November 6, 2024 • 15 mins
Todd Lutsky shares his insight into gifted assets and how to make the most of them. Todd also takes calls from listeners about their personal estate planning needs.
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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 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 (00:27):
Ask problems.
Speaker 3 (00:28):
We got Todd Lutsky from the law firm of Cushing
and Dolan with us.
Speaker 2 (00:32):
Now.
Speaker 3 (00:33):
The segment here is called Ask Todd because it is
your chance to ask Todd your estate planning questions. I'm
sure you might have some with the Trump election. Hey,
what does the estate planning landscape look like for the future?
How might it change? Give us a call eight eight
eight two zero five two two six three. That is
(00:53):
the number to call in order to speak with Todd
about your estate planning questions. We got the phone lines
open again at eight eight eight two zero five two
two six three. Mister Lutsky, how are you doing today?
Speaker 2 (01:08):
I am doing great? You I'm good do.
Speaker 3 (01:12):
You know why the lifeguard didn't rescue the hippie. No,
cause he's too far out man. That's good, Todd. I
want to talk to you a little bit about gifting.
We're getting towards the end of the year right now,
and when it comes to the current state of being
able to make gifts to individuals, what's the law of
(01:35):
the land today, the current landscape for making just it
doesn't matter the size of the gift. Are we talking
about smaller, bigger gifts? How much is allowed without having
to pay tax? Like how what's the law of the
land today.
Speaker 4 (01:47):
That's that's fair because that really covers two questions. We'll
try to take care of both of them. So One,
many folks who don't really you can, don't really care
about the impact of the gift, right, So if it's if,
if it's a present interest exclusion gift. Today it's eighteen
thousand dollars per year per person January one tax law change,
(02:09):
nineteen thousand per year per person. I say these are
the simple gifts and the freebies because they require no
filing of a seven h nine gift tax return, no
reporting to the irs of any kind. You simply write
to check and it's tax free to the giver, and
of course, as always tax free to the recipient. However,
(02:32):
people say, well, what if I have a lot more
money I want to give. What if I want to
give away one hundred thousand, or if I want to
give away a million, can I? Yeah, Now you move
to what is called a taxable gift. So let's use
a million dollars as an example. If I had a
million dollars and I wanted to get it out of
my estate. Maybe it's going to bring my estate down
(02:52):
to reduce my state estate tax. Maybe it's going to
help reduce my federal estate tax. So I want to
make this gift. Let's just say it's cash for now.
If I move a million dollars out of the estate,
now I've made a taxable gift. Call it a million
eighteen thousand, So I can bring back in the present
interest exclusion for you. If I give away a million
(03:12):
eighteen thousand dollars, the first eighteen I just said was
a freebie. Now you back that out and the taxable
gift is a million dollars, and that gets reported on
the seven h nine gift tax return that the giver files,
not the recipient. Okay, now I've made a million dollar gift.
I don't want to pay tax on that. What's that
(03:33):
bottom line tax do on that million dollar transfer?
Speaker 2 (03:37):
Well, it's going to be zero.
Speaker 4 (03:38):
But why because we now shift over to what is
known as a federal gift tax exemption, which happens to
mirror the federal estate tax exemption of thirteen million, six
hundred thousand and change roughly today. Now that's going up
January one as well. But today that's so much I
can give away. So if I have thirteen point six
(03:59):
and I give a million, I just eat into that
thirteen point six by one million, leaving me an exemption
of twelve point six and zeroing out my tax.
Speaker 2 (04:09):
Liability on that gift. So pretty easy to do. Can
you give away more than a million? Sure? Can the
whole thirteen six?
Speaker 3 (04:15):
If you like talking with Todd Lutsky from the law
firm of Cushing and Dole, and if you've got questions
for Todd about your estate plan. We got the phone
lines open here at eight eight eight two zero five
two two six three. That number again is eight eight
eight two zero five two two six three. Still got
some room on the phone line, So again, that number
(04:36):
is eight eight eight two zero five two two six
three Todd. If someone is trying to incorporate a gifting
strategy into their estate plan, what are some of the
constructions that you've seen that could potentially be successful.
Speaker 4 (04:52):
So the first there's so many things to think about, though, Chuck,
But I'll just try and give you a quick heads up. Right,
think about what you're gifting.
Speaker 2 (05:01):
Is it cash?
Speaker 4 (05:02):
Is it low basis stock that I bought years and
years ago and I'm gonna have a huge built in gain.
Speaker 2 (05:07):
Is it rental.
Speaker 4 (05:09):
Property that I have had and depreciated the basis to
zero with a huge built in gain. So you want
to think about the type of asset I gift. Gifting
away high basis assets is better than low basis assets.
So to the extent you can do that, do that,
like what cash or stock that I just bought that
(05:29):
has a high basis That way you're getting it out
of your estate without incurring or trapping I should say
a built in capital gain, because remember, folks, the capital
gains tax that you're building in could be higher than
the estate tax you're trying to avoid. Lots to think about, folks,
for sure, talking with Tom Lotski from the law firm
(05:51):
of Cushing and Dolan. If you've got a question for Todd,
we've got the phone lines open at eight eight eight
to zero five to two sixty three. That number again
is eight eight eight to zero five two two six three.
We're gonna take a quick break here, but when we
come back, it's going to be right to your questions
(06:13):
with Todd again. Still a little bit of room on
the phone lines at eight eight eight to zero five
two two sixty three. Quick break, then your questions with Todd.
Speaker 1 (06:25):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (06:42):
All right, let's get right to the callers here.
Speaker 3 (06:44):
We got ed in Newberry ed. What's your question for
Todd Lutsky.
Speaker 5 (06:48):
Well, maybe I'm misunderstanding what you just said, but we
have five kids. If I give each of them a
nineteen thousand dollars gift or ninety five thousand dollars, I
understand it's tax free for them, but won't I have
to pay taxes on that money? When I pull it
out with my account.
Speaker 4 (07:07):
Well, if you pull it out of an IRA, yes,
But if it's sitting in your investment brokerage account, no, right,
because distributions out of your brokerage account are not taxable. Now,
if you have to sell something to liquidate the investment
to generate cash, well, sure you have a capital gain
if you sell something, or a capital loss depending on
what you sell. But no, there's no tax on withdrawing
(07:28):
money from your non IRA account. It's just whatever you incurse.
So if you've got a core account with cash sitting
in it, you can give. And by the way, the
nineteen is next year, eighteen is this year, So yeah,
you can give away eighteen thousand per year per person,
no tax for you, no filing for you, no gift
tax for you, no filing for you, and no income
(07:50):
tax or gift tax to the recipient at all. So
hope that helps. Definitely have a that. But folks, you know,
gifting is not easy. We're starting to learn this right now,
just as we start to touch the tip of the
gifting iceberg. If you will, we'll be exploring these all
month long. But you can get ahead of the curve
by getting the guide making the most of gifting your assets.
(08:12):
Don't make mistakes like, oh, I added a joint name
to an account.
Speaker 2 (08:16):
That's easy. Was that a problem? I don't know.
Speaker 4 (08:19):
Well, I put a joint name on a rental property
with my kid. I decided to put my kid's name
on the property. Oh my gosh, did I make a
completed gift? Do I have income tax problems? Did I
expose assets to creditors unnecessarily? So many things can happen
when you make simple moves or simple things that you
think are simple, like gifting. Please learn how to gift
(08:40):
the right way. Get the guide eight six six eight
four eight five six nine nine or Legal Exchange Show
dot com. Making the Most of Gifting your Assets eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com.
Speaker 3 (08:57):
Todd, I've got another one here for you. We've got
Carol an old Orchard Beach. Carol, what's your question for Todd?
Speaker 6 (09:04):
Well, it's fairly similar, But I don't have a million
to give someone. I'm probably gonna have about that much
sluv on myself as I go into retirement. Hopefully that'll
take me through. But my question is a smaller amount.
If I want to give, like one of my kids,
let's say ten thousand dollars. How do I do it
so that I'm not taxed on that ten thousand? And
(09:26):
when I give it to him, he doesn't you know,
it doesn't add to his income and therefore he gets
taxed so on it.
Speaker 4 (09:32):
You're right, it was very similar to the last question, Carol.
But that's okay, So let me do it this way.
The ten thousand you're giving, is it cash?
Speaker 6 (09:40):
Well, okay, let's I guess I'd better make myself clear.
What if I write a check? I mean, yes, I can.
Speaker 2 (09:45):
Call out catch Yes.
Speaker 4 (09:46):
Absolutely, So all you need to do to accomplish your
goal of getting that ten thousand dollars to your beneficiary
is simply go to your bank, write a check, pay
to the order of hand it to him. You do
not need to file any federal gift tax return. You
are not required to do it, nor do you have to. Secondly,
(10:07):
so that means there's no gift tax for you. Your
child who receives the money does not have an income
tax liability because gifts are never an income taxable event,
so does it matter how much they receive. The recipient
has no gift tax and the recipient has no income tax.
(10:27):
Simply right the check and you can do that. So
great question. I hope that that helps Todd.
Speaker 3 (10:33):
We'll keep the train moving.
Speaker 6 (10:35):
Here.
Speaker 3 (10:36):
We've got Tom in Charlestown with a question for you. Tom,
you're on with Todd Lutsky.
Speaker 7 (10:42):
Thank you, Good morning, Todd. Last week you spoke about
leaving your IRA to your state, and I have two
questions about that. One is is it subject to probate
in order to get it out of the estate. And secondly,
since it is subject to probate, if you find yourself
(11:02):
in a situation where you qualify for medicaid, but medicaid
is going to have a lean, will that lean attached
to that iora that you've left to your estate.
Speaker 2 (11:12):
Great question. So two answers.
Speaker 4 (11:14):
One in order to name the estate the beneficiary, Yes,
you are going to go to probate, No way to
avoid it for that one item. Then that item, and
again that only happens when you die, so you have
to be married. Let's say you pass away, Tom, you
never went to the nursing home. The asset flows through
probate into your testamentary trust. So yes, you have to
(11:37):
have a testamentary trust in place as well to receive
the money through probate, but then it is in trust
for the benefit of your spouse who can enjoy the
income and the principle. And the next day gets sick
and go to a nursing home and it is immediately
protected from the nursing home. And lastly there will be
(11:58):
no lean on that. So it really is a home
run for the one bad part. I got to go
to probate, but the pros in my mind, generally outweigh
the cons here, so hopefully that helps.
Speaker 2 (12:11):
Todd.
Speaker 3 (12:11):
I've got another one for you here. Let's go to
Steve in Maine. Steve, what's your question for Todd?
Speaker 8 (12:17):
Yeah, Hi, Todd, I have a question for you. So,
my mom has owned that beach home for about thirty years.
It's not her primary residence. It's worth a little under
a million dollars, and after she passes, she's giving it
to my brother and I, but she just wants us
to sell it just so we don't have to share it,
which is challenging. Would it be better taxes if she
(12:38):
were to sell it before she passes or would it
make any difference?
Speaker 4 (12:42):
Yeah, it'd be horrible. Horrible to sell it before she passes.
So please, folks, this is exactly what we talk about.
Thirty years ago. She bought this property. I don't know,
maybe she paid one hundred grand for it. Maybe she
paid fifty grand for it, say one hundred grand. We've
got nine hundred thousand dollars of built in game here.
You give away an asset like this. When I talked
(13:02):
earlier about high basis and low basis, right, this is
low basis. You give this away, you're trapping nine hundred
thousand dollars of gain during life. Don't give it away.
Don't sell it during life because you got the nine
hundred thousand dollars of built in gain to pay tax on. Instead,
hang on to it right, plan for it, put it
in a trust, whatever you want, die owning it, and
(13:25):
when you dine, it passes to you kids. You kids
will now get it with a brand new basis of
a million dollars fair market value. Date of death eliminates
the built in gain. Sell it you guys, pay no
capital gains tax, or if one of you want it,
buy out the interest of the other one. You have
every option available to you. Don't just sell it or
(13:46):
give it away now.
Speaker 3 (13:48):
Todd, any other final thoughts on gifting We got a
little bit of time here, and any last thoughts before
we wrap up.
Speaker 4 (13:56):
Yeah, I think I just want to spend a little
more time on Steve's question because I didn't know if
there was another caller. But on Steve's question again, Folks this,
if you have the time, right, you should not just
not give it away but stick it into an irrevocable
medicaid trust. I don't know how old she is or
she didn't mention anything about her health. Right, if we
have time, I would put that into an irrevocable medicaid
(14:19):
trust so that I can get a clock running so
that yes, I'm keeping it, but I also don't want
to lose it in case she needs long term care
before she dies.
Speaker 2 (14:27):
This kind of irrevocable.
Speaker 4 (14:28):
Trust, unlike gifting trusts, will allow the asset to be
protected and included in the estate when you pass away,
therefore still preserving that step up in basis I just
talked about for the kids who then can sell it
with no capital gains tax.
Speaker 3 (14:46):
Mister Lutsky, thank you so much for joining us today.
We appreciate the time.
Speaker 2 (14:50):
It's always a pleasure, Thank you.
Speaker 1 (14:57):
This has been asked on on the Financially Exchange Radio network,
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:18):
Cushing and Dolan Armstrong Advisory. 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 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 (00:27):
Ask problems.
Speaker 3 (00:28):
We got Todd Lutsky from the law firm of Cushing
and Dolan with us.
Speaker 2 (00:32):
Now.
Speaker 3 (00:33):
The segment here is called Ask Todd because it is
your chance to ask Todd your estate planning questions. I'm
sure you might have some with the Trump election. Hey,
what does the estate planning landscape look like for the future?
How might it change? Give us a call eight eight
eight two zero five two two six three. That is
(00:53):
the number to call in order to speak with Todd
about your estate planning questions. We got the phone lines
open again at eight eight eight two zero five two
two six three. Mister Lutsky, how are you doing today?
Speaker 2 (01:08):
I am doing great? You I'm good do.
Speaker 3 (01:12):
You know why the lifeguard didn't rescue the hippie. No,
cause he's too far out man. That's good, Todd. I
want to talk to you a little bit about gifting.
We're getting towards the end of the year right now,
and when it comes to the current state of being
able to make gifts to individuals, what's the law of
(01:35):
the land today, the current landscape for making just it
doesn't matter the size of the gift. Are we talking
about smaller, bigger gifts? How much is allowed without having
to pay tax? Like how what's the law of the
land today.
Speaker 4 (01:47):
That's that's fair because that really covers two questions. We'll
try to take care of both of them. So One,
many folks who don't really you can, don't really care
about the impact of the gift, right, So if it's if,
if it's a present interest exclusion gift. Today it's eighteen
thousand dollars per year per person January one tax law change,
(02:09):
nineteen thousand per year per person. I say these are
the simple gifts and the freebies because they require no
filing of a seven h nine gift tax return, no
reporting to the irs of any kind. You simply write
to check and it's tax free to the giver, and
of course, as always tax free to the recipient. However,
(02:32):
people say, well, what if I have a lot more
money I want to give. What if I want to
give away one hundred thousand, or if I want to
give away a million, can I? Yeah, Now you move
to what is called a taxable gift. So let's use
a million dollars as an example. If I had a
million dollars and I wanted to get it out of
my estate. Maybe it's going to bring my estate down
(02:52):
to reduce my state estate tax. Maybe it's going to
help reduce my federal estate tax. So I want to
make this gift. Let's just say it's cash for now.
If I move a million dollars out of the estate,
now I've made a taxable gift. Call it a million
eighteen thousand, So I can bring back in the present
interest exclusion for you. If I give away a million
(03:12):
eighteen thousand dollars, the first eighteen I just said was
a freebie. Now you back that out and the taxable
gift is a million dollars, and that gets reported on
the seven h nine gift tax return that the giver files,
not the recipient. Okay, now I've made a million dollar gift.
I don't want to pay tax on that. What's that
(03:33):
bottom line tax do on that million dollar transfer?
Speaker 2 (03:37):
Well, it's going to be zero.
Speaker 4 (03:38):
But why because we now shift over to what is
known as a federal gift tax exemption, which happens to
mirror the federal estate tax exemption of thirteen million, six
hundred thousand and change roughly today. Now that's going up
January one as well. But today that's so much I
can give away. So if I have thirteen point six
(03:59):
and I give a million, I just eat into that
thirteen point six by one million, leaving me an exemption
of twelve point six and zeroing out my tax.
Speaker 2 (04:09):
Liability on that gift. So pretty easy to do. Can
you give away more than a million? Sure? Can the
whole thirteen six?
Speaker 3 (04:15):
If you like talking with Todd Lutsky from the law
firm of Cushing and Dole, and if you've got questions
for Todd about your estate plan. We got the phone
lines open here at eight eight eight two zero five
two two six three. That number again is eight eight
eight two zero five two two six three. Still got
some room on the phone line, So again, that number
(04:36):
is eight eight eight two zero five two two six
three Todd. If someone is trying to incorporate a gifting
strategy into their estate plan, what are some of the
constructions that you've seen that could potentially be successful.
Speaker 4 (04:52):
So the first there's so many things to think about, though, Chuck,
But I'll just try and give you a quick heads up. Right,
think about what you're gifting.
Speaker 2 (05:01):
Is it cash?
Speaker 4 (05:02):
Is it low basis stock that I bought years and
years ago and I'm gonna have a huge built in gain.
Speaker 2 (05:07):
Is it rental.
Speaker 4 (05:09):
Property that I have had and depreciated the basis to
zero with a huge built in gain. So you want
to think about the type of asset I gift. Gifting
away high basis assets is better than low basis assets.
So to the extent you can do that, do that,
like what cash or stock that I just bought that
(05:29):
has a high basis That way you're getting it out
of your estate without incurring or trapping I should say
a built in capital gain, because remember, folks, the capital
gains tax that you're building in could be higher than
the estate tax you're trying to avoid. Lots to think about, folks,
for sure, talking with Tom Lotski from the law firm
(05:51):
of Cushing and Dolan. If you've got a question for Todd,
we've got the phone lines open at eight eight eight
to zero five to two sixty three. That number again
is eight eight eight to zero five two two six three.
We're gonna take a quick break here, but when we
come back, it's going to be right to your questions
(06:13):
with Todd again. Still a little bit of room on
the phone lines at eight eight eight to zero five
two two sixty three. Quick break, then your questions with Todd.
Speaker 1 (06:25):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (06:42):
All right, let's get right to the callers here.
Speaker 3 (06:44):
We got ed in Newberry ed. What's your question for
Todd Lutsky.
Speaker 5 (06:48):
Well, maybe I'm misunderstanding what you just said, but we
have five kids. If I give each of them a
nineteen thousand dollars gift or ninety five thousand dollars, I
understand it's tax free for them, but won't I have
to pay taxes on that money? When I pull it
out with my account.
Speaker 4 (07:07):
Well, if you pull it out of an IRA, yes,
But if it's sitting in your investment brokerage account, no, right,
because distributions out of your brokerage account are not taxable. Now,
if you have to sell something to liquidate the investment
to generate cash, well, sure you have a capital gain
if you sell something, or a capital loss depending on
what you sell. But no, there's no tax on withdrawing
(07:28):
money from your non IRA account. It's just whatever you incurse.
So if you've got a core account with cash sitting
in it, you can give. And by the way, the
nineteen is next year, eighteen is this year, So yeah,
you can give away eighteen thousand per year per person,
no tax for you, no filing for you, no gift
tax for you, no filing for you, and no income
(07:50):
tax or gift tax to the recipient at all. So
hope that helps. Definitely have a that. But folks, you know,
gifting is not easy. We're starting to learn this right now,
just as we start to touch the tip of the
gifting iceberg. If you will, we'll be exploring these all
month long. But you can get ahead of the curve
by getting the guide making the most of gifting your assets.
(08:12):
Don't make mistakes like, oh, I added a joint name
to an account.
Speaker 2 (08:16):
That's easy. Was that a problem? I don't know.
Speaker 4 (08:19):
Well, I put a joint name on a rental property
with my kid. I decided to put my kid's name
on the property. Oh my gosh, did I make a
completed gift? Do I have income tax problems? Did I
expose assets to creditors unnecessarily? So many things can happen
when you make simple moves or simple things that you
think are simple, like gifting. Please learn how to gift
(08:40):
the right way. Get the guide eight six six eight
four eight five six nine nine or Legal Exchange Show
dot com. Making the Most of Gifting your Assets eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com.
Speaker 3 (08:57):
Todd, I've got another one here for you. We've got
Carol an old Orchard Beach. Carol, what's your question for Todd?
Speaker 6 (09:04):
Well, it's fairly similar, But I don't have a million
to give someone. I'm probably gonna have about that much
sluv on myself as I go into retirement. Hopefully that'll
take me through. But my question is a smaller amount.
If I want to give, like one of my kids,
let's say ten thousand dollars. How do I do it
so that I'm not taxed on that ten thousand? And
(09:26):
when I give it to him, he doesn't you know,
it doesn't add to his income and therefore he gets
taxed so on it.
Speaker 4 (09:32):
You're right, it was very similar to the last question, Carol.
But that's okay, So let me do it this way.
The ten thousand you're giving, is it cash?
Speaker 6 (09:40):
Well, okay, let's I guess I'd better make myself clear.
What if I write a check? I mean, yes, I can.
Speaker 2 (09:45):
Call out catch Yes.
Speaker 4 (09:46):
Absolutely, So all you need to do to accomplish your
goal of getting that ten thousand dollars to your beneficiary
is simply go to your bank, write a check, pay
to the order of hand it to him. You do
not need to file any federal gift tax return. You
are not required to do it, nor do you have to. Secondly,
(10:07):
so that means there's no gift tax for you. Your
child who receives the money does not have an income
tax liability because gifts are never an income taxable event,
so does it matter how much they receive. The recipient
has no gift tax and the recipient has no income tax.
(10:27):
Simply right the check and you can do that. So
great question. I hope that that helps Todd.
Speaker 3 (10:33):
We'll keep the train moving.
Speaker 6 (10:35):
Here.
Speaker 3 (10:36):
We've got Tom in Charlestown with a question for you. Tom,
you're on with Todd Lutsky.
Speaker 7 (10:42):
Thank you, Good morning, Todd. Last week you spoke about
leaving your IRA to your state, and I have two
questions about that. One is is it subject to probate
in order to get it out of the estate. And secondly,
since it is subject to probate, if you find yourself
(11:02):
in a situation where you qualify for medicaid, but medicaid
is going to have a lean, will that lean attached
to that iora that you've left to your estate.
Speaker 2 (11:12):
Great question. So two answers.
Speaker 4 (11:14):
One in order to name the estate the beneficiary, Yes,
you are going to go to probate, No way to
avoid it for that one item. Then that item, and
again that only happens when you die, so you have
to be married. Let's say you pass away, Tom, you
never went to the nursing home. The asset flows through
probate into your testamentary trust. So yes, you have to
(11:37):
have a testamentary trust in place as well to receive
the money through probate, but then it is in trust
for the benefit of your spouse who can enjoy the
income and the principle. And the next day gets sick
and go to a nursing home and it is immediately
protected from the nursing home. And lastly there will be
(11:58):
no lean on that. So it really is a home
run for the one bad part. I got to go
to probate, but the pros in my mind, generally outweigh
the cons here, so hopefully that helps.
Speaker 2 (12:11):
Todd.
Speaker 3 (12:11):
I've got another one for you here. Let's go to
Steve in Maine. Steve, what's your question for Todd?
Speaker 8 (12:17):
Yeah, Hi, Todd, I have a question for you. So,
my mom has owned that beach home for about thirty years.
It's not her primary residence. It's worth a little under
a million dollars, and after she passes, she's giving it
to my brother and I, but she just wants us
to sell it just so we don't have to share it,
which is challenging. Would it be better taxes if she
(12:38):
were to sell it before she passes or would it
make any difference?
Speaker 4 (12:42):
Yeah, it'd be horrible. Horrible to sell it before she passes.
So please, folks, this is exactly what we talk about.
Thirty years ago. She bought this property. I don't know,
maybe she paid one hundred grand for it. Maybe she
paid fifty grand for it, say one hundred grand. We've
got nine hundred thousand dollars of built in game here.
You give away an asset like this. When I talked
(13:02):
earlier about high basis and low basis, right, this is
low basis. You give this away, you're trapping nine hundred
thousand dollars of gain during life. Don't give it away.
Don't sell it during life because you got the nine
hundred thousand dollars of built in gain to pay tax on. Instead,
hang on to it right, plan for it, put it
in a trust, whatever you want, die owning it, and
(13:25):
when you dine, it passes to you kids. You kids
will now get it with a brand new basis of
a million dollars fair market value. Date of death eliminates
the built in gain. Sell it you guys, pay no
capital gains tax, or if one of you want it,
buy out the interest of the other one. You have
every option available to you. Don't just sell it or
(13:46):
give it away now.
Speaker 3 (13:48):
Todd, any other final thoughts on gifting We got a
little bit of time here, and any last thoughts before
we wrap up.
Speaker 4 (13:56):
Yeah, I think I just want to spend a little
more time on Steve's question because I didn't know if
there was another caller. But on Steve's question again, Folks this,
if you have the time, right, you should not just
not give it away but stick it into an irrevocable
medicaid trust. I don't know how old she is or
she didn't mention anything about her health. Right, if we
have time, I would put that into an irrevocable medicaid
(14:19):
trust so that I can get a clock running so
that yes, I'm keeping it, but I also don't want
to lose it in case she needs long term care
before she dies.
Speaker 2 (14:27):
This kind of irrevocable.
Speaker 4 (14:28):
Trust, unlike gifting trusts, will allow the asset to be
protected and included in the estate when you pass away,
therefore still preserving that step up in basis I just
talked about for the kids who then can sell it
with no capital gains tax.
Speaker 3 (14:46):
Mister Lutsky, thank you so much for joining us today.
We appreciate the time.
Speaker 2 (14:50):
It's always a pleasure, Thank you.
Speaker 1 (14:57):
This has been asked on on the Financially Exchange Radio network,
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:18):
Cushing and Dolan Armstrong Advisory. 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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