Episode Transcript
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Speaker 1 (00:00):
A vent In co host today the fifteenth annual Mac
(00:03):
and Cheese.
Speaker 2 (01:40):
Good morning everyone, Welcome to Life Happens Radio, your weekly
radio broadcast here on WGY that brings you ideas, information
and tools to help you plan for your future, your
family's future. Brought to you by Pierre O'Connor and Strauss
Attorneys here in Latham, New York with Austine all across
New York State. Practice is around the country Massachusetts, Connecticut,
(02:02):
New Jersey, Florida, and what we do is a state planning,
elder law, business succession planning. We help families create a
plan that takes care of mom and dad. Now perhaps
we're planning also for grandma, granddad, looking at the kids.
What are the kids needs currently? What are the grand
(02:23):
children's needs? How do we structure a plan to make
sure that your family is protected and that you are protected.
As we often say, when you're on the plane and
those oxygen masks come down, first thing we have to
do is put our own mask on so that we
can breathe and make sure that we can take care
(02:44):
of everyone else around us. That oxygen mask is very
often in the form of things like income, social Security, pension,
retirement plans. A lot of the things that we hear
on the radio show right before us Dave Copec and
his group talking about financial planning, planning for retirement, how
(03:04):
do you build assets and then how do you use
those assets in retirement? And David, this group, we're also
talking about another issue which is a major issue, and
that is healthcare. And right now our government is shut
down over healthcare and it's you know, you're very polarized
debate depending upon which side you're on. You have very
(03:24):
strong beliefs and feelings over what's going on in Washington.
But at the bottom line, when you walk into a hospital,
or if you're not walking in, if you're being rolled
into the hospital, and you get admitted, and you go
through a normal emergency room admission, if there is such
a thing, and then you go into a room for
(03:45):
a few days, and then you get released because your
condition has been treated, and you go home and all
of a sudden the mail you get a bill for
eighty five thousand dollars. How do you deal with that?
How do you keep your assets protected? Health insurance is
so important, such a critical issue, and that's acute care.
(04:08):
So if people have primary health insurance, if you have Medicare,
if you have Medicare supplements or Medicare advantage plans, those
kinds of expenses are covered. And this morning, I'm very
happy to welcome one of our star associates, and that's
not just my opinion anymore, recognized by Best Lawyers as
(04:28):
a rising star in the legal profession. Patricia Whylan, Good morning, Patty.
Speaker 3 (04:32):
Good morning, Lou. Thanks for having me on the show
this morning.
Speaker 2 (04:34):
Well, thank you for joining me on the show. And
I just went through my own little escapade. I had
an Ablasian, something called an Ablasian I've I've talked about
this on the show a number of times. It's about
ten years ago. I had open heart surgery and I
had a quintuple bypass operation and a valve replacement, very serious.
(04:56):
And you know, I remember back then ten years ago,
the hospital bill was two hundred thousand dollars, and fortunately
for us, we have very good insurance at our firm.
We have a policy that covered everything but one thousand dollars.
So that was my out of pocket obligation, my deductible
for that hospitalization. And I just recently, on August eighth,
(05:18):
went in for an Ablasian, which is a procedure when
I was in atrial fibrillation. They go in and they
quarterize nerve endings in the heart. And I was in
from seven am till three pm and just got the
bill for one hundred and eighteen thousand dollars, all covered
by insurance, but one thousand dollars. So if you don't
(05:41):
have that health insurance and you get the bill that
I just got for one hundred and eighteen thousand dollars,
if you don't have any coverage. This is why healthcare
is the number one cause of bankruptcy among seniors, because
how do you satisfy one hundred and eighteen thousand dollars debt?
Many people don't have a one hundred eight thousand dollars
liquid They might have their house and that's that's their
(06:04):
primary asset. They might have some retirement savings, but how
do you navigate that? How do you make sure that
you have the coverage that you need when the time comes.
We're going to talk today about a very important topic
and something in our practice, Patty, that we sit down
with our clients every day, sometimes you and Ie six
times a day.
Speaker 3 (06:23):
Yeah, that's so true.
Speaker 2 (06:26):
So we will sit with six sets of family members
and clients and go through this process on a given day.
And it's hearing the stories and hearing the concerns and
hearing the considerations. You draw common themes. People have interesting
and very unique lives. They have very unique family situations,
(06:46):
and I can tell you over forty two years and
having done thousands of estate plans, every situation is unique.
And Patty, you've been doing this now for a few years,
and I'm sure you're kind of seeing these themes play
out over and over.
Speaker 4 (07:01):
Yeah, yeah, certainly. I mean every person we meet with
is totally different. You know, some of the themes are
the same, but a lot of them are different. And
so every you know, meeting we walk into with a
new client, we never really know what, you know, who
we're going to be talking to and what goals and
you know, concerns and wishes they have. I mean, we
had an interesting consultation what a few weeks ago now
where we met with our first what polyamorous couple I
(07:25):
think is what.
Speaker 2 (07:25):
Yeah, there's a big word, folks, polyamorous couple. That's four
people and all different gender identities.
Speaker 4 (07:33):
Yeah, So I mean that was you know, it's an
interesting planning, you know file, because there's a lot of
different aspects going on, a lot of different things to consider,
and you know, just an interesting file. So you know,
we never know who we're going to see or who
we're going to talk to when we walk into those
initial consultations.
Speaker 2 (07:51):
Yeah, when I started this practice forty two years ago,
I don't remember a polyamorous group. And it's not a couple,
it's a foresome Yeah, I don't remember that happening, But
now it's come. You know, it's just the way that
our society has changed and life has changed. But you
sat with those folks, and I'm I was almost an
observer because I couldn't keep track of all of the
(08:14):
relationships and the things that needed to be done. But
they needed planning. And when we talk today, we're going
to talk about one of the most important things when
we sit down with those couples or any other set
of clients. How do you set yourself up to keep
yourself protected, As I said, put your oxygen man up
(08:36):
mask on first. How do you make sure that you
have what you need in terms of income and assets
and healthcare coverage and more importantly, long term care coverage
as you age, and how do you make sure that
what you have translates down to your beneficiaries, your spouses,
(08:56):
your children, your grandchildren. How do you protect it? And
when we look at this, Patty, when we look at
a problem as a state planning attorneys, we very often
have a solution that involves the word trust. And trusts
are one of the staples of a state planning. So
just fill our listeners in on what a trust is
(09:18):
because we're going to start right from the ground up
and we're going to take your calls today as well.
So I'm going to shoot the phone number out there
early so you can write it down if you have
a question on planning state planning trusts. We're going to
go through a series of different considerations in creating a trust,
managing a trust. Give us a call eight hundred talk WGY.
(09:39):
That's eight hundred eighty two five five nine four nine.
One more time. Write it down so you have it,
because you're gonna get that urge to pick up the
phone and give us a call. We hope you do.
Eight hundred eighty two five fifty nine forty nine. So
what is a trust?
Speaker 4 (09:55):
So a trust is a vehicle that you can set
up during your lifetime. Typically so you can set up
living trust during your lifetime that are in effect during
your lifetime, in effect during your incapacity, and also are
there for you when you pass away. It's a probably
the better vehicle to handle, you know, what happens to
(10:16):
your things and your assets and those sorts of things.
Speaker 3 (10:19):
After you pass.
Speaker 4 (10:21):
You know, probate that process can take a really long time.
Usually it's at least seven months, but you know often
now it's taking several years, and you know that process
can be lengthened by you know, numerous factors including you know,
conflict within the family or having complicated assets, or having
you know, other issues that you know may not have
(10:41):
been thought about prior to the person's passing. And so
having a will is definitely the better, you know, better.
Speaker 2 (10:48):
Way to.
Speaker 4 (10:50):
You know, set up your estate planning because it, you know,
makes it easier for you during your lifetime and especially
during any period where you may be incapacitated, because you
can have people there that can, you know, help manage
your assets, help manage your things when you can't, and
then when you pass, it makes it easier for your
loved ones and the people you leave behind because you
(11:10):
get to avoid having to.
Speaker 3 (11:11):
Go to court and going through the approbate process.
Speaker 2 (11:14):
So let's break that down. We have a show several
weeks ago called how to Punish Your Family when You
got and I did that show with one of our colleagues,
Adriana Mahelik, and we talked about all the things that
people do wrong, but importantly all the things that people
don't get to before the event occurs. And if you've
(11:35):
listened to the show before, you know that one of
the themes is life happens. Are you prepared? Because you
don't know when that car is going to pull out
in front of you. You don't know when you're going
to walk in the doctor's office and get a diagnosis.
You don't know when these things are going to befall you.
So being prepared for life's events is the theme. And
(11:55):
when you have no planning, we've talked about this, you
have no will. That's the worst of all possible situations
because court is in your family's future. And not only
is it court, it's contested court because there is no
person that you've appointed as your executor. People have to
come in and petition to be an administrator. You haven't
(12:16):
chosen beneficiaries, so the government is going to choose your
beneficiaries for you by statute and choose who your assets
are going to go to. And it's kind of the
worst of all worlds. But you mention a will, and
a will is a fundamental document. We call it part
of the core four. But a trust, as you said,
is the better vehicle because of the fact that every
(12:39):
will And people don't believe me when I say this,
because we do seminars a lot. And I asked the question,
how many people have a will? How many people think
they have to go to court? And half the people think, oh,
I have a will, I never have to go to probate.
How many times do you hear.
Speaker 3 (12:52):
That, Oh, very often, very often.
Speaker 2 (12:55):
So what does a will do? It doesn't do anything
until you die. You mentioned you have to go through
this court proceeding which could take several years. So when
we look at planning, why would you inflict the several
year court process on your family? Why would you do
that consciously and voluntarily? And the answer is many people
(13:16):
don't do it voluntarily. They do it by accident because
they don't understand the difference. So when we have a trust,
and we're going to talk about different types of trusts,
but when we have a trust, it starts to work
right away. So what is the process when you sit
down with clients? What are you telling them? What are
you showing them? How do you illustrate what a trust
(13:37):
does when when they're going to look at this plan?
Speaker 3 (13:41):
So you love flow charts.
Speaker 4 (13:43):
So one of the things that I've learned from you
is the use and creation of a flow chart. And
a flow chart is a good way to not only organize,
you know, the person's assets, but it helps them understand,
you know, the way that we would deal with you know,
different assets that they have and how we would tie
them in to a trust plan.
Speaker 3 (14:03):
So typically when we create flow charts for.
Speaker 4 (14:05):
Them, you know, we you know, have them be in
the middle, so we have them as individuals in the
middle of the page, and then on the right hand
of the page we have you know, a box for
the trust. And when we first meet with people, we
have them fill out a questionnaire and asset list, which
is you know, helpful to have upfront because it makes
the consultation more productive. And we use that asset list
(14:27):
and we use the things they tell us during our
conversation to organize you know, the things they have by
putting them in you know, essentially different boxes. We you know,
may put it in the trust box and may put
it in their individual box, you know, depending on the
asset that we're talking about.
Speaker 2 (14:43):
And so this process and it is a process to
get to a trust that is going to meet your needs,
meet your family's needs. And generally it boils down into
two main categories. We have revocable trusts and irrevocable trusts.
We have ass sets that go into the trust, assets
that stay out of the trust. You have trustees and
(15:05):
that could be you, and certain types of trusts could
be other people. All of the things that go into
trust soup. We're going to break down when we come back,
but for now, we're gonna take a short break. Thanks
for joining us this morning and Life Happens Radio again.
Give us a call eight hundred Talk WGY. That's eight
hundred eight two five five nine four nine. We'll be
(15:26):
back after this short break. Welcome back to Life Happens.
(16:30):
Our phone lines are open if you want to give
us a call. Eight hundred talk WGY. That's eight hundred
eight two five five nine four nine Lupiro in studio
with Patricia Whalan, attorneys from Pierre o'connoran Strauss, and we're
talking about trusts, a topic that permeates our world because
when you give a trust a state planning attorney a problem,
(16:53):
ninety nine percent of the time the solution is going
to be some type of trust. So the different types
of trusts that we're going to talk about fall into
two very broad categories, revocable and irrevocable. And a revocable
trust we're going to cover first, which is very flexible.
You are the trustee, you have full authority. Why would
(17:14):
you do an irrevocable trust? And an irrevocable trust falls
into two main branches. One, if you have a tax issue,
if you have an estate tax issue, then a trust
is going to be part of your plan. And you
may do trust for gifting purposes to move assets outside
your estate so they avoid a state tax. Because we
(17:34):
always want to minimize tax when we do trust planning,
and trusts are very good for this, whether it be
a state tax, income tax, capital gains tax, all the
things that become part of the planning process that you
want to minimize taxes irrevocable trusts fall into that category.
But Patty, we don't have a lot of clients that
(17:54):
fall into a state tax planning today because of the
high exemption rates.
Speaker 3 (17:58):
Yeah, yeah, that's true. It's a little bit less common.
Speaker 4 (18:00):
I mean, New York right now, you know, has a
pretty high exemption level, but that wasn't so certain up
until a few months ago. You know, there's talk about
whether or not that would continue. But no, yeah, certainly
tax planning is least common. You know, we don't we
don't focus on people who fall into that category certainly
as often as we do others.
Speaker 2 (18:19):
So the number in New York today is seven million,
one hundred and sixty thousand dollars. If your a state
is under that, a state taxes aren't part of your planning.
If it's over that, then they would be. Federally. We're
going on January one, because, as you mentioned, the One
Big Beautiful Bill Act extended the federal exemption and it
(18:41):
will increase and become permanent based upon this federal legislation
passed in July at fifteen million dollars per person. So
a married couple for federal estate tax purposes can pass
on thirty million dollars without really doing a whole lot
of work. But New York is again seven million, and
if you're over seven million, we have to get into
the tax side of this. We're not going to get
(19:03):
into the tax trusts today. We're going to get into
the two types of trust, revocable and irrevocable that are
the most common. But before we do, we have a caller,
Mary and all. But good morning, Mary, Oh, hello, good morning.
Speaker 5 (19:17):
How are you.
Speaker 2 (19:18):
We're doing well? How are you today?
Speaker 5 (19:21):
I'm well, thank you. I did have, unfortunately a question
about the tax part because I wasn't sure. I visited
your firm and am looking at the irrevocable trust. But
I did see something about the the ax I didn't
I don't have my papers in frontally, and I just
(19:43):
wondered my estate is not big enough. I'm thinking to
be concerned about the tax part. I forgot to ask that.
Speaker 2 (19:49):
Sure, if you get up close to seven million, you know,
if you start broaching six million, then we want to
start thinking about tax planning in advance and the process
so that we don't fall over it. New York has
punitive laws if you get just a little bit over
that seven point one to six million dollar exemption in
(20:09):
New York, you fall off what they call the cliff,
which means that you lose your entire exemption and you
go from zero tax to seven hundred thousand dollars of tax,
which is a big number when you just get slightly
over that number. But if you're under, say six million,
then a state tax is not going to be a
consideration in the creation of your trust. And we're going
(20:32):
to talk about the other reason that you do trusts,
which is asset protection. If you do an irrevocable trust,
sometimes we do it for asset protection purposes, and we're
going to talk about that next. Is that kind of
what you were thinking?
Speaker 5 (20:46):
Yep, No, I think that's right on. That's right on.
I'm not close to seven million, not even nearly close.
And we were taught, we discussed asset protection, so I
think I'm right where I need to be.
Speaker 2 (20:58):
So that's good.
Speaker 5 (20:58):
But I'm looking forward to with so yeah, stay.
Speaker 2 (21:01):
Tuned because we're going to cover that in depth.
Speaker 5 (21:05):
All right, awesome, Well, thank you so much. I appreciate
your time and I appreciate what you guys do.
Speaker 2 (21:08):
Thank you, thanks for your call. Appreciate that. And if
you have a question or comment on trusts or estate
planning eight hundred talkwg Y. That's eight hundred eight two
five five nine four nine. Uh So, Patty, that's a
good lead in. And we're gonna kind of dissect a
revocable trust and then we're going to get into the
(21:29):
irrevocable trust that we do most commonly, and that is
called a medicaid asset protection trust. And let's just start
with the why question. Why would you not do a
revocable trust versus that irrevocable trust that you can have
asset protection for medicaid.
Speaker 4 (21:47):
So you know, typically we do medicaid asset protection trusts
when we have older clients or you know, maybe sickly
clients who you know are looking to protect and shield
their assets from medicaid and then also you know, potentially
become eligible for medicaid in the first place. And so
that's a huge difference between the two trusts because revocable
living trusts do not protect your assets from medicaid recovery.
(22:12):
And you know, the assets you put into a vocable
living trust are still accountable towards you for medicaid purposes.
So by doing the medicaid asset protection trust. You not
only exempt your assets for Medicaid because they're no longer
seem to be in your name, but you know, it
also avoids Medicaid trying to recover you know, assets from
(22:32):
you after you pass.
Speaker 2 (22:34):
So the wide question very often becomes, if I do
have that illness and I need to get care, and
this isn't hospital care because you better have health insurance
for that, and this is care at home, home health care,
nursing home care, in some cases assisted living care. If
(22:57):
I get into a situation where I need that, then
I want to have an opportunity to access the only
government program that pays for that care, and that is
not Medicare, So get that out of your mind. Medicare
does not cover this liability. It's Medicaid. And the difference
between Medicare and Medicaid is part of the why question
(23:19):
because Medicaid is not a program anyone can just sign
up for. You can only sign up for it if
you have a certain level of assets. And the number
in New York, which is a higher number than most states,
but the number in New York is about thirty two
thousand dollars. If you have more than thirty two thousand dollars,
then Medicaid is not going to be available to you.
(23:42):
So how do we create a plan where it looks
like we have less than thirty two thousand dollars, We've
given enough money away that we qualify for Medicaid and
keep it in a trust that has features that we're
going to break out and really break down for you.
And why we do this Medicaid asset protection trust versus
(24:05):
the revocable trust to qualify you for the care that
you may need because the cost of that care, and
this has become a bigger why question. The cost of
that care is well over two hundred thousand dollars a
year now. So if you go to a nursing home,
an average nursing home here in the Capital region, you're
paying about eighteen thousand dollars a month. Write that check
(24:28):
a few times, folks, and it's like, oh my god,
what just happened? Eighteen thousand dollars a month. It's over
two hundred thousand dollars a year, and that's going to
deplete your assets and that's going to put you below
thirty two thousand dollars really really fast. So part of
the planning here and part of the reason we discuss
(24:49):
both revocable and irrevocable trusts. Part of that reason, Patty,
is we want to have a trust that if we
do need that care, and there's a five year wait
for nursing home care, so you got to do this
in advance. We want to have a trust that's going
to protect our assets.
Speaker 3 (25:03):
Yep, yep. So you know that's a good point.
Speaker 4 (25:06):
So you know, there is that five year look back
period that you know, we have to be aware of
when creating this trust. So you know, a question we
have and then I get pretty often, is you know,
are we at the right age you know.
Speaker 3 (25:19):
To set up this trust? Is there a right age?
And you know it depends.
Speaker 4 (25:22):
I mean that's such a loyally answer, but you know
it really just depends, you know, on the clients and
you know what they're looking to accomplish.
Speaker 2 (25:30):
I can give you the perspective of forty two years
of legal practice. Very few people can say that, and
that is that when we did these trusts thirty years ago,
people were in their eighties. Twenty years ago, people were
in their seventies. Now people are in their fifties and sixties.
Because as we're going to explain in the second half
of the show. When you boil it down and you
(25:52):
look at the revocable trust versus this particular version of
irrevocable trust, they don't look that different. And that's why
we do the flow chart and the diagram, because that
spells out what the critical differences are between a revocable
trust and an irrevocable trust. Who's the trustee, how do
you access the benefits, how do you get income and
(26:12):
assets out of the trust, how do you change the trust?
All of those things are going to be the topic
for the next thirty minutes, so that we hope that
you can stay with us as we dissect revocable and
irrevocable trusts, and again if you have a question or
a comment. Eight hundred eighty two five five nine four nine,
eight hundred eight two five fifty nine forty nine, we
(26:33):
hope that you can stay with us on this Saturday
here in the Capitol region. We'll be back after the news,
so be sure to stay with us and we're back.
(28:18):
Welcome back. I'm Lupiro, your host for this morning on
Life Happens Radio. Thank you for listening. I'm here in
studio with Patricia Whalen, one of our star associate attorneys
at pier o'connoran Strauss, and we're talking about Trust's a
topic that we discuss frequently, the why of trusts revocable
versus irrevocable. We're going to talk about the how and
(28:38):
how trusts get created, what the differences are, and what
the long term benefits are of a revocable trust versus
an irrevocable trust. But first a commercial. I want to
talk to you about a program that we have on Monday,
and it's our regular recurring Medicaid Monday, and typically it's
on the second Monday of each month. This time it
(29:00):
was a holiday, so where we pushed it back a
week and it's going to be this Monday, the twentieth,
from twelve noon to twelve thirty. And if you heard
the last piece of the first half of the show,
you heard us talking about Medicaid and Medicaid trusts. Medicaid
benefits are critical to our clients to keep them afloat,
(29:21):
to keep them solvent, to get the care that they
need in home care, nursing, home care, making sure that
it isn't going to break the bank, and you don't
die penniless, because that, folks, is the final answer for
the government. You spend all of your own money. You
spend down below thirty two thousand dollars in total assets
might be enough to bury you and your spouse and
(29:44):
then that's it. Then you get Medicaid and you get
the help. But with planning, you can get Medicaid and
still have access to certain resources. So that's the trick
to it. Medicaid is a means tested program. When you
get to home care, the rules just changed. We do
a lot of advocacy, We do a lot of work
(30:05):
in home care and getting care in your home. Let's
face it, that's where you want to be. And I've
done seminars for many, many, many years, and I've talked
to thousands of people, and I asked the question, if
you needed care, where would you prefer to be at
your own home or in a nursing home. And we
actually have a seminar that we do and repeat on
(30:26):
a regular basis called your Home with a Nursing Home
and it's I want to hunker down. And this goes back.
We've talked about this on the show many many times
to my mother who had Alzheimer's, and she gave my
sister and I a directive that the only way I'm
leaving this house is feet first. And so how do
you plan for that? How do you make sure that
(30:46):
you have the coverage that you need? And once you
get Medicaid eligible, how do you get the hours of
care that you need? Well, the game has changed, and
if you want to see what the reality is right
now of Medicaid home care, join us us on Monday
this coming Monday at noon, myself, Frank Heming, and Nina
Crissanda of Ever Home Care Advisors, who is an occupational
(31:07):
therapist but a professional health advocate who works with families
in getting the care they need in the home through
the Medicaid process. So we're going to talk about it
from the legal perspective. Nina will talk about it from
the care coordination and access and health advocacy perspective. And
we hope you can join us on Monday at noon.
You can watch in your jammies, you can have your
(31:29):
cup of coffee, you can do it from your office,
your home, and you can sign up as always on
our website and just go to pyrolaw dot com. That's
pie r R law dot com. Go to the events
tab sign up for this coming Monday's Medicaid Monday noon
to twelve thirty. It's a thirty minute CRISP presentation. And
(31:49):
if you have other questions on Medicaid, we have a
library of Medicaid mondays on our website that cover virtually
every topic in great depth and detail. So education is
a part of this. We want to make sure that
you understand why you're doing a revocable trust, why you're
doing a Medicaid asset protection trust, the why question, and
that will be become clear to you if you watch
(32:12):
this series of videos, and this one is live and
it is all new. The law changed on September one.
We're getting calls from clients that are on Medicaid home care.
The changes are being felt and the reduction and hours
of care being felt. So we hope you can join
us sign up. You can always call five one eight
four or five nine twenty one hundred. Join us Monday
(32:33):
at twelve noon. So, Patty, the irrevocable trust is the
one that we use to get to this care. Let's
just take a step back. We talked about healthcare, we
talked about hospitals and the bills that you get from
the hospital, which are sometimes astronomical physician care, those are
covered by Medicare primarily. So when you turn sixty five
(32:55):
or you have a disability, Medicare becomes your primary payer.
You have Medicare supplement. You make your advantage plans very complicated,
but you need to shop and you need to have
the right coverage for your particular situation. But when it
comes to crossing the line from healthcare to long term care,
Medicare does not pay. And there there are only three
(33:16):
sources of payment. One is you pay out of pocket.
And folks, think about those checks eighteen thousand dollars a month.
If you're in twenty four to seven home care, and
you can run your own numbers, the average home health
aid through an agency today is thirty five dollars an hour.
If you need twenty four hours a day of care
three hundred and sixty five days a year, you're up
(33:37):
around two hundred and sixty thousand dollars. And we have
clients that pay that because they can. So the people
that have the resources and the income to private pay
will find caregivers and they will pay them privately, and
they will get the care that they need, but it's
going to cost about two hundred and sixty thousand a
year for twenty four to seven round o' clock care.
How many people can afford that? And if you can
(34:00):
or that, have you bought long term care insurance? We
talk about that on this show frequently. We've had our
favorite guest, Bob Vandy on, who is one of the
leading experts in the country on long term care insurance,
and Bob talks about the policies and unfortunately, to buy
long term care insurance today is difficult because we're down
to one company that's it in New York State. One
(34:22):
company sells long term care insurance. Where you go is
to get life insurance. And life insurance is a great product,
and this is where you can start planning. If you're
not eighty yet, if you're thirty five, you probably need
some life insurance if you have kids, and instead of
just buying the term policy, you might consider buying a
permanent policy that can allow you if you keep paying
(34:44):
your premiums, you'll have the death benefit available if you die,
but you'll have the death been available during your lifetime
in a living benefit to pay for your own long
term care so when you look at that cost of care,
you have your own income and your own assets is enough.
If it isn't enough, do you have an insurance policy?
And can you buy an insurance policy that will cover
(35:05):
the gap to make sure that you are private paying
and can do it without depleting your assets. And if
you don't have enough income and assets and enough insurance
to private pay, and we go through this analysis and
very few people have enough income and assets to private pay,
then medicaid is the only answer for you. And so Patty,
(35:27):
the revocable trust, we're going to start with that, and
then we're going to get to the irrevocable Medicaid Asset
Protection Trust. The differences why one over the other, and
this analysis is something as you mentioned, we float chart
for our clients and look at what is your situation
and is this the right trust for you?
Speaker 4 (35:46):
Yeah, So the revocable trust does a couple of things,
you know, the probably the main thing that.
Speaker 3 (35:51):
It does is help you avoid probate.
Speaker 4 (35:54):
Like I said earlier, it also allows you to you know,
manage your assets, you know, during any period of incapacity
because as your success or trustees you know can be
there for you. You know, the other thing the trust
is you know, at least in comparison to a wills,
that it is completely private, so you know, upon your passing,
the trust doesn't get filed anywhere. There's no court proceeding,
so you know it happens, you know, without things being
(36:16):
made available online or you know, for other people. But
you know, unlike the Medicaid ask protection trust, it doesn't
have any sort of asset protection, so you know, all
of the assets you put in there are still deemed
to be yours. But you know that does provide you
with a great deal of flexibility because you have full
control over the assets you put into the trust. You
could take it out at any point. You can use
(36:38):
it for whatever reason. And you know, with the revocable
trust kind of like you know, the trust name implies,
you can revoke it and modify it, you know, on
your own, at any point without having to go through
or get consent from anyone.
Speaker 2 (36:51):
Yeah, so this is a wrapper around all of your
assets that you are the one hundred percent manager of.
So as the sole trustee, which you can be if
his husband and wife. You can have a joint trust,
you can be co trustees. A lot of different variations
on who the trustees are. But when you have a
revocable trust, you are not changing your life one iota
(37:14):
because you're managing every asset inside that trust. It's simply
a matter of changing the title on the asset so
that when one of two things happened, Patty, you're protected.
And what are the two contingencies that you mentioned earlier
that are part of the trust that we draft, the
(37:34):
incapacity and then ultimately.
Speaker 3 (37:36):
Death the estate.
Speaker 4 (37:39):
Yeah, so with the incapacity portion, you know your successor
trustees can be there to manage the trust to make
distributions for you during any period of your incapacity. So
you know, it's something you set up now, and the
idea is that you're fully in control of it until
you can't be, and then at that point you have
people that can be there and can continue the trust
(37:59):
for you. And then when you pass, you know the beneficiaries,
the people you name in your trust, you know would
be the ones to inherit any of the assets from
the trust upon your passing.
Speaker 2 (38:10):
And I'm working on this analogy to a movie of
your life and the script and I kind of have
been using this more and more. You're writing your own
script for the rest of your life. And if you
stay healthy until the day you die, then your trust
doesn't change until the day you die. If you face
(38:31):
an incapacitating event, if you have an illness or an accident,
an injury, your trust is protecting you because now you've
written the script and you're determining who the trustees are
going to be when you can't be your own trustee.
You're telling them how to invest the money in your trust.
If you have a business, we're putting special provisions in
(38:53):
the trusts to make sure that your business is properly
run and the value of your business doesn't go down
simply because you've lost capacity. And for business owners, this
is such an essential and so many business owners don't
have it and don't do it. I'm one. I have it,
I did it, and it's it just gives me comfort
that I know if something happened to me, all of
(39:14):
the things that I have are going to be taken
care of by the people that I trust. It's my
team in my trust. They don't have to go to court,
they don't need a judge for any of this. It's private,
and it's a script that I have written and determined
how I want this to play out, and we can
be as detailed as you want to be in terms
of how you want the assets managed, how you want
(39:35):
things used for you. If you have a child with
a disability, this is an essential trust for you because
if you become incapacitated and you're supporting that child, you
want to make sure that your success or trustee can
do the same thing. And we build in special needs
trust types provisions for that. If you have any other
special circumstances, we write them all into the trust. It's
your script. So Act one is you being trustee of
(39:59):
your vocable trust and managing everything just as you do today.
Act two. Act two. Scene one opens with a car
accident and you have a car accident and you have
a traumatic, traumatic brain injury, and you're in the hospital
and you're not able to manage your own finances and
your business. Now you have your trust stepping in and
(40:20):
covering yourself and your family for Act two and then
so far we only have three acts and Act three
is probate, right right.
Speaker 4 (40:29):
I think one of the biggest things that comes up
during our meetings with clients is, you know, a primary
concern that we hear, and you know, it varies in
like what concern they have. But a big concern that
people have is, you know, how how are their beneficiaries
going to inherit their assets? You know, are there different
conditions or different ways that they can inherit you know,
(40:51):
because primarily, you know, the main way that we think
of inheritance is just you getting it outright, getting a
check or something. But you know, the better way is
by putting it into you know, typically some type of trust.
And so you know, if it's someone who is disabled
or you know, may not be able to manage their
own affairs because they have other, you know, disabilities that
(41:12):
may not be intellectual, then you know, we can set up,
you know, a special needs trust or you know a
different type of trust that can get created to you know,
hold whatever money they inherit from you.
Speaker 2 (41:22):
And now we're to act for which is the denuma
of the story. You're gone, you're not deceased, but your children,
your grandchildren, your family is left behind. But you can
leave them behind with a great legacy in their own script.
And we do something called a beneficiary control trust, which
(41:45):
even if the child doesn't have any unique needs, provides
them with unique benefits. And as you know, I'm pretty passionate,
Yeah you are. So just talk about when a trust ends.
And this again is court free. These these things happen
folk in the matter of weeks, maybe a couple of months.
The trusts are fully administered, no filing with the court,
(42:06):
no filing with the government, no estate tax in most
of these trusts. And so we just divide assets among
the beneficiaries that you choose. And then this trust, particular
trust I think gives kids the best chance at success
with what you've built during your lifetime.
Speaker 4 (42:24):
Right, Yeah, So beneficiary control trusts, you know, they're a
form of legacy planning because you create them upon your
passing for your kids. And not only are they there
for your kids, but they're there for you know, your
kids kids, so your grandkids, great grandkids. You know, it
can continue on for the legacy of your beneficiaries. And
this is the type of trust, a type of trust
that provides the beneficiary of the trust with complete asset protection.
(42:48):
It's not a trust that you could ever create for yourself.
It's a type of trust you can create for other
people against the.
Speaker 2 (42:53):
Law, which a lot of people don't understand or appreciate.
New York State has a public policy and statutes that
say if I try to create a trust for myself
and protect those assets in the trust from my own creditors,
that is against public policy and that trust is void.
The one exception for asset protection in New York is medicaid,
(43:16):
and we'll talk about that trust next. But when we
do asset protection trusts, true asset protection trusts for a
client themselves, we have to go to a state like
Nevada or an offshore jurisdiction like Nevus or the Cook
Islands to do true asset protection trust and we do.
People in high risk categories that have a lot of
assets want to protect themselves from lawsuits and liabilities, and
(43:37):
that's possible, but it's a whole different realm. It's very expensive,
and you're going to be working with a trustee, not
yourself in those offshore jurisdictions. But you can do this
very simply patty for your kids right out of your
own revocable trust. And the price to do that is
deminimus compared to the potential benefits.
Speaker 3 (43:56):
Yep, yep, that's so true.
Speaker 2 (43:58):
So we're going to take another short break our life.
Last break and when we come back, we're going to
talk about the difference. All right, So make sure you
(45:04):
listen to that guy that was in the commercial there.
He's really smart. Follow his advice. I'm Lupiro back here
live in studio today on a Saturday morning here in Albany,
New York, and I'm in studio with Patricia Whaling. Good morning, Patty,
and how are things going for you. How's your weekend
going so far?
Speaker 3 (45:20):
It's good.
Speaker 4 (45:21):
I mean it's still pretty early into the weekend, but
you know, there's a lot to look forward to. We have,
you know, a Sienna basketball game tomorrow, so that should
be that should be interesting.
Speaker 3 (45:29):
It's you know, that time of year again.
Speaker 2 (45:31):
So two local schools going to play an exhibition game
Union College against Sienna University now, and we're sponsors of
Sienna basketball. We have been for the last several years.
We're hoping that coach mac Jerry McNamara can put a
good team on the floor this year. It's looking promising,
but you never know. So we're going to be there
and if you join a Sienna game, you'll see a
(45:52):
putting game that we sponsor. You can get in at,
hopefully and win yourself one hundred dollars gift card. That's
that's every Sianna home game. And we're gonna be able
tomorrow two o'clock rooting Sienna on. But I know a
lot of people from Union too, so it should be
a good game, should be fun. And then I'm gonna
play some paddle tennis today and get out there on
the paddle courts. So hope you're doing something fun. I
(46:16):
know a lot of people at this time of year
raking leaves and doing outdoor work and getting ready for
the winner. But we have another little respite weekend. I
heard the temperature tomorrow is going to be up to
seventy one. Yeah, it's great, so you know, get out,
put your short sleeved shirt on, enjoy it, enjoy the day.
And we're going to take a last ten minutes here, Patty,
and we're going to unwind the difference between the revocable
(46:36):
trust that we just talked about and the Medicaid Asset
Protection trust. One subset, one form of irrevocable trust. And
when clients come into us, they come in with a
lot of misinformation and disinformation and they say, oh, if
I do this irrevocable trust, I can never break it,
I can never change anything. I have to run to
(46:58):
my kids to get money. I don't have any autonomy
or any ability to live my life. And it takes
a flow chart to overcome a lot of those misconceptions.
So just start with number one. Who is the trustee?
We said, I can be my own trustee and a
revocable trust. Who's the trustee of a Medicaid asset protection trust?
Speaker 4 (47:20):
So a trustee of a medicid ASCID protection trust can
be anyone that you you know, you want. You can
appoint anyone in that position, you know, to be there
for you to, you know, manage the trust for your benefit.
And you know, typically it's children, you know, sometimes it's siblings.
It can also be friends, you know. It really can
be anyone that you trust in.
Speaker 2 (47:39):
Anyone you think, what about a spouse.
Speaker 4 (47:41):
No, unfortunately, it cannot be a spouse. It has to
be you know, a child, or a sibling or another
family member.
Speaker 3 (47:49):
It cannot be a spoused.
Speaker 2 (47:50):
Yeah, I met with We met with clients yesterday that
are unmarried. They've been together twenty six years, kids, she
has kids, and so they just never got married. We
have a lot of clients that have lived together even
changed names to have the same name for the kids,
but it didn't get married. And from a medicaid perspective,
that actually is an advantage because when you have a
(48:12):
married couple, everything is considered as one unit, so all
of the assets are considered as available. But when you
have an unmarried couple, yours is yours and mine is mine.
And in this case, the partner, the significant other, can
be the trustee, which is kind of a unique situation
which has a lot of flexibility.
Speaker 4 (48:31):
Yeah, and we don't see that very often, and we're
not encouraging people to get divorced either for that.
Speaker 2 (48:35):
But it was funny, well when you weren't practicing yet,
but they had something called DOMA when the ability for
same sex couples to marry was brought into law, and
we sat down with probably one hundred couples who had
been together for thirty forty years and they were coming
(48:57):
in to get a consultation on whether or not they
should get married, and we had an analysis of all
the tax implications, all of the medicaid implications, and probably
in eighty percent of the cases they decided to do
a civil ceremony, but not a legal ceremony and not
tie the knot from a legal perspective, because they didn't
(49:19):
want to expose everyone's assets to a long term care
liability i e. Medicate. So choosing a trustee is important.
But the big thing about this, and what we like
to tell our clients is if you choose a trustee
and they're not doing the right job, what do you
say to them.
Speaker 3 (49:34):
Patty, You're fired.
Speaker 2 (49:36):
You can remove them and replace them at any time.
Even though it's an irrevocable trust, you have the absolute
right yourself to change trustees and that is a lever
that you can pull at any time, and that leverage
is important. But you can also change beneficiaries and that's
another lever Patty yep.
Speaker 4 (49:56):
So we have language in our document that provides for
what we call ap power appointment and basically what that
means is that you have the ability to change your
beneficiary at any point. You can always decide, you know,
in the future, how you want to appoint your property,
you know, which is huge, you know, and I think
a lot of clients when they find that out, when
they get educated about that, they feel a lot better
(50:18):
knowing that they can, you know, not only change their beneficiaries.
But they also have the ability to change their trustees.
Speaker 2 (50:24):
Yeah, so the irrevocable trust isn't as irrevocable as it sounds.
You have certain powers and certain controls. You can keep
the income from this trust. But the other major difference
is if I'm in a revocable trust and I'm the trustee,
I can pull money out put money in. It's it's
like a permeable barrier that kicks in benefits upon my
(50:49):
incapacity or my passing. But in a Medicaid Asset protection trust,
that trust is starting today and you can't have a
permeable barrier and quality five for Medicaid because if the
trustee of that trust has the ability to just take
money out of the trust and give it back to you,
then Medicaid is going to say that it's still yours.
(51:12):
So on the flow chart, how do you overcome that barrier?
Speaker 4 (51:17):
So we draw a little you know arrow, the back
door of the of the trust is what we call it.
And that is a way to show, you know, the
people that we're meeting with that there is a way
to get the principle out of the trust. And you know,
although it cannot be given back to the you know,
the people directly. It can't be given back to the
creators of the trust directly. It can be paid you know,
(51:39):
back to you know, the children or other people, you know,
other people that are the you know, ultimate beneficiaries of
the trust, and they can take it out and they
can use it for you know, whatever purpose.
Speaker 2 (51:50):
So revocable versus irrevocable. I'm the trustee of the revocable.
I control the trustees of the irrevocable, but it's not me,
It's somebody I choose, but I can always change who
that person is. I'm the beneficiary of income and principle
in the revocable trust, but I'm the beneficiary of income
in the medicaid trust. Principle cannot come to me directly,
(52:14):
but can be taken out through my kids or the
other beneficiaries who are going to get the remainder of
that trust someday. So we still have access to principle
through those third parties. And the other question then becomes,
can I break this irrevocable trust because I can revoke
(52:36):
the revocable trust And it sounds like too good to
be true, But does that work In New York?
Speaker 4 (52:42):
It does yeah, we get that question a lot. So
New York does allow you to break an irrevocable trust.
And the way that we would do that is by
getting the consent of all the beneficiaries.
Speaker 2 (52:53):
And who names the beneficiaries?
Speaker 4 (52:56):
You do the person who creates the trust. So that's
pretty flexible.
Speaker 2 (53:01):
Just think about that. You have a trust it says
it's irrevocable. You can control trustees, you can control who
the beneficiaries are, and if you can get the consent
of those beneficiaries, that trust can actually be revoked. So
when we line these two trusts up for people, and
I think this is why a lot of people at
younger ages are comfortable going into the Medicaid Asset Protection
(53:23):
Trust because you still have all of that flexibility and control.
You control trustees, you control beneficiaries. You can break the
trust if you get the consent of those beneficiaries who
you choose. So I think if you went out there
and you said, Okay, I'm going to make you the
beneficiary of my trust if you allow me to break it,
and oh, by the way, I'm going to leave you
ten thousand dollars or fifty thousand dollars or you can
(53:45):
figure that out, folks. There's leverage there, and it's a
way that you can create a trust now. And as
we mentioned earlier, this is designed to shelter assets if
you need long term care, and if it's nursing home care.
You have to do this five years in advance. So
I see more and more people coming in Patty in
their late fifties or early sixties. That are when we
(54:10):
put the two trusts down side by side. Because of
the flexibility and it has to be the right family situation,
they're going with the eriphone trust.
Speaker 3 (54:19):
Yeah, yep, that's true. I've noticed that as well.
Speaker 2 (54:22):
So those are some of the choices, folks, and we're
winding down. I do want to talk about another program.
I talked about Medicaid Monday that's coming up on Medicaid
home care benefits and the new home care rules. Hope
you can join us this Monday, the twentieth of October
at twelve noon for Medicaid Monday on Medicaid Homecare. But
we have another program on intergenerational estate planning. So the
(54:46):
other side of our practice is dealing with people who
have more assets, who have businesses, who have the need
for financial planning. Insurance planning and estate planning. And this
is our Intergenerational Estate Planning conference. It's our twentieth year
doing this. It's on November fifth, from twelve thirty to
five thirty, with a catered reception to follow. It is
(55:09):
free of charge. We have wonderful sponsors and speakers and
one of our keynote speakers. If you have cryptocurrency you're
going to want to attend again, go to pyrolaw dot
com look for the inter gen Patty. Thanks for joining
me on a Saturday morning. Thank you for joining us.
We'll be back next week right here on Life Happens Radio.
(55:30):
And as always, stay well and stay healthy.
A vent In co host today the fifteenth annual Mac
(00:03):
and Cheese.
Speaker 2 (01:40):
Good morning everyone, Welcome to Life Happens Radio, your weekly
radio broadcast here on WGY that brings you ideas, information
and tools to help you plan for your future, your
family's future. Brought to you by Pierre O'Connor and Strauss
Attorneys here in Latham, New York with Austine all across
New York State. Practice is around the country Massachusetts, Connecticut,
(02:02):
New Jersey, Florida, and what we do is a state planning,
elder law, business succession planning. We help families create a
plan that takes care of mom and dad. Now perhaps
we're planning also for grandma, granddad, looking at the kids.
What are the kids needs currently? What are the grand
(02:23):
children's needs? How do we structure a plan to make
sure that your family is protected and that you are protected.
As we often say, when you're on the plane and
those oxygen masks come down, first thing we have to
do is put our own mask on so that we
can breathe and make sure that we can take care
(02:44):
of everyone else around us. That oxygen mask is very
often in the form of things like income, social Security, pension,
retirement plans. A lot of the things that we hear
on the radio show right before us Dave Copec and
his group talking about financial planning, planning for retirement, how
(03:04):
do you build assets and then how do you use
those assets in retirement? And David, this group, we're also
talking about another issue which is a major issue, and
that is healthcare. And right now our government is shut
down over healthcare and it's you know, you're very polarized
debate depending upon which side you're on. You have very
(03:24):
strong beliefs and feelings over what's going on in Washington.
But at the bottom line, when you walk into a hospital,
or if you're not walking in, if you're being rolled
into the hospital, and you get admitted, and you go
through a normal emergency room admission, if there is such
a thing, and then you go into a room for
(03:45):
a few days, and then you get released because your
condition has been treated, and you go home and all
of a sudden the mail you get a bill for
eighty five thousand dollars. How do you deal with that?
How do you keep your assets protected? Health insurance is
so important, such a critical issue, and that's acute care.
(04:08):
So if people have primary health insurance, if you have Medicare,
if you have Medicare supplements or Medicare advantage plans, those
kinds of expenses are covered. And this morning, I'm very
happy to welcome one of our star associates, and that's
not just my opinion anymore, recognized by Best Lawyers as
(04:28):
a rising star in the legal profession. Patricia Whylan, Good morning, Patty.
Speaker 3 (04:32):
Good morning, Lou. Thanks for having me on the show
this morning.
Speaker 2 (04:34):
Well, thank you for joining me on the show. And
I just went through my own little escapade. I had
an Ablasian, something called an Ablasian I've I've talked about
this on the show a number of times. It's about
ten years ago. I had open heart surgery and I
had a quintuple bypass operation and a valve replacement, very serious.
(04:56):
And you know, I remember back then ten years ago,
the hospital bill was two hundred thousand dollars, and fortunately
for us, we have very good insurance at our firm.
We have a policy that covered everything but one thousand dollars.
So that was my out of pocket obligation, my deductible
for that hospitalization. And I just recently, on August eighth,
(05:18):
went in for an Ablasian, which is a procedure when
I was in atrial fibrillation. They go in and they
quarterize nerve endings in the heart. And I was in
from seven am till three pm and just got the
bill for one hundred and eighteen thousand dollars, all covered
by insurance, but one thousand dollars. So if you don't
(05:41):
have that health insurance and you get the bill that
I just got for one hundred and eighteen thousand dollars,
if you don't have any coverage. This is why healthcare
is the number one cause of bankruptcy among seniors, because
how do you satisfy one hundred and eighteen thousand dollars debt?
Many people don't have a one hundred eight thousand dollars
liquid They might have their house and that's that's their
(06:04):
primary asset. They might have some retirement savings, but how
do you navigate that? How do you make sure that
you have the coverage that you need when the time comes.
We're going to talk today about a very important topic
and something in our practice, Patty, that we sit down
with our clients every day, sometimes you and Ie six
times a day.
Speaker 3 (06:23):
Yeah, that's so true.
Speaker 2 (06:26):
So we will sit with six sets of family members
and clients and go through this process on a given day.
And it's hearing the stories and hearing the concerns and
hearing the considerations. You draw common themes. People have interesting
and very unique lives. They have very unique family situations,
(06:46):
and I can tell you over forty two years and
having done thousands of estate plans, every situation is unique.
And Patty, you've been doing this now for a few years,
and I'm sure you're kind of seeing these themes play
out over and over.
Speaker 4 (07:01):
Yeah, yeah, certainly. I mean every person we meet with
is totally different. You know, some of the themes are
the same, but a lot of them are different. And
so every you know, meeting we walk into with a
new client, we never really know what, you know, who
we're going to be talking to and what goals and
you know, concerns and wishes they have. I mean, we
had an interesting consultation what a few weeks ago now
where we met with our first what polyamorous couple I
(07:25):
think is what.
Speaker 2 (07:25):
Yeah, there's a big word, folks, polyamorous couple. That's four
people and all different gender identities.
Speaker 4 (07:33):
Yeah, So I mean that was you know, it's an
interesting planning, you know file, because there's a lot of
different aspects going on, a lot of different things to consider,
and you know, just an interesting file. So you know,
we never know who we're going to see or who
we're going to talk to when we walk into those
initial consultations.
Speaker 2 (07:51):
Yeah, when I started this practice forty two years ago,
I don't remember a polyamorous group. And it's not a couple,
it's a foresome Yeah, I don't remember that happening, But
now it's come. You know, it's just the way that
our society has changed and life has changed. But you
sat with those folks, and I'm I was almost an
observer because I couldn't keep track of all of the
(08:14):
relationships and the things that needed to be done. But
they needed planning. And when we talk today, we're going
to talk about one of the most important things when
we sit down with those couples or any other set
of clients. How do you set yourself up to keep
yourself protected, As I said, put your oxygen man up
(08:36):
mask on first. How do you make sure that you
have what you need in terms of income and assets
and healthcare coverage and more importantly, long term care coverage
as you age, and how do you make sure that
what you have translates down to your beneficiaries, your spouses,
(08:56):
your children, your grandchildren. How do you protect it? And
when we look at this, Patty, when we look at
a problem as a state planning attorneys, we very often
have a solution that involves the word trust. And trusts
are one of the staples of a state planning. So
just fill our listeners in on what a trust is
(09:18):
because we're going to start right from the ground up
and we're going to take your calls today as well.
So I'm going to shoot the phone number out there
early so you can write it down if you have
a question on planning state planning trusts. We're going to
go through a series of different considerations in creating a trust,
managing a trust. Give us a call eight hundred talk WGY.
(09:39):
That's eight hundred eighty two five five nine four nine.
One more time. Write it down so you have it,
because you're gonna get that urge to pick up the
phone and give us a call. We hope you do.
Eight hundred eighty two five fifty nine forty nine. So
what is a trust?
Speaker 4 (09:55):
So a trust is a vehicle that you can set
up during your lifetime. Typically so you can set up
living trust during your lifetime that are in effect during
your lifetime, in effect during your incapacity, and also are
there for you when you pass away. It's a probably
the better vehicle to handle, you know, what happens to
(10:16):
your things and your assets and those sorts of things.
Speaker 3 (10:19):
After you pass.
Speaker 4 (10:21):
You know, probate that process can take a really long time.
Usually it's at least seven months, but you know often
now it's taking several years, and you know that process
can be lengthened by you know, numerous factors including you know,
conflict within the family or having complicated assets, or having
you know, other issues that you know may not have
(10:41):
been thought about prior to the person's passing. And so
having a will is definitely the better, you know, better.
Speaker 2 (10:48):
Way to.
Speaker 4 (10:50):
You know, set up your estate planning because it, you know,
makes it easier for you during your lifetime and especially
during any period where you may be incapacitated, because you
can have people there that can, you know, help manage
your assets, help manage your things when you can't, and
then when you pass, it makes it easier for your
loved ones and the people you leave behind because you
(11:10):
get to avoid having to.
Speaker 3 (11:11):
Go to court and going through the approbate process.
Speaker 2 (11:14):
So let's break that down. We have a show several
weeks ago called how to Punish Your Family when You
got and I did that show with one of our colleagues,
Adriana Mahelik, and we talked about all the things that
people do wrong, but importantly all the things that people
don't get to before the event occurs. And if you've
(11:35):
listened to the show before, you know that one of
the themes is life happens. Are you prepared? Because you
don't know when that car is going to pull out
in front of you. You don't know when you're going
to walk in the doctor's office and get a diagnosis.
You don't know when these things are going to befall you.
So being prepared for life's events is the theme. And
(11:55):
when you have no planning, we've talked about this, you
have no will. That's the worst of all possible situations
because court is in your family's future. And not only
is it court, it's contested court because there is no
person that you've appointed as your executor. People have to
come in and petition to be an administrator. You haven't
(12:16):
chosen beneficiaries, so the government is going to choose your
beneficiaries for you by statute and choose who your assets
are going to go to. And it's kind of the
worst of all worlds. But you mention a will, and
a will is a fundamental document. We call it part
of the core four. But a trust, as you said,
is the better vehicle because of the fact that every
(12:39):
will And people don't believe me when I say this,
because we do seminars a lot. And I asked the question,
how many people have a will? How many people think
they have to go to court? And half the people think, oh,
I have a will, I never have to go to probate.
How many times do you hear.
Speaker 3 (12:52):
That, Oh, very often, very often.
Speaker 2 (12:55):
So what does a will do? It doesn't do anything
until you die. You mentioned you have to go through
this court proceeding which could take several years. So when
we look at planning, why would you inflict the several
year court process on your family? Why would you do
that consciously and voluntarily? And the answer is many people
(13:16):
don't do it voluntarily. They do it by accident because
they don't understand the difference. So when we have a trust,
and we're going to talk about different types of trusts,
but when we have a trust, it starts to work
right away. So what is the process when you sit
down with clients? What are you telling them? What are
you showing them? How do you illustrate what a trust
(13:37):
does when when they're going to look at this plan?
Speaker 3 (13:41):
So you love flow charts.
Speaker 4 (13:43):
So one of the things that I've learned from you
is the use and creation of a flow chart. And
a flow chart is a good way to not only organize,
you know, the person's assets, but it helps them understand,
you know, the way that we would deal with you know,
different assets that they have and how we would tie
them in to a trust plan.
Speaker 3 (14:03):
So typically when we create flow charts for.
Speaker 4 (14:05):
Them, you know, we you know, have them be in
the middle, so we have them as individuals in the
middle of the page, and then on the right hand
of the page we have you know, a box for
the trust. And when we first meet with people, we
have them fill out a questionnaire and asset list, which
is you know, helpful to have upfront because it makes
the consultation more productive. And we use that asset list
(14:27):
and we use the things they tell us during our
conversation to organize you know, the things they have by
putting them in you know, essentially different boxes. We you know,
may put it in the trust box and may put
it in their individual box, you know, depending on the
asset that we're talking about.
Speaker 2 (14:43):
And so this process and it is a process to
get to a trust that is going to meet your needs,
meet your family's needs. And generally it boils down into
two main categories. We have revocable trusts and irrevocable trusts.
We have ass sets that go into the trust, assets
that stay out of the trust. You have trustees and
(15:05):
that could be you, and certain types of trusts could
be other people. All of the things that go into
trust soup. We're going to break down when we come back,
but for now, we're gonna take a short break. Thanks
for joining us this morning and Life Happens Radio again.
Give us a call eight hundred Talk WGY. That's eight
hundred eight two five five nine four nine. We'll be
(15:26):
back after this short break. Welcome back to Life Happens.
(16:30):
Our phone lines are open if you want to give
us a call. Eight hundred talk WGY. That's eight hundred
eight two five five nine four nine Lupiro in studio
with Patricia Whalan, attorneys from Pierre o'connoran Strauss, and we're
talking about trusts, a topic that permeates our world because
when you give a trust a state planning attorney a problem,
(16:53):
ninety nine percent of the time the solution is going
to be some type of trust. So the different types
of trusts that we're going to talk about fall into
two very broad categories, revocable and irrevocable. And a revocable
trust we're going to cover first, which is very flexible.
You are the trustee, you have full authority. Why would
(17:14):
you do an irrevocable trust? And an irrevocable trust falls
into two main branches. One, if you have a tax issue,
if you have an estate tax issue, then a trust
is going to be part of your plan. And you
may do trust for gifting purposes to move assets outside
your estate so they avoid a state tax. Because we
(17:34):
always want to minimize tax when we do trust planning,
and trusts are very good for this, whether it be
a state tax, income tax, capital gains tax, all the
things that become part of the planning process that you
want to minimize taxes irrevocable trusts fall into that category.
But Patty, we don't have a lot of clients that
(17:54):
fall into a state tax planning today because of the
high exemption rates.
Speaker 3 (17:58):
Yeah, yeah, that's true. It's a little bit less common.
Speaker 4 (18:00):
I mean, New York right now, you know, has a
pretty high exemption level, but that wasn't so certain up
until a few months ago. You know, there's talk about
whether or not that would continue. But no, yeah, certainly
tax planning is least common. You know, we don't we
don't focus on people who fall into that category certainly
as often as we do others.
Speaker 2 (18:19):
So the number in New York today is seven million,
one hundred and sixty thousand dollars. If your a state
is under that, a state taxes aren't part of your planning.
If it's over that, then they would be. Federally. We're
going on January one, because, as you mentioned, the One
Big Beautiful Bill Act extended the federal exemption and it
(18:41):
will increase and become permanent based upon this federal legislation
passed in July at fifteen million dollars per person. So
a married couple for federal estate tax purposes can pass
on thirty million dollars without really doing a whole lot
of work. But New York is again seven million, and
if you're over seven million, we have to get into
the tax side of this. We're not going to get
(19:03):
into the tax trusts today. We're going to get into
the two types of trust, revocable and irrevocable that are
the most common. But before we do, we have a caller,
Mary and all. But good morning, Mary, Oh, hello, good morning.
Speaker 5 (19:17):
How are you.
Speaker 2 (19:18):
We're doing well? How are you today?
Speaker 5 (19:21):
I'm well, thank you. I did have, unfortunately a question
about the tax part because I wasn't sure. I visited
your firm and am looking at the irrevocable trust. But
I did see something about the the ax I didn't
I don't have my papers in frontally, and I just
(19:43):
wondered my estate is not big enough. I'm thinking to
be concerned about the tax part. I forgot to ask that.
Speaker 2 (19:49):
Sure, if you get up close to seven million, you know,
if you start broaching six million, then we want to
start thinking about tax planning in advance and the process
so that we don't fall over it. New York has
punitive laws if you get just a little bit over
that seven point one to six million dollar exemption in
(20:09):
New York, you fall off what they call the cliff,
which means that you lose your entire exemption and you
go from zero tax to seven hundred thousand dollars of tax,
which is a big number when you just get slightly
over that number. But if you're under, say six million,
then a state tax is not going to be a
consideration in the creation of your trust. And we're going
(20:32):
to talk about the other reason that you do trusts,
which is asset protection. If you do an irrevocable trust,
sometimes we do it for asset protection purposes, and we're
going to talk about that next. Is that kind of
what you were thinking?
Speaker 5 (20:46):
Yep, No, I think that's right on. That's right on.
I'm not close to seven million, not even nearly close.
And we were taught, we discussed asset protection, so I
think I'm right where I need to be.
Speaker 2 (20:58):
So that's good.
Speaker 5 (20:58):
But I'm looking forward to with so yeah, stay.
Speaker 2 (21:01):
Tuned because we're going to cover that in depth.
Speaker 5 (21:05):
All right, awesome, Well, thank you so much. I appreciate
your time and I appreciate what you guys do.
Speaker 2 (21:08):
Thank you, thanks for your call. Appreciate that. And if
you have a question or comment on trusts or estate
planning eight hundred talkwg Y. That's eight hundred eight two
five five nine four nine. Uh So, Patty, that's a
good lead in. And we're gonna kind of dissect a
revocable trust and then we're going to get into the
(21:29):
irrevocable trust that we do most commonly, and that is
called a medicaid asset protection trust. And let's just start
with the why question. Why would you not do a
revocable trust versus that irrevocable trust that you can have
asset protection for medicaid.
Speaker 4 (21:47):
So you know, typically we do medicaid asset protection trusts
when we have older clients or you know, maybe sickly
clients who you know are looking to protect and shield
their assets from medicaid and then also you know, potentially
become eligible for medicaid in the first place. And so
that's a huge difference between the two trusts because revocable
living trusts do not protect your assets from medicaid recovery.
(22:12):
And you know, the assets you put into a vocable
living trust are still accountable towards you for medicaid purposes.
So by doing the medicaid asset protection trust. You not
only exempt your assets for Medicaid because they're no longer
seem to be in your name, but you know, it
also avoids Medicaid trying to recover you know, assets from
(22:32):
you after you pass.
Speaker 2 (22:34):
So the wide question very often becomes, if I do
have that illness and I need to get care, and
this isn't hospital care because you better have health insurance
for that, and this is care at home, home health care,
nursing home care, in some cases assisted living care. If
(22:57):
I get into a situation where I need that, then
I want to have an opportunity to access the only
government program that pays for that care, and that is
not Medicare, So get that out of your mind. Medicare
does not cover this liability. It's Medicaid. And the difference
between Medicare and Medicaid is part of the why question
(23:19):
because Medicaid is not a program anyone can just sign
up for. You can only sign up for it if
you have a certain level of assets. And the number
in New York, which is a higher number than most states,
but the number in New York is about thirty two
thousand dollars. If you have more than thirty two thousand dollars,
then Medicaid is not going to be available to you.
(23:42):
So how do we create a plan where it looks
like we have less than thirty two thousand dollars, We've
given enough money away that we qualify for Medicaid and
keep it in a trust that has features that we're
going to break out and really break down for you.
And why we do this Medicaid asset protection trust versus
(24:05):
the revocable trust to qualify you for the care that
you may need because the cost of that care, and
this has become a bigger why question. The cost of
that care is well over two hundred thousand dollars a
year now. So if you go to a nursing home,
an average nursing home here in the Capital region, you're
paying about eighteen thousand dollars a month. Write that check
(24:28):
a few times, folks, and it's like, oh my god,
what just happened? Eighteen thousand dollars a month. It's over
two hundred thousand dollars a year, and that's going to
deplete your assets and that's going to put you below
thirty two thousand dollars really really fast. So part of
the planning here and part of the reason we discuss
(24:49):
both revocable and irrevocable trusts. Part of that reason, Patty,
is we want to have a trust that if we
do need that care, and there's a five year wait
for nursing home care, so you got to do this
in advance. We want to have a trust that's going
to protect our assets.
Speaker 3 (25:03):
Yep, yep. So you know that's a good point.
Speaker 4 (25:06):
So you know, there is that five year look back
period that you know, we have to be aware of
when creating this trust. So you know, a question we
have and then I get pretty often, is you know,
are we at the right age you know.
Speaker 3 (25:19):
To set up this trust? Is there a right age?
And you know it depends.
Speaker 4 (25:22):
I mean that's such a loyally answer, but you know
it really just depends, you know, on the clients and
you know what they're looking to accomplish.
Speaker 2 (25:30):
I can give you the perspective of forty two years
of legal practice. Very few people can say that, and
that is that when we did these trusts thirty years ago,
people were in their eighties. Twenty years ago, people were
in their seventies. Now people are in their fifties and sixties.
Because as we're going to explain in the second half
of the show. When you boil it down and you
(25:52):
look at the revocable trust versus this particular version of
irrevocable trust, they don't look that different. And that's why
we do the flow chart and the diagram, because that
spells out what the critical differences are between a revocable
trust and an irrevocable trust. Who's the trustee, how do
you access the benefits, how do you get income and
(26:12):
assets out of the trust, how do you change the trust?
All of those things are going to be the topic
for the next thirty minutes, so that we hope that
you can stay with us as we dissect revocable and
irrevocable trusts, and again if you have a question or
a comment. Eight hundred eighty two five five nine four nine,
eight hundred eight two five fifty nine forty nine, we
(26:33):
hope that you can stay with us on this Saturday
here in the Capitol region. We'll be back after the news,
so be sure to stay with us and we're back.
(28:18):
Welcome back. I'm Lupiro, your host for this morning on
Life Happens Radio. Thank you for listening. I'm here in
studio with Patricia Whalen, one of our star associate attorneys
at pier o'connoran Strauss, and we're talking about Trust's a
topic that we discuss frequently, the why of trusts revocable
versus irrevocable. We're going to talk about the how and
(28:38):
how trusts get created, what the differences are, and what
the long term benefits are of a revocable trust versus
an irrevocable trust. But first a commercial. I want to
talk to you about a program that we have on Monday,
and it's our regular recurring Medicaid Monday, and typically it's
on the second Monday of each month. This time it
(29:00):
was a holiday, so where we pushed it back a
week and it's going to be this Monday, the twentieth,
from twelve noon to twelve thirty. And if you heard
the last piece of the first half of the show,
you heard us talking about Medicaid and Medicaid trusts. Medicaid
benefits are critical to our clients to keep them afloat,
(29:21):
to keep them solvent, to get the care that they
need in home care, nursing, home care, making sure that
it isn't going to break the bank, and you don't
die penniless, because that, folks, is the final answer for
the government. You spend all of your own money. You
spend down below thirty two thousand dollars in total assets
might be enough to bury you and your spouse and
(29:44):
then that's it. Then you get Medicaid and you get
the help. But with planning, you can get Medicaid and
still have access to certain resources. So that's the trick
to it. Medicaid is a means tested program. When you
get to home care, the rules just changed. We do
a lot of advocacy, We do a lot of work
(30:05):
in home care and getting care in your home. Let's
face it, that's where you want to be. And I've
done seminars for many, many, many years, and I've talked
to thousands of people, and I asked the question, if
you needed care, where would you prefer to be at
your own home or in a nursing home. And we
actually have a seminar that we do and repeat on
(30:26):
a regular basis called your Home with a Nursing Home
and it's I want to hunker down. And this goes back.
We've talked about this on the show many many times
to my mother who had Alzheimer's, and she gave my
sister and I a directive that the only way I'm
leaving this house is feet first. And so how do
you plan for that? How do you make sure that
(30:46):
you have the coverage that you need? And once you
get Medicaid eligible, how do you get the hours of
care that you need? Well, the game has changed, and
if you want to see what the reality is right
now of Medicaid home care, join us us on Monday
this coming Monday at noon, myself, Frank Heming, and Nina
Crissanda of Ever Home Care Advisors, who is an occupational
(31:07):
therapist but a professional health advocate who works with families
in getting the care they need in the home through
the Medicaid process. So we're going to talk about it
from the legal perspective. Nina will talk about it from
the care coordination and access and health advocacy perspective. And
we hope you can join us on Monday at noon.
You can watch in your jammies, you can have your
(31:29):
cup of coffee, you can do it from your office,
your home, and you can sign up as always on
our website and just go to pyrolaw dot com. That's
pie r R law dot com. Go to the events
tab sign up for this coming Monday's Medicaid Monday noon
to twelve thirty. It's a thirty minute CRISP presentation. And
(31:49):
if you have other questions on Medicaid, we have a
library of Medicaid mondays on our website that cover virtually
every topic in great depth and detail. So education is
a part of this. We want to make sure that
you understand why you're doing a revocable trust, why you're
doing a Medicaid asset protection trust, the why question, and
that will be become clear to you if you watch
(32:12):
this series of videos, and this one is live and
it is all new. The law changed on September one.
We're getting calls from clients that are on Medicaid home care.
The changes are being felt and the reduction and hours
of care being felt. So we hope you can join
us sign up. You can always call five one eight
four or five nine twenty one hundred. Join us Monday
(32:33):
at twelve noon. So, Patty, the irrevocable trust is the
one that we use to get to this care. Let's
just take a step back. We talked about healthcare, we
talked about hospitals and the bills that you get from
the hospital, which are sometimes astronomical physician care, those are
covered by Medicare primarily. So when you turn sixty five
(32:55):
or you have a disability, Medicare becomes your primary payer.
You have Medicare supplement. You make your advantage plans very complicated,
but you need to shop and you need to have
the right coverage for your particular situation. But when it
comes to crossing the line from healthcare to long term care,
Medicare does not pay. And there there are only three
(33:16):
sources of payment. One is you pay out of pocket.
And folks, think about those checks eighteen thousand dollars a month.
If you're in twenty four to seven home care, and
you can run your own numbers, the average home health
aid through an agency today is thirty five dollars an hour.
If you need twenty four hours a day of care
three hundred and sixty five days a year, you're up
(33:37):
around two hundred and sixty thousand dollars. And we have
clients that pay that because they can. So the people
that have the resources and the income to private pay
will find caregivers and they will pay them privately, and
they will get the care that they need, but it's
going to cost about two hundred and sixty thousand a
year for twenty four to seven round o' clock care.
How many people can afford that? And if you can
(34:00):
or that, have you bought long term care insurance? We
talk about that on this show frequently. We've had our
favorite guest, Bob Vandy on, who is one of the
leading experts in the country on long term care insurance,
and Bob talks about the policies and unfortunately, to buy
long term care insurance today is difficult because we're down
to one company that's it in New York State. One
(34:22):
company sells long term care insurance. Where you go is
to get life insurance. And life insurance is a great product,
and this is where you can start planning. If you're
not eighty yet, if you're thirty five, you probably need
some life insurance if you have kids, and instead of
just buying the term policy, you might consider buying a
permanent policy that can allow you if you keep paying
(34:44):
your premiums, you'll have the death benefit available if you die,
but you'll have the death been available during your lifetime
in a living benefit to pay for your own long
term care so when you look at that cost of care,
you have your own income and your own assets is enough.
If it isn't enough, do you have an insurance policy?
And can you buy an insurance policy that will cover
(35:05):
the gap to make sure that you are private paying
and can do it without depleting your assets. And if
you don't have enough income and assets and enough insurance
to private pay, and we go through this analysis and
very few people have enough income and assets to private pay,
then medicaid is the only answer for you. And so Patty,
(35:27):
the revocable trust, we're going to start with that, and
then we're going to get to the irrevocable Medicaid Asset
Protection Trust. The differences why one over the other, and
this analysis is something as you mentioned, we float chart
for our clients and look at what is your situation
and is this the right trust for you?
Speaker 4 (35:46):
Yeah, So the revocable trust does a couple of things,
you know, the probably the main thing that.
Speaker 3 (35:51):
It does is help you avoid probate.
Speaker 4 (35:54):
Like I said earlier, it also allows you to you know,
manage your assets, you know, during any period of incapacity
because as your success or trustees you know can be
there for you. You know, the other thing the trust
is you know, at least in comparison to a wills,
that it is completely private, so you know, upon your passing,
the trust doesn't get filed anywhere. There's no court proceeding,
so you know it happens, you know, without things being
(36:16):
made available online or you know, for other people. But
you know, unlike the Medicaid ask protection trust, it doesn't
have any sort of asset protection, so you know, all
of the assets you put in there are still deemed
to be yours. But you know that does provide you
with a great deal of flexibility because you have full
control over the assets you put into the trust. You
could take it out at any point. You can use
(36:38):
it for whatever reason. And you know, with the revocable
trust kind of like you know, the trust name implies,
you can revoke it and modify it, you know, on
your own, at any point without having to go through
or get consent from anyone.
Speaker 2 (36:51):
Yeah, so this is a wrapper around all of your
assets that you are the one hundred percent manager of.
So as the sole trustee, which you can be if
his husband and wife. You can have a joint trust,
you can be co trustees. A lot of different variations
on who the trustees are. But when you have a
revocable trust, you are not changing your life one iota
(37:14):
because you're managing every asset inside that trust. It's simply
a matter of changing the title on the asset so
that when one of two things happened, Patty, you're protected.
And what are the two contingencies that you mentioned earlier
that are part of the trust that we draft, the
(37:34):
incapacity and then ultimately.
Speaker 3 (37:36):
Death the estate.
Speaker 4 (37:39):
Yeah, so with the incapacity portion, you know your successor
trustees can be there to manage the trust to make
distributions for you during any period of your incapacity. So
you know, it's something you set up now, and the
idea is that you're fully in control of it until
you can't be, and then at that point you have
people that can be there and can continue the trust
(37:59):
for you. And then when you pass, you know the beneficiaries,
the people you name in your trust, you know would
be the ones to inherit any of the assets from
the trust upon your passing.
Speaker 2 (38:10):
And I'm working on this analogy to a movie of
your life and the script and I kind of have
been using this more and more. You're writing your own
script for the rest of your life. And if you
stay healthy until the day you die, then your trust
doesn't change until the day you die. If you face
(38:31):
an incapacitating event, if you have an illness or an accident,
an injury, your trust is protecting you because now you've
written the script and you're determining who the trustees are
going to be when you can't be your own trustee.
You're telling them how to invest the money in your trust.
If you have a business, we're putting special provisions in
(38:53):
the trusts to make sure that your business is properly
run and the value of your business doesn't go down
simply because you've lost capacity. And for business owners, this
is such an essential and so many business owners don't
have it and don't do it. I'm one. I have it,
I did it, and it's it just gives me comfort
that I know if something happened to me, all of
(39:14):
the things that I have are going to be taken
care of by the people that I trust. It's my
team in my trust. They don't have to go to court,
they don't need a judge for any of this. It's private,
and it's a script that I have written and determined
how I want this to play out, and we can
be as detailed as you want to be in terms
of how you want the assets managed, how you want
(39:35):
things used for you. If you have a child with
a disability, this is an essential trust for you because
if you become incapacitated and you're supporting that child, you
want to make sure that your success or trustee can
do the same thing. And we build in special needs
trust types provisions for that. If you have any other
special circumstances, we write them all into the trust. It's
your script. So Act one is you being trustee of
(39:59):
your vocable trust and managing everything just as you do today.
Act two. Act two. Scene one opens with a car
accident and you have a car accident and you have
a traumatic, traumatic brain injury, and you're in the hospital
and you're not able to manage your own finances and
your business. Now you have your trust stepping in and
(40:20):
covering yourself and your family for Act two and then
so far we only have three acts and Act three
is probate, right right.
Speaker 4 (40:29):
I think one of the biggest things that comes up
during our meetings with clients is, you know, a primary
concern that we hear, and you know, it varies in
like what concern they have. But a big concern that
people have is, you know, how how are their beneficiaries
going to inherit their assets? You know, are there different
conditions or different ways that they can inherit you know,
(40:51):
because primarily, you know, the main way that we think
of inheritance is just you getting it outright, getting a
check or something. But you know, the better way is
by putting it into you know, typically some type of trust.
And so you know, if it's someone who is disabled
or you know, may not be able to manage their
own affairs because they have other, you know, disabilities that
(41:12):
may not be intellectual, then you know, we can set up,
you know, a special needs trust or you know a
different type of trust that can get created to you know,
hold whatever money they inherit from you.
Speaker 2 (41:22):
And now we're to act for which is the denuma
of the story. You're gone, you're not deceased, but your children,
your grandchildren, your family is left behind. But you can
leave them behind with a great legacy in their own script.
And we do something called a beneficiary control trust, which
(41:45):
even if the child doesn't have any unique needs, provides
them with unique benefits. And as you know, I'm pretty passionate,
Yeah you are. So just talk about when a trust ends.
And this again is court free. These these things happen
folk in the matter of weeks, maybe a couple of months.
The trusts are fully administered, no filing with the court,
(42:06):
no filing with the government, no estate tax in most
of these trusts. And so we just divide assets among
the beneficiaries that you choose. And then this trust, particular
trust I think gives kids the best chance at success
with what you've built during your lifetime.
Speaker 4 (42:24):
Right, Yeah, So beneficiary control trusts, you know, they're a
form of legacy planning because you create them upon your
passing for your kids. And not only are they there
for your kids, but they're there for you know, your
kids kids, so your grandkids, great grandkids. You know, it
can continue on for the legacy of your beneficiaries. And
this is the type of trust, a type of trust
that provides the beneficiary of the trust with complete asset protection.
(42:48):
It's not a trust that you could ever create for yourself.
It's a type of trust you can create for other
people against the.
Speaker 2 (42:53):
Law, which a lot of people don't understand or appreciate.
New York State has a public policy and statutes that
say if I try to create a trust for myself
and protect those assets in the trust from my own creditors,
that is against public policy and that trust is void.
The one exception for asset protection in New York is medicaid,
(43:16):
and we'll talk about that trust next. But when we
do asset protection trusts, true asset protection trusts for a
client themselves, we have to go to a state like
Nevada or an offshore jurisdiction like Nevus or the Cook
Islands to do true asset protection trust and we do.
People in high risk categories that have a lot of
assets want to protect themselves from lawsuits and liabilities, and
(43:37):
that's possible, but it's a whole different realm. It's very expensive,
and you're going to be working with a trustee, not
yourself in those offshore jurisdictions. But you can do this
very simply patty for your kids right out of your
own revocable trust. And the price to do that is
deminimus compared to the potential benefits.
Speaker 3 (43:56):
Yep, yep, that's so true.
Speaker 2 (43:58):
So we're going to take another short break our life.
Last break and when we come back, we're going to
talk about the difference. All right, So make sure you
(45:04):
listen to that guy that was in the commercial there.
He's really smart. Follow his advice. I'm Lupiro back here
live in studio today on a Saturday morning here in Albany,
New York, and I'm in studio with Patricia Whaling. Good morning, Patty,
and how are things going for you. How's your weekend
going so far?
Speaker 3 (45:20):
It's good.
Speaker 4 (45:21):
I mean it's still pretty early into the weekend, but
you know, there's a lot to look forward to. We have,
you know, a Sienna basketball game tomorrow, so that should
be that should be interesting.
Speaker 3 (45:29):
It's you know, that time of year again.
Speaker 2 (45:31):
So two local schools going to play an exhibition game
Union College against Sienna University now, and we're sponsors of
Sienna basketball. We have been for the last several years.
We're hoping that coach mac Jerry McNamara can put a
good team on the floor this year. It's looking promising,
but you never know. So we're going to be there
and if you join a Sienna game, you'll see a
(45:52):
putting game that we sponsor. You can get in at,
hopefully and win yourself one hundred dollars gift card. That's
that's every Sianna home game. And we're gonna be able
tomorrow two o'clock rooting Sienna on. But I know a
lot of people from Union too, so it should be
a good game, should be fun. And then I'm gonna
play some paddle tennis today and get out there on
the paddle courts. So hope you're doing something fun. I
(46:16):
know a lot of people at this time of year
raking leaves and doing outdoor work and getting ready for
the winner. But we have another little respite weekend. I
heard the temperature tomorrow is going to be up to
seventy one. Yeah, it's great, so you know, get out,
put your short sleeved shirt on, enjoy it, enjoy the day.
And we're going to take a last ten minutes here, Patty,
and we're going to unwind the difference between the revocable
(46:36):
trust that we just talked about and the Medicaid Asset
Protection trust. One subset, one form of irrevocable trust. And
when clients come into us, they come in with a
lot of misinformation and disinformation and they say, oh, if
I do this irrevocable trust, I can never break it,
I can never change anything. I have to run to
(46:58):
my kids to get money. I don't have any autonomy
or any ability to live my life. And it takes
a flow chart to overcome a lot of those misconceptions.
So just start with number one. Who is the trustee?
We said, I can be my own trustee and a
revocable trust. Who's the trustee of a Medicaid asset protection trust?
Speaker 4 (47:20):
So a trustee of a medicid ASCID protection trust can
be anyone that you you know, you want. You can
appoint anyone in that position, you know, to be there
for you to, you know, manage the trust for your benefit.
And you know, typically it's children, you know, sometimes it's siblings.
It can also be friends, you know. It really can
be anyone that you trust in.
Speaker 2 (47:39):
Anyone you think, what about a spouse.
Speaker 4 (47:41):
No, unfortunately, it cannot be a spouse. It has to
be you know, a child, or a sibling or another
family member.
Speaker 3 (47:49):
It cannot be a spoused.
Speaker 2 (47:50):
Yeah, I met with We met with clients yesterday that
are unmarried. They've been together twenty six years, kids, she
has kids, and so they just never got married. We
have a lot of clients that have lived together even
changed names to have the same name for the kids,
but it didn't get married. And from a medicaid perspective,
that actually is an advantage because when you have a
(48:12):
married couple, everything is considered as one unit, so all
of the assets are considered as available. But when you
have an unmarried couple, yours is yours and mine is mine.
And in this case, the partner, the significant other, can
be the trustee, which is kind of a unique situation
which has a lot of flexibility.
Speaker 4 (48:31):
Yeah, and we don't see that very often, and we're
not encouraging people to get divorced either for that.
Speaker 2 (48:35):
But it was funny, well when you weren't practicing yet,
but they had something called DOMA when the ability for
same sex couples to marry was brought into law, and
we sat down with probably one hundred couples who had
been together for thirty forty years and they were coming
(48:57):
in to get a consultation on whether or not they
should get married, and we had an analysis of all
the tax implications, all of the medicaid implications, and probably
in eighty percent of the cases they decided to do
a civil ceremony, but not a legal ceremony and not
tie the knot from a legal perspective, because they didn't
(49:19):
want to expose everyone's assets to a long term care
liability i e. Medicate. So choosing a trustee is important.
But the big thing about this, and what we like
to tell our clients is if you choose a trustee
and they're not doing the right job, what do you
say to them.
Speaker 3 (49:34):
Patty, You're fired.
Speaker 2 (49:36):
You can remove them and replace them at any time.
Even though it's an irrevocable trust, you have the absolute
right yourself to change trustees and that is a lever
that you can pull at any time, and that leverage
is important. But you can also change beneficiaries and that's
another lever Patty yep.
Speaker 4 (49:56):
So we have language in our document that provides for
what we call ap power appointment and basically what that
means is that you have the ability to change your
beneficiary at any point. You can always decide, you know,
in the future, how you want to appoint your property,
you know, which is huge, you know, and I think
a lot of clients when they find that out, when
they get educated about that, they feel a lot better
(50:18):
knowing that they can, you know, not only change their beneficiaries.
But they also have the ability to change their trustees.
Speaker 2 (50:24):
Yeah, so the irrevocable trust isn't as irrevocable as it sounds.
You have certain powers and certain controls. You can keep
the income from this trust. But the other major difference
is if I'm in a revocable trust and I'm the trustee,
I can pull money out put money in. It's it's
like a permeable barrier that kicks in benefits upon my
(50:49):
incapacity or my passing. But in a Medicaid Asset protection trust,
that trust is starting today and you can't have a
permeable barrier and quality five for Medicaid because if the
trustee of that trust has the ability to just take
money out of the trust and give it back to you,
then Medicaid is going to say that it's still yours.
(51:12):
So on the flow chart, how do you overcome that barrier?
Speaker 4 (51:17):
So we draw a little you know arrow, the back
door of the of the trust is what we call it.
And that is a way to show, you know, the
people that we're meeting with that there is a way
to get the principle out of the trust. And you know,
although it cannot be given back to the you know,
the people directly. It can't be given back to the
creators of the trust directly. It can be paid you know,
(51:39):
back to you know, the children or other people, you know,
other people that are the you know, ultimate beneficiaries of
the trust, and they can take it out and they
can use it for you know, whatever purpose.
Speaker 2 (51:50):
So revocable versus irrevocable. I'm the trustee of the revocable.
I control the trustees of the irrevocable, but it's not me,
It's somebody I choose, but I can always change who
that person is. I'm the beneficiary of income and principle
in the revocable trust, but I'm the beneficiary of income
in the medicaid trust. Principle cannot come to me directly,
(52:14):
but can be taken out through my kids or the
other beneficiaries who are going to get the remainder of
that trust someday. So we still have access to principle
through those third parties. And the other question then becomes,
can I break this irrevocable trust because I can revoke
(52:36):
the revocable trust And it sounds like too good to
be true, But does that work In New York?
Speaker 4 (52:42):
It does yeah, we get that question a lot. So
New York does allow you to break an irrevocable trust.
And the way that we would do that is by
getting the consent of all the beneficiaries.
Speaker 2 (52:53):
And who names the beneficiaries?
Speaker 4 (52:56):
You do the person who creates the trust. So that's
pretty flexible.
Speaker 2 (53:01):
Just think about that. You have a trust it says
it's irrevocable. You can control trustees, you can control who
the beneficiaries are, and if you can get the consent
of those beneficiaries, that trust can actually be revoked. So
when we line these two trusts up for people, and
I think this is why a lot of people at
younger ages are comfortable going into the Medicaid Asset Protection
(53:23):
Trust because you still have all of that flexibility and control.
You control trustees, you control beneficiaries. You can break the
trust if you get the consent of those beneficiaries who
you choose. So I think if you went out there
and you said, Okay, I'm going to make you the
beneficiary of my trust if you allow me to break it,
and oh, by the way, I'm going to leave you
ten thousand dollars or fifty thousand dollars or you can
(53:45):
figure that out, folks. There's leverage there, and it's a
way that you can create a trust now. And as
we mentioned earlier, this is designed to shelter assets if
you need long term care, and if it's nursing home care.
You have to do this five years in advance. So
I see more and more people coming in Patty in
their late fifties or early sixties. That are when we
(54:10):
put the two trusts down side by side. Because of
the flexibility and it has to be the right family situation,
they're going with the eriphone trust.
Speaker 3 (54:19):
Yeah, yep, that's true. I've noticed that as well.
Speaker 2 (54:22):
So those are some of the choices, folks, and we're
winding down. I do want to talk about another program.
I talked about Medicaid Monday that's coming up on Medicaid
home care benefits and the new home care rules. Hope
you can join us this Monday, the twentieth of October
at twelve noon for Medicaid Monday on Medicaid Homecare. But
we have another program on intergenerational estate planning. So the
(54:46):
other side of our practice is dealing with people who
have more assets, who have businesses, who have the need
for financial planning. Insurance planning and estate planning. And this
is our Intergenerational Estate Planning conference. It's our twentieth year
doing this. It's on November fifth, from twelve thirty to
five thirty, with a catered reception to follow. It is
(55:09):
free of charge. We have wonderful sponsors and speakers and
one of our keynote speakers. If you have cryptocurrency you're
going to want to attend again, go to pyrolaw dot
com look for the inter gen Patty. Thanks for joining
me on a Saturday morning. Thank you for joining us.
We'll be back next week right here on Life Happens Radio.
(55:30):
And as always, stay well and stay healthy.
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