Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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 your particular
(00:24):
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 billions millions, you've
got a couple grand or a house, it's important, no
(00:46):
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 ancestor whether it's the house that you
bought or built. Those 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. We're
(01:10):
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. We want to protect the home.
We want to make sure if one of the children
is living there that they have a right to get
to that house. If the kids are just all going
(01:31):
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 were things called pensions,
(01:51):
and when you went to work for a company, 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
(02:13):
government employee, public employee are gone. Private employers don't 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
(02:34):
ways to save. Do you do a roths are very
popular today. Do you do a traditional IRA? 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.
(02:57):
You have Social Security and your retire retirement accounts, and
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
(03:18):
the next generation because there are not only tax issues,
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 accounts, life insurance annuities,
(03:40):
and we're going to talk about the new age of
a state planning and that is digital assets. Do you
have them? I think you do 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,
if you bank online, you have a digital asset. How
do you track that? How do you make sure that
(04:02):
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 help me explain all of this,
(04:24):
very fortunate today to have two of our associates at
Pierre O'Connor and Strauss and PR. Connor and Strauss is
a law firm. 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 2 (04:41):
Good morning, Tom, Good morning, Thank you for having me Lott.
Speaker 1 (04:44):
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 years, Tom, that's correct, and
he's a great attorney and experienced attorney that helps our
clients in our Long Island and our New York City offices,
and right here live sitting in front of me is
Patricia Whalan. Good morning, Patty, and Patty is our one
(05:08):
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 been doing it a year. She had
(05:31):
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 of state planning has now encompassed a
(05:52):
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 2 (06:11):
I mean, that's 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 an
(06:32):
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, if
(06:55):
you know, if 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 be more a
(07:16):
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 you or
(07:37):
have authority to access whatever it is that they want.
And that 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. So that's a lot of the
things now that I've been really going over with my
(07:59):
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 1 (08:08):
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
(08:30):
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,
(08:53):
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
(09:13):
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
(09:36):
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 I can't remember them all. There's
(09:58):
there's no way to keep track of all. 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, and we work
(10:21):
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 the password, guess what they're
(10:42):
not getting in. 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 wallet or you have
the other types of digital platform where you can store cryptocurrency,
(11:03):
you can store NFTs, you can store all types of
different different currencies, you have to have the ability to
get to those accounts.
Speaker 2 (11:11):
And it's not the levels of encryption.
Speaker 1 (11:13):
It's not easy. 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 2 (11:30):
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, 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
(11:53):
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
(12:15):
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're we have the right plan
(12:36):
in 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
(12:58):
on 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
(13:19):
we 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
(13:39):
if in the event your agent, under the power of
attorney or or 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,
(14:03):
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 (14:16):
Valuable lesson. Tom couldn't have said it better myself. 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
(14:37):
for them. You have to think about them and in
a good planning process with a good planning law firm,
those are things that you're going to take account of.
Stay with us. We're going to talk about the other assets.
Your home, your IRA, your four oh one K, your stocks,
your bonds, the things that you need to value and
how do you transition them. We're going to talk about
(14:58):
all of those things and how they're tax too. 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. 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
(15:19):
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 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 dry. January is something a
(15:40):
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 you've stuck to them for
(16:03):
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. And planning for those things that you don't
expect is why we're here. 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
(16:25):
of the things that we're talking about a state planning,
give us a call eight hundred talk w G y.
That's eight hundred eight two five five nine four nine.
Once again, eight hundred eight two five 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
(16:49):
who has gone through law school, come out, gotten admitted
to the bar, passed the bar first time. Congratulations. Uh,
and now you're practicing law. What are 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 that they should.
Speaker 3 (17:10):
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,
(17:31):
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,
(17:53):
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,
(18:16):
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 1 (18:30):
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 oh one k twenty years ago. I don't remember
who the beneficiaries are. I've never checked back. I bought
that life insurance policy twenty years ago. I don't remember
(18:53):
who 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
(19:15):
online 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 clients. Some
people are forthcoming with that information, but some people, Patty,
don't want to talk about it. They don't want to
(19:36):
give 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
(19:57):
information out of clients.
Speaker 2 (20:01):
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
(20:23):
can open up and say okay and understand that we're
here to help you. So sometimes 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.
Speaker 1 (20:39):
The person, sure, And so we do send that questionnaire. Oh,
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 own,
who the beneficiaries are. As planners, if you don't have
the right beneficiary name, it's going to send your plan
(21:02):
in a completely different direction. And Patty, part of the
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
(21:24):
are the best methods to transfer assets and what are
the best ways to receive assets from a beneficiary's perspective.
So just talk a little bit about the trust process
and the document is one step, but funding is equally
as important.
Speaker 3 (21:45):
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 to not go into the trust. So making sure
that we have a full idea of what assets they
have allows it to figure out, you know, which assets
should you know, be put into the trust and which
should stay out. You know, typically we always put real
(22:07):
property in there, so you're 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,
promisory noes into a trust. For example, sometimes we assign
(22:31):
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,
and it depends on kind of the nature of it.
Speaker 1 (22:54):
So when you have a house, you you have a
deed and the deed gets transfer into your trust. And
when you have a bank account, you 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 do we
(23:16):
deal with those in terms of putting them into play
in the estate plan?
Speaker 2 (23:22):
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 not
(23:44):
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 because we're.
Speaker 1 (24:00):
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
(24:23):
estate plan so that during your lifetime it's good and
when you're gone, it's good for the next generation. We'll
be right back 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,
(24:44):
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
your assets and your loved ones while you are alive,
and we do a lot of asset protection planning we
talk to We're going to get a little bit of
the trust topic and talk about what types of trust
(25:04):
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 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
(25:24):
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
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
(25:49):
as you're trying to protect your home, protect your retirement accounts,
protect these other assets that we're talking about, how do
you deal with that? If you have the need for
home health care, did 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?
(26:11):
Medicaid Monday is a thirty minute webinar and our next
one is coming up on January thirteenth. Myself and Frank
Hemming 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
(26:33):
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
twelve noon, twelve to twelve thirty thirty minutes an update
on the Medicaid program in New York State. Frank Hemming
myself and you can sign up as always at pyrolaw
dot com. Right on our website go to events and
(26:54):
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
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. So join
(27:19):
us January thirteenth. Tommy 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? And 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 talk. WGY would love to hear from you
(27:43):
and take your call. But Tommy dig into a little bit,
how do we put all these pieces together?
Speaker 2 (27:49):
So when when we're thinking about what we're leaving behind,
we have to think about how we're going to leave
it 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
(28:09):
sitting 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
(28:30):
whether they have their own health issues or if they've
experienced any 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
(28:50):
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. If 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,
(29:12):
so 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.
(29:33):
That allows 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,
(29:57):
whatever's 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
(30:18):
over that money, but also be able to utilize it
in a way that works for their circumstances.
Speaker 1 (30:25):
So, looking at the risks that our clients face during lifetime,
what has become probably 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
(30:47):
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 and 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
(31:10):
drug coverage, which I think is an admirable benefit to have.
But when you get beyond just the doctors and the
hospitals and the co payments, that 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
(31:31):
growing old and having health issues in your aging years
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
(31:53):
during your lifetime. And we're talking about trusts, and there's
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 MAPP.
Speaker 3 (32:11):
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
(32:34):
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
(32:54):
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 1 (33:11):
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.
(33:32):
They think, oh, I can't do anything with my assets.
I don't have any more control. I'm totally at the
at the uh mercy of my trustees. But that's not
how these trusts work. 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
(33:57):
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.
Speaker 2 (34:09):
Sure, 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
(34:29):
a trustee is not acting in a matter in which
you find suitable, you can always replace them.
Speaker 3 (34:35):
So you have that power.
Speaker 2 (34:37):
And also, if ever you need to change for your
beneficiaries or how the a particular assets passing on to somebody.
You have an ability to go in to change that
as well, and if necessary, if ever there needed to
be some type of an amendment or if we needed
to repeal the trust. While the name says it's revocable,
(35:00):
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 the team
that it is necessary at that time, and utilizing the
other tools that we discussed as far as the ability
for the change of beneficiary and trustee, we would be
(35:21):
able to go back in and do that if it
were necessary.
Speaker 1 (35:24):
And I've had clients challenge me on that, what do
you mean you could revoke the revocable trust.
Speaker 2 (35:28):
There's no way you can do that.
Speaker 1 (35:30):
So I've had the happy the statute and uh, you know,
fifty cents to anybody that can tell me what the statute.
Speaker 2 (35:35):
Is ep saled seven. Nu's one point nine.
Speaker 1 (35:39):
Patty knew it.
Speaker 3 (35:40):
Yeah, I knew.
Speaker 1 (35:43):
In our office. You have to know that statue because
that's a statue in New York that says, if I
could consent to the beneficiaries, I can break the trust. Well,
guess what, who controls the beneficiaries? You do, so you
can uppoint 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,
(36:05):
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 certain
assets that don't go in the trust.
Speaker 3 (36:21):
And one of those so retirement assets, so life for
our own k's you know, you know, different wroths I rays,
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.
(36:45):
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
(37:07):
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
about if.
Speaker 1 (37:17):
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 3 (37:32):
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
(37:52):
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
(38:13):
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 1 (38:30):
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. That's the good news. 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 account stay right in
(38:52):
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 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
h one k's and retirement accounts, but New York does.
(39:13):
So that's your asset. You can access that 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
(39:34):
you want to sell the house, you can 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 iras 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
(39:57):
you said, Patty, we take a look and it's case
by case. How much cash do you want to leave
in your own name, And that's a comfort level. 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.
(40:20):
You've got your own cash that's yours. But what if
you want to get money out of the trust, Patty?
Is there a way to do that?
Speaker 3 (40:27):
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
(40:48):
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 prince 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,
(41:10):
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
(41:31):
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
(41:53):
you from that account.
Speaker 1 (41:55):
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
(42:16):
next generation trust. We talked about your assets, protecting your home,
protecting your IRASE. Four oh one k's life insurance can
be protected annuities can be protected, stocks, bonds, 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
(42:37):
to do it in attack smart way. And when you
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.
(42:58):
Puro your host for this morning from O'Connor and Strauss,
and I'm looking out the window here at the WGY
Studios in beautiful downtown Latham, New York. 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,
(43:20):
but hope you've had a good start to the new year.
I'm live in studio with Patricia Whalan, our associate at
Pier o'connoran Strauss, and on the 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
(43:42):
oh one K, your life insurance and we go. We
have clients that walk into our office saying I don't
have anything, walking out and saying I'm a millionaire because
they never added everything up. 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 general is significant. So tom real
(44:04):
quick difference between revocable trusts and irrevocable trusts and why
do you use one versus the other?
Speaker 2 (44:11):
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 whatever 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
(44:34):
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 net worth individual or even a
very high income earning individual, then revocable trusts may be
more suitable than the irrevocable trust if it's not really
(44:55):
a long term care concern that you.
Speaker 1 (44:58):
Have, and so that avoids probate, it manages assets during lifetime,
and for some people it's absolutely the right fit. But
whether it's a Medicaid asset 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
(45:21):
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 assets are coming to the next generation.
And Patty, I've had this conversation with my children. We
(45:42):
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 3 (45:51):
So a beneficiary control trust is a really powerful state
planning tool. It allows you to leave money, you know,
asset to your loved ones, to your children, whoever your
beneficiaries are in you know, a vehicle.
Speaker 1 (46:06):
It's a protective vehicle.
Speaker 3 (46:07):
And it's protective in the sense that you know, the
things that you leave to them, you know can't be
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 important because it's a type of
trust that you can create for someone else. It's not
(46:28):
a type of trust that you can create for yourself.
And so you know, you're giving them a huge, you know,
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,
(46:51):
but you know, for the second generation, which I think
is huge.
Speaker 1 (46:55):
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
in nineteen thirties, Medicare started in nineteen sixty five, and
people have been paying in taking money out of their
(47:17):
wages and 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 were they blaming for this the
(47:40):
recipients that pay the 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
(48:01):
spouse to come in and 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 2 (48:15):
I think that's invaluable. I don't think you can put a.
Speaker 1 (48:17):
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? 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, but it's my money.
Speaker 3 (48:35):
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
(48:57):
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 will happen in the future. And
so I think that's a really smart way to plan.
Speaker 1 (49:07):
Be a better planner than a senator or a 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 trusts 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 protect it for your kids. The Beneficiary Control Trust
(49:31):
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 I love my grandchildren. Well,
this is a way that you can protect that inheritance
for your grandchildren. And I just want to touch on
one more topic. We got 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
(49:52):
a business tool called the limited liability company. And I'm
going to circle all the way back to the beginning
because kids got me into NFTs. Go figure, I'm into ethereum.
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
(50:14):
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
LLC is something we use for real estate management, but
we also use it for management of digital assets as well.
So that's the final word for Today, Patty Whalen, Tommy Morasco,
(50:35):
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
com for all of your estate planning needs
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 your particular
(00:24):
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 billions millions, you've
got a couple grand or a house, it's important, no
(00:46):
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 ancestor whether it's the house that you
bought or built. Those 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. We're
(01:10):
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. We want to protect the home.
We want to make sure if one of the children
is living there that they have a right to get
to that house. If the kids are just all going
(01:31):
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 were things called pensions,
(01:51):
and when you went to work for a company, 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
(02:13):
government employee, public employee are gone. Private employers don't 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
(02:34):
ways to save. Do you do a roths are very
popular today. Do you do a traditional IRA? 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.
(02:57):
You have Social Security and your retire retirement accounts, and
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
(03:18):
the next generation because there are not only tax issues,
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 accounts, life insurance annuities,
(03:40):
and we're going to talk about the new age of
a state planning and that is digital assets. Do you
have them? I think you do 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,
if you bank online, you have a digital asset. How
do you track that? How do you make sure that
(04:02):
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 help me explain all of this,
(04:24):
very fortunate today to have two of our associates at
Pierre O'Connor and Strauss and PR. Connor and Strauss is
a law firm. 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 2 (04:41):
Good morning, Tom, Good morning, Thank you for having me Lott.
Speaker 1 (04:44):
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 years, Tom, that's correct, and
he's a great attorney and experienced attorney that helps our
clients in our Long Island and our New York City offices,
and right here live sitting in front of me is
Patricia Whalan. Good morning, Patty, and Patty is our one
(05:08):
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 been doing it a year. She had
(05:31):
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 of state planning has now encompassed a
(05:52):
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 2 (06:11):
I mean, that's 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 an
(06:32):
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, if
(06:55):
you know, if 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 be more a
(07:16):
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 you or
(07:37):
have authority to access whatever it is that they want.
And that 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. So that's a lot of the
things now that I've been really going over with my
(07:59):
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 1 (08:08):
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
(08:30):
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,
(08:53):
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
(09:13):
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
(09:36):
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 I can't remember them all. There's
(09:58):
there's no way to keep track of all. 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, and we work
(10:21):
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 the password, guess what they're
(10:42):
not getting in. 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 wallet or you have
the other types of digital platform where you can store cryptocurrency,
(11:03):
you can store NFTs, you can store all types of
different different currencies, you have to have the ability to
get to those accounts.
Speaker 2 (11:11):
And it's not the levels of encryption.
Speaker 1 (11:13):
It's not easy. 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 2 (11:30):
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, 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
(11:53):
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
(12:15):
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're we have the right plan
(12:36):
in 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
(12:58):
on 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
(13:19):
we 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
(13:39):
if in the event your agent, under the power of
attorney or or 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,
(14:03):
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 (14:16):
Valuable lesson. Tom couldn't have said it better myself. 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
(14:37):
for them. You have to think about them and in
a good planning process with a good planning law firm,
those are things that you're going to take account of.
Stay with us. We're going to talk about the other assets.
Your home, your IRA, your four oh one K, your stocks,
your bonds, the things that you need to value and
how do you transition them. We're going to talk about
(14:58):
all of those things and how they're tax too. 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. 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
(15:19):
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 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 dry. January is something a
(15:40):
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 you've stuck to them for
(16:03):
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. And planning for those things that you don't
expect is why we're here. 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
(16:25):
of the things that we're talking about a state planning,
give us a call eight hundred talk w G y.
That's eight hundred eight two five five nine four nine.
Once again, eight hundred eight two five 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
(16:49):
who has gone through law school, come out, gotten admitted
to the bar, passed the bar first time. Congratulations. Uh,
and now you're practicing law. What are 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 that they should.
Speaker 3 (17:10):
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,
(17:31):
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,
(17:53):
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,
(18:16):
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 1 (18:30):
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 oh one k twenty years ago. I don't remember
who the beneficiaries are. I've never checked back. I bought
that life insurance policy twenty years ago. I don't remember
(18:53):
who 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
(19:15):
online 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 clients. Some
people are forthcoming with that information, but some people, Patty,
don't want to talk about it. They don't want to
(19:36):
give 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
(19:57):
information out of clients.
Speaker 2 (20:01):
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
(20:23):
can open up and say okay and understand that we're
here to help you. So sometimes 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.
Speaker 1 (20:39):
The person, sure, And so we do send that questionnaire. Oh,
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 own,
who the beneficiaries are. As planners, if you don't have
the right beneficiary name, it's going to send your plan
(21:02):
in a completely different direction. And Patty, part of the
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
(21:24):
are the best methods to transfer assets and what are
the best ways to receive assets from a beneficiary's perspective.
So just talk a little bit about the trust process
and the document is one step, but funding is equally
as important.
Speaker 3 (21:45):
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 to not go into the trust. So making sure
that we have a full idea of what assets they
have allows it to figure out, you know, which assets
should you know, be put into the trust and which
should stay out. You know, typically we always put real
(22:07):
property in there, so you're 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,
promisory noes into a trust. For example, sometimes we assign
(22:31):
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,
and it depends on kind of the nature of it.
Speaker 1 (22:54):
So when you have a house, you you have a
deed and the deed gets transfer into your trust. And
when you have a bank account, you 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 do we
(23:16):
deal with those in terms of putting them into play
in the estate plan?
Speaker 2 (23:22):
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 not
(23:44):
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 because we're.
Speaker 1 (24:00):
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
(24:23):
estate plan so that during your lifetime it's good and
when you're gone, it's good for the next generation. We'll
be right back 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,
(24:44):
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
your assets and your loved ones while you are alive,
and we do a lot of asset protection planning we
talk to We're going to get a little bit of
the trust topic and talk about what types of trust
(25:04):
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 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
(25:24):
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
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
(25:49):
as you're trying to protect your home, protect your retirement accounts,
protect these other assets that we're talking about, how do
you deal with that? If you have the need for
home health care, did 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?
(26:11):
Medicaid Monday is a thirty minute webinar and our next
one is coming up on January thirteenth. Myself and Frank
Hemming 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
(26:33):
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
twelve noon, twelve to twelve thirty thirty minutes an update
on the Medicaid program in New York State. Frank Hemming
myself and you can sign up as always at pyrolaw
dot com. Right on our website go to events and
(26:54):
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
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. So join
(27:19):
us January thirteenth. Tommy 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? And 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 talk. WGY would love to hear from you
(27:43):
and take your call. But Tommy dig into a little bit,
how do we put all these pieces together?
Speaker 2 (27:49):
So when when we're thinking about what we're leaving behind,
we have to think about how we're going to leave
it 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
(28:09):
sitting 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
(28:30):
whether they have their own health issues or if they've
experienced any 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
(28:50):
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. If 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,
(29:12):
so 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.
(29:33):
That allows 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,
(29:57):
whatever's 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
(30:18):
over that money, but also be able to utilize it
in a way that works for their circumstances.
Speaker 1 (30:25):
So, looking at the risks that our clients face during lifetime,
what has become probably 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
(30:47):
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 and 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
(31:10):
drug coverage, which I think is an admirable benefit to have.
But when you get beyond just the doctors and the
hospitals and the co payments, that 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
(31:31):
growing old and having health issues in your aging years
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
(31:53):
during your lifetime. And we're talking about trusts, and there's
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 MAPP.
Speaker 3 (32:11):
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
(32:34):
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
(32:54):
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 1 (33:11):
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.
(33:32):
They think, oh, I can't do anything with my assets.
I don't have any more control. I'm totally at the
at the uh mercy of my trustees. But that's not
how these trusts work. 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
(33:57):
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.
Speaker 2 (34:09):
Sure, 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
(34:29):
a trustee is not acting in a matter in which
you find suitable, you can always replace them.
Speaker 3 (34:35):
So you have that power.
Speaker 2 (34:37):
And also, if ever you need to change for your
beneficiaries or how the a particular assets passing on to somebody.
You have an ability to go in to change that
as well, and if necessary, if ever there needed to
be some type of an amendment or if we needed
to repeal the trust. While the name says it's revocable,
(35:00):
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 the team
that it is necessary at that time, and utilizing the
other tools that we discussed as far as the ability
for the change of beneficiary and trustee, we would be
(35:21):
able to go back in and do that if it
were necessary.
Speaker 1 (35:24):
And I've had clients challenge me on that, what do
you mean you could revoke the revocable trust.
Speaker 2 (35:28):
There's no way you can do that.
Speaker 1 (35:30):
So I've had the happy the statute and uh, you know,
fifty cents to anybody that can tell me what the statute.
Speaker 2 (35:35):
Is ep saled seven. Nu's one point nine.
Speaker 1 (35:39):
Patty knew it.
Speaker 3 (35:40):
Yeah, I knew.
Speaker 1 (35:43):
In our office. You have to know that statue because
that's a statue in New York that says, if I
could consent to the beneficiaries, I can break the trust. Well,
guess what, who controls the beneficiaries? You do, so you
can uppoint 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,
(36:05):
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 certain
assets that don't go in the trust.
Speaker 3 (36:21):
And one of those so retirement assets, so life for
our own k's you know, you know, different wroths I rays,
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.
(36:45):
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
(37:07):
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
about if.
Speaker 1 (37:17):
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 3 (37:32):
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
(37:52):
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
(38:13):
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 1 (38:30):
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. That's the good news. 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 account stay right in
(38:52):
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 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
h one k's and retirement accounts, but New York does.
(39:13):
So that's your asset. You can access that 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
(39:34):
you want to sell the house, you can 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 iras 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
(39:57):
you said, Patty, we take a look and it's case
by case. How much cash do you want to leave
in your own name, And that's a comfort level. 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.
(40:20):
You've got your own cash that's yours. But what if
you want to get money out of the trust, Patty?
Is there a way to do that?
Speaker 3 (40:27):
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
(40:48):
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 prince 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,
(41:10):
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
(41:31):
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
(41:53):
you from that account.
Speaker 1 (41:55):
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
(42:16):
next generation trust. We talked about your assets, protecting your home,
protecting your IRASE. Four oh one k's life insurance can
be protected annuities can be protected, stocks, bonds, 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
(42:37):
to do it in attack smart way. And when you
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.
(42:58):
Puro your host for this morning from O'Connor and Strauss,
and I'm looking out the window here at the WGY
Studios in beautiful downtown Latham, New York. 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,
(43:20):
but hope you've had a good start to the new year.
I'm live in studio with Patricia Whalan, our associate at
Pier o'connoran Strauss, and on the 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
(43:42):
oh one K, your life insurance and we go. We
have clients that walk into our office saying I don't
have anything, walking out and saying I'm a millionaire because
they never added everything up. 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 general is significant. So tom real
(44:04):
quick difference between revocable trusts and irrevocable trusts and why
do you use one versus the other?
Speaker 2 (44:11):
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 whatever 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
(44:34):
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 net worth individual or even a
very high income earning individual, then revocable trusts may be
more suitable than the irrevocable trust if it's not really
(44:55):
a long term care concern that you.
Speaker 1 (44:58):
Have, and so that avoids probate, it manages assets during lifetime,
and for some people it's absolutely the right fit. But
whether it's a Medicaid asset 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
(45:21):
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 assets are coming to the next generation.
And Patty, I've had this conversation with my children. We
(45:42):
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 3 (45:51):
So a beneficiary control trust is a really powerful state
planning tool. It allows you to leave money, you know,
asset to your loved ones, to your children, whoever your
beneficiaries are in you know, a vehicle.
Speaker 1 (46:06):
It's a protective vehicle.
Speaker 3 (46:07):
And it's protective in the sense that you know, the
things that you leave to them, you know can't be
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 important because it's a type of
trust that you can create for someone else. It's not
(46:28):
a type of trust that you can create for yourself.
And so you know, you're giving them a huge, you know,
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,
(46:51):
but you know, for the second generation, which I think
is huge.
Speaker 1 (46:55):
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
in nineteen thirties, Medicare started in nineteen sixty five, and
people have been paying in taking money out of their
(47:17):
wages and 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 were they blaming for this the
(47:40):
recipients that pay the 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
(48:01):
spouse to come in and 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 2 (48:15):
I think that's invaluable. I don't think you can put a.
Speaker 1 (48:17):
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? 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, but it's my money.
Speaker 3 (48:35):
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
(48:57):
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 will happen in the future. And
so I think that's a really smart way to plan.
Speaker 1 (49:07):
Be a better planner than a senator or a 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 trusts 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 protect it for your kids. The Beneficiary Control Trust
(49:31):
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 I love my grandchildren. Well,
this is a way that you can protect that inheritance
for your grandchildren. And I just want to touch on
one more topic. We got 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
(49:52):
a business tool called the limited liability company. And I'm
going to circle all the way back to the beginning
because kids got me into NFTs. Go figure, I'm into ethereum.
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
(50:14):
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
LLC is something we use for real estate management, but
we also use it for management of digital assets as well.
So that's the final word for Today, Patty Whalen, Tommy Morasco,
(50:35):
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
com for all of your estate planning needs
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