Life Happens

January 25th, 2025

Episode Transcript

Speaker 1 (00:00):
And good morning everyone. Welcome to Life Happens Radio. Life
happens all around us every day. Be prepared. That's the
theme of this show. And if you're listening for Joe
Gallagher at nine am on Saturdays, Joe has gone off
the air and we are the nine o'clock Entertainment Hour,
and we're glad to be here with you. I'm Lou Piro,
your host for this morning, Pierre O'Connor and Strauss is

(00:21):
the sponsor for this morning, and here live in studio
with me as my partner Frank Heming. Good morning, Frank Hillo.
And we have a special show today because we're going
to bring you another one of WGY's talents. Someone who
occupies the morning space with us here on WGY on
Saturday morning is and that is none other than Dave Kopek.

Speaker 2 (00:41):
Good morning, Dave, Lou and Frank, good morning.

Speaker 3 (00:44):
Glad to be here, and of course, you know, I'm
glad that you're back to back now because I think
it makes a lot easier for the WGY listeners. Lou
to have kind of a focus that's really kind of
on a retirement agenda. You know, probably seventy five to
eighty percent of our clients are probably over the age

(01:06):
of fifty five, and I'm assuming that's probably a good
part of your book of business too.

Speaker 1 (01:11):
Oh god. Yeah. And so we're we're listening to your
show as I sometimes do on our way here, and
Frank and I kind of sitting in the studio, and
you were talking about themes that we hit on frequently
from the legal perspective, that you hit on from the
financial perspective, And today we're going to give our audience
a treat of how do those things cross over. How

(01:33):
do the things that you're investing in your iras, your annuities,
your life insurance, your retirement accounts, your home, your business,
How do those things then weave into an estate plan?
How do we make sure that all of the things
that are covered have been done from both perspectives, the
life insurance, the annuities, the retirement, along with your trust,

(01:56):
your will, your power of attorney, and the legal document.
So thanks for joining us today, Dave. We appreciate you
hanging out with us and giving the listeners an opportunity
to kind of hear how all of these things play together.

Speaker 2 (02:08):
Well, it's a pleasure, you know.

Speaker 3 (02:09):
I have a lot of respect for your firm and
the staff that you have. And I've known you for
a long time, and as I've said to people over
and over again, this is really your expertise, you know what,
inside and out. I'm always flabbergasted when people don't take
advantage of that complimentary consultation.

Speaker 1 (02:24):
And we appreciate the ad.

Speaker 2 (02:28):
I'll see the ovelope next week.

Speaker 1 (02:30):
Right, I'll give it to Zach, he'll hold It'll hold
it for you. So today we're going to talk about
finance and law, and so Frank is here with me.
In part of our practice, we deal with clients of
all worths net worths, very very wealthy people who have

(02:53):
literally one hundred million dollars right down to mom and
pop who own a house that they built forty fifty
years ago and they want to protect that house. And Frank,
you deal with a lot of clients who are looking
at protecting those assets later in life. As Dave said,
when you get to the point where retirement is imminent
or you're in retirement now, you have to, as I say,

(03:17):
turn from offense, which is accumulation of wealth, to defense,
which is protecting that wealth.

Speaker 4 (03:22):
Yeah, what I like to do when I sit down
with a family or a single person, right, whoever is
in front of me, is I like to kind of
get settled, and I like to kind of just take
a look at what they've already told us about them,
because we do ask for some preliminary information. So we
do typically ask for a questionnaire to be filled out.
It tells us a little bit about who you are

(03:43):
and who your family is, and there's a financial questionnaire,
so we know kind of what you bringing to the table.
But usually one of the very first questions I ask
people is why are you here? Because I can guess
as to what people want to talk about just based
on again, what they're bringing to the table and what
their life looks like. But at the end of the day,
I want to make sure that if they have a
specific concern or they you know, they want to talk

(04:04):
about protection, they want to talk about medicaid, they need
a new will, I want to see kind of why
they're there, And a lot of times, what a lot
of people ultimately want, whether they say it directly or
whether they kind of go around in a roundabout way
to get there, is we want to protect the things
that we have. We want to make sure the people
that we have in our life can help us when

(04:25):
we need it. We want to keep our money where
we want it to go, and we want to make
sure that it doesn't go where we don't want it
to go, and we want it and we want it
to go how we want it to go when we
want it to go, and.

Speaker 1 (04:37):
Kind of putting those pieces together. And Dave, I'm sure
you see this. There's an old adage in the law,
bad facts make bad law. You when you have a
bad case, don't appeal it because the appellate court is
going to hammer you. But bad facts also make bad planning.
And when we sit down with clients and oh, well
I have an IRA, but I'm not sure who the

(04:57):
beneficiary is. And I think I have this asset over here,
but I'm not quite sure how it works. I'm guessing
you probably see that in your practice as well.

Speaker 2 (05:06):
Well.

Speaker 3 (05:06):
I think you know, one of the things that I
think is critical for people to understand is that your
side of the fence is so different than most of
the legal practices that are out there. I mean, it's
an expertise into itself. And for people that you know,
they've been working with an attorney that's doing their you know,
work in court with the speeding ticket. They're taking care
of the closing on their house. I mean, that's fine

(05:28):
and dandy, but when they get on your side of
the fence and they need to protect in a state,
and they need to understand the dynamics of I rays,
four oh one, k's annuities, et cetera, they really need
someone that has really been in the trenches and knows
what to do with those assets, because you and I
both know when they start coming after your assets, it's

(05:49):
not a fun situation, and it can cause all sorts
of problems, not only as far as the stress and
anxiety with the families, but it's also going to cause
a lot of problems with the mother or the fire
that's trying to get into the facility or get some
kind of services either provided by the county or by
a long term care insurance policy. It's just it's a

(06:10):
very complicated process. And I always say to people, go
to the people that do it every day. This is
guys the expert, him.

Speaker 2 (06:18):
And his firm.

Speaker 3 (06:19):
This is all they do is older law and a
state planning. Don't go to a generalist.

Speaker 1 (06:25):
I was at a bar Association meeting down in New
York City last week. It's the annual meeting of the
New York State Bar. So there are, you know, hundreds
of lawyers and there are two sections that we are
integral in and a big part of Trust and the
States and elder law. So those are the two components.
And the speaker in the Trust and the States was
talking about malpractice, legal malpractice and what is the most

(06:49):
common causes of legal malpractice in trust and the States,
And it's failing to integrate assets into an estate plan.
So we send out a question Shaire, as Frank said
in advance, it's online, and we ask clients to give
us all of those details. They don't always have it right.

(07:09):
And so when we're trying to create a trust plan
and we don't integrate an annuity into the trust, or
a retirement account or a life insurance policy into the
trust ten twenty years ago, by the person dies and
all of a sudden, the money is out floating somewhere
and is not in the place we want it to be,
in a trust for their children, a special needs trust,
or a beneficiary trust. And so we have to work

(07:31):
with you, Dave and the Retirement Planning Group as a
team and it becomes a collaboration. We have a program
that we work with our clients on. It's called the
Professional Advisor's Lifetime Management System, big name for an acronym
we call PALMS, and our PALMS program is utilizing data technology,

(07:55):
the documents that we create, and the team and we
have a logo of a triangle which is your financial advisor,
your accountant, and your attorney. And you need all three,
Dave to really make this work on an ongoing basis.

Speaker 3 (08:09):
One hundred percent guaranteed, one hundred percent. I couldn't agree
with you more, Lou. The problem is is that a
lot of times there's fragmentation. I don't know if you
listen to the entire show that I did, probably not,
but I talked about good friends of mine. She's going
through horrific situation right now. Got a substantial estate. Father
died about twenty years ago. The mother's ninety six, and

(08:30):
she goes upstairs and she finds all of these bank
statements from all these banks in Albany that mom didn't
give her full disclosure and her sister of where the
money was. And now they have a trust with some
assets in it in the house. But they have all
this other money and excess of a million dollars that's
outside the trust that they didn't even know about.

Speaker 1 (08:49):
And so they're going to go to court yep, and
they're going to try to find probate and get a
will probated or if there is no will in testacy
that's the even harder case. And then they're going to
try to recoup all of those assets, run them through
the court system, and then on the other end, hope
they get to the right place if the document is
doing what it's supposed to do. And Frank, we always

(09:11):
preach to our clients, keep your family out of court.
Why would you inflict this if you're really sadistic and
you don't like your kids, make them go to probing.

Speaker 4 (09:21):
Yeah, I literally said to people yesterday I had some
meetings with some prospective clients, and you know, again, I
asked them what they were looking to do, and they said,
ultimately so that the big thing for this family was
their house.

Speaker 2 (09:33):
Right.

Speaker 4 (09:33):
They don't have a lot of assets, but they have
their house, and they wanted to make sure that their
house goes to their son and their daughter. Now they
have another daughter who lives out of state, she's very
well off. They have another son that they don't have
a good relationship with at all, and they said, we
don't want our son that we don't have a good
relationship with to get anything because he's been out of
our lives. It's just not what we look what we're

(09:55):
looking to do. And they said, well, that means we
have to kind of ratchet up our conversation a little bit,
because you know, another reason that you want us to
add a court is if you have airs at law,
if you have natural beneficiaries and you don't want them
to get anything, well, if you go through the probate process,
they get to know about everything and they get invited
to potentially challenge everything and just muck things up. So

(10:16):
I said, well, if you want to really ensure that
your house not only goes where you want, you have
to do some planning. But if you want to make
this as easy as you can, then we need to
not go through court because that's only going to give
your your son and avenue to come in and try
to cause problems. That doesn't mean that he wins, that
doesn't mean that he prevails and that he gets anything,
but he'll be good in the opportunity to And I said,

(10:37):
and at the end of the day is where does
it sounds if we're doing our job properly, we're keeping
you out of court, regardless of the family situation. Because
at the end of the day, the people that win
the most when you go to court are the attorneys
more than anybody else. That's absolutely true, right, So we
actually do if we do our job properly, which we
try to do is to the best of our ability,

(10:58):
we cost ourselves money of our client's nice peace of mind,
and we don't send them to court.

Speaker 1 (11:03):
And we're very happy to work ourselves out of that
job of being a probate lawyer if we can be
a trust lawyer instead and have things go the right way.
And that's something that we really focus on. So we're
going to take a short break, Dave. When we come back,
I want to just dig into the iras because over time,
when I started my career and I've been doing this
forty one years, yourself, Dave three forty three, so we

(11:26):
got four days.

Speaker 2 (11:27):
I'm young. I don't know what that picture was from.

Speaker 1 (11:32):
It's five years ago, but you look good for.

Speaker 2 (11:35):
Every young baby forever. I refuse to get that picture
ever changed.

Speaker 1 (11:42):
So what we're going to talk about when we come
back over time defined benefit pensions. We're the way of
the world. If you work for General Electric and Schenectady
and you're retired, you had a fixed pension and you
got paid from the company because they took all of
your money that you contributed to that plan and they
built it up over time. Well, those plans just disintegrated

(12:02):
and now you have four to oh one k's and
four oh three b's and four fifty seven retirement plans
that you're putting the money and you're managing it and
then likely scenario rolling it out into an IRA that
is your retirement. So aren't we lucky to have Dave
Kopek from the Retirement Planning Group to come back after
the break when we're going to talk about IRA's four

(12:24):
oh one case, how they work, why they work, ROTH
conversions which are very popular right now, and how that
retirement account becomes part of your estate plan. You're listening
to Talk Radio WGY Life Happens. I'm Lupiro. We'll be
back right after the short break and Lupiro in studio

(12:50):
live today on a Chili morning here in the Great
northeast in Latham, New York, or as the people in
New York City say, Latham, New York. And and we're
here with Frank Heming, my partner.

Speaker 2 (13:03):
That's right, that's right next to Albany. Right, we go
through the.

Speaker 1 (13:08):
Names that they butcher absolutely and the inimitable Dave Kopek,
who's joining us. I understand, Dave, you're in Florida, Yes,
I am boy. Is that not fair?

Speaker 3 (13:17):
My daughters in Boca Rattan going to Fau, which is
not too far from your kid. Your son went to Miami.

Speaker 2 (13:22):
He did.

Speaker 1 (13:23):
He's a hurricane you Miami grad.

Speaker 3 (13:26):
Yeah, but there was a sixty degree difference the other
day between where you guys were and where I was.

Speaker 2 (13:30):
And I had a big smile on my face. Yeah.

Speaker 1 (13:33):
Has the weather down there been okay? Because we have
an employee of paralegal in Tampa and I was talking
to her yesterday morning and she said, it didn't get
out of the thirties in Tampa.

Speaker 3 (13:42):
You know, you know this because you've been down here.
There's a big difference between southern Florida and the mid
mid central smart of Florida and north. My son's in
Tampa and they're freezing. We were down here. It's not ideal,
but it's in the sixties. It's in the sixties instead
of like seventy five to eighty. But today it's bright
blue skies. It's going to be I don't know, seventy

(14:02):
degrees today, So I'll take that. It's better than the alternative.
And that's Albani.

Speaker 1 (14:07):
So you can't you can't wear your Tommy Bahama, you know,
prince shirt.

Speaker 3 (14:11):
You don't want to see that anyway.

Speaker 1 (14:15):
So for our listeners, Dave is the Retirement Planning group
and the head of that, and he has a radio
show before us and after us, and so we're talking
about the integration of financial planning and estate planning, legal planning,
and it is so crucial. And I mentioned our Palm's
program which really tries to bring all of this together

(14:36):
and create a team for clients that they can work
with on a year over year basis and make sure
all of these things get put in place the right
way and for me over time, probably the most common
question that I ask that no one can answer is
who is the beneficiary of your four oh one K? Well, okay,
I've been working thirty years. I set it up thirty

(14:57):
years ago. I probably haven't changed beneficiaries. It's amazing the
answers we get when they finally checked with the company.
Oh god, I had my mother on there. I've been
married twenty years, I have four kids. My mother's my beneficiary.
So it's something that has to be maintained on a
year over year basis.

Speaker 3 (15:14):
I've seen horror stories loough that actually happened in my family.
My brother in law died of cancer, and he worked
with a major corporation, had a very successful career, had
quite a bit of money and four oh one K
and also his life insurance policy. When he started with
the company, he wasn't married. My mother in law was

(15:35):
named as the beneficiary of his life insurance policy, and
of course he passed away after battle and cancer. Never
looked at those documents, and when they went to the documents,
they found out that my mother in law was the
beneficiary of a very substantial life insurance policy and not
his wife and kids.

Speaker 1 (15:54):
And that could have been a worse story had his
mother in law already done plenty with Frank Hemming and
been on medicaid, in which case you dump these assets
into her lap and they're gone.

Speaker 2 (16:05):
That's exactly right.

Speaker 3 (16:07):
But you know I always tell people when they come in,
the most important document that you're going to have besides
the legal documents that you do with Piro and his team,
is the beneficiary form that you're going to fill out
here on these investment accounts. And you better make sure
that luin his team are fully involved in this because

(16:28):
they need to understand exactly who's the primary and who's
the contingent contingent and how this all fits into your
overall estate plan.

Speaker 1 (16:37):
You just hit critical right on the head, yep. Because
we have laws, folks, Arissa E r I SA which
govern retirement accounts and they are like Chinese arithmetic. There's
some of the most complex, indiscernible rules and regulations that
we have to deal with as lawyers, and Arista lawyers
get like two thousand dollars an hour because there are

(16:57):
so few of them and so few people actually understand
the code when you're dealing with large four O n
K plans and things, and when people start to look
at this. We had a law that passed just five
years ago called the Secure Act, came in under President
Trump and David. Secure Act changed the landscape for beneficiary planning.
Just tell our listeners a little bit about how that works,

(17:19):
and we'll come back to Frank to talk about how
we then weave that together with the trust that he does.

Speaker 2 (17:24):
Well.

Speaker 3 (17:24):
When I first met you, Lou, I know you probably
I was a disciple of Ed Slott stretch iras stretch
Ira s stretch Ira. You know a good friend of ours, Kevin,
we sponsored when he came into PBS here locally in
the Capitol district of Reaching.

Speaker 2 (17:39):
You know how I'm talking about it.

Speaker 1 (17:41):
So I know I've met Ed. I don't know him personally.
He's from Long Island, so he's a New Yorker and
he wrote the book on retirement planning. He's a great speaker.
So I've watched him on PBS for years and years
and years, and it's a great service that he provides,
teaching people how to integrate retirement accounts into their planning.
But it's not easy.

Speaker 3 (18:03):
Well, there's no more stretch Ira. It's tenure unless there's
certain criteria that you know, you don't have to do
the ten year for siblings and if you have a
disabled child, et cetera. But the bottom line gets down
to is that you know We're not talking peanuts here.
The qualified assets in America right now are probably somewhere
around This is just IRA sixteen trillion dollars with a T.

(18:28):
I mean, that's a whole hell of a lot of money.
And the bottom line gets down to is that I
tell people you better understand exactly how you're drafting this thing,
and understand the dynamics of primary contingent beneficiary disclaiming IRA assets. Ultimately,
are the children or the loved ones that are out
there they're going to receive these assets capable of managing

(18:49):
this type of wealth. What's going to be necessary for
wealth replacement for a surviving spouse like you just talked about.
Is there one foot on a banana pil and she's
going into the nursing home. She doesn't need all this money.
So it's complicated, But people have a tendency to do
what procrastinate, They don't motivate, and then when all hell
breaks lose, they're saying, why didn't I do something?

Speaker 1 (19:11):
So this account that the government has encouraged you to
fund over your career, maximize your four oh one K,
and we do a matching four oh one K, as
many employers do.

Speaker 2 (19:23):
We do the same thing where we'll.

Speaker 1 (19:24):
Match up to four percent of contributions. And so you know,
people put away in our in our case it's a
safe heart called a safe harbor plan. They put away
five percent of their income on a monthly basis, and
we give them an additional four So you get nine
percent a year going into your four oh one K,
almost half of which well I'm putting it. You know,

(19:46):
it's a gift. And I can't tell you how many
people don't take advantage of the matching contribution because they
don't want to give up that five percent. But when
we do this right, we accumulate significant amounts of money
in that IRA. And the government is not stupid. They
gave you this benefit of accumulation on a fully taxable basis,
because if you haven't paid tax on that dollar when

(20:09):
it's a dollar, you pay tax on the two dollars
once it has inflated. And that's what gets lost on
a lot of people.

Speaker 3 (20:15):
Dave, Well, you know, I'm a big believer in the match,
but I'm also a huge believer I think you know
this of the wroth four oh one K and the rotha,
especially in today's world. Yeah, absolutely, you know, The thing
is the problem is that when most people go into retirement,
they have a small percentage of their wealth and what
I call tax preference money, money I can get to
without a tax liability. Most people are overweighted, tilted too

(20:39):
much pre tax and also the equity that they have
at home, which makes up sometimes seventy five to eighty
percent of their net worth. So I'm a huge advocate
of WROTH tax preference money. But I'm also a big
believer that there are vehicles out there to transfer wealth
which you know, are very tax efficient. I am not
an advocate for Roth convert. I'm just that's I think

(21:02):
there's better ways to do it, especially if it's a
wealth transfer.

Speaker 1 (21:07):
Well, you can certainly start drawing that IRA early yep
and fund a life insurance policy.

Speaker 3 (21:14):
Bullseye And I didn't know this. I didn't know this
until I worked with Kevin and Dan Bouchard, And the
first time I saw it, I thought it was smoking mirrors.
I just thought, but we've written millions and millions and
millions of dollars at these policies, and now after being
in the years as long as I have these these
kids are eyeballs are popping out of their head as
far as the amount of wealth that mom and dad
left them tax free.

Speaker 1 (21:35):
Tax free, and the retirement account the IRA when you
draw it, and they they gave with the Secure Act
this new law that passed in two thousand and they
gave you a little bit more leeway, so you don't
have to start drawing it until you're seventy three, but
you can begin drawing it without any penalties at fifty
nine and a half. So you start drawing, you start

(21:57):
pulling money out or just contributing to a life insurance policy.
And depending upon how you structure that life insurance policy,
we hold it typically in a trust and it becomes
income tax free because the death benefit does not fall
into the income tax bucket. It's a state tax free
if you structure it properly. So if you happen to

(22:18):
have an a state tax problem, the life insurance can
be kept out of that and it can get to
the kids quickly. And you know, we talk about probate.
I've had clients that name their estate as the beneficiary
of their life insurance policy and I said, what are
you crazy? Because that puts it into the soup and
they're not going to get it for a year, but
just talk about And I've been solicited, Dave over forty

(22:40):
years to be a life insurance salesman by a thousand people.

Speaker 2 (22:43):
Why are you doing this?

Speaker 1 (22:44):
And I learned the life insurance products, and I learned
how to structure them, and I learned how they work
and why they work. And I know what an enforce
illustration is and I know how to read it, but
I don't sell it. And to me, that just gives
me a little bit more of a buffer and a
credibility for clients. Right have to take a break for
the news. This is a great conversation. We're gonna keep
it up. We're gonna talk about your retirement accounts, how

(23:05):
to put money away effectively. I may give you a
little different twist on the roth because I think some
people can benefit from that. But certainly, looking at this
planning before you're ninety five, maybe when you're fifty five,
is the way to do it. We're Life Happens Radio
every Saturday morning at nine. Now, Dave Kopeck, Lupiro, Frank
Hemming be right back. Having a heatwave, folks, it's gonna

(23:31):
be thirty degrees. We're talking with Dave Kopeck, who's town
in Boca Raton in Florida. Lupiro Frank coming here in
the Latham Studios of WGY, and we're talking about your retirement.
How can you build a plant financially, legally, tax wise
and have it secure for you? And then what we

(23:52):
talk about as the second phase. Once and I use
this analogy all the time, Dave, when you're playing his
hit Turbulence and those masks fall down, what do they
teach you put your own mask on first. So, and
that's because you can't help anyone unless you are secure,

(24:16):
unless you have your mask on. So the first thing
we talk to clients about is, Okay, let's secure your retirement,
let's secure your future. Let's make sure you have access
to income, you have access to assets, and that everything
that you can muster up to support yourself throughout your
lifetime is there for you. And then let's talk about

(24:36):
legacy planning, and let's talk about the next generation and
leaving the next generation a little bit better off. And
I don't want to get off on a philosophical tangent,
but I think we've screwed our kids and our grandkids.
I mean, the way that we have operated the economy
with the debt, the deficit, and the things that they
have to face, and this swelling social secure security and

(25:00):
medicare liability, the mandate and the inability to fund that
successfully over over their lifetimes. I think we're good, Dave,
but I don't know about our kids.

Speaker 3 (25:11):
Well, they're they're simply just kicking the canda. I mean,
everybody knows. I mean, you don't have to be a
rocket scientist to figure out, you know, we need to
make some changes here. It's just the question do they
have the spine to do it? And I hate to
say this, I don't care if you're a Republican or
a Democrat. I think the gentleman that's now the President
of the United States has probably the spying because he's
not going to be re elected again in order to

(25:32):
hopefully address what I considered to be one of the
greatest challenges that and I agree one hundred percent though
these are some of the greatest challenges that we're going
to face, is these unfunded mandates by the federal government,
as far as Social Security, Medicaid, you know, medicare, all
these things that are out there. It's a big number.

Speaker 1 (25:53):
If you don't follow budget politics. The unfunded man, Well,
they're not unfunded, man, it's they're funded partially, so there's
some funding, but they're being more and more paid out
of current collections of Social Security and Medicare tax as
opposed to having a fund that could fund it. That
those days are waning, and those trust funds, as they

(26:15):
call it, our money that's going to be gone soon.
So it's going to be funded out of current revenues
and current collections. Those numbers, if you go out to
twenty sixty, twenty seventy and you look at when our
kids have kids, those programs are unsustainable. So our philosophy
is the more we can do today to protect and

(26:37):
preserve the wealth that we've been able to accumulate. And
the baby boomers were pretty good earners, Dave. They accumulated
some money. And the numbers that I've heard are staggering
for the wealth transfer over the next thirty years. As
the boomers die.

Speaker 3 (26:52):
Now they say it's going to be eighty four to
eighty five trillion dollars of a wealth.

Speaker 1 (26:56):
Transfer will almost have as much money as Elon going.
So when you look at it from that perspective, if
I can take a plan, and I can say, Okay,
you've got your mask on. You're going to breathe for
the rest of your life. You're gonna do that. You're
gonna go to Florida, You're gonna do the things you
want to do. Travel, you know, play your pickleball, buy
a new pickleball racket, all the things that you want

(27:18):
to do throughout your retirement. Have that martini at five o'clock.
I'm with that. Then you can look at your kids
and say, Okay, how do I do this best for them?
And we're talking about IRA's four oh one ks and
retirement accounts, and you've built up a ticking time bomb.
And that time bomb is an income tax time bomb
because when they collect the money, they have to pay

(27:41):
income tax at their rates, and God bless them if
they're as successful as you, or more successful. If you
live in New York, your income tax rate is damn
near fifty percent. So looking at and you talked about
the ten year rule, that is something completely new in
the last five years that a lot of people still
aren't really comfortable with. But if you have a child

(28:03):
who is a child, who's healthy, earning, and they inherit
your million dollar IRA. They've inherited six hundred thousand dollars.

Speaker 3 (28:12):
Well, I just had a couple of lou real quick
two professionals. He was a supervising principal of a school district.
She was a teacher, did very well from themselves, has
great income, and her sister died prematurely. Was medical professional
at all many med had a substantial amount of money
in an IRA. Was really a four h three B
which they offered through the hospital. We rolled it into

(28:34):
an IRA. She didn't know what to do with it.
She goes, well, you know, make my sister the primary
and I'll come back and i'll make the changes. Well,
she never came back. She got sick very quickly and
she died. The money went to her sister, and they
were in my office about a month ago, and he's
saying to me, listen, I don't want this money because
now he's starting to see what's going to happen as
far as the r and DS that he's going to

(28:55):
have to take, how it's affecting his Medicare premium. He
can't get equalization because she didn't do the equalization on
the beneficiary form, and now he's going to have to
pay the tax in order for it to be divided
out to the kids and the loved ones and the
nieces and the nephews, which his wife feels obligated that
they should do.

Speaker 1 (29:13):
It's a nightmare, yep, it's a nightmare. And it comes
back to just having good data, having good facts, knowing
the situation for all of these assets. And you talked
about some exceptions to the rules. If it goes to
a sibling who is less than ten years younger, they
can still stretch over a life expectancy as opposed to

(29:36):
having to pull it out and pay the tax over
ten years. The other what they call eligible designated beneficiaries,
so there's all this technical jargon in the code. Those
are people who have special needs. So you can we
do a lot of planning where we kind of rewire
the plan. If we have a special needs trust being
created for a disabled child, we'll have the retirement funds

(29:58):
go to that trust and the other assets go to
the other kids, because that disabled child can stretch the
IRA over a life expectancy. And other people with chronic illnesses,
which is a very ill defined term. We don't really
know what a chronic illness is that qualifies you for
the stretch. You'll find out when we claim it and
they deny it, right, but there's very little guidance in that.

(30:21):
And then the other So someone ten years less than
ten years younger, someone disabled, someone chronically ill, and then
a spouse. Those are the four categories. That's it. Everybody
else is going to get whacked with this income tax,
and so how do you plan? And Dave, just talk
a little bit about that, the life insurance technique, because
that is something that we've preached wealth replacement trusts. We

(30:43):
used to call them life insurance trust because we didn't
want to call them life insurance trust, so we call
them wealth replacement trust for forty years, that's what we've
been talking about, and it resonates because of the leverage
of that life insurance policy.

Speaker 3 (30:54):
I think when you and I started the state tax
with what six seventy five.

Speaker 1 (31:00):
It was less, well, it was less, Yeah, I started
before the Reagan cuts came o. Reagan adjustments came in.
He put it up to six hundred, and it went
up gradually. It was three four, five, six, There was
a phase in. But I remember this number, David. This
is how peculiar my brain is. When I started practicing
the New York state a state tax exemption, and not

(31:22):
many people know this number was one hundred eight thousand,
three hundred thirty three dollars.

Speaker 2 (31:28):
That's crazy.

Speaker 1 (31:29):
That's what you got to to leave without paying New
York one hundred and eight thousand, three hundred and thirty
three dollars. And in nineteen eighty three a lot of
clients fell over that. So you had to do marital
deduction planning and all the things we put in the documents.
Now that New York state of state tax exemption is
seven million, one hundred and sixty thousand dollars times two

(31:52):
times two.

Speaker 2 (31:53):
If you do it right.

Speaker 1 (31:55):
Federally, you get the automatic exemption for both spouses, but
new York you have to do what we call the
credit shelter planning. This is where this comes in. I
want to get Frank back on here, because we talk
about the tax hostility of iras. Sure, but for medicaid purposes,
iras ain't bad. No, no, it's uh.

Speaker 4 (32:14):
You want to talk about things that people don't know.
How often do we hear, oh, well, I have a
big IRA and I'm worried about it for medicaid purposes.

Speaker 1 (32:22):
For long term care purposes. And the nice thing that
we get to tell people is, well.

Speaker 4 (32:25):
Your IRA or your four oh one, your four h three,
you know that tax shelter retirement account is exempt for
Medicaid in New York as long as it's in payment status. So,
Lou you said before, you have to start taking your
required minimum distributions at seventy three, but you can start
drawing at fifty nine and a half, So you can
as long as you're past fifty nine and a half.
If you need Medicaid, we just turn your distributions on

(32:47):
early if you're not seventy three yet. If you're seventy
three or older, your distributions are already turned on and
that exempts your retirement account. So in New York, as
strange as it sounds, you could have twenty thousand dollars
in a bank account five million dollars in your IRA,
and you would technically be eligible for medicaid in a
home care scenario from an asset perspective. From an asset perspective, right,

(33:09):
we'd have to do some pretty creative income planning for you.
But from an asset perspective, your five million dollar IRA
in my example, would not render you an eligible for Medicaid,
but it's such a New York specific rule.

Speaker 1 (33:21):
Many what happened New York you're in the other state,
Dave that that follow.

Speaker 3 (33:27):
Yeah, there's there's two questions I have for you, guys,
because this is something that I don't think the public understands.
Zip code where you're going to live is extremely important
as your primary And the second happens You guys know
that there's traumatic things that happen to family and loved ones.

Speaker 2 (33:42):
We've seen it happen over our careers. What happens if there's.

Speaker 3 (33:45):
The five million dollar IRA and you're under the age
of fifty nine and a half.

Speaker 1 (33:50):
So in that case, you can do something called a SAUSEP,
a series of substantially equal payments. There you go, okay,
and you can begin to annuitize the IRA without penalty.
You can if you're disabled.

Speaker 3 (34:06):
Yes, okay, okay, because I've had that question to me
and I didn't know what the answer was.

Speaker 2 (34:11):
But you know, guys, you guys know.

Speaker 3 (34:13):
I mean, I said, there's almost sixteen trillion in iras.
That doesn't take into consideration all the other moneies that
are out there. There's like forty trillion dollars in qualified assets.
Right now, when you've add it all up, there's eighty
five trillion that's going to be transferred, of which almost
half of it is problematic money, what I call the
Achilles Heel of your estate planning. I don't care how

(34:34):
you do it or how you slice it and dice it.
If you sit and wait, it's a time bomb. Like
you said, Loke, the question is when we talk about
the life insurance A guy that I respect, Bob Y Andy,
who you know very well, start at the phrase we're
going to talk a little bit about I love you planning.

Speaker 2 (34:51):
I love you planning. Is that listen.

Speaker 3 (34:53):
I'm going to do something to make this money more
unburdened by taxes and all the things that go with
IRA distribution planning. And you're going to get tax free assets,
but I'm going to have to pay the tax the
owner of the IRA. If they're adverse to that, then
they're you know what, then just sit and wait. But
I've seen, and you've seen, and I think Frank is seen.

(35:15):
You can add a whole heck of a lot of
wealth unburdened by tax protected by the trust. Good for
the kids and the grandkids. And certain events in their lives,
and the evil son and laws and the daughter in laws.
It does everything that most people want.

Speaker 1 (35:31):
And Frank, when we do a diagram for clients, and
most people, Dave are visuals. Yeah, and I've studied something
called neuro linguistic programming. I've gone through sales training until
I'm blue in the face. And so when we sit
with clients and you kind of do that first five
to ten minute probe, as Frank said, you know, what

(35:53):
do you want to accomplish today? What are your goals,
what are your concerns, what keeps you up at night?
We start most of our consults with that open ended
conversation and you sit back and you observe the answers
and and you know, this gets down to okay, so
they looked up into the left, so that means they're
a kinesthetic and not a visual. So there's a lot,
there's a lot that goes into this, but but the

(36:14):
basics are most people, when they see it, believe it.
And so we diagram out all of these plans. We're
big believers in putting it on paper, not just in words,
but in diagrams, so people can follow the money, follow
the trail. And when we do our Medicaid Asset Protection
Trust diagram, when people are planning for long term care,

(36:35):
you have geometry on paper, so we put a circle
to the left of the page and into that circle go, what, Frank.

Speaker 4 (36:45):
Your IRA's or your you know, your retirement funds And
they're over there for a reason. Yeah, because they're not
in your trust, they're still with you. Because one of
the biggest I think reasons why people don't do the
plan besides they don't want to have the conversation, they're
not ready to have the conversation, they're not worried about it,
you know, whatever, whatever the reason is. But there's just
so much misinformation about trusts and how they work and

(37:08):
how accessible they are and how flexible they can be.
So one of the one of the great things we
get to tell people is if you want to do
protection planning, you don't have to take every dollar that
you have and lock it away behind this closed door
that you don't have access to. And Lou again, as
you said earlier, more and more and more people now
are putting substantial money in their retirement accounts.

Speaker 1 (37:28):
And they say exactly where they are.

Speaker 4 (37:30):
Whether you do the trust or not, because again they're
exempt from medicaid, So it's not a bar to you
to do a plan and keep your IRA, keep your
income exactly as it is, and then we do planning
for your other things. And usually when we go through
the entire plan, it's a lot more flexible, it's a
more accessible than they ever thought that would have been possible.

Speaker 1 (37:49):
And going back, can I ask you a question?

Speaker 2 (37:52):
Can I ask you a question, Dave?

Speaker 3 (37:55):
What percentage of your population people that you work with
are leaving New York?

Speaker 1 (38:03):
That's a good question. And I'd say overall maybe ten.

Speaker 2 (38:07):
Percent, Okay, so it's it's a limited amount.

Speaker 4 (38:10):
Yeah, I mean we we frequently, at least I try
to frequently ask you know, what are your plans to
Are you staying in New York?

Speaker 2 (38:18):
Do you want to move?

Speaker 4 (38:19):
I think a lot of people are either saying, you know,
I'm here and I'm going to remain here, or I'm
thinking about it. Very few people, Dave, I think, are
saying I know I'm leaving, you know, in two to
three years, like we know we're.

Speaker 2 (38:33):
Out of here.

Speaker 1 (38:34):
Yeah, And it's it's very much driven by where the
kids are and where the grandkids are. Yeah, absolutely, so
we we actually have a lot of parents that move
out to Florida or go somewhere to a retirement state,
and when it comes time to okay, we're getting to
the point where we may need care, they come back
to where the kids are. Ye, so they actually move
back to New York. And we see probably the next

(38:56):
to Florida. The primary state that we see people moving
to is South Carolina. So you have South Carolina and
North Carolina, Georgia which have become retirement states, and the
rules there are vastly different, vastly different. We need that's
and that's.

Speaker 3 (39:12):
One of the things, Lou that I think that you overemphasize,
and I think it's critical that you do do that.

Speaker 2 (39:17):
Where will your zip code.

Speaker 3 (39:18):
Be when you retire, because you need to understand what
you're doing and when you when you leave and the
horses out of the barn, Now you're under those rules
and regulations.

Speaker 1 (39:28):
Yeah, so when we do our planning for asset protection,
and you've got the IRA over here and here's my
million dollars, I got my house over here, but I
put my house in the trust and I have the
right to live there for the rest of my life.
And those are the two main assets. The oxygen comes
from the i RA and the house. I get to
use those things at my discretion, so now I can breathe,

(39:51):
and now I can put the rest of the plan together.
So we have one more short break. We're gonna I
wish this hour were two hours, Dave. That's why you
do two hours.

Speaker 2 (39:59):
So we're gonna, Well, you talked to Donna about that.
You know what I'm talking about.

Speaker 1 (40:05):
We'll come back after a short break and finish up
this conversation retirement planning with finance and law combined. Stay
with us. We'll be right back and Loup Puro Frank
Heminghen Studio Dave Kopick somewhere on the beach down in

(40:26):
Boca Raton, Florida, and I just want to give a
little information about an upcoming workshop that we do. And
we do a lot of education, folks. This is complex stuff.
We believe very strongly, I have forever that educated clients
are good clients because they understand the plans that we do,
and that's what we want. So we have a Trust

(40:47):
Administration workshop on February eleventh, Tuesday, February eleventh, from noon
to one thirty pm and at this trust Administration workshop,
it's myself and a CPA, Gretchen Gunther, who is very
good at explaining all of the tax implications of trusts.
So that triangle that I talked about earlier, the financial advisor,

(41:09):
the accountant, the attorney, the palms program. Gretchen is going
to talk about how you operate a trust, what the
tax implications are. I will be talking about all the legal,
administrative and this is not a sales workshop. This is
an administration workshop.

Speaker 2 (41:23):
So we're going to.

Speaker 1 (41:23):
Teach you the details of how to be a trustee,
what your rights are as a beneficiary, how the trusts
work from a tax perspective, a legal perspective. Tuesday, February eleventh,
noon to one thirty pm, and it's at the Trustcode
Bank Center, sixth Metro Park Road in Albany, and you
can register anytime at pyrolaw dot com, go to the

(41:44):
events tab that's p I E R Rlaw dot com Events,
or call us at our number here in the big
the grade five one, eight four or five nine twenty
one hundred and Dave. We did a couple of seminars together,
and I think they were very successful, and I hope
we get to do a couple more. I think that
we're talking about that.

Speaker 2 (42:02):
My understanding is that we are.

Speaker 3 (42:04):
I know that I've rattled the cage, and I know
that Donna's working on it, and I think some of
the people at WGUI, you know, Lou, To be honest
with you, I think that was one of the best
ones I ever did as far not only as far
as the response, but the content. And the bottom line
gets down to is I agree with you one hundred percent.
An educated inform individual is going to make better decisions,

(42:26):
and you guys do a great job. And I'm envious
that you have the ability to do these workshops online.
We're a little bit constrained because of compliance, right, But
bottom line gets down to is that I think it's
a great way for people to get a touch to
see who you are, what you do, and what you
guys do. As far as when you build the sauce,

(42:46):
when you put all the ingredients into the pot, and
people are foolish if they don't take advantage of that.

Speaker 1 (42:51):
Appreciate that. Frank has been the star of the show
in something we call Medicaid Mondays YEP, which is every
second Monday of the month, we've been doing this now
going on two years, kind of took it up. Our
web presence became much greater as all people did during COVID,
and we've continued it on and we did our Medicaid

(43:13):
update in January for twenty twenty five, and so that
video is available on our website. It's a thirty minute
webinar that Frank and I did. But Medicaid Monday, Dave
had three hundred and twenty five people at day Wow
virtually Wow. And these are not just consumers, these are
people in professions all and they're all across New York

(43:35):
State now because we kind of have a statewide presence
in the medicaid field, and it's people that work at
senior centers and senior organizations and service providers and it's
a great thing. And we have an Elder Law Forum
that we do each year, to be our thirtieth annual
coming up on May fifteenth. So Frank's a big part
of that and that's why he's partner now.

Speaker 2 (43:53):
Yeah, well he gets to carry the water with you.

Speaker 1 (43:59):
I was saying to lose during the break.

Speaker 4 (44:00):
I'll be out of my office on Monday, so that
way you can, you know, when you pay it back
from Florida, you'll have a place to come into.

Speaker 2 (44:08):
So, you know, I just wanted to say one thing.

Speaker 3 (44:11):
When you talk about the ability for people, you know
that's people want to do it on their time. I'm
not too sure are these presentations that people can go
back and watch them if they're if they can't do
it as because that's important in today's world.

Speaker 2 (44:24):
We're all busy, yep.

Speaker 3 (44:25):
You have to be able to give resources and information
to people on their time, not on our time.

Speaker 1 (44:31):
So this radio show is on Spotify, so we do
it and we have some really interesting guests and topics,
so people can go on to Spotify and get ten
years of shows and go back and listen to different
topics and different speakers. But Medicaid Monday. We have an
enormous video library and our whole Elder Law Forum. We
do in a very high end two camera format, so

(44:51):
we videotape an entire day of seminar with very good
topics and speakers from all around. We had the Lieutenant Governor,
we had three state senators, Assembly people, heads of the
Department of Health, state Office for Aging. That's the caliber
of people that we bring to that Elder Law Forum
and it's available free online on our website. So anybody
that wants to do a little bit more research and

(45:12):
digging learn the new numbers for Medicaid. Those videos are
available twenty four to seven. So let's go back to
our topic. We got about five minutes left and talk
about the integration of assets and retirement accounts. And I
just want to close out the conversation talking about Medicaid.
Asset protection, yes, life insurance planning, tax planning, yes, we

(45:35):
don't have to do a state tax planning DAVE until
we get to seven million, and so not a lot
of people are up there, but we do have a
lot of clients that are and that takes very special
planning as well. But I just want to close out
on the Wroth conversion because one of the things that
people miss on the Wroth conversion is, Okay, I'm seventy
five and I have a life expectancy of what's a

(45:57):
seventy five year old.

Speaker 2 (45:58):
Life exubdency sevent eight years? Oh it's got to be
more than that. Think so at.

Speaker 1 (46:02):
Seventy five ft, Well look it up, but we'll know.
And Okay, so I convert, I have to pay the
tax on the conversion, so I have to come out
of pocket with whatever my income tax rate is times
that WROTH conversion amount. The ideal way to do that
is ed slot, as you said, will tell you, is
to use money other than that retirement plan money, because
you want to roll every dollar back into the WROTH.

(46:25):
So if you do a million dollar wroth conversion and
you owe four hundred thousand in tax, you don't necessarily
want to take that four hundred thousand out of the
retirement account money. You want to put the full million
in the WROTH and pay the four hundred thousand from elsewhere.
But not a lot of people can do that, So
a lot of people will do the conversion and pay
the tax right out of the converted proceeds. When that

(46:48):
conversion happens, you then grow what's in there tax free,
and you don't have to take your required minimum distributions.
So if people don't need it, if it's never money,
it's money they just want to accumulate and leave on
to the next generation. And this is more for legacy planning,
not necessarily your own retirement plan. If you're going to
consume the IRA, don't roll it over. But if You're

(47:10):
going to let that IRA grow and cook, and you
want it to go on to the next generation. You
can't forget that when they when you die and they
inherit the IRA and it's a roth, they have a
ten year time period that they must liquidate within, but
they don't have to take anything out until the end.
So you compound tax free the value of the wroth

(47:33):
for ten years, and even at five percent, Dave, that
doubles the money.

Speaker 3 (47:38):
Well, I tell you, Louis, I agree with you, but
I disagree with you. I'm still in the camp, and
you've seen the presentations before, because you know we've worked
with some similar people a day one dollar one you
get an explosive velocity of money once you get the
approval on the insurance policy. And instead of taking that
dollar amount that you just mentioned, you might I'd have

(48:00):
a multiplier maybe two or three or four, depending on
your age as far as what the actual net value
is going to be at death. And it's all tax
free assets. So I guess it's like anything else. It's
just a different way in order to facilitate. But I
also like the ability that it's in a trust and

(48:21):
it's protected. I don't know what the rules are for
the raw. Once it's out the door, can the southern
law the daughter in law is in an asset, the
creditors and predators can go after it.

Speaker 1 (48:32):
Is it's anytime you inherit an IRA, it's no longer
asset protected. But when you make it payable, and this
is where it really gets powerful, you make it payable
to a TRUSTEP and then it goes into that trust
after ten years, fully asset protected. And Frank has the
answer for us.

Speaker 2 (48:47):
Yeah.

Speaker 4 (48:48):
So if it's just looking at the IRA rm D tables,
So a seventy five age retiree life expectancy is twenty
four point six years based on the table.

Speaker 1 (48:57):
Wow, twenty four point six at age seven.

Speaker 2 (49:01):
Wow.

Speaker 1 (49:01):
So you get a lot of time to grow back
your your converted wrath and then you have another tack
on ten year period for the airs. And there's some
software that you can use to kind of crunch those numbers.
And I'm not saying that the wroth is better than
the life insurance. I'm saying it's an alternative because if
you're seventy five, you may not be insurable.

Speaker 3 (49:23):
You're one hundred percent right, and I think it's you
know what you say a lot of times low it's
particular to the family and what they're trying to achieve.
The roth is going to be there sometimes and the
insurance is going to be Maybe it could be a
combination of both. But listen, guys, I say this all
the time in the radio show. I respect you guys,
and you guys have a wonderful, wonderful program.

Speaker 1 (49:45):
And that feeling is mutual. We have about ten seconds left.

Speaker 2 (49:49):
I'll see you guys.

Speaker 1 (49:50):
Dave Kopik from Florida, Frank Heming Lupiro from the frigid
Albany Latham Studios. We'll be back next week with Life
Happens Radio at nine am on TI Radio WGY. Hope
you can join us.