Best way to buy real estate with a non-spouse

Episode Transcript

Speaker 1 (00:01):
This is the Legal Exchange with Todd Lutsky from the
law firm of Cushing and Dolan and Susan Powers of
the Armstrong Advisory Group. Each week, Todd and Susan will
discuss many topics, including estate planning, how to avoid probate,
and protecting your money from a nursing home. If you
need assistance in any of these areas, or have a
question about another issue that may affect your future, call

(00:21):
eight six six eight four eight five six ninety nine
to make an appointment. That's eight sixty six eight four
eight five six ninety nine. Operators are standing by. Now
Here are your hosts, Todd Lutsky and Susan Powers.

Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Lutsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Welcome Todd.
How are you today?

Speaker 3 (00:52):
I'm never better in you?

Speaker 2 (00:53):
I'm great? Thank you. What do you have for us
this week?

Speaker 3 (00:56):
We have got no cases but two real life stories.
And these are two cases that I actually came across
that I thought were just just appropriate. So the first one, basically,
I'll give you the title careful when you're buying real
estate within loss that might be a problem in and

(01:17):
of itself. And I'm going to leave you hanging on
that one as to what we did and when they
came in with the daughter and one mother and wanting
to disinherit the other daughter and doing a state plan
and deal with this one piece of property that they have,
which is valuable. So stay tuned for that, folks. There's
ways that you can do it, and we're going to
fix it for them to make sure they do it right.

(01:37):
So good that they came in. The other one is
is basically we talk how important is to review your plan.
And this will also show you that in the review process,
switching even to a joint trust was okay. These people
were about four point seven million concerned about you know,
they had two revocable trusts. Now they're thinking about home planning,

(02:00):
they're older. I'm going to tell you found out the
trust weren't even funded. You know, what's the best approach
for them? They had long term care insurance. It was
really a good analysis. This is a great case to
show you what you need to think about even if
you have your plan in place, and how the review
could result in doing something better than what you had before.
So all that's important. It all comes down to planning,

(02:23):
comes down to thinking about it. But unfortunately lots of
times people don't plan. And that's really what the brand
new guide is for this month, right It's the last
minute things you can do for Medicaid eligibility. Basically, we
tell people all the time, please don't write the check
to the nursing home. Even if you're faced with going
in there and you think you have this five year

(02:44):
waiting period and you can't do anything, folks, there are
things that can be done last minute. This guide will
give you those tips as to what you can think about.
Each asset is treated differently. A house versus a rental property,
versus jointly held bank accounts with a spouse versus jointly
held with an individual, or investment accounts, how they're treated.

(03:07):
What about four oh one k's iras Folks, assets are
treated differently and things can be done last minute to
save those assets or at least slow the financial bleeding.
Call and get the guide Last minute Medicaid eligibility tips
brand new for the month eight six six eight four
eight five six nine nine again or legal exchange show

(03:28):
dot com again eight six six eight four eight five
six nine nine or go to legal exchange show dot
com download it there before you write the check. All right,
what happened here? Excuse me? Seventy six year old comes in,
call her Jane, and with one daughter and the daughter's

(03:51):
husband to do planning for mom and for themselves. Jane
has another daughter, but it's not really close with the
other daughter, and she's going to leave a small amount
of an ira. And there was apparently a loan that
she lent her like one hundred and thirty thousand dollars
that she's going to forgive. But basically she had about
two point two million dollars home and that she had

(04:12):
purchased back in two thousand and seven, long time ago.
So they didn't pay that in which she paid twenty
five percent and the son in law, the husband of
the daughter who was there, paid seventy five percent.

Speaker 2 (04:27):
Oh so they all lived together.

Speaker 3 (04:28):
And they all lived together. They placed it into a
revocable trust that they called a realty trust. Of course,
the schedule of beneficiaries were lost, so they didn't know,
you know, who owned it. This seventy five twenty five
split we have to figure out. It turns out that
this trust says principal and income cannot be distributed to
himself herself without the consent of all the beneficiaries. Okay,

(04:53):
so I don't really love the language. Also, the trust
is revocable, but you cannot amend the schedule of beneficiaries,
which was kind of weird. So you can't change who
the beneficiaries are, but you can revoke the trust. So
and they can't find it again, very strange. You can't
find the schedule, right, so very strangely drafted. There's also
language in there that says at death that the beneficiary

(05:18):
may by will transfer his or her interest i e.
To anyone that they want through their will. So that's strange.
So that means it doesn't necessarily go to the beneficiaries
that are listed. If you change your will, if there's
no will, then it passes by the to the intestate

(05:38):
succession by the heirs at law, and so that was
kind of strangely the beneficiary, Yeah, so they can change.
I mean, I'm not surprised it's just inconsistent.

Speaker 2 (05:49):
But doesn't that not take effect until they're dead?

Speaker 3 (05:51):
No, it does, But that's okay, that's when this trust
would distribute because there's a termination clause in there also
that says that upon termination it goes to the beneficiaries. Well,
that's inconsistent with you being able to change your will.

Speaker 2 (06:08):
Was this a do it yourself kind of no trust?

Speaker 3 (06:12):
Again, it really wasn't a realty trust. It used the word,
but really didn't qualify as one. It's more of just
a revocable trust. Now, she also had one hundred thousand
the bank, a million of investments, three hundred in IRA,
so you know some of the IRA, but that the
million dollar investment and the property supposed to go to
this other daughter. So the issue is again she wants

(06:33):
almost all of this to go to the one daughter, to.

Speaker 2 (06:35):
The one that's living with her.

Speaker 3 (06:36):
Yeah, lots of stuff to unpack here, folks. So I said,
first and foremost, I have to get around the undue
influence problem. I go, this to me, looks like daughter
coming in with mother, finding the lawyer with her husband,
getting lawyer to do a plan for mother that benefits daughter.
This has like got undue influence written all over it.

(06:57):
So I had to separate them. I had to ask questions,
I had to get the lay of the land. And
again there's apparently really valid reasons why she doesn't want
this to go to her other daughter. So I'm okay
with that. Yeah, you know, we're able to get past that.
But folks, those are things you need to think about
to make this plan work. So you know, I kind
of get the whole issue there, and we resolved all

(07:19):
of those things. So now what Now it really comes
down to the drafting. Right, So when I look at this,
first of all, I said, the current trust is revocable.
So if it's revocable, it provides no protection from the
nursing home. Remember this, the husband and the daughter paid
seventy five percent for this house, and there's still a

(07:41):
mortgage on it, and he's still playing the mortgage they got.

Speaker 2 (07:44):
It was given to them.

Speaker 3 (07:45):
They bought it together. Oh, they legitimately bought it together. Yeah,
that wasn't a problem. They were show me that though.
Well the daughter and she's seventy four the mother and
so their average age and so yeah, so I said, okay,
you paid seventy five percent of this the mother wants

(08:05):
the property to go to you, but if she gets
sick and goes to the nursing home, you're going to
have to buy out that twenty five percent interest. So
that's that's a problem. Yeah. I also don't love the
fact that the way it's owned, you know, you could
run into issues where you could be forced out, you
could have a petition to partition. I don't know that
she's got enough rights, so I want to give her

(08:28):
a little more rights. But yeah, I said that that's
a problem in and of itself. It's not protected from
the nursing home. Now, how do we fix that? Well,
if we set up an irrevocable trust, then we can
fix that.

Speaker 2 (08:42):
Just for mom's part. Just for mom's part, okay.

Speaker 3 (08:45):
But we have to get it out of the trust.
The other problem I saw here is that I think
there's a probate problem, right. I think the way this
is drafted, one, if the beneficiaries really are in their name,
then it could end up in probate. But more importantly,
it seems to say that you can do your will
to direct where this asset goes. And if you do that,

(09:07):
then you're going to probate to direct where the asset
goes and if you don't do a will, it says
it passes by intestate succession. Well, if that's the case,
which it is conflicting with the termination clause, then it
won't all go to your daughter, It'll go half to
the other door. So now you've got a problem with
how this is set up in terms of where it's

(09:28):
ultimately going to go.

Speaker 2 (09:29):
And one daughter will own twelve and a half percent
in the of her sister's house.

Speaker 3 (09:33):
That's right.

Speaker 2 (09:33):
That won't be enjoyable, not at all.

Speaker 3 (09:35):
And so, folks, these are the kind of problems I
was able to spot looking at this really poorly drafted trust.
To fix pretty simple. Get the house out of the trust,
seventy five percent to the daughter, and then amend the
old trust. What you're allowed to do, make the distribution.
We're not changing the beneficiaries. She puts her twenty five
percent in a Medicaid income only trust, gets it protected

(09:57):
from probate nursing homes, and puts the language and so
make sure it goes to the daughter that she wants.
To get problem solved, everybody moves on, folks. That's just
when you do planning. When you don't do planning in
your face with nursing home care. Last Minute, don't write
the check, Get the guide, learn how to protect your
assets last Minute eight six six eight four eight five

(10:18):
six nine nine or Legal Exchange show dot com.

Speaker 2 (10:22):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We've got
much more to come when we return to the Legal
Exchange with Todd Lutsky.

Speaker 1 (10:36):
Changes to Medicaid occur almost every year, and if you're
not informed, your assets could be at risk, especially if
you or your spouse need nursing home care. Cushing and
Dolan are experts in elder lam and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process, which is critically important if you're retired
or getting close to retiring. The guide has important information

(10:56):
regarding numerous strategies that can protect your assets from the
nursing home. It could be your primary home, a vacation home,
or any rental property you may own. You've worked hard
to achieve wealth, so don't take chances when it comes
to protecting it. Get your copy of Cushing and Dolan's
brand new guide called Last Minute Medicaid Eligibility Call right
now eight six six eight four eight five six nine nine.

(11:16):
That's eight six six eight four eight five six nine nine,
Or you can request it online by visiting Legal exchange
Show dot com. That's Legal exchange show dot com. The
proceeding was paid for in The views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and Orarmstrong
Advisory may contact you offering legal or investment services. Cushing
and Dolan and Armstrong Advisory do not endorse each other
and are not affiliated. Summers here, New England, and it's

(11:40):
the perfect time to trade the daily routine for something extraordinary.
Say hello to the US Virgin Islands, America's Caribbean paradise.
Explore the vibrant history and flavor of Saint Croix. Lounge
on the stunning beaches of Saint Thomas, or find your
peace on the quiet shores of Saint John. From the
moment you arrive, you'll feel it. You're naturally in rhythm

(12:00):
with the heartbeat of the islands. There's no passport needed,
no currency to exchange, just warm weather, clear blue water,
and unforgettable experiences waiting for you. Whether you're planning a
romantic escape, a family adventure, or a little of both,
this is the summer to make it happen. Go to
visit USVII dot com to learn more in start planning.

(12:21):
That's visit USVII dot com. Your island getaway is closer
than you think, the US Virgin Islands where summer never ends.
Book your trip today at visit USVII dot com. Hi.

Speaker 4 (12:36):
I'm Michael Valila, adjunent of the Disabled American Veterans Department
of Massachusetts. The DAV of Massachusetts provides thousands of hours
of voluntary services at our VA medical centers and soldiers homes,
and is the only DAV department in the country to
lead a veterans housing initiative for both single veterans and
those with families. These programs are critical to serving our

(12:56):
veterans and their time and need. You can help our
great American heroes by making a donation today. Please visit
DAV fivek dot Boston. That's DAV fivek dot Boston.

Speaker 5 (13:07):
Artificial intelligence is constantly evolving and can even be a
revolutionary asset to a financial strategy.

Speaker 3 (13:13):
HI.

Speaker 5 (13:13):
This is Mike Armstrong from the Armstrong Advisory Group. Our
new guide is called AI and your Financial Plan. In it,
we explain how artificial intelligence continues to make inroads into
our daily lives and how the advent of its technologies
may affect an existing or future financial plan. AI serves
the public in a variety of ways, from apps to
monitor personal finances to tools that analyze investments. AI is

(13:35):
not the future anymore. Its effect is felt by businesses
of all kinds on a daily basis. Call us today
at eight hundred three nine three four zero zero one
and ask for your free guide. That number again is
eight hundred three nine three four zero zero one, or
you can request the guide online by visiting us at
Armstrong Advisory dot com.

Speaker 1 (13:52):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or text advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange with Todd Lutsky,
an expert in elder life planning and taxation. Need help

(14:13):
with your estate plan call Todd right now and make
an appointment. Eight sixty six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.

Speaker 2 (14:23):
Welcome back into the legal exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Lotski, a partner with the
law firm of Cushing and Dolan with the Masters in Taxation.
Where we headed now, Tood.

Speaker 3 (14:38):
So we're gonna do or stay right here, We're gonna
do another real life story. This is another case I got. Basically,
we talk about reviewing your planning m suprime. Example, when
the family came in to review their planning, you could
end up with doing nothing, which is fine, or you
could end up fixing your plan. So even if you've

(14:58):
done planning, reviews allways important. If you haven't done planning,
planning is important. So let's look at the facts. So
in this case, we had a husband wife in their seventies.
They came in let's call him Sue and Bill, two kids,
two grandkids. They have about a million bucks in an,
they have a million dollar home. Husband has a five

(15:18):
hundred thousand dollars IRA. Wife's got one point two, So
call it one point seven in IRA's one point nine.
Invested one hundred thousand dollars in banks, okay, four point
seven in total, one point seven IRA. Keep that in mind.
There's a large IRA, and that makes a difference when

(15:40):
you're doing planning. How old were they todd in their seventies?

Speaker 2 (15:43):
Okay, you know.

Speaker 3 (15:45):
Then I went on a little further and I found
out that they also have an unbelievable long term care
insurance policy. I've never seen this, honestly, you've never seen it.
Six hundred and eighty dollars a day for five years.

Speaker 2 (15:56):
Wow, yeah, twice is more than twice as high as typical.

Speaker 3 (16:00):
Now, remember a lot of insurance companies went out of
business because they did it wrong. They underpriced them pro long.
This was the problem, was, Yeah, but they're stuck with it.
So six hundred and eighty dollars a day for five years,
that's twenty five hundred dollars a month, way more than
the cost of nursing home care. Yep, So keep that
in mind as we go through this, because again I'm
analyzing their estate.

Speaker 2 (16:19):
They could go do nursing home care in a yacht.

Speaker 3 (16:22):
Yeah, I'm like so, and that doesn't count social security
income or investment an interest, dividend income on top of
all the money they have all that. So they already
had two revocable trusts in place. I said, Okay. Turns out, though,
as you might imagine, nothing was in these trusts completely empty.
So I said, all right, well that's not helpful, completely unfunnyed.

(16:46):
So then the trust language I looked at and said,
equally to the kids paid out if living, otherwise to
the grand kids till thirty standard distribution language, a lot.

Speaker 2 (16:55):
Of networth to just hand it out right.

Speaker 3 (16:58):
Exactly, Susan. That was an other thing that I sort
of spotted. I go, well, maybe you know one thing
I spot right off the bat is you probably don't
need two trusts. A joint trust would be far better.
Another thing I spotted, as you just did, Susan, is
this payout language. You might want to review that a
little bit. So it was a good review of the EP.
And then again their concerns where they were also saying, well,

(17:19):
maybe they wanted to know about nursing home protection, believe
it or not. And they also wanted to know how
best to leave their assets to their kids. So those
were the issues. Do they change their trusts, do they
do nursing home planning? How do they best leave their
assets to the kids, and what's the most efficient way
to save estate taxes? Pretty much what we had to
look at on a four point seven million dollar estate

(17:41):
people in their seventies. Well, folks, I'm going to give
you some answers to that, and this again is planning.
The guide that we're doing this month is about people
who didn't plan but find themselves faced with a nursing home.
For example, you have a house, you might find how
it's non countable and non leanable if you're married. If
you're single, also non accountable, but treated a little differently.

(18:04):
You know, what about do I how do annuities work?
If I want to buy an annuity last minute and
save all my excess assets. It's in the guide. You
can learn different assets are treated differently for eligibility purposes,
last minute, qualified plan, money, et cetera. Call get the guide.
Learn what to do if you're faced with nursing home
care and you haven't. You know, either you haven't done

(18:28):
any planning or you've done planning, but there's still going
to be assets outside the trust that need protected eight
six six eight four eight five six nine nine or
Legal Exchange show dot com again eight six six eight
four eight five six nine to nine or Legal Exchange
Show dot com. So what we do objectives? Avoid probate, reducer,

(18:53):
eliminated state taxes, bloodline planning, nursing home protection. Let's start
with nursing home protection. They have revocable trusts in place,
so I said, folks, even if that was on your mind,
but way back when it wouldn't have done anything, you
would have never gotten the five year clock started using

(19:13):
revocable trusts, so that was the first issue. Had to
explain that to him. However, I said, look, you've got
great long term care insurance, and when you add that
to your interest and dividends and Social Security income, I
think you're covered. I think yourself insured. At this point
in fact, there's more than enough income there to not

(19:36):
only pay the nursing home susan, but for the healthy
spouse really to live, comfort to be, and to me,
with all that income, you're never going to touch the
assets anyway. So at this point you really are not
only you don't need to have an irrevocable trust to
shelter assets from the nursing home. They're sheltered just because

(20:00):
because of your income, you.

Speaker 2 (20:01):
Need one to accomplish all the other objectives, but not
necessarily nursing home.

Speaker 3 (20:05):
So not the earf. So we're able to at least
knock that out out of the park. Right now, that's
off the table. So they understood and agreed that the
nursing home objective no longer is a is a concern.
So then I said, well, let's take a look at
what you do have. Well, I explained to them that
we could take your existing assets and fund your existing trusts.

(20:26):
I said, assuming the tax formulas are done right, it
will serve to reduce your taxes. That is a correct answer. However,
if you divide your assets equally into the two trusts
you have, it will not serve you to reduce the
estate tax as efficiently as a joint trust. Come, So
I said, why don't we do a joint trust? So

(20:47):
I said, let's explain the example. So in Massachusetts, we
all know we can shelter two million dollars per person.
But if we don't use our full exemption on the
first death, we lose it, so we want to use it. Now,
generally you do not put iras into a trust. So
that's one point seven million of assets here, yep, that

(21:10):
would not go in the trust. So if you have
four point seven, yeah, minus the one seven leaves us
three million dollars of available assets for a trust to
put in. Ye. So if we took those assets and
we split them, the most that you can put in
each trust would be one five. So that means that

(21:32):
on the first death, we're only going to be able
to shelter one five in the remainder share. So in essence,
that means we are wasting five hundred thousand dollars of
an exemption on the first death.

Speaker 2 (21:47):
You want every bit of that coupon.

Speaker 3 (21:49):
So if you're worth four point seven and you back
out one five, you're still left with what two five?
That's a lot that's over the two million dollar exemption.
So on the surviving spouse's death, you're unnecessarily paying estate
taxes in mass because of this calculation. So when there's

(22:10):
large iras folks and moderate estates joint trusts are better.
Why because I'm gonna take the whole three million and
put them in one trust. Yeah, husband puts half in,
Wife puts half in, and then I have a general
power of appointment built into the trust that says when

(22:31):
husband dies, his half is included because he contributed, so
it's his half he's included. Her half gets included in
his estate because of this general power of appointment. He
dies with the ability to direct where her half goes,
even to himself.

Speaker 2 (22:51):
So regardless of who dies first, they can both do this.

Speaker 3 (22:55):
They both have a general power appointment over the other
ones half. So now that language causes the full three
million to be included on the first death. Now, with
three million in there, I can put into the remainder
share two million, which is the Massachusetts a state tax exemption.

Speaker 2 (23:14):
So we've used our full two million exemptions.

Speaker 3 (23:16):
Full two million. One million goes in the q TIP
share to be taxed later. So four point seven minus
two leaves me yep, right, So we're able to shelter
way more assets than we could shelter. Again, they're over
the exemption anyway, at least this way. At least this way,
I would be able to save state taxes by sheltering

(23:39):
the full four million compared to what they would have
to pay before. Folks, Again, this is planning. Planning works.
They were able to review and change their designated beneficiaries
and divorce proof and everything else. If you don't plan
in your face with nursing home care on the other hand,
please call and get the guy. Don't write the check
to the nursing home. There might be something it can

(23:59):
be done. Eight six six eight four eight five six
ninety nine or Legal Exchange show dot com.

Speaker 2 (24:07):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your listener questions when we return to the
Legally Exchange with Todd Lutsky.

Speaker 1 (24:23):
Changes to Medicaid occur almost every year, and if you're
not informed, your assets could be at risk, especially if
you or your spouse need nursing home care. Cushing and
Dolan are experts in elder lam and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process which is critically important if you're retired
or getting close to retiring. The guide has important information

(24:43):
regarding numerous strategies that can protect your assets from the
nursing home. It could be your primary home, a vacation home,
or any rental property you may own. You've worked hard
to achieve wealth, so don't take chances when it comes
to protecting it. Get your copy of Cushing and Dolan's
brand new guide called Last Minute Medicaid Eligibility Call right
Now eight six six eight four eight five six nine nine.

(25:03):
That's eight six six eight four eight five six nine nine,
or you can request it online by visiting legal exchangshow
dot com. That's legal exchangshow dot com. The proceiving was
paid for in The views expressed are sole lead those
of Cushing and Dolan. Cushing and Dolan and or Armstrong
Advisory may contact you offering legal or investment services. Cushing
and Dolan and Armstrong Advisory You do not endorse each
other and are not affiliated.

Speaker 5 (25:24):
Artificial intelligence continues to evolve and can now play a
role in financial planning. HI, this is Mike Armstrong from
the Armstrong Advisory Group. There's a lot that's still unknown
about the benefits of utilizing artificial intelligence, but understanding it
may help you make smarter decisions about how to manage
your retirement plan. We have a new guide called AI
and your Financial Plan. In it will take a look

(25:45):
at what AI does, how it works, and what risks
are associated with using it. The guide is designed to
provide you with a clearer picture of the tools available
as you evaluate your overall strategy. If you'd like to
learn more about how AI can have an effect on
your financial planning, call us today at eight hundred three
nine three for zero zero one. That numbers eight hundred
three nine three for zero zero one, or you can

(26:07):
request it online from our website Armstrong Advisory dot com.

Speaker 1 (26:10):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, intestate planning advisors before making any
investment decisions. Armstrong may contact you to offer investment advisory services.
Summers here, New England, and it's the perfect time to
trade the daily routine for something extraordinary. Say hello to

(26:33):
the US Virgin Islands, America's Caribbean paradise. Explore the vibrant
history and flavor of Saint Croix, Lounge on the stunning
beaches of Saint Thomas, or find your peace on the
quiet shores of Saint John. From the moment you arrive,
you'll feel it. You're naturally in rhythm with the heartbeat
of the islands. There's no passport needed, no currency to exchange,

(26:54):
just warm weather, clear blue water, and unforgettable experiences waiting
for you. Whether you're planning romantic escape, a family adventure,
or a little of both, this is the summer to
make it happen. Go to visit USVII dot com to
learn more and start planning. That's visit USVII dot com.
Your island getaway is closer than you think, the US

(27:16):
Virgin Islands where summer never ends. Book your trip today
at visit USBI dot com. You're listening to the Legal
Exchange and it's time for Ask Todd, the segment where
Todd will answer your questions about anything and everything that's
included in the estate planning process. Once again, here's Todd,

(27:37):
Lutsky and Susan Powers.

Speaker 2 (27:40):
Welcome back, Todd. Have a few questions from listeners for you.
First question comes from Chrissy and Norwood Mass And Chrissy writes,
I've been caring for my mother for the past three months.
She has a trust that you established for her six
years ago. She has around two hundred thousand outside of
her trust that we are using to pay for care
from an agency. She is on end of life care

(28:01):
and will definitely not be going into a nursing home.

Speaker 3 (28:04):
Okay.

Speaker 2 (28:05):
Can I pay myself and my siblings for the care
that we've provided when the caretaker is not there? Should
I wait until after she passes to do this?

Speaker 3 (28:16):
Well, the fact that she's not going to a nursing
home really changes the dynamics. Yes, I mean, I think
you can pretty much do whatever you want if you're
not worried about nursing home care, because it won't it
won't matter if it looks like a gift or not
because she's not going in, because.

Speaker 2 (28:35):
The only time that matters when you give away assets
is if you go into the nursing home. Correct.

Speaker 3 (28:39):
Yeah, I think we should probably analyze this from both
of those yas.

Speaker 2 (28:42):
I think that's a good idea.

Speaker 3 (28:44):
I think the first aspect is her question if she's
not going into the nursing home or not worried about that.
All she's going to be worried about is what her
siblings are going to think if she takes money, right,
I mean, that's going to be the issuing.

Speaker 2 (28:57):
And it sounds like they've all been stepping up, so
she wants to pay herself and her siblings.

Speaker 3 (29:02):
Oh okay, So if if that's the case, then you know,
I don't don't know the size of the estate. I
don't think it'll matter. It'll just look like mom is
making gifts to all these people, which is okay. We
have a thirteen point nine million dollar gift tax exemption.
Probably wouldn't matter. But if mom's treating all the people equally,

(29:28):
what's the point. Why not just wait till you die
and get the money. That way, you don't have to
worry about gift taxes and filings. You just get an inheritance. Yeah,
now what you're going to get it anyway? Why do
you need it?

Speaker 2 (29:39):
You know, I suppose six months in advance. I suppose
only if they weren't all doing the same.

Speaker 3 (29:45):
Yeah, I guess they're getting if they're going to get
different amounts. But again, then you now need to consider
what the ramifications are of one getting more than another.
So I think that's where you are. I think you
need to decide one. If everybody's treated equally, I would say,
there's really no reason to make a gift if you know,
you know, I'm going to get it anyway in just
a little while.

Speaker 2 (30:03):
So how about if she was going to go into
a nursing home, because that's a very different answer.

Speaker 3 (30:09):
Correct, very different answer. So if that was the case,
first and foremost, it sounds like there's been no personal
care contract established here. So if there wasn't, the quick
answer is no, you cannot take money and pay for
past services rendered, Okay, saying that that really was for me,
you know, getting paid for services. Yeah, if you don't

(30:30):
have the personal care contract in place, you cannot. It'll
be deemed that those services were provided out of love
and affection, not because you wanted to get paid. So
that would be a disqualifying transfer for Medicaid. So that
would be a hard stop.

Speaker 2 (30:44):
No. But then going forward, if they put one in place,
could they Yeah?

Speaker 3 (30:48):
I would say, going forward, you know, if you think
she's going to stay out of the nursing home for
you know, a year or six months whatever it is.
You know, you don't know how long. Yeah, you could
then set up a personal care contract, which needs to
be established. You need to have how you get paid,
how much you get paid, how frequently you get paid,

(31:08):
how many hours you're working, the type of work you're
doing for the person, you know the term, how long
you're going to provide the care for, you know, all
that stuff, and then take the money you get and
report it on your income tax return okay, as income.
When you do all of those things, that cleanses this

(31:30):
and makes it no longer a gift but something you're
doing for services rendered, and you know you're converting it
to being paid, and then that won't be a disqualifying transfer.
So you could move five thousand a month six thousand
a month and not have to worry about the five
year waiting period. But you need the contract in place.

(31:51):
Got it? Okay, So I think that's the answer, Chrissy,
tough one situation, but figure out those facts. But you know,
this is exactly what you need to think about, folks,
when you're faced with nursing home care. Whether you've done
planning and there's something still outside the trust, which there
always is or not done any How do we protect

(32:11):
what needs to be protected last minute, whether it's a
house or a vacation home or rental treated differently? Same
thing with four oh one k's and jointly held investment
accounts with a non spouse. You wouldn't think about it,
but all these assets have different treatment and can be
saved last minute or at least slow the bleeding by

(32:33):
getting on medicaid and shifting around assets. Learn what to
do last minute with these assets. Call and get the
guide eight six six eight four eight five six nine
to nine or Legal exchange Show dot com Brand New
for the month eight six six eight four eight five
six nine nine or Legal Exchange Show dot com.

Speaker 2 (32:56):
Our last question comes from Peter in Woober Mass in
Peter Wrights. Three years ago, my mother created an irrevocable
trust and put in around eight hundred thousand in investments
and her home. She also has around three hundred thousand
outside of her trust. She has been declining while we
have someone come into the home to care for her,

(33:17):
but she is likely to need to go to a
nursing home prior to the end of the five year
lookback period. What do we do if this happened. So
they're three years.

Speaker 3 (33:26):
In, they're three years in now, and let's say so,
but they've got eight hundred thousand and a home that's.

Speaker 2 (33:35):
In the trust in the trust already. Yeah, so there's
a lot again.

Speaker 3 (33:38):
And what do you think the homes? What you had
to guess gott to be your Well, it's brilliant.

Speaker 2 (33:41):
Well, it's between the investments in her home. Oh, together
is the investments and her home.

Speaker 3 (33:46):
I see, all right, So you got eight hundred thousand
in there, three hundred out. So if you're sure that
you're not going to make the five year waiting period,
you know, I might. I might just say at this
point one, even if you did nothing and she got
sick the next day, we have two years to deal with. Well,

(34:09):
when you start adding in social Security and another one
hundred thousand dollars to pay the nursing home, you know
you're going to blow through two hundred of the three hundred,
just so you know, worst case scenario to private pay
right away. Yeah, if she had to go in right away,
you know, you could cover two years and still have
one hundred left. But more importantly, I spend two hundred

(34:30):
to save eight hundred because eight hundred will be protected
at the end of two years, so you need to
think about that dynamic. So that's a worst case scenario dynamic.
She makes it another year, well now I only have
to spend about one hundred and twenty thousand dollars. Yeah,
to protect eight hundred. It gets better. So having the

(34:51):
clock running is always better than not having the clock running.
So I like that approach. I would probably say. The
other thing you could do is you could, if you
think you know you have enough to cover two years,
take one hundred thousand throw it in. But if you
did that, you're going to create a new five year
waiting period.

Speaker 2 (35:10):
Well, she'll also need to pay for the care in
the meantime, right if she does.

Speaker 3 (35:15):
She got to keep it out there. So the other
thing I might think about is maybe take that money
and you could put it in a joint account with
a non spouse. You might luck out there and say, oh, well,
joint accounts with non spouses are only deemed half included
a bank account, not a bank account, sorry, an investment account. Yeah,

(35:37):
but I think the best approach here is probably to
set up a personal care contract, almost like what we were
talking about before. If we want to keep mom home
and that's the goal, and that's her goal. This really
is a personal care contract situation, right because with three
hundred thousand dollars, if I'm spending you know, it depends
how much time you're spending, but you know you're spending

(35:59):
four hours a week. If you can justify that and
you're not working, you could be moving five six thousand
a month, right, Well, that get sixty thousand. You know,
if she takes another year, you've moved sixty thousand dollars.
That's not subject to being a five year waiting period
if you do the personal care contract that I just
explained in the prior example, prior question.

Speaker 2 (36:20):
So what happens Todd if they comes to the end
of the day she's going into the nurse home and
she has one hundred thousand dollars or two hundred thousand
dollars left left that is not going to be used
to private pay. Can you protect that last minute when
she goes in?

Speaker 3 (36:34):
Yeah, so the last minute things you would do with
any excess resource. The same thing here. If I spent
two hundred and I had one hundred left, and I
got past a five year waiting period, you could either
buy an annuity, depending on her age, a medicaid annuity.
You could set up a pooled trust if the annuity
numbers don't work. So lots to think about, but lots
that can be done last minute, which is exactly what
the guide is all about. Folks, call and get it.

(36:56):
Learn what you can do last minute eight six y
six eight four eight five six nine nine, or go
to our website Legal Exchange Show dot com and download
it right there.

Speaker 2 (37:07):
If you have a question you would like to ask Todd,
visit his website Legal Exchange Show dot com and click
on the ask Tod tab. Maybe I'll be able to
read your question on the air, and hopefully his answer
will stop you from becoming one of his next real
life stories. You've been listening to Todd Lutsky, a part
with a law firm of Cushing and Dolan with a
master's in taxation. I'm Susan Powers, a financial advisor with

(37:31):
the Armstrong Advisory Group. We'll be back with more after
this quick break on the Legal Exchange with Todd Lutsky.

Speaker 1 (37:39):
Changes to Medicaid occur almost every year, and if you're
not informed, your assets could be at risk, especially if
you or your spouse need nursing home care. Cushing and
Dolan are expert in elder loam and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process, which is critically important if you're retired
or getting close to retiring. The guide has important information

(37:59):
reg guard yarding, numerous strategies that can protect your assets
from the nursing home. It could be your primary home,
a vacation home, or any rental property you may own.
You've worked hard to achieve wealth, so don't take chances
when it comes to protecting it. Get your copy of
Cushing and Dolan's brand new guide called Last Minute Medicaid
Eligibility call right Now eight six six eight four eight
five six nine nine. That's eight six six eight four

(38:21):
eight five six nine nine, or you can request it
online by visiting Legal exchange Show dot com. That's Legal
exchange show dot com. The proceeding was paid for in
The views expressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan and Armstrong
Advisory do not endorse each other and are not affiliated.

(38:41):
Summers here New England, and it's the perfect time to
trade the daily routine for something extraordinary. Say hello to
the US Virgin Islands, America's Caribbean paradise. Explore the vibrant
history and flavor of Saint Croix. Lounge on the stunning
beaches of Saint Thomas, or find your peace on the
quiet shores of Saint John. From the moment you arrive,

(39:02):
you'll feel it. You're naturally in rhythm with the heartbeat
of the islands. There's no passport needed, no currency to exchange,
just warm weather, clear blue water, and unforgettable experiences waiting
for you. Whether you're planning a romantic escape, a family adventure,
or a little of both, this is the summer to
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(39:22):
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Speaker 5 (39:39):
Artificial intelligence is constantly evolving and can even be a
revolutionary asset to a financial strategy. Hi this is Mike
Armstrong from the Armstrong Advisory Group. Our new guide is
called AI and your Financial Plan. In it, we explain
how artificial intelligence continues to make inroads into our daily
lives and how the advent of its technologies may affect
an existing or future your Financial Plan. AI serves the

(40:01):
public in a variety of ways, from apps to monitor
personal finances to tools that analyze investments. AI is not
the future anymore. Its effect is felt by businesses of
all kinds on a daily basis. Call us today at
eight hundred three nine three four zero zero one and
ask for your free guide. That number again is eight
hundred three nine three four zero zero one, or you
can request the guide online by visiting us at Armstrong

(40:24):
Advisory dot com.

Speaker 1 (40:25):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. Your tune to the legal exchange with Todd Lutsky.
If you are a loved one needs a nursing homestay.

(40:46):
Call Todd right now at eight sixty six eight four,
eight five six ninet nine and let him make sure
your assets are protected. That's eight six six eight four
eight five six nine nine, or visit him online at
Legal Exchange show dot com.

Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with the law firm of Cushing and Dolan with a
master's in taxation. So Todd, we're focusing this month. Your
new guide is all about the medicaid process. So when
someone goes into a nursing home, yeah, what can be

(41:22):
done to save those assets? And you know I love
a loophole. So what I would like to talk about
this week or some of those last minute wild card
exceptions that are out there. So okay, let's start with
a disabled child. There are things that you can do
with your assets if you have a disabled child, last minute, correct.

Speaker 3 (41:43):
There are there are. So the nice thing about you know,
a disabled child is there's really no limitation or no
asset no value limitation. So it's truly one of the
one of the wild cards. And again I always ask
so when clients to come in, like if someone gets
this guide and they realize they need help last minute

(42:04):
and they come in, say what do I do? The
first question I ask is do you have a disabled child?
And as as perhaps you know, maybe you wouldn't think
about it, but there's a lot of them, and it
comes up more often than than you might than you
might think, And so I always tell them, well, if
we've got a disabled child, well, first of all, you'd

(42:25):
be single, you'd be dealing this. If you're married, you
would not be you would not be concerned about using,
utilizing necessarily your disabled child. But if you're single, then
then then yes I would probably And again, folks, that's
the reason why you get the guide. There's different rules
for single people and married people, so always remember that.
So if you're single, I'd say, yeah, well, I can

(42:46):
actually take all my assets, not just a house. It
could be a home, it could be money investment accounts,
and you can transfer them either directly to a disabled
child or do you want to do that? Yeah, And
that's where I was headed, so or to a trust

(43:08):
for the sole benefit of the disabled child, and those
transfers are considered non disqualifying transfers, meaning there is no
five year waiting period. You transfer it, you don't have it,
you could apply for Medicaid the next day, so you
could basically bring your assets down to two thousand dollars overnight. Okay,

(43:30):
if that was the solution, right, I know, you might
have other children, but sometimes this is a way of
saving the assets.

Speaker 2 (43:37):
If nothing's been done.

Speaker 3 (43:38):
But the problem is it would disinherit the other children potentially.
What I mean by that is it's got to be
for the sole benefit of Now. It can have language
that says when that child dies, it could go to
the siblings, right, but not until.

Speaker 2 (43:53):
But they couldn't, you know, gift out of that trust
after you know, mom passes away and you no longer
in the nursing home.

Speaker 3 (44:00):
No, that there would be designed as the sole benefit
of that child. And so you know, the nice part
about that is is the transfer is not disqualifying, So
for Medicaid purposes, you're immediately eligible and you've provided for
someone who who might be otherwise on the Medicaid roles themselves.
You've now provided a trust to take care of them.

(44:23):
The reason I wouldn't give it to them directly though,
is because if you give it to them directly, then
they could lose the governmental benefits they might have been getting,
maybe they were on SSDI or some kind of benefit
that they're entitled to. You would lose that. But if
you give it to a special needs trust or a
sole benefit trust as they call it, then they don't

(44:45):
own it, and if they don't own it, they don't
lose the benefit.

Speaker 2 (44:48):
Does it have to be your child? Is that the
only option?

Speaker 3 (44:52):
Well, in this case, there's a paragraph that says you
can transfer it to a child, and so yes, it
would have to be a child. But then there's another
regulation that says transferring assets to a individual right, not
just a child. So you can transfer it to a person,
and it could. I've seen a case where they've they've

(45:14):
set up a trust for a disabled in law. Yeah,
go figure. So yes, you can do it to other
people as well. You know, I think for the other
people though, they need to be under sixty five. But
no matter, I mean, there's these are nice options to
have when you're thinking about how am I going to

(45:35):
say my assets last week? Folks? That's one example. There's
many examples in here about taking assets and transferring to
caretaker children. What if you own property with a sibling
and you both own it together, You'll see how you
might be able to save the asset by transferring it
to a sibling. There's many exceptions, not to mention how

(45:58):
assets are treated. Some are accountable, some are non countable.
Right from the get go, you got to learn how
each asset you own is treated and what can be
done to save certain assets outright and slow the bleeding
on other assets and become eligible for medicaid last minute,
with no advanced planning. This is the guide for you

(46:20):
eight six six eight four eight five six nine nine
or Legal Exchange Show dot com. Don't just write the check,
get the guide eight sixty six eight four eight five
six nine nine or Legal Exchange Show dot com.

Speaker 2 (46:37):
So in our last segment, Todd, we talked about that
personal care contract. How is that different than this wildcard exception,
which is the caretaker child.

Speaker 3 (46:48):
Ah, yeah, that's a very different one.

Speaker 2 (46:50):
So you could have a child that has that personal
care contract right.

Speaker 3 (46:53):
Right, but you wouldn't need the contract at all. Those
are mutually exclusive ideas. So the personal care contract and
a caretaker child are completely mutually exclusive. So if you
have a By the way, this is different than the
disabled child wild card exception. This is only a house,

(47:14):
not money, not investment accounts, not bank accounts, just a home.
And it's your primary residence, not your vacation home, not
your rental home.

Speaker 2 (47:24):
And how would you qualify for that?

Speaker 3 (47:27):
In order to do this, you are allowed to transfer
the house primary residence to a caretaker child, and that
transfer will not be a disqualifying transfer for Medicaid. It's
a freebie. Now. In order to qualify, the child needs

(47:47):
to have lived in the home for two years prior
to the person going to the nursing home. And for
those two years prior to the data admission to the
nursing home, this child needed to have provided care.

Speaker 2 (48:05):
And how would you prove that?

Speaker 3 (48:06):
Usually you get a doctor's note to explain the care.
And by the way, it's not just you know, I
did the laundry and cut the grass, right, that's not
going to do it. No, you need to actually provide
skilled nursing level care like toileting, bathing, cleaning, cooking, feedings,
two of those. Ye as long as you're doing at

(48:26):
least two of those for the individual that keeps them
out of the nursing home longer then would otherwise be
the case, which is why they do this. And remember,
if you moved in there, you might not have a
place to live anymore, so you really need the house.

Speaker 2 (48:41):
So officially formally moved in there.

Speaker 3 (48:43):
Yeah. Yeah, so you got to prove both of those things.
Proven that you live there is usually pretty easy. It's
the care that you need that note for, and then
if you qualify for that, you can transfer the house.
Lots of problems with this that I see.

Speaker 2 (48:57):
Yeah, what if you're not the only child?

Speaker 3 (49:00):
Things right, One, if you're not the only child, you're
giving it to one child who doesn't have to give
it to the other children. That's a problem. Although now
there's a new regulation that says you don't have to
make the actual transfer. It will be non countable because
it's your house and as long as it passes to
that person, even some portion to that person, So you

(49:21):
could leave it to all three at death and still
qualify for now. I don't love that you could do it,
but I actually I do because then you get your
step up in basis. But if you were still in
the situation where you were transferring it during life to
that one child. Make sure you reserve a life estate.

Speaker 2 (49:41):
And what's the importance of that.

Speaker 3 (49:42):
So if you reserve a life estate, then you're going
to get this step up in basis.

Speaker 2 (49:46):
Okay, that's very important.

Speaker 3 (49:48):
And so all the built in gain associated with that
house when you finally die and it goes the remainder
interest in the life estate vest that in the caretaker
child's the caretaker child will have it with a basis
equal to fair market value. So if it's really appreciated
over the years, the kid could sell it, but no,

(50:09):
no gains, no capital gains. Text. Now you could live
there for two years and get the exception, but I'd
rather have the high basis. So lots to think about
even when you're using the caretaker child exception, folks. But
that is an example laid out in the guide. That's
just one of the many examples of how to treat
certain assets like rental property. There's an example of how

(50:29):
to treat that. Each asset is treated differently. Learn how
to get eligible for Medicaid last Minute eight six six
eight four eight five six nine nine or legal Exchange
show dot Com.

Speaker 2 (50:44):
Todd Letsky from the law firm of Cushing and Dolan.
Thank you so much.

Speaker 3 (50:48):
Thank you, Susan. Always a pleasure.

Speaker 2 (50:49):
I'm Susan Power as a financial advisor with the Armstrong
Advisory Group. We thank you for joining us today and
we'll be back again next week on the legal exchange
with Todd Letsky.

Speaker 1 (51:00):
Changes to Medicaid occur almost every year, and if you
are not informed, your assets could be at risk, especially
if you or your spouse need nursing home care. Cushing
and Dolan are experts in elder lam and their new
guide is called Last Minute Medicaid Eligibility. It'll help you
understand the Medicaid process, which is critically important if you're
retired or getting close to retiring. The guide has important
information regarding numerous strategies that can protect your assets from

(51:23):
the nursing home. It could be your primary home, a
vacation home, or any rental property you may own. You've
worked hard to achieve wealth, so don't take chances when
it comes to protecting it. Get your copy of Cushing
and Dolan's brand new guide called Last Minute Medicaid Eligibility.
Call right now eight six six eight four eight five
six nine nine. That's eight six six eight four eight
five six nine nine, or you can request it online

(51:45):
by visiting legal exchainshow dot com. That's legal exchange show
dot com. The proceeding was paid for in The views
expressed are solely those of Cushing and Dolan. Cushing and
Dolan and or Armstrong Advisory may contact you offering legal
or investment services. Cushing and Dolan and Armstrong Advisory do
not endorse each other and are not affiliated. It summer's here,
New England, and it's the perfect time to trade the
daily routine for something extraordinary. Say hello to the US

(52:09):
Virgin Islands, America's Caribbean paradise. Explore the vibrant history and
flavor of Saint Croix. Lounge on the stunning beaches of
Saint Thomas, or find your peace on the quiet shores
of Saint John. From the moment you arrive, you'll feel it.
You're naturally in rhythm with the heartbeat of the islands.
There's no passport needed, no currency to exchange, just warm weather,

(52:30):
clear blue water, and unforgettable experiences waiting for you. Whether
you're planning a romantic escape, a family adventure, or a
little of both. This is the summer. To make it happen,
go to visit USVII dot com to learn more in
start planning. That's visit USVII dot com. Your island getaway
is closer than you think, the US Virgin Islands where

(52:53):
summer never ends. Book your trip today at visit USVII
dot com.

Speaker 5 (53:00):
Artificial intelligence continues to evolve and can now play a
role in financial planning. Hi, this is Mike Armstrong from
the Armstrong Advisory Group. There's a lot that's still unknown
about the benefits of utilizing artificial intelligence, but understanding it
may help you make smarter decisions about how to manage
your retirement plan. We have a new guide called AI
and your Financial Plan. In it will take a look

(53:21):
at what AI does, how it works, and what risks
are associated with using it. The guide is designed to
provide you with a clearer picture of the tools available
as you evaluate your overall strategy. If you'd like to
learn more about how AI can have an effect on
your financial planning, call us today at eight hundred three
nine three for zero zero one. That numbers eight hundred
three nine three for zero zero one, or you can

(53:43):
request it online from our website. Armstrong Advisory dot Com.

Speaker 1 (53:46):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or any Armstrong
guide a specific financial, legal, or tax advice. Consult your
own financial, tax into state planning advisors before making any
investment decisions. Armstrong may contact you to offer investment advisory services.