42):
So a couple of things, and I know we don't
have a lot of time left. But a couple of
things to point out here. One, you know, from an
income tax perspective, there's not really a lot of planning
to do there. Maybe sitting with your accountant, maybe sitting
with a financial advisor might help you. But as you
withdraw money from your qualified it's always taxable, and you know,
(14:02):
your other investments, if you invested in, like, you know,
income tax free municipal bonds or something, might reduce your income.
But I can't really address the income tax side of
that equation. But on the estate tax side, we can.
I guess if I ran the numbers correctly, you're somewhere
around you know, three million ish, maybe a little more
(14:22):
in total assets. Good news is, federally you don't have
any estate tax. I don't even see it being a
problem in twenty twenty six, when the exemption drops back
down to seven million, give or take, I think you'll
be fine. And even in Massachusetts, if you know, I
assume you live here, So if you're in Massachusetts, it's
(14:43):
also not a really big problem because the exemption went
up to two million. So yeah, you're over a little bit.
But you know, do we want to start thinking about
lifetime gifting. And by the way, under the new estate
tax legislation, there's no more cliff rule, so we're able
to make gifts and be able to still get a
(15:04):
credit and reduce our gift to our Massachusetts of state tax.
So yeah, there might be a way to do some gifting,
but we'd have to balance that, of course with the
idea of a loss of a step up in basis.
But most importantly, maybe you want a trust if it's
not revocable, you want to add some nursing home protection
to protect some of the non qualified assets and focus
(15:27):
on living off of the qualified assets so that you
can now add nursing home protection at the same time.
Speaker 2 (15:34):
Mister Lutsky, thank you so much for joining us today.
Speaker 3 (15:36):
Always a pleasure.
Speaker 1 (15:38):
This has been asked OD on the Financial Exchange Radio Network.
Askedd with Todd Lutsky. Has been presented by Cushing and Dolan,
serving Massachusetts in 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 Cushingdolan dot com. The
views expressed in this segment are solely those of Cushing
(15:59):
and Dolan Armstrong advisor. He does not provide any legal
or tax advice. Please consult with your illegal or tax
advisor on such matters. Cushing and Armstrong do not endorse
each other and are not affiliated
This is Ask Todd on the Financial Exchange Radio network.
If you have an existing estate plan or in the
market for one, Todd Letsky is here to answer your
questions and help you plan for a 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.
(00:22):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (00:28):
As promised, We're now joined by Todd Lutsky for Ask Todd.
This is the segment where you get to ask your
questions to Todd Lutsky live on air. Anything related to
your estate plan or lack thereof. This is your opportunity.
We've got the phone lines open at eight eight eight
to zero five two two six three. That is the
number to call to Ask Todd your estate planning questions
(00:50):
right now. Again, that number is eight eight eight to
zero five two two six three. Last couple weeks, we
haven't enough time to get all the way through, so oh,
get dialing I early, get in line and we'll get
to you again. Eight eight eight two zero five two
two six three is the number, mister Lutsky. How are
you today?
Speaker 3 (01:11):
I am doing wonderful and and you pretty good overall?
Oh yeah, what's going on?
Speaker 4 (01:16):
Well?
Speaker 2 (01:16):
I ate an I ate an abacus yesterday an abacus
talking to my parents and they told me that it's
really on the what's on the inside that counts, and
so I.
Speaker 3 (01:27):
Went that to one of those Yeah, yeah, yeah, everything's.
Speaker 2 (01:30):
Great, though, Todd, I want to talk to you a
little bit about retirement accounts and how they relate to
the estate tax.
Speaker 3 (01:38):
Yeah, tough, tough apples.
Speaker 2 (01:40):
Is there any way through estate planning that someone with
retirement accounts IRA four one k roth, iray, whatever it
might be, Is there any way to potentially reduce one's
estate tax burden that they might have that they might incur,
you know, through holding those retirement accounts or they kind
of stuck with it.
Speaker 3 (02:00):
Yeah. So, I guess when you're looking at IRA accounts,
there's lots of components. Right first and foremost, remember there's
an estate tax, as you're mentioning, Chuck, and an income tax.
So already right out of the gate, we have to
think about two types of taxes when you're dealing with
an IRA. So makes it a little more complicated. And
(02:23):
by the way, I'm just going to throw this out
there too. It you didn't ask about it, But a
roth ira is still an ira, and so as much
as we think in our minds, oh, it's tax free,
that's what I understand about roths that's true. So when
I'm dealing with a roth ira, I have one less
(02:43):
tax to deal with, meaning when you withdraw the money,
it's income tax free. But what people forget when they
say tax free is that there's still the estate tax
side of the equation. Sure, right, so many people right think, oh, well,
it's a roth ira, so it's tax free. I don't
have to worry about it. But it's still included in
your estate when you die, because you own it after all,
(03:07):
and therefore it is subject to the estate tax, even
though it's not subject to the income tax. So just
keep that in mind when you're doing it. Now, if
we're talking about the estate tax side, for both iras
and roth iras, to reduce the debt, to reduce your
(03:30):
estate tax, there's really only one way to do it,
right if you leave your ira to your spouse, which
most people will do, and it's okay It's a great
income tax way to leave your your IRA, no question
about it. But it's a horrible estate tax way to
(03:52):
leave your IRA. Why because if you've got a million
dollar IRA and you just leave it to your spouse,
your spouse, the state just went up by a million dollars.
It's not sheltered, so that's just adding to whatever your
spouse has in her own right follow me, So it's
subject to a state tax if you, on the other hand,
(04:15):
want to leave it the designated beneficiary to your family trust,
and inside the family trust it hits the q tip share.
I'll call it the marital share, but it's a q tip.
Then it can still come out to the beneficiary your
spouse over her lifetime, which is what you want from
(04:39):
an income tax perspective, but it's sheltered in the trust
when she dies for estate tax purposes. So at least
you're winning now on both fronts, not harming the payout
for income and sheltering it from being included in her
estate when she dies. If she has not spent a.
Speaker 2 (05:00):
Talking with Todd Lutsky from the law firm of Cushing
and Dole, and again the number to call to ask
Todd your questions about your estate plan eight eight eight
to zero five two two sixty three. That is eight
eight eight to zero five two two sixty three. Still
a little bit of room on the phone line, so
again get calling if you do have a question for Todd.
(05:23):
That number again is eight eight eight to zero five
two two six three. Todd, when when you're looking at
I guess again just sticking with kind of the the
estate tax side of things, What about other assets that
might not be retirement accounts, after tax investment accounts. Is
there a different approach that is utilized there in terms
(05:46):
of trying to minimize estate taxes?
Speaker 3 (05:49):
Yeah, I mean after tax investment accounts. Please a much
simpler answer, thankfully. Please just retitle those while you're alive
to your family revocable trust, an end or to your
irrevocable trust to the extent you want to for medicaid, nursing,
home plannings. Just put it in there, and now it
(06:11):
will be avoiding probate and sheltered first eight taxes.
Speaker 2 (06:15):
Talking with Todd Lutsky from the law firm of Cushing
and Dolan. Again, still a little bit of room on
the phone lines at eight eight eight to zero five
two two six three. That's the number to call to
ask Todd your questions live on air. We're going to
take a quick break right now, but when we come back,
it's going to be right to your questions with Todd.
(06:35):
That number one last time is eight eight eight to
zero five two two sixty three.
Speaker 1 (06:43):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. Todd Letsky
answers your questions about a state and elder life planning
every Wednesday at ten thirty, right here on the Financial
Exchange Radio Network.
Speaker 2 (07:05):
Right to your calls with Tod Letsky. First up, we
got Sal in Boston. Sal, what's your question for Todd?
Speaker 4 (07:12):
Hey, Todd, question about inherited IRA. I heard you can
turn it into a like kind IRA in your own
name and you have like ten years to the clear
the the money.
Speaker 3 (07:25):
Are you the child?
Speaker 5 (07:27):
Yes?
Speaker 3 (07:28):
Okay, so a parent died and you're the you're the beneficiary.
Speaker 4 (07:31):
Go ahead, So if you do that, does that affect
like your own IRA, you know, contributing to it or
prevent you from contributing to your own in that year?
Speaker 6 (07:42):
Or is this no?
Speaker 3 (07:45):
I think this is what I'm talking about. What we're
talking about here is not whether you're able to contribute
to your own IRA or how much you're able to
contribute to your IRA. This has no effect on that.
This simply is about you withdrawing from that. Meaning again,
how old are you.
Speaker 6 (08:05):
Eight?
Speaker 3 (08:05):
So you're fifty eight, So your iras are you don't
have to touch them, you don't have to withdraw, you
don't have to do anything with them. But this IRA
you kind of have to, right, depending on how old
your father or mother was when they passed, but likely
at worst case scenario, you have to take this out
over ten years, and you have to either a start
(08:27):
right now and minimum distributions have to come out. Probably
one tenth would make sense from an income tax standpoint,
but depending on whether or not your parent had reached
their required beginning date, you might be able to delay
the distribution and not make required minimums, but it still
has to come out over ten at the end of
the tenth year, and you'd never wait ten years to
(08:49):
take it out, because yeah, you'd have tax deferred growth
for ten years, but then you're going to get hammered
in year ten when you have to take it all out.
From an income tax standpoint, So no impact on what
you can contribute that I'm aware of to your own iras,
but you do got to focus on the withdrawing from
this IRA sooner rather than later and watch out for
any penalties if you do not. Folks, iras tough assets,
(09:14):
tricky assets to deal with. This is why we put
together a guide this month naming your estate and IRA beneficiary.
When would you do it? How do you do it?
Does it make sense to do it right? This is
a situation where if you want to now reduce estate
taxes by sheltering these for IRA purposes, you want to
not get an adverse income tax when the beneficiary takes
(09:38):
out the money that's the required minimum distributions. And at
the same time, if you have a surviving spouse, you
want the surviving spouse to be able to enjoy the
money access the money. But if they get sick even
the next day before they go into the nursing home,
not at risk for the nursing home, which is way better,
(09:59):
perhaps and just leaving it directly to the spouse, in
which case it would be at risk for the nursing
home and less to the children. Lots to think about
with an IRA folks from an estate planning and nursing
home planning perspective. Pretty new stuff here. Get the guide
eight six six eight four eight five six nine nine
(10:20):
or Legal Exchange Show dot com again eight sixty six
eight four eight five six nine nine or Legal Exchange
Show dot com.
Speaker 2 (10:29):
Todd, I got another one qu'ed up for you here.
Let's go to Bob in Wooster Bob, you are on
with Todd Lutsky.
Speaker 5 (10:36):
Hi, Tod, good morning. I'm considering putting my rental property
in a trust with a spendthrift provision that states something
to the effect that the assets shall not be subject
to sale or transfer in any manner. Is this going
to make it difficult for my beneficiaries to eventually sell
the property at some point down the road.
Speaker 3 (10:55):
Well, I think you're you're comparing apples and oranges, right.
So the trusts have language in it regarding what the
trust's powers are, the trustees powers are. I don't mind
having the spendthrift language in there. That's certainly a great
idea to put in your trust. I may suggest that
the rental property go into an LLC first, and then
(11:16):
the shares go into your trust. That way, in case
there's a lawsuit, you are going to have creditor protection
from that tenant rather than being sued personally, you would
be sued that LLC would be sued, and your other
assets would not be at risk. To your point, again,
selling when the beneficiaries get it. If the trust says, hey,
(11:39):
pay it out to your kids and let them do
what they want with it, then there's absolutely no restriction
on selling it, even if you hold the asset in trust.
Again forgetting the spendthrift language, that doesn't really impact this.
You simply have language in there that says hold it
in trust for my kids for their life, to give
them creditor protection and divorce protection. Trust would still generally
(12:01):
have the ability to sell the property or not sell
the property. So I don't think that's going to be
a problem. I hope that that helps a little ton.
I've got another one here for you. Let's go to
Lynn in Springfield, Linn. You are on with Todd Lutsky.
Speaker 6 (12:17):
Hey, Tod, good morning, Thank you for taking my call.
I have a problem. It's a very good problem, but
it's a problem done the less.
Speaker 3 (12:24):
Okay, we like problems.
Speaker 6 (12:27):
Well, here's a good one. For you to work on.
I am sixty one, almost sixty two. I'm retired. I've
been retired for a couple of years. I've been drawing
off of my four oh one K. My four oh
one K currently has about a million dollars in it,
and what I've drawn down, I've made back up because
the stock market's been doing pretty good.
Speaker 1 (12:48):
Okay.
Speaker 6 (12:50):
I have about another half million dollars in cash, a property,
a parcel of land that's worth about a half million,
and a home that's worth about another million. So I
have ample means. And this is before four oh one K,
before I mean social Security and a small pension.
Speaker 3 (13:07):
Are you single?
Speaker 6 (13:08):
I'm single, okay, and I have one child.
Speaker 3 (13:11):
Okay.
Speaker 6 (13:11):
So I have a lot of stuff, a lot of
moving pieces, and I know that as and I live
very simply, okay.
Speaker 3 (13:20):
So now try to ask the question. Just ask the question.
Speaker 6 (13:23):
I'm just trying to figure out how to best minimize
my income tax in the future when I start drawing
off of Social Security and continuing to pull out of
my four oh one K, and then minimize my state
tax for my child when I pass my assets along.
Speaker 3 (13:42):
So a couple of things, and I know we don't
have a lot of time left. But a couple of
things to point out here. One, you know, from an
income tax perspective, there's not really a lot of planning
to do there. Maybe sitting with your accountant, maybe sitting
with a financial advisor might help you. But as you
withdraw money from your qualified it's always taxable, and you know,
(14:02):
your other investments, if you invested in, like, you know,
income tax free municipal bonds or something, might reduce your income.
But I can't really address the income tax side of
that equation. But on the estate tax side, we can.
I guess if I ran the numbers correctly, you're somewhere
around you know, three million ish, maybe a little more
(14:22):
in total assets. Good news is, federally you don't have
any estate tax. I don't even see it being a
problem in twenty twenty six, when the exemption drops back
down to seven million, give or take, I think you'll
be fine. And even in Massachusetts, if you know, I
assume you live here, So if you're in Massachusetts, it's
(14:43):
also not a really big problem because the exemption went
up to two million. So yeah, you're over a little bit.
But you know, do we want to start thinking about
lifetime gifting. And by the way, under the new estate
tax legislation, there's no more cliff rule, so we're able
to make gifts and be able to still get a
(15:04):
credit and reduce our gift to our Massachusetts of state tax.
So yeah, there might be a way to do some gifting,
but we'd have to balance that, of course with the
idea of a loss of a step up in basis.
But most importantly, maybe you want a trust if it's
not revocable, you want to add some nursing home protection
to protect some of the non qualified assets and focus
(15:27):
on living off of the qualified assets so that you
can now add nursing home protection at the same time.
Speaker 2 (15:34):
Mister Lutsky, thank you so much for joining us today.
Speaker 3 (15:36):
Always a pleasure.
Speaker 1 (15:38):
This has been asked OD on the Financial Exchange Radio Network.
Askedd with Todd Lutsky. Has been presented by Cushing and Dolan,
serving Massachusetts in 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 Cushingdolan dot com. The
views expressed in this segment are solely those of Cushing
(15:59):
and Dolan Armstrong advisor. He does not provide any legal
or tax advice. Please consult with your illegal or tax
advisor on such matters. Cushing and Armstrong do not endorse
each other and are not affiliated
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