Life Happens

January 4th, 2024

Episode Transcript

Speaker 1 (00:00):
Why, Good morning everyone.

Speaker 2 (00:02):
Welcome to our first show in twenty twenty five. Welcome
to the new year, Welcome to Life Happens Radio. If
you've listened before, you'll know that we bring you content
to help you shape the planning that you do for life,
whether it be planning for education, planning for healthcare, planning, finances,
legal planning. We're going to talk about today looking at

(00:26):
your particular estate and ways to hold on to money,
protect money, but also how do we transition money. There
is something going on in our country right now called
the Great Wealth Transfer. And whether you're in the you know, billions, millions,
you've got a couple grand or a house, it's important

(00:49):
no matter what the size of your estate, how you
treat that estate, and how you treat the things that
you have, whether they're personal possessions, whether it's something handed
down to you from an whether it's the house that
you bought or built. Those are important things to you
and the way that you treat them during your lifetime
and then transition them onto the next generation is so critical.

(01:14):
We're going to talk about different types of assets. We're
going to look at things the most common types of
assets that people own when they walk into our office
and we start talking about, well, we have our home,
we paid off the mortgage.

Speaker 1 (01:27):
We want to protect the home.

Speaker 2 (01:29):
We want to make sure if one of the children
is living there, that they have a right to get
to that house.

Speaker 1 (01:34):
If the kids are just.

Speaker 2 (01:34):
All going to say, Okay, we're going to sell it someday,
but you want to make sure that you have a
plan that you protect that house. The other major asset
that we see that creates issues is retirement accounts. And
if you've been working for a while, as I have,
you know that once upon a time there are things
called penance. And when you went to work for a company,

(01:57):
you were a company employee and you got a pension,
and that pension became part of the reason you kept
that employment for thirty or forty years, because when you
hit retirement age, you got the gold watch and you
got to check every month. Well, those days, unless you're
a government employee, public employee are gone. Private employers don't

(02:20):
offer pension plans what we call define contribution plans or
define benefit plans. They offer you an opportunity to save
for yourself, and that's in the form of a four
oh one k an ira. We hear before US and
after US ways to save? Do you do a roths
are very popular today? Do you do a traditional IRA?

(02:43):
How much do you put into your four oh one K?
If you have an employer that matches, you want to
make sure that you're taking advantage of that. So accumulating
wealth inside of a retirement account is not only a
good idea, it's essential because no one else is saving
for you. You have Social Security and your retirement accounts, and

(03:04):
that's what most people rely on to live a good, healthy,
extended lifetime and to have the financing to live that
life with the lifestyle that you want. So how do
we make sure that our retirement accounts are protected and
how do we make sure that they transition on to
the next generation because there are not only tax issues,

(03:26):
but now with a new law that came in in
twenty twenty, the Secure Act, there are new requirements in
terms of how that account gets liquidated. So we're going
to talk about the home retirement accounts, if you have
stocks and bonds, if you have bank.

Speaker 1 (03:40):
Accounts, life insurance annuities, and.

Speaker 2 (03:44):
We're going to talk about the new age of a
state planning, and that is digital assets.

Speaker 1 (03:50):
Do you have them. I think you do.

Speaker 2 (03:52):
We're going to talk about it because everyone today you
can't escape having a digital asset. If you have a
password to your bank account online, you have a digital asset.

Speaker 1 (04:03):
How do you track that?

Speaker 2 (04:04):
How do you make sure that your digital assets are
accounted for, that someone has access, that someone can do
the things that you could do and get the things.
Not even talking about the exotics if you will, like
cryptocurrency and NFTs, but just everyday digital assets and to

(04:25):
help me explain all of this. Very fortunate today to
have two of our associates at Pierre O'Connor and Strauss
and PR.

Speaker 1 (04:33):
Connor and Strauss is a law firm.

Speaker 2 (04:35):
We're based here in Albany, New York, but we have
offices in Manhattan, Long Island, and we have one of
our associates who is joining us today from Long Island,
Tommy Morasco.

Speaker 3 (04:45):
Good morning, Tom, Good morning, Thank you for having me, Lott.

Speaker 2 (04:48):
Great to have you on again. And Tom works in
the estate planning area, elder law. He's been doing this
for about what ten eleven.

Speaker 1 (04:56):
Years, Tom, that's correct.

Speaker 2 (04:59):
And he's you know, a great attorney and experienced attorney
that helps our clients down in our Long Island and
our New York City offices, and right here live sitting
in front of me, is Patricia Whalan.

Speaker 1 (05:09):
Good morning, Patty.

Speaker 2 (05:11):
And Patty is one of our associate attorneys here in
the Albany office, and she has been working with our
clients on estate planning, putting together trust plans, how to
deal with trust, and how to deal with all of
these assets. And you know, Tom, I'm going to start
with you because I've been doing this forty years. You've
been doing this ten or eleven years, and Patty has

(05:32):
been doing it a year. She had admitted this time
last year, but has gained extremely valuable experience over that
one year time period. And so Tom, looking at it,
kind of the traditional estate planning the home, the bank accounts,
the stocks, the bonds, retirement accounts, and then new age

(05:54):
of state planning has now encompassed a whole slew of
other types of assets. What have you seen in your
experience and what do you see kind of for the future.
What should our clients be thinking about in terms of
the assets that they've assembled accumulated, and how do you
put all of this together in a plant?

Speaker 3 (06:15):
I mean, that's a great question. So you always see
the traditional as you pointed out the home retirement accounts,
I don't see there being any changes in that. And
as you also pointed out, with this great transition and
a lot more things that are going to be panned
down and passed on, people who are let's just say

(06:35):
an average family are going to have to deal with
a lot more just by just by the sheer nature
of what it is that they're going to be getting
on top of, as far as it's inheritance. And now
we turned into this digital world. And I actually had
a client yesterday and they pointed out the same thing.
Well I've been keeping around, they said, a notebook with
all my passwords in one place, because I don't know,

(06:58):
if you know, it's something happened to me. How anyone's
going to access this. So it really brings up a
great point. And as we continue to move forward, I
think we've all seen how reliant we've become on our
cell phones and other digital products, whether that's an iPad
or a computer. So I think that's really going to

(07:18):
be more a new focus. And I mean we in
our firm, we have a program that we've implemented to
assist our clients, especially just for this purpose of tracking assets,
making sure that there is one central location, because just
because we have loved ones and then we tell this
to our clients all the time, that doesn't mean that
people can just come in and start making decisions for

(07:40):
you or have authority to access whatever it is that
they want. And it doesn't matter what your circumstances, whether
you're healthy, whether you're incapacitated, or if you've become deceased.
People have to understand that familiar relationships are not enough
to overcome a lot of the laws that are in
place that protect individual privacy rights. That's a lot of
the things now that I've been really going over with

(08:02):
my clients and making sure that there is a plan
on accessing and transitioning those sorts of accounts and assets
when they're no longer able to do it themselves.

Speaker 2 (08:12):
We've always thought of privacy being in the healthcare realm.
You have Health Insurance Portability Act, which prohibits people from
getting access to health information regardless of whether it's a
loved one or not. So we do planning for that.
We do a healthcare directive, we do a living will,
and we give hippa authorization, a waiver of the hip

(08:34):
of privacy rules for healthcare data that people need to
make informed decisions. But you don't really have a digital
healthcare or digital proxy where you appoint someone to get
access to your digital assets. I'm guessing someday the government
will do this and appoint have a document where you
can appoint someone as your digital representative. Right now, Tom,

(08:56):
I think the document that and we do have a
whole section in this document is the power of attorney.
So if you want to appoint an agent to do
things for you if you can't do them for yourself.
But remember this is only while you are alive. We'll
talk about the other scenario in a minute. But while
you are alive, that power of attorney you can put

(09:16):
in giving access people to your bank accounts, to your
your passwords, your codes. And you know this is you know,
the wealth transfer that's going to take place. And I'm
not sure exactly how much money is going to be
handed over, but they're saying sixty trillion dollars over the
next twenty years is going to change hands. And guess

(09:40):
what that's in the hands of us boomers. So if
any of my kids are listening, they're all driving back
to New York City. Two of them are driving back
to New York City today. If you guys are in
the car yet, you know, hello from the boomer. But
they kind of they kind of laugh at me because
I have a typed out list of you know, twenty
five thirty passwords and you can't remember them all.

Speaker 1 (10:01):
There's no way to keep track of all that.

Speaker 2 (10:04):
But you mentioned something that our law firm has done
that not many law firms have done, and that is
we have taken on the responsibility of creating for our
clients a private, secure, encrypted vault where this type of information,
along with legal documents, financial documents, et cetera, can be maintained,

(10:24):
and we work with that and we keep that in
our for our law firm confidentially and we allow clients
to access it and if they want to hand over
the password that they create to that account, they have
the opportunity to do that. But the other scenario, the
power of attorney can give some one ability to get
to these things, but if they don't have.

Speaker 1 (10:45):
The password, guess what they're not getting in.

Speaker 2 (10:48):
And well, it gets worse when you start talking about cryptocurrency,
because you need your wallet you need the twelve key
code words to get to that account. And if you
have a coinbase, while it or you have the other
types of digital platforms where you can store cryptocurrency, you
can store NFTs, you can store all types of different

(11:09):
different currencies. You have to have the ability to get
to those accounts.

Speaker 3 (11:15):
And it's not the levels of encryption.

Speaker 1 (11:17):
It's not easy.

Speaker 2 (11:18):
So just talk and you mentioned in heralink or you
didn't call it by name, but that is the program
we use to work with our clients and make sure
that we have all of the data that they want
to keep account of and keep stored.

Speaker 3 (11:34):
Yeah. So what I love about the program is that
you know, we have clients when we come in and
a lot of the times at the beginning of our
meetings that always start with trying to understand the big picture,
the full picture, and that's really crucial for us as planners. Right.
So I want to help you. I want to do
everything that I can to achieve your goals, whatever they

(11:56):
might be for yourself or your loved ones, for your future.
But in order to do that, we have to have
an understanding. And so the first portion of any meeting
is this information gathering identifying well, what are your assets?
Sometimes people don't even know themselves exactly what they've had, okay.
And we have people who come in, especially after the fact,
after something's happened already and we're in a crisis, and

(12:19):
they say, oh, I need to help my father, I
need to help my mother, I need to help my spouse,
and they can't identify where everything is, or they don't
even know, well, I'm not sure where they might have accounts,
so they're looking through unopened mail to try and figure
out where everything is. What I love about this program
is we identify everything in the beginning. So number one,
we make sure that we have the right plan in

(12:39):
place for you and for your goals, and then we
have a place where we can track and identify everything,
and that allows us to make sure, okay, are these
assets titled appropriately? Do we have the right beneficiaries? As
you've mentioned before, it's a secure act when it comes
to retirement counts. How you title and how you leave
those accounts behind have huge, huge tax ramifications depending on

(13:03):
how you do it. So when we lay them all out,
we have the ability to identify make whatever changes. And
this program allows both us on the firm end and
you as a user to have access to be able
to continually update these things. And then what we do
specially is we have a yearly annual meeting where we

(13:23):
sit down together, we review all the information, we go
through and hera linked together, identify, make sure that your
documents are one location, we identify, make sure that the
assets that are there are up to date and accurate,
and then we continually keep them updated. And this is
a site that we both have access to. So now
if in the event your agent, under the power of

(13:45):
attorney or or a trustee or whomever needs to step in, well, hey,
we can call the attorney and say I know that
you know my mom was working with Tommy. Hey, Tommy,
something happened. Well, at least now we have a means
of accessing and identifying where everything is so that we
can say, okay, this is what we need to do
going forward and develop an action plan. So in a crisis,

(14:06):
it's chaos, and if you don't have a plan, it
makes it worse. By making sure that there's a roadmap
in place, even if you don't know what to do
in that particular moment, you know where to go, where
to start, and how to proceed from there.

Speaker 1 (14:20):
Valuable lesson. Tom couldn't have said it better myself.

Speaker 2 (14:23):
We do have to take a short break, and when
we come back, we're going to hear from Patty, who's
been sitting waiting patiently to talk about the planning and
digital assets is where we started. We jumped into a
kind of a new age planning. And if you don't
think you have them, folks, you do. You have to
account for them. You have to think about them, and

(14:43):
in a good planning process with a good planning law firm,
those are things that you're going to take account of.

Speaker 1 (14:49):
Stay with us. We're going to talk about the other assets.

Speaker 2 (14:52):
Your home, your IRA, your four oh one K, your stocks,
your bonds, the things that you need to value and
how do you try transition though. We're going to talk
about all of those things and how they're tax to
when we come back. You're listening to Life Happens Radio
every Saturday morning here on Talk Radio WGY. We'll be
back after this short break. We are back on a windy,

(15:22):
chilly Saturday morning here in the Great Northeast. It is January,
and here we go. The holidays are over, the days
are getting longer. Believe it or not, they're still pretty short,
but they're getting longer, and you know, sooner or later
it will be spring. And hopefully you enjoy the skiing.
I played paddle tennis outdoors this morning, which is a

(15:43):
great game. But do something to get outside, snowshoe whatever
you're gonna do. Take a hike, take a walk, get
get healthy, stay healthy.

Speaker 1 (15:52):
Dry.

Speaker 2 (15:52):
January is something a lot of my friends are doing,
and so am I. So that's kind of an interesting
concept to get get your systems straightened out coming into
the new year. But whatever you're doing, whatever you have
done in terms of putting your life on track and
what resolutions you have made, it's January fourth, so hopefully

(16:15):
you've stuck to them for those four days, but it's
a long way to go and hopefully you can stick
to them for the rest of the year, in some cases,
for the rest of your life.

Speaker 1 (16:23):
And planning for those things that you don't expect is
why we're here.

Speaker 2 (16:29):
So we're talking about a state planning. We're talking about
your particular assets. We started with digital assets, and you
know we're gonna throw the phone number out there if
you have questions on any of the things that we're
talking about the state planning Give us a call eight
hundred talk WGY. That's eight hundred eight two five five
nine four nine. Once again, eight hundred eight two five

(16:49):
five nine four nine. Patty, you've been doing this now,
and you do a lot of client meetings as a
young attorney. You're meeting with clients of all ages. But
from the perspective of someone who has gone through law school,
come out, gotten admitted to the bar, passed the bar
first time, congratulations, and now you're practicing law. What are

(17:13):
your observations as someone new to the practice of a
state planning and what kinds of things strike you as
mistakes people make and things people just don't think about.

Speaker 1 (17:21):
That they should.

Speaker 4 (17:23):
I think there's a lot of things that people don't
even know that they don't know. I mean, I think
a lot of things are things that they may not
even like think about. I mean, one of the common
ones is forgetting to put beneficiaries on bank accounts. A
lot of people don't know what a transfer on death
or a people on death beneficiary is, and you know,

(17:44):
they weren't even aware that that was something they needed
to do with their financial institutions. So That's something that
I see that comes up quite often. Another thing, like
Tommy mentioned earlier, was that people sometimes aren't really sure
where they keep, you know, their physical, you know, important
critical documents. Sometimes it's in a file cabinet, sometimes it's
in the back of a closet. And so, you know,

(18:06):
when they come to us and they sit down with
us for the first time and we start asking them
all these questions, we start asking them about, oh, you know,
where's a d to your home? You know, do you
know what your who your beneficiaries are, like, do you
know how much you know your life insurance is? Do
you have long term care insurance? And when people start
thinking about all these different things, you know, they're like, oh,

(18:29):
I haven't really thought about that thing in a while.
I'm not really sure where it is or what the
status of it is. And so I think a lot
of people kind of just you know, get caught up
in everyday life and forget to kind of make sure
they have all their things, you know, together, all their
things in one place.

Speaker 2 (18:43):
So taking inventory is is a key making sure that
you know where things are, what they are, how they're owned.
And the one that I see that people most often
don't have a clue about is oh. I opened that
four one K twenty years ago. I don't remembermember who
the beneficiaries are. I've never checked back. I bought that
life insurance policy twenty years ago. I don't remember who

(19:06):
I named as beneficiary. And a lot of times you
look at it and they named their mother although they're
married now with three kids, and they never went back
and changed it, or they named a spouse that they're
divorced from, and now they have to go back and
they have to fix that and make sure that if
they do have kids, that the kids are on as
secondary are contingent beneficiaries. So we send out an online

(19:29):
questionnaire for people, and I think this is for a
lot of people the first time that they've really thought
about what kind of stuff do they have? And it
kind of it varies from client to client. Some people
are forthcoming with that information, but some people, Patty, don't
want to talk about it. They don't want to give

(19:49):
up that confidential information, and sometimes we have to really
pry it loose when we meet with them. But it's
vital for people to know how assets are owned, what
the values are, who the beneficiaries are. So Tom in
your experience, how easy is it to get this information

(20:13):
out of clients?

Speaker 3 (20:16):
Sometimes I wish there are a lot easier because sometimes
and you know what it is, it's sometimes it's just
it's a psychological thing, right, It's something that we don't
we're not typically used to speaking with about people. We
don't talk about our finances most of the time with people,
and so when somebody sits down, you have to kind
of make sure that they feel comfortable enough that they

(20:38):
can open up and say okay and understand that we're
here to help you. So sometimes it's it's a lot
more challenging because I just don't think it's it's it's
not natural to people sometimes I want to open up
about these certain things. So you know, it depends on
the person, sure, and.

Speaker 1 (20:58):
So we do send that question.

Speaker 2 (21:00):
Most clients do give most of the information, but we
do find that a lot of clients don't know the
answer to all of the questions, how things are owned,
who the beneficiaries are. As planners, if you don't have
the right beneficiary named, it's going to send your plan
in a completely different direction. And Patty, part of the

(21:23):
planning that we do is to involve the use of trusts,
and when we talk to our clients and we get
that information, we have to really be very specific, asset
by asset as to how assets get owned, and what
are the best methods to transfer assets and what are

(21:45):
the best ways to receive assets from a beneficiari's perspective.
So just talk a little bit about the trust process
and the document is one step, but funding is equally as.

Speaker 4 (21:59):
Important, right So that's yeah, you make a good point there.
So there are you know, different ways to be funding
different assets. Some assets should go into the trust, some
assets should not go into the trust. So making sure
that we have a full idea of what assets they
have allows us to figure out, you know, which assets
should you know, be put into the trust and which

(22:19):
should stay out. You know, typically we always put real
property in there, so your home, your vacation property, that's
one of the first things that will go into a trust.
If you own like an LLC or corporation, or if
you have other business interests, we like to put those
into the trust as well. We even do things that
you may not even consider, like we've assigned you know,

(22:42):
promisory nodes into a trust. For example, sometimes we assign
life insurance policies into a trust depending on what type
they are. Usually the whole life policies should go in there.
We also do things like stocks retirement accounts, though actually
or you know, those are things that stay outside of
the trust. So just it depends on what the asset is,

(23:05):
and it depends on kind of the nature of it.

Speaker 2 (23:09):
So when you have a house, you have a deed,
and the deed gets transferred into your trust. And when
you have a bank account, you go to the bank.
Can you transfer the bank account into the trust, your
brokerage account, your stocks, your bonds, mutual funds. But Tom
Patty's right iras cannot go into the trust, So how

(23:31):
do we deal with those in terms of putting them
into play in the estate plan?

Speaker 3 (23:37):
So that depends on and you know, obviously who we
have available to inherent but how we name things are
extremely important. So what we want to see is who
are the intended beneficiaries, And what we want to do
is make sure that we're giving it to them in
a manner that's going to be the most effective for

(23:59):
not just for them inheriting it, but also for tax
purposes and the payout. So if we do have a trust,
and we have individual trusts created for the beneficiaries, which
I'm sure we'll get into shortly.

Speaker 2 (24:16):
We're going to dive into that topic as soon as
we hear from the news, which is coming right up,
so on this thread, Tom, We're going to come back
and talk about the trusts, how the trusts get funded,
and upon death, how do the assets pass to those beneficiaries,
whether they're in the trust, outside the trust, and how
do we thread all of this together in a comprehensive

(24:39):
estate plan so that during your lifetime it's good and
when you're gone, it's.

Speaker 1 (24:43):
Good for the next generation. We'll be right back. Welcome Back.

Speaker 2 (24:58):
Life Happens Radio weekly radio broadcast right here on wi
every Saturday morning, bringing you ideas state planning, elder law,
special needs planning, business planning, how to manage your life,
how to manage the lives of those you love when
you are gone in terms of what you leave to
them inheritance, making sure that you have protected yourself and

(25:20):
your assets and your loved ones while you are alive,
and we do a lot of asset protection planning. We
we're going to get a little bit of the trust
topic and talk about what types of trust can protect
assets for you. And then we're going to open up
a whole topic, which I think, to me, in terms
of what we do for our clients and the families

(25:41):
that we represent, is one of the best planning ideas
that we've ever had. And it isn't just ours, but
it's something that I think is so valuable that we
bring it into every conversation that we have with clients.
And I'm going to talk about that in just a moment,
but I want to give you a heads up to
an upcoming program that we have, and we do a

(26:01):
series called Medicaid Mondays, and for people who are planning
and have health issues, planning to age and get care,
the cost of that care has become prohibitively expensive. So
as you're trying to protect your home, protect your retirement accounts,
protect these other assets that we're talking about, how do

(26:23):
you deal with that if you have the need for
home health care or assisted living care or nursing home care,
and Folks, if you live long enough, the odds of
you needing this kind of care are extremely high, So
how do you protect yourself? How do you plan for it?
Medicaid Monday is a thirty minute webinar and our next
one is coming up on January thirteenth, myself and Frank Heming,

(26:46):
we're going to be talking about changes to the Medicaid
program in New York coming up in twenty twenty five.
What you should be aware of, what your plan may
need in terms of some tweaks. And we've been doing
this planning for thirty years plus, so we have a
lot of these plans out there and sometimes you need
to revisit them, sometimes you need to freshen them up
a little bit. So join us on January thirteenth at

(27:09):
twelve noon twelve to twelve thirty thirty minutes an update
on the Medicaid program in New York State, Frank Heming
myself and you can sign up as always at pyrolaw
dot com. Right on our website go to events and
sign up for Medicaid Monday the thirteenth of January twelfth
to twelve thirty. Love to have you join us and
learn what is coming up in medicaid. And if you

(27:29):
can't join us live, you can always get the video
recording which is on our website under resources. All of
our past Medicaid mondays, every element aspect of Medicaid in
New York State is available on the website.

Speaker 1 (27:45):
So join us.

Speaker 2 (27:46):
January thirteenth, Tom, I want to come back to the
idea that you were getting into when we had to
cut for the news. Looking at the assets, looking at
the inheritance, looking at the planning. How do we get
to the next generation? If you have a question on
this eight hundred eight two, five, five, nine, four nine
or anything we're talking about this morning, that's eight hundred

(28:07):
talk WG. Why would love to hear from you and
take your call, But tell me dig into a little bit.
How do we put all these pieces together?

Speaker 3 (28:16):
So when when we're thinking about what we're leaving behind,
we have to think about how we're going to leave behind.
And it's not always as simple as well, this is
the person I want to give it to them. Let's
just name them and let's give it to them. Maybe
in certain situations that could be appropriate, but is it
the best way? Because what you also have to consider
is not just that moment in time when you're sitting

(28:37):
in our office and we're talking about your plan. You
have to think about, well, when is it that these
people are going to inherit this? You know you may
be young, you may be very you may be older,
but you may be very healthy and fit. So it
could be some time and we don't know what your
loved ones, what their circumstances are going to be by
the time they are ready to inherit from you. So

(28:57):
whether they have their own health issues or if they've
experienced then the other difficulties in life, whether that's financial struggles,
marital struggles, we don't know. We don't have that crystal ball.
So how we leave it to them is just as
important as what we're leaving them. So keeping that in mind,
when we give something to someone outright, we're really not

(29:17):
taking it to consideration certain circumstances. If they have any
type of medical needs that they need or require government
benefits for, that's an issue, they need some type of
special needs plan that could be an issue, or financial problems,
marital problems as I was alluding to earlier. So if
we leave it to them in a trust, right, so

(29:39):
we have our trust that we would be creating, and
that's how we centralize all of our assets into one place.
And again, whether that's titling the asset into the trust
right now or naming the trust as a beneficiary on
some of those accounts that Patty was alluding to earlier.
But by the time that we pass we want everything
to flow through and go through the trust. That allows

(30:00):
us to avoid the probate, and it also allows us
to have that control to make sure that it's passing
on in that manner in which we intended. And then
we can also put in their vehicle another trust for
our beneficiaries to inherit that and what that does is
it provides them with asset protection and it can be
tailored and flexible to whatever the circumstance is, whatever is

(30:24):
going on for their lives in that time, so whether
or not they have judgment creditors, whether they're filing for bankruptcy,
whether they're getting a divorce, whether they have their own
long term care needs and require government benefits. This tool
allows them to inherit from you, but in a way
that allows them to still have some autonomy over that money,

(30:46):
but also be able to utilize it in a way
that works for their circumstances.

Speaker 2 (30:52):
So, looking at the risks that our clients face during lifetime,
what has become probably be the primary risk is healthcare bankruptcy.
Having medical needs that are so expensive that they outpace
your savings, outpace your income, and require you to deplete

(31:14):
your savings to the point where you are intogen And that, unfortunately,
is how the system works. Because Medicare is a program
that covers certain health expenses. You have prescription drugs, and
we're coming up on a cap this year on two
thousand dollars for seniors on Medicare for the prescription drug coverage,

(31:38):
which I think is an admirable benefit to have. But
when you get beyond just the doctors and the hospitals,
and the co payments and deductibles themselves can be significant.
But when you get beyond traditional healthcare into something called
long term care, there is no coverage for that, and
growing old and having health issues in your aging years

(32:03):
or having a disability in your younger years can put
a strain on your finances and all the things that
we're talking about here. So one fundamental and there are
three things that I really want to focus on here.
One fundamental patty is protecting yourself and protecting your assets
during your lifetime. And we're talking about trusts, and there's

(32:24):
one particular type of trust that we utilize to help
people prevent that healthcare bankruptcy, in that long term care bankruptcy,
and it's something you do every day at this point
in your career. So just talk a little bit about
the map.

Speaker 4 (32:38):
So the map is what's called a Medicaid Asset Protection Trust.
This trust is used to one protect your assets from
being counted towards Medicaid. So you know, Medicaid you have
you know, an asset you know kind of restriction and
income restriction, so you can't be over you know, the
asset amount and the income amount, otherwise you won't be

(33:01):
you know, really eligible for Medicaid. But the bigger, you know,
point of this trust is to protect your assets from
being recoverable from Medicaid. So by putting your assets into
the trust, you know, whether it's a house or your
bank account or life insurance, it allows you to, you know,
take the assets out of your name, put them into

(33:21):
a different type of vehicle, and it allows you to
protect them from you know, medicaid recovery, so that those
assets that you know, you've worked hard for all your
life are you know, protected and then able to be
transferred down to your children or you know, your loved ones.

Speaker 2 (33:38):
And we talk about the Medicaid Asset Protection Trust every
day with our clients, and almost every client comes in
with misconceptions about what that trust is and how it works.
And there are three things that you need to know
about the Medicaid Asset Protection Trust. Number one, it has
to be an irrevocable trust, and an irrevocable trust scares people.

(33:59):
They think, oh, I can't do anything with my assets.
I don't have any more control. I'm totally at the
mercy of my trustees.

Speaker 1 (34:09):
But that's not how these trusts work.

Speaker 2 (34:13):
The second hurdle is you have to give up the
right to direct access to principle of the trust. And
the third is that you cannot have the ability to
be your own trustee. So, Tom, how do you overcome
those three hurdles for clients? And I'm going to come
to Patty for how we draw this up sight.

Speaker 3 (34:36):
So the first thing I tell the client is that
while it seems that you're relinquishing some degree of control,
there are two things that you always are entitled to
make changes to, and that's number one, who your trustees
are and number two, who your beneficiaries are. So, if
a trustee is not acting in a matter in which

(34:59):
you find suitable, you can always replace them, so you
have that power. And also if ever you need to
change for your beneficiaries or how they a particular assets
passing on to somebody, you have an ability to go
in to change that as well. And if necessary, if

(35:20):
ever there needed to be some type of an amendment
or if we needed to repeal the trust. While the
name says it's irrevocable, in New York State, there is
a particular law that if we have the consent of
all beneficiaries and parties involved, the trust could in fact
be revoked if we deemed that it is necessary at
that time, and utilizing the other tools that we discussed

(35:42):
as far as the ability for the change of beneficiary
and trustee, we would be able to go back in
and do that if it were necessary.

Speaker 2 (35:51):
And I've had clients challenge me on that, what do
you mean you could revoke an irrevocable trust.

Speaker 3 (35:55):
There's no way you can do that.

Speaker 2 (35:57):
So I've had the happy the statute and you know,
fifty cents to anybody that can tell me what the
statute is.

Speaker 3 (36:04):
EP seven's one point nine there.

Speaker 1 (36:06):
Patty knew it.

Speaker 4 (36:07):
Yeah, I knew it too.

Speaker 2 (36:10):
In our office, you have to know that statue, because
that's a statue in New York that says, I, if
I could consent to the beneficiaries, I can break the trust.

Speaker 1 (36:18):
Well, guess what, who controls the beneficiaries? You do?

Speaker 2 (36:23):
So you cannotpoint people who will work with you and
consent to the revocation of the trust and you can
break that trust and get all of the assets back.
But Patty, there is a kind of a shining light
on this. And when we do this planning with our clients,
we draw a picture. Picture's worth a thousand words. So
just on the left side of our diagram, there are

(36:46):
certain assets that don't go in the trust.

Speaker 4 (36:48):
And one of those so retirement assets. So life war
owne ks, you know, you know, different wroths I raised.
Those don't go into your trust. Those kind of stay
in its own little bubble outside of the trust. We
don't want to put them into the trust because you know,
there's negative consequences associated with putting those into the trust.
So those stay out there on the left by themselves.

(37:12):
In the middle of the diagram, we have you, so
we have you as an individual. And then on the
right side of the trust, I mean on the right
side of the page, we have the trust, the Medicaid
Asset Protection Trust, and each of those little sections have
different assets in them. So again, the left side has
your retirement accounts. The middle portion has some assets that

(37:34):
we keep in your name. So for Medicaid purposes, you
can only have about thirty thousand I think in your
name roughly. I'm not sure if that number is going
to go up or not with the new year, but.

Speaker 2 (37:44):
About if they if you join us on May or
January thirteenth, Frank, we'll have that number for us, the
new asset eligibility number. It's it's a little over thirty
one thousand, and we'll have the new number for everyone
on January thirteenth, along with income, asset levels and all
the other changes.

Speaker 4 (37:59):
Okay, so yeah, you can have about that amount in
your own name. I mean, obviously you don't have to have,
you know, that low of a number, but roughly you
want to be kind of around there. But it can vary.
The number can vary depending on you know, how much
more money you need and you know what your standard
of living is, and you know that's something we discussed

(38:19):
with you at the consultation. Because some people may want
to keep more money in their names. Some people may feel,
you know, okay with putting more money into their trust.
It just really depends. And then on the right side,
we have the trust and in the trust box we
list out all of the assets that you know, we think,
you know, are a good idea to put in there.
So typically we do the real estate, so we'll put

(38:40):
your house there. You know, if you have CDs or
some bank accounts or a really large investment account, we
like to put those things in there. And those three
different box represent you know, most of the assets that
you have, you know, in different categories that they may
fall into.

Speaker 2 (38:57):
So the left bubble, if you will, those assets are
exempt for medicaid purposes, so you don't have to put
them in a trust.

Speaker 1 (39:05):
That's the good news.

Speaker 2 (39:06):
And we talked earlier about the fact that most people
the major assets that they have later in life are
their home and retirement accounts. So the retirement accounts stay
right in your name. You have one hundred percent access.
So if you have five hundred thousand dollars in an
IRA and a home, the home will go in that

(39:28):
trust the right box, but the iras stay in your name.
They don't have to go anywhere in New York State.
Other states are different. Other states don't exempt iras and
four roh one ks and retirement accounts, but New York does.

Speaker 1 (39:40):
So that's your asset. You can access that.

Speaker 2 (39:42):
Any time, you can take money out any time, and
when you get to seventy three you take your required
minimum distributions. But that is your asset. The home goes
into the trust and you can live in that house
for the rest of your life. It's fully protected. You
keep your Star exemption for real property tax veterans exemptions,
and if you want to sell the house, you can

(40:03):
sell it. The money goes in the trust and you
keep your capital gains tax exemption of two hundred and
fifty thousand dollars. So the house and the IRA is
you have unfettered access to, unfettered use of during your lifetime,
and that doesn't affect you at all in terms of
your lifestyle. Then, as you said, Patty, we take a

(40:25):
look and it's case by case how much cash do
you want to leave in your own name?

Speaker 1 (40:30):
And that's a comfort level.

Speaker 2 (40:31):
I want fifty thousand, I want one hundred thousand, I
want one hundred and fifty two hundred whatever, you want
in that middle box that's your cash, so that you
don't have to ever worry about money going forward. You've
got the IRA that's yours, got income from the trust
that's yours. You've got your own cash that's yours. But
what if you want to get money out of the trust, Patty?

Speaker 1 (40:52):
Is there a way to do that?

Speaker 4 (40:54):
So yeah, there are two different ways that you can
get money out of the trust. The one way is
you can receive income directly from the trust. So if
you have assets in there that are appreciating in value,
so if you're getting you know, interest payments or dividend payments,
those are things that you know can continue to go
directly to you, and so that's one of the ways

(41:15):
that you can get money from the trust. The other
way is called, you know, we like to call it
the back door method. So in order to do this,
one of your trustees has to you know, take out
the money, take out money from the principle and take
it out, put it into a separate account that they
create in their name, and then they can give money
to you from that separate account. It's kind of like

(41:37):
you know, a triangle. So it'll go from the trust
to an account the trustee creates and then back to you.
Another way that I find a little bit more simpler
is to have the trustee just pay things for you
on your behalf. So you know, if you need a
new roof on the house and you need to take
money out of, you know, some principle from an investment

(41:58):
account that you have in the trust, your trustee can
just go in there and you know, pay the roofers directly.
Or you know, if you want to buy a plane
ticket or something, you can just have the trustee pay
those bills, those expenses, you know, whatever you need directly. Otherwise,
the other way to do it would be to have them,
you know, put it into a separate bank account that
they create, and then you know, give it back to

(42:20):
you from that account.

Speaker 2 (42:22):
So for Medicaid purposes, we want to keep it outside
of your personal name, so it goes into an account
in the kids' names, and they can use that money
for you anytime, any way you choose. The Medicaid Asset
Protection Trust is just one trust that we use. We're
going to take a short break. When we come back,
I want to talk about a revocable trust and the

(42:43):
next generation trust. We talked about your assets, protecting your home,
protecting your IRASE four O one k's life insurance can
be protected. Annuities can be protected, stocks, bunds, mutual funds,
bank accounts, all of those things can be protected for you. You
want to avoid probate. You want to have asset protection.
If you need it for medicaid purposes, you want to

(43:04):
do it in attack smart way.

Speaker 1 (43:06):
And when you.

Speaker 2 (43:08):
Leave it to your kids, you want to make sure
they have the best chance at success. And what I
mean by success is they can keep those assets for
themselves without anyone else touching them. We're going to take
a short break and we'll be right back after this.

Speaker 1 (43:31):
And we're back. Welcome back to life Happens.

Speaker 2 (43:33):
I'm Lou Piro, your host for this morning from Pier
o'connoran Strauss, and I'm looking out the window here at
the WGY Studios in beautiful.

Speaker 1 (43:40):
Downtown Latham, New York.

Speaker 2 (43:42):
It's a little bit cloudy, but little windy, little blustery,
little chili. Hope you're having a great day, sitting by
the fire, taking a nice drive, doing something useful, productive,
getting into twenty twenty five January fourth, got a long
way to go, but hope you've had a good start
to the new year. I'm live and student with Patricia Whalan,
our associate at pier O'Connor and Strauss, and on the

(44:03):
phone we have Tommy Morasco from our Long Island office.
We're talking about your wealth. And when I say your wealth,
it doesn't mean that you want a billion dollars. Your
wealth is your home. Your wealth is your bank accounts,
your IRA, your four oh one K, your life insurance.
And we we have clients that walk into our office
saying I don't have anything, walking out and saying I'm

(44:25):
a millionaire because.

Speaker 1 (44:26):
They never added everything up.

Speaker 2 (44:27):
They never looked at the life insurance, they never looked
at the retirement account says as wealth and as assets
and their home and the value to the next.

Speaker 1 (44:35):
Generation is significant.

Speaker 2 (44:38):
So tom real quick difference between revocable trusts and irrevocable
trusts and why do you use one versus the other?

Speaker 3 (44:47):
So the revocable trust, I know you've run over before
the irrevocable trust. So with the revocable you are able
to be your own trustee and you have the ability
to have unfettered access to a ever is inside the trust,
not just income, but principle as well, and you can amend, modify,
or revoke the trust unilaterally at any given points. And

(45:10):
why we would use one versus the other. We were
talking about long term care, So the irrevocable trust is
really more a tool for long term care planning. If
you are a high networth individual or even a very
high income earning individual, then revocable trust may be more
suitable than the irrevocable trust if it's not really a

(45:31):
long term care concern that you have, and.

Speaker 2 (45:36):
So that avoids approbate, it manages assets during lifetime, and
for some people it's absolutely the right fit.

Speaker 1 (45:46):
But whether it's medicaid.

Speaker 2 (45:47):
As protection trust or a revocable trust or a very
complex trust we do in Delaware called a dynasty trust
or a family bank trust. When that trust ends, it
ends typically upon your death, and upon death, the assets
that you've accumulated, and now the life insurance policies are
paying out, the iras are pouring in, all of those

(46:11):
assets are coming to the next generation. And Patty, I've
had this conversation with my children. We have it with
our clients every time they come in and they have kids,
and I want you to talk about that beneficiary control trust.

Speaker 4 (46:26):
So a beneficiary control trust is a really powerful state
planning tool. It allows you to leave money, you know, assets,
to your loved ones, to your children, whoever your beneficiaries
are in you know, a vehicle. It's a protective vehicle,
and it's protective in the sense that you know, the
things that you leave to them, you know can't be

(46:48):
attacked by you know, creditors, divorcing spouses, bankruptcy, you know,
if they ever get sued, if they ever need medicaid themselves.
And you know, it's import because it's a type of
trust that you can create for someone else. It's not
a type of trust that you can create for yourself.
And so you know, you're giving them a huge, you know,

(47:09):
favor in the future by setting up this nice little,
you know, protective eggshell for them, so that you know,
the money you leave to them is protected for them,
and not only them, but also their children, so your grandchildren,
this trust can continue on for not only their lifetimes,
but you know, for the second generation, which I think

(47:30):
is huge.

Speaker 2 (47:31):
And I have a philosophical reason to love this concept,
and that is that we have as taxpayers paid into
systems over the last one hundred years. Social Security started
nineteen thirties, Medicare started nineteen sixty five, and people have
been paying in, taking money out of their wages and

(47:53):
paying into a system that the government has not managed well.
Social Security Trust Fund is bankrupt in twenty twenty nine,
the Medicare Trust Fund is bankrupt a few years after that,
and the government is now scrambling to find ways to
cut Social Security benefits, to cut Medicare benefits. And who
are they blaming for this The recipients that pay the

(48:17):
taxes all that time. Oh, you want your entitlement, you
want your money back. We haven't invested it well, so
we can't pay you back. This is a major problem.
So public wealth is in jeopardy. Don't put private wealth
in jeopardy. So, Tom, when you leave assets to your children,
you don't want that divorcing spouse to come in and

(48:38):
get them. You don't want them to be subject to
a state taxes. You don't want creditors, lawsuits, bankruptcies to
jeopardize the money that you leave to your kids. What's
the value of that concept.

Speaker 3 (48:51):
I think that's invaluable. I don't think you can put a.

Speaker 1 (48:53):
Number on that so how would you like to inherit, Patty?
Would you rather have it just dumped on you and say, okay,
what do I do now?

Speaker 2 (49:02):
Or in a trust fund that you're the manager of
that you can say, Okay, I can invest my mid
I can buy cryptocurrency, I can do whatever I want.

Speaker 1 (49:09):
But it's my money.

Speaker 4 (49:11):
I mean, I think that's a no brainer. I mean,
I would definitely prefer to receive money, you know, in
that type of trust, you know, not only for me,
but for my children one day. I mean, I think
that's huge. You know. The other thing that I was
just thinking about that I think is also something worth noting,
is that, you know, if something ever happened to me,
and let's say I didn't have my you know, state
planning already set up, there could be another trustee behind

(49:33):
me that could be there to help manage that money
for me as well, because you know, life happens and
you don't know what'll happen in the future. And so
I think that's a really smart way to plan.

Speaker 2 (49:43):
Be a better planner than a senator or congress member
or president. Do the right planning, don't spend money you
don't have, keep your private wealth private. Protect it using
the trust that you have available to you, and when
you leave that money to the next generation, this wealth transfer,
whether it's just your home or whether it's more protected

(50:04):
for your kids, the beneficiary control trust is a way
that you can set them up for life and go
right down to your grandkids. And I have a lot
of clients commit and say, well, you know, all right,
my kids are okay, but.

Speaker 1 (50:15):
I love my grandchildren.

Speaker 2 (50:17):
Well, this is a way that you can protect that
inheritance for your grandchildren. And I just want to touch
on one more topic because about a minute left, and
that is there is another planning tool that we don't
talk about a lot as a planning tool, but it's
a business tool called the limited Liability company. And I'm
going to circle all the way back to the beginning
because my kids got me into NFTs.

Speaker 1 (50:38):
Go figure, I'm into ethereum.

Speaker 2 (50:40):
I don't have Bitcoin, but I have a decent amount
of ethereum, and I have some board apes, and I
have some creeps and we sold some creeps. But what
we did creeps or NFTs, we put them all in
an LLC. And an LLC is an excellent way to
manage digital assets like currencies, and other NFTs. So the

(51:02):
LLC is something we use for real estate management, but
we also use it for management of digital assets as well.
So that's a final word for today. Patti Whalen, Tommy Morasco,
thanks for joining me today on a wendy, chilly Saturday.
Thank you all for joining us here on Life Happens Radio.
We hope you can join us next week. Don't forget
Medicaid Monday on January thirteenth, and go to pyrolaw dot

(51:22):
com for all of your estate planning needs.