Dying without a will

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 am never better in you?

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

Speaker 3 (00:55):
A couple of thanks. We're going to go to Minnesota.
We have an appellate court case there dealing with with
something we don't talk about a lot called disclaimers. So
a disclaimer is something that you can really do post mortem.
It's like post mortem planning. We can make changes and
do things. You know, first of all, why would we
do things post mortem. It's not generally something you want
to do, but it does. It can provide a benefit,

(01:18):
and we're going to explain how that works really with
this case. Then we're going to head over to Montana.
We have an appellate court case there dealing with basically
somebody who died without a will and survived by four
daughters with a main piece of property in Montana, big
cabin that nobody really wants and.

Speaker 2 (01:37):
Can't imagine what could go wrong in that situation. Yeah,
I made a planned Dad hasn't really been planned for
and hasn't been paid played out. So we're going to
see how this all all works out with these four daughters.
But folks, that's just one item, and in a state plan,
there's lots of items in an estate plan. There's family
behind the estate plan. There's lots of issues you have
to deal with, and that's what this guide is about.

(01:58):
It's avoiding the potholes that come up in estate planning.
So for you know, relying on a will, relying on
a nominee realty trust, that's not planning.

Speaker 3 (02:07):
That's not planning, right. You know you think you don't
have enough money to plan. You think you're single and
you don't need to plan. Folks, learn and if you've
done your planning, call and get this guide because it
has information about what you might need to redo to
update it. Like it's been fifteen years, I got a divorce,
I remarried. You know, you you there's so many things
to think about, folks, for both people, whether you've planned

(02:30):
or not. This guide is for you eight six six
eight four eight five six nine to nine or Legal
Exchange Show dot com. Learn about the potholes to avoid
in your estate planning eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.
Now off to Minnesota Disclaimers. So Laurie died intestate, of

(02:57):
course we all know now what that means without a will,
without a will, and died in April twenty twenty two,
leaving no spouse and no kids, survived by father Tom
Senior and brother Tom Junior. Just to make things harder Well,
Senior apparently got a two hundred and ninety three thousand

(03:20):
dollars interest in a promisory note. Well Junior presented Senior
with the disclaimer regarding his interest in the promisory note. Now,
the disclaimer identified the note, but it didn't really identify
the value of the note. Senior signed it, but then

(03:42):
later moved the court to revoke it because he really
didn't understand the disclaimer and he didn't understand the value
that was being disclaimed, So the district court invalidated the disclaimer. Junior,
of course didn't like that, so Junior appealed, stating that

(04:04):
the law itself does not require the disclaimer to state
the value of the interest being disclaimed, and the Court
of Appeals reversed and said, that's right. A disclaimer that
does not state the value may still be a binding
disclaimer if it conveys enough information to impart an idea

(04:31):
or an impression of the interest, the qualities or the
distinctive traits of the item and the promisory note in
this case, you know, indicates that it at least involved money,
and it.

Speaker 2 (04:45):
Was enough interesting. Can you explain to people what a
disclaimer is?

Speaker 3 (04:50):
Yes? I think that's where we need to we need
to spend some time. So so in this case, obviously
there was a fight between I don't know if there
was a fight or not, but but I I can
tell you that Dad didn't end up with the note.

Speaker 2 (05:03):
Yeah, sounds like some shenanigans from junior though.

Speaker 3 (05:06):
So d Dad didn't end up with a note. And
you're right, you know, I'm not sure why or how,
if any you know, I know, you can really have
undue influence here. It just presented them with a document.
It's not the same as as undue influence. So okay,
So what is what is a disclaimer? A disclaimer is
a statement that the individual who was to receive the

(05:30):
bequest in the will or or in a trust does
not want it, okay, and does not want to get it.
And and by doing a disclaimer, the estate planning document
is simply reread as if the person had predeceased the decedent.

Speaker 2 (05:50):
So treat me as if I'm dead and go to
the next.

Speaker 3 (05:52):
Yes, okay, treat me as if I'm already dead. Then
the asset would simply go to the next living person
or the next person in line via the terms of.

Speaker 2 (06:05):
The document junior in this case, well.

Speaker 3 (06:09):
This person died intestate, so there was no document, there
was no will. So now what do we do? So
the disclaimer. You know, the other important part about a
disclaimer is if it's a qualified disclaimer, it has to
be done within nine months of the date of death.

Speaker 2 (06:28):
Okay, so meaning like a retirement plan qualified.

Speaker 3 (06:31):
No, no, no, that's just a term they use. Qualified disclaimer.
It's not a qualified IRA account. It's just a qualified disclaimer.
It's a It has to be done within nine months
of the date of death. Like this, it treat me
as if I'm already dead. And another big part of
a disclaimer is the disclaiming party cannot direct where it goes.

(06:53):
So you don't have the luxury of saying I don't
want it, but I want it to go over here
to you know, uncle Billy can't do that. You have to,
as you said, Susan, have to simply say, treat me
as if I'm already dead, and go down the line,
Where's where's the next right, where's the next person who
gets it? And so that's really what would happen here.

(07:15):
So now what do we have to do, Well, we
have to look to the intestate succession statue. So in
this case, there was no will, so the next closest
next of kin. And again I'm not sure I know
Minnesota's intestate succession statue, but let's just assume this is
kind of how it works. Right, if there's no spouse
and no kids, well, then the next person in line

(07:38):
very well could have been the parents, which would have
been Tom Senior, which is why Tom Senior got the
promisory note, got it okay, because he would have been
the next in line because he's he was the parent.
Remember that she had no kids, no spouse. Well, then
next as parents, well, if there's no parent, guess who's

(08:00):
next in line?

Speaker 2 (08:00):
Siblings?

Speaker 3 (08:01):
Siblings, So there's Junior coming.

Speaker 2 (08:03):
Around, Junior lining up with his hand out.

Speaker 3 (08:05):
So so Junior would have likely been the one that
would have got.

Speaker 2 (08:09):
This, and assuming they didn't have other siblings, because it
would have been split between Junior and whoever the other
siblings were, right.

Speaker 3 (08:15):
Right, got it right?

Speaker 2 (08:17):
Right?

Speaker 3 (08:17):
If there's other siblings and it's going to go across
the sibling line, So so jor Junior's kind of involved here.
But but think about this, so now that we understand
what it is, why would we do a disclaimer, right,
why are they even available? Well, there's a lot of reasons. Well,
in this case, you know, you would have been leaving

(08:37):
an asset up a generation. You know, you don't want
to generally leave assets up a generation from daughter to
dad because now you could have paid taxes at daughters level,
and now it went up a generation and dad could
be close to dying just to have a tax to
get back down to the same level it already was at.

(08:58):
So it's like a double tax. You don't want that.
So that would be a good reason to do a disclaimer, right,
Sometimes you do disclaimers because you know, we again, if
you leave it the way it is, it could have
been exposed to a nursing home. Maybe he's you know,
older and or if he's in one, they just take it. Yeah,
so so you know, it could be a nursing home situation. Now,

(09:20):
be careful. Disclaimers could actually be triggering a five year
waiting period because that technically is an action taken to
avoid getting an asset. So that could trigger a five
year waiting period. But who cares. I mean, you might
as well avoid taxes and avoid Yeah, yeah, you really do.
And I mean You could have a trust situation too,

(09:42):
that where one spouse died and you never did nursing
home planning, but you want to preserve the estate planning benefits.
You can then disclaim your right just to the income
and now you've protected that from the nursing home and
added and preserve the estate planning benefits. So, folks, there
are reasons to do it. Most mortem planning does happen,
but you know what, Planning in advance is better. But

(10:04):
when you plan, there's many potholes to avoid in your
estate plan. So call and get the guide Learn how
to avoid the potholes in estate planning eight six six
eight four eight five six ninety nine or Legal Exchange
show dot com.

Speaker 2 (10:19):
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. We've got much
more to come when we return to the Legal Exchange
with Todd Lutsky.

Speaker 1 (10:34):
Creating an estate plan can be a difficult process if
you aren't working with an expert who can make sure
your plan is secure. Cushing and Dolan can help. Call
them today at eight six six eight four eight five
six nine nine. Estate planning is their business, and their
new monthly guide is called Detour a head estate planning
blunders to avoid. Don't put your assets at risk and
open yourself up to severe tax consequences. Even if you

(10:57):
already have a plan. This guide may correct an issue
that could come back to haunt you in the years
to come. Proper estate planning is crucial to you being
able to enjoy your later years, and it may be
the difference between retiring comfortably or living under incredible financial pressure.
Call Cushing and Dolan right now at eight sixty six
eight four eight five six ninet nine and get your
free guide today that's eight six six eight four eight

(11:19):
five six nine nine, or request an online from their
website legal exchange show dot com. The proceeding was paid
for and the us expressed are solely those of Cushing
and Dolin. Cushing and Dolin and or Armstrong Advisory may
contact you offering legal or investment services. Cushing and Armstrong
do not endorse each other and are not affiliated. HI.

Speaker 4 (11:35):
This is Mike Armstrong from the Armstrong Advisory Group. A
state and financial plan and go hand in hand and
one of the most common ways to keep that bond
secure is with a trust. Our new guide called Trusts
in your Financial Plan is available right now. In it,
we'll discuss the various types of trusts that exist and
how they might benefit your planning process. Trust provide a
number of different protections for your assets, including privacy control

(11:57):
and tax efficiency. If you're retired or nearing retirement and
have concerns about your financial strategy and whether or not
a trust may help, call us today at eight hundred
three nine three four zero zero one and ask for
your free guide called Trusts and your Financial Plan. Learn
about how a trust could make a difference for you
and your family by calling eight hundred three nine three
four zero zero one. That number again is eight hundred

(12:18):
three nine three four zero zero one, or you can
request the guide from Armstrong Advisory dot com.

Speaker 1 (12:22):
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 may contact you to offer investment
advisory services.

Speaker 5 (12:35):
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Department in Massachusetts. The DAV of Massachusetts provides thousands of
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country to lead a veterans housing initiative for both single
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serving our veterans and their time and need. You can

(12:57):
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Please visit DAV FIVEK dot Boston. That's davfivek dot Boston.

Speaker 1 (13:07):
The United States Virgin Islands is consistently voted one of
the top Caribbean destinations, and recently two of their beaches,
Trunk Bay and Saint John and Magan's Bay and Saint Thomas,
were voted at top ten best beach in the Caribbean
at the twenty twenty five Travelers Choice Best of the
Best awards. From the pristine beaches to its world class dining,
rich history, incredible golf, and perfect weather, the USVII has

(13:30):
everything you need to make memories that will last a lifetime.
From the moment you arrive, you will fall naturally in
rhythm with the heartbeat of the Islands. There's no money
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(13:52):
for more information and to book your trip. The USVII
is Americas Caribbean Paradise. Go to visit us USVI dot
com today. That's visit USVII dot com. You're listening to
the Legal Exchange with Todd Lutsky, an expert in elder
life planning and taxation. Need help with your estate plan

(14:14):
Call Todd right now and make an appointment. Eight six
six eight four eight five six ninety nine. That's eight
six 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 Lutsky, a partner with the
law firm of Cushing and Dolan with a master's in taxation.
We got another one about not planning right.

Speaker 3 (14:39):
Yes, so in this case, that's Montana. Right, We're gonna
head over to Montana upellate court case. And this is
where Richard died again intestate. So we have two people
with no no plan, no planning, and they die. She
Richard died in October of twenty twenty two, survived by
four daughters. Curious enough, rich Anne, don Yeah, rich Anne,

(15:06):
you think, yeah, I'm pretty sure. Yeah. So so the
first daughter was rich Anne, and then don and then
Shelby and then Donita. So rich Anne and the oldest
apparently was appointed personal representative or in this case, administrator,
because there was no no will, and the primary asset,
as I said earlier, was this cabin in Lincoln, Montana.

(15:31):
The daughters could not agree on what to do with it,
so they reached a settlement through a mediator. I mean, really,
first of all, you got four kids who can't agree,
they have to go to a mediator to pay money
and get a settlement. So they get a settlement agreement,
and they say the agreement is to appraise the cabin,
and within thirty days of the appraisal, one or more

(15:52):
of the daughters, could you know, buy the cabin at
the appraised value. Seems fair. The appraisal came out at
two hundred thirty four thousand dollars. Well, no one bid
on the property and so thirty days went by and
that was the end of that. So you know, rich Anne,
the pr or administrator, had to list the property. So

(16:15):
she listed it and when she listed it, she discovered
through inspections that it needed a lot of work structural work,
foundation work, engineering work. So she submitted an engineer report
to get the construction company to give them an appraisal
for what it would cost to fix this about one
hundred and twenty seven thousand dollars to fix it, which

(16:37):
is almost half the price of the whole thing. Okay,
so while it was listed, they got one offer and
that didn't go through, so they really had no interest.
No one had any interest in it. So rich Anne
then filed emotion. I'm sorry. So then what they did
is they listed the property and they got that one
offer that was withdrawn. So then rich Anne filed emotion

(16:59):
with the court to approve an offer to purchase the
cabin by three of the sisters. This is way after
the thirty days right to purchase a cabin by the
three sisters for the for one hundred and six thousand dollars. Well,
why is it one hundred and six thousand dollars because
it's the appraised value less the construction costs to fix it. Well,

(17:21):
that makes sense. And then they offered the one daughter, Shelby,
twenty six thousand dollars, which is her one quarter interest
of the property.

Speaker 2 (17:29):
Let me guess shall be objected.

Speaker 3 (17:31):
Yeah, Shelby wasn't happy with this approach, so she opposed
the motion to the court. The court approved it approved
the motion. Yes, so she's out the appellate court and
the Supreme Court because they still wanted to take this.

Speaker 2 (17:47):
High have been paying all these legal.

Speaker 3 (17:50):
Fees and look at the size of the assal each
come on, well that re member the one hundred and six
because yeah, because you have the fix up cost of
one hundred and twenty seven thousand. Well, they affirmed that
in the court finding that the offer was reasonable. It
certainly was. It was in the best interest of the estate. Plus,
the agreement that they spent money on initially to put

(18:12):
together did not provide for what happens if the girls
don't vote within thirty days. It was just silent as
to that. So, well, you gave no direction in the agreement,
The agreement went beyond its thirty days, nobody voted to
buy it, nobody bid on it. What do we do?
Court said, this seemed like a reasonable approach. I don't disagree.

(18:34):
I think it was a reasonable approach. But folks, this
is a big problem. Real estate is a big asset
for people right in your estate, and you need to
learn how to deal with that asset that could create
a pothole, which is what this guide is all about,
avoiding potholes, whether it's how to deal with a certain
piece of property, whether you got remarried, whether you have

(18:57):
a second marriage. You know, so, even if you've done planning,
this will give you reasons to adjust the planning you've done.
And certainly if you've not done your planning, it's great
for you to avoid these things that might happen, these
potholes that you could run into in doing your planning.
So call and get the guide eight six six eight
four eight five six nine nine or Legal Exchange Show

(19:20):
dot com again eight six six eight four eight five
six nine nine or Legal Exchange Show dot com.

Speaker 2 (19:27):
What a nightmare and what a waste of money.

Speaker 3 (19:30):
I know that's really the key end time.

Speaker 2 (19:33):
Time, the legal fees, because you can't go all the
way up to the to the Supreme Court.

Speaker 3 (19:38):
Where did it go to? No, I think it just
went to the appelic It was the superior court and the
appellate court.

Speaker 2 (19:42):
Yeah, I mean that's that's not quick.

Speaker 3 (19:45):
No, No, the appellate court levels a lot. And you
know it's not even just the time and the money.
This family is not going to be happy with each
other anymore. Now you've got four siblings who that might
be all they have left in terms of family, you know,
and it's like, now what Now you're going to be
mad at each other over a log cabin in Montana.

Speaker 2 (20:02):
That's not the Yellowstone Ranch for sure.

Speaker 3 (20:04):
Yeah, I'm like, what do you think they should.

Speaker 2 (20:07):
Have listed it for one hundred grand and been done
with it?

Speaker 3 (20:09):
Take it, you know, let some builder develop it or
something if you don't want it. I mean, but they
were given the opportunity. So yeah. So these are the
kinds of things that go beyond just taxes and probate.
This really impacted the family, I think, and most people
don't want their kids fighting when when they're.

Speaker 2 (20:29):
Gone, Right, So, how do you account for real estate?

Speaker 3 (20:32):
So we actually put and think about it in terms
of if they had done this here, how much it
would have avoided exactly what happened here. Right, So, our
document has language in it for any real estate unless
you specifically wanted to go to one child or something
and you tell us to, you know, give something to
one child. Basically, there's never a problem anymore with our

(20:57):
trust because our trust has that langue jenet that we've
talked about in the past that prevents fighting, prevents litigation,
prevents settlement agreements wasted time. The language states that the
property in the trust. Let's say you had three pieces
of property, you could just say this log cabin doesn't matter,
you know, do you kids, all four of you? You

(21:19):
got four here? Do you kids want property number one?
Property number two, Property number three? Do you want it?
We talk about each one separately, even though the document
might earlier on, say upon the death of the donor
and the donor spouse, divide everything equally amongst the kids.
That's okay, That's how it starts. And then down below

(21:43):
it says, notwithstanding the equal treatment, when it comes to
real estate, you got to go through this paragraph. So
before we allocate the real estate to the four shares.
We ask them if they want it. If they all
say yeah, yeah, yeah, we want property number one, then
we will prepare deeds and put one quarter of the
property in each of their buckets within the trust. If,

(22:08):
by the way the property it starts off by saying
the property must be sold unless unless you all fore
want it, then we give it to you. If any
one of you don't want it, then the ones who
want it have the right to buy out the interest
the interest of the ones who don't. You don't have

(22:28):
to buy out your own interests. You already got it,
and we put a timetable in thirty days from the
written notice given to you. Exercise this and at fair
market value, go get an appraisal. So there's no fighting
over the value, and there's everybody still treated equally, and
everybody got what they wanted. Their buckets will still be equal.

(22:52):
It just might be that one bucket has more money
and one bucket has more real estate.

Speaker 2 (22:57):
And think about that, Todd, That one paragraph that you
putting your trust documents would have saved the entire situation
that these four girls went through.

Speaker 3 (23:06):
And preserve family relationship.

Speaker 2 (23:08):
And in the appeals court and period though, just what
a nightmare.

Speaker 3 (23:13):
And really the idea is to keep keep the family
you know together, so you know, lots of stuff and
if you and if you do want to keep it together,
you can even preserve it for generations to come. You
don't have to pay it out, you can hold it
in trust. And if the kids really get along, then
they're not going to fight over which vacation week we
get and how we pay the property taxes and who
gets who does this maintenance and who does that maintenance. Hey,

(23:34):
if they all want it, then they're getting along and
they're going to work those things out, you know, amongst themselves.
So but again it can actually be preserved for even
the next generation. So folks planning so much better. It
gives everybody an opportunity to get what they want, when
they wanted, how they want it, and at the end

(23:55):
of the day, it would have kept the four kids together. Folks,
get the guide how to avoidoid the Potholes in Estate
Planning eight six six eight four eight five six nine
nine or Legal Exchange show dot com.

Speaker 2 (24:07):
You've been listening to Todd Lutski, a partner with the
law firm of Cushing in 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
Legal Exchange with Todd Lutsky.

Speaker 1 (24:24):
Creating an estate plan can be a difficult process if
you aren't working with an expert who can make sure
your plan is secure. Cushing and Dolan can help. Call
them today at eight six six eight four eight five
six nine nine. Estate planning is their business, and their
new monthly guide is called Detour a head estate planning
blunders to avoid. Don't put your assets at risk and
open yourself up to severe tax consequences. Even if you

(24:46):
already have a plan, this guide may correct an issue
that could come back to haunt you in the years
to come. Proper estate planning is crucial to you being
able to enjoy your later years, and it may be
the difference between retiring comfortably or living under incredible financi pressure.
Call Cushing and Dolan right now at eight six six
eight four eight five six ninety nine and get your
free guide today. That's eight six six eight four eight

(25:09):
five six nine nine, or requested online from their website
Legal Exchange Show dot com. The proceeding was paid for
and the views expressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you
are offering legal or investment services. Cushing and Armstrong do
not endorse each other and are not affiliated. The United
States Virgin Islands is consistently voted one of the top
Caribbean destinations, and recently two of their beaches, Trunk Bay

(25:33):
and Saint John and Magan's Bay and Saint Thomas, were
voted at top ten best beach in the Caribbean at
the twenty twenty five Travelers Choice Best of the Best awards.
From the pristine beaches to its world class dining, rich history,
incredible golf and perfect weather, the USVII has everything you
need to make memories that will last a lifetime. From
the moment you arrive, you will fall naturally in rhythm

(25:55):
with the heartbeat of the islands. There's no money to exchange,
and travel from New England could not be easier. Whether
you're looking for a romantic getaway or a family vacation,
the US Virgin Islands is the perfect place for your
next adventure. Go to visit USVII dot com right now.
For more information and to book your trip the USVII
is Americas Caribbean Paradise, go to visit USVII dot com today.

(26:20):
That's visit USVII dot com.

Speaker 6 (26:25):
Trust can play a key role in your financial strategy,
and understanding the different kinds and their purpose may help
you make the right decisions for your overall plan. Hi,
this is Chuck Zada from the Armstrong Advisory Group. Trusts
are utilized for a variety of reasons, but the most
basic use is to make settling in a state easier.
Trust have the ability to bypass probate, which can save
you significant time and money while allowing your assets to

(26:46):
be distributed directly to your beneficiaries. Our new guide this
month is called Trusts in your Financial Plan and you
can get it by calling eight hundred three nine three
four zero zero one. Learn about trusts and their possible
benefits to your financial stratig by requesting your free guide today.
That number again is eight hundred thirty nine three four
zero zero one, or request it online at Armstrong Advisory

(27:08):
dot com. That's Armstrong Advisory dot com.

Speaker 1 (27:11):
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 may contact you to offer investment
advisory services. You're listening to the Legal Exchange, and it's
time for Ask Todd, the segment where Todd will answer

(27:31):
your questions about anything and everything that's included in the
estate planning process. Once again, here's Todd Lutsky and Susan Powers.

Speaker 2 (27:42):
Welcome back top. We have a few questions from listeners
for you. First question comes from a Lane in Brockton,
mass and a Lane Wrights. I created an irrevocable trust
six years ago at the time my son was receiving
governmental benefits for disability. His inheritance was supposed to be
in hell, held in trust for him so that he
wouldn't risk his benefits. Supposed to be, is supposed to be.

(28:05):
She's alive, is supposed to be Sorry, he's now back
to work and no longer receiving benefits. Can I update
my trust now or is it too late because I
created it more than five years ago?

Speaker 3 (28:18):
Okay, so now we've got a trust already in place,
which is good. Let's just go by the way okay, okay,
good client super good. Good to know. So so we've
let's just unpack this a little bit so we can
we can follow all the moving parts we did planning.

(28:41):
Check the box. Good. It was more than six years ago,
I mean more than five years ago. Check the box right.
So now we've got an irrevocable we know we're beyond
the five year waiting period. So if it since it's
our trust, we know it's drafted right, thankfully, and and uh,
it is protected from the cost of long term care,
and it's avoiding probate. So far, so good. Now, at

(29:04):
the time when we set the trust up, the sun
was receiving these governmental benefits. So that means that at
the date of death, we would have had language in
there that says, you know, let's say, treat the kids equally,
but we would have had like a special need share.

Speaker 2 (29:18):
Yeah, there's four kids, right, three of them were going
to pay out and then there's only one where it
was going to be held this way.

Speaker 3 (29:25):
Okay, So at a bare minimum, we would have said, okay,
if we're treating the kids equally, yes, then I would
have said, how do you want them to get it? Oh, well,
like you said, my three kids, they can just have it.
But this one child we have is special needs and
we don't want to lose governmental benefits. So, just to
give you some background, we would have then created inside
the trust a special need share to hold it. So

(29:47):
it would have language like payout and the trustees sole discretion,
income and principal period, no ascertainable standards. It's protected from
a governmental benefits. He can he can retain his governmental benefits. However,
you're saying, now he's back to work. Yep, this is
the sun the son.

Speaker 2 (30:07):
Yeah, he was disabled with an injury, and now he's
back to work.

Speaker 3 (30:11):
He's back to work, he's recovered, and he's no longer
receiving the governmental benefits. So can I update my trust
now or is it too late? Well, at the end
of the day, can we update it, yes, But do
we have to update it no? So remember the sole
discretionary language we use offers many benefits. It's not just

(30:33):
designed to protect people from government losing governmental benefits. Maybe
this child's we're worried about a future divorce. Maybe this
child has a problem with money. Maybe this child, there's
other reasons, right, So holding it that way isn't a problem.
It can still come out to him in the trustees discretion. Yep,
if that's what they want. So you don't have to

(30:55):
change it for that reason. And secondly, you don't have
to change it because you you know, you could simply say, look,
it was designed for this and mom's gone. Now can
you just distribute all the money out? Yeah. Remember it's
not stuck there, so it can come out if need be. However,
if she says, listen, I don't want to deal with
all that.

Speaker 2 (31:14):
She says, I don't want him to feel like he's
being treated differently.

Speaker 3 (31:17):
A good point, you know, something like that, really good point.
So I want I don't want that angst feeling amongst
the children. So why don't we just fix it? Yes,
we can fix it. We would go through the will
and we would exercise what is known as a limited
power of appointment inside the trust changing that paragraph.

Speaker 2 (31:41):
That's your change your mind, that's.

Speaker 3 (31:42):
Right, that's that limited power of appointment that we talk
about a lot. You would exercise that power. You would
then redirect and say, now divide everything four ways, which
it was already but in the case of the share
allocated to say Billy, it would it would now pay
out like the rest of them, And yes, we can
do that.

Speaker 2 (32:02):
So from that perspective, what if you now kind of
the reverse order of that is, what if she says, now,
now I have concerns because someone's getting divorced. Could she
flip it and say, okay, now all four of them
are going to held it and have it held in
trust for the So she could go the either way.

Speaker 3 (32:20):
Oh yeah, when you're talking about changing how you leave
the assets to the family, I don't think there's an issue.
You can change it any way you want.

Speaker 2 (32:29):
So if some people never had concerns her future divorces
for their children, and then we'll now do.

Speaker 3 (32:34):
Yeah, sure you could add it, and that's good for
everybody to know that has these trusts. Yeah, if these
are concerns, you should do that. And just lastly, before
we leave it. It did not trigger a new five
year waiting period. It doesn't change anything about how long
before the assets are protected. They're still protected.

Speaker 2 (32:50):
And she could have done this a year after doing
her planning or ten years after her plan has no impact, okay.

Speaker 3 (32:55):
On the five year waiting period. So, folks, really a
lot of flexibility is what this shows in this case.
But of course doing your planning is so important, not
only because it provides all the protections and gives you
this flexibility, but when you go through the planning process,
hopefully you will not run into these potholes that this
guide that we're giving away tells you about. Like I'm
not going to plan because I'm single. I'm not going

(33:17):
to plan because I you know, I got a nominee
realty trust or all I need is a will. You know, folks,
that isn't the case. So learn how to avoid potholes
with this guide. If you've not planned, and if you've
already planned, hey maybe I got divorced, Maybe I've got
a second marriage that is happening. Maybe I'm moving out

(33:37):
of state. Folks, there's things that happen that make you
want to rethink your plan. Call and get the guide
on how to avoid these potholes in your estate planning
World 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 nine or Legal

(33:58):
Exchange Show dot Com.

Speaker 2 (34:00):
Our last question comes from Jenna and Dover, mass and
Jenna writes, years ago, my parents transferred their home to
me and reserved a life estate. I have since gotten married,
and unfortunately I am now going through a divorce. Is
their home at risk. I'm terrified that my ex will
go after it.

Speaker 3 (34:18):
Good. You should be terrified. It's a horrible idea. Yeah, folks,
you know how this is. I don't love life estates.
You know me by now, you know us by now. Right.
We've preached about life estates a lot, and this is
one of the big problems that happens when you do
a life estate and you give it to the children. Right.

(34:41):
In fact, I just last week I did a seminar
and I had to because of the real life story
I ran into a few weeks ago. I had to
change my seminar to add this whole section about life
states because I believe that it's not just people who
don't understand them, but a lot of accountants and people
who need to understand the taxm cations of life states
also could get confused or need a refresher. It's stuff

(35:05):
you don't think about a lot, but when you give
a house to the children, you lose some of this,
you know, control over the house. You can't just change
your mind now, right, And well you can, but at
this point, you know you have to talk to Jenna
and say, Jen, are you willing to give up your

(35:25):
remainder interest because she has a vested interest in the
future of that house.

Speaker 2 (35:31):
And if she's getting a divorce, that's an asset. Yeah, no,
a marital asset.

Speaker 3 (35:36):
Yeah. I mean, do they force the parent out? Probably not,
because she has a right to live there, right. I
don't know if they could get into a petition to partition,
but they could certainly probably allow her to live there.
But then what if the house ends up going to
the X. Now you're living there and the X could
move in. Actually not the If you're the present owner,

(35:57):
you have the present right to live in.

Speaker 2 (35:58):
The parents are in the sty, so they.

Speaker 3 (36:00):
Would still live there. But still, I don't think you
want it to be a part of the divorce, and
it will be so at some point it would seem
like Jenna might have to give up other assets to
keep the house, yeah, or to keep half the house.
So I don't love that, and I do think that absolutely, Jenna,
you have to worry because it is going to be

(36:21):
an asset of the marriage.

Speaker 2 (36:23):
So I guess the silver lining in this entire situation
is that they didn't just give her the house, the
whole house. They reserved that life estate, because if they
gave her the whole house, that's a very different story.

Speaker 3 (36:35):
A very different story. You give up a lot more
when you when you give away the entire house. At
least here they preserve some rights for themselves, and that's
really critical. So you know, folks, don't, don't just do
life estates. Get the guide on how to avoid potholes.
In fact, that's that's a pothole, is doing life estates

(36:55):
the wrong way or doing them at all. So call
and get the guide how to Avoid Estate Planning Potholes
eight six six eight four eight five six nine nine,
or go to our website Legal Exchange Show dot com
and download it there.

Speaker 2 (37:10):
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 Lutski, a partner
with the law firm of Cushing in Dolan. I'm Susan Powers,

(37:31):
a financial advisor with 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):
Creating an estate plan can be a difficult process if
you aren't working with an expert who can make sure
your plan is secure. Cushing and Dolan can help. Call
them today at eight six six eight four eight five
six nine nine. Estate planning is their business, and their
new monthly guide is called Detour a head estate planning
blunders to avoid. Don't put your assets at risk and
open yourself up to severe tax consequences. Even if you

(38:02):
already have a plan, this guide may correct an issue
that could come back to haunt you in the years
to come. Proper estate planning is crucial to you being
able to enjoy your later years, and it may be
the difference between retiring comfortably or living under incredible financial pressure.
Call Cushing and Dolan right now at eight sixty six
eight four eight five six ninety nine and get your
free guide today. That's eight six six eight four eight

(38:25):
five six ninety nine, or request an online from their
website Legal Exchange Show dot com. The proceeding is paid
for and the views expressed are solely those of Cushing
and Dolin. Cushing and Dolin and or Armstrong Advisory may
contact you offering legal or investment services. Cushing and Armstrong
do not endorse each other and are not affiliated.

Speaker 3 (38:41):
HI.

Speaker 4 (38:41):
This is Mike Armstrong from the Armstrong Advisory Group. A
state and financial plan and go hand in hand, and
one of the most common ways to keep that bond
secure is with a trust. Our new guide called Trusts
in your Financial Plan is available right now. In it,
we'll discuss the various types of trusts that exist and
how they might benefit your planning process. Trust provide a
number of different protections for your assets, including privacy control

(39:02):
and tax efficiency. If you're retired or nearing retirement and
have concerns about your financial strategy and whether or not
a trust may help, call us today at eight hundred
three nine three four zero zero one and ask for
your free guide called Trusts and your Financial Plan. Learn
about how a trust could make a difference for you
and your family by calling eight hundred three nine three
four zero zero one. That number again is eight hundred

(39:23):
three nine three four zero zero one, or you can
request the guide from Armstrong Advisory dot Com.

Speaker 1 (39:28):
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 may contact you to offer investment
advisory services. The United States, Virgin Islands has consistently voted
one of the top Caribbean destinations, and recently two of

(39:48):
their beaches Trunk Bay and Saint John and Maggan's Bay
and Saint Thomas. We're voted at top ten best beach
in the Caribbean at the twenty twenty five Travelers Choice
Best of the Best awards. From the pristine beaches to
it's world class dining, rich history, incredible golf and perfect weather,
the USVII has everything you need to make memories that
will last a lifetime. From the moment you arrive, you

(40:10):
will fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Whether you're looking for a romantic
getaway or a family vacation, the US Virgin Islands is
the perfect place for your next adventure. Go to visit
USVII dot com right now for more information and to
book your trip. The USVII is America's Caribbean paradise. Go

(40:34):
to visit USVII dot com today. That's visit USVII dot com.
Your tune to the Legal Exchange with Todd Lutsky. If
you are a loved one needs a nursing homestay, 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 for eight

(40:55):
five six nine nine, or visit him online at Legal
Exchange show dot com.

Speaker 2 (41:01):
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 we're talking about all those potholes
to avoid all the mistakes you don't want to make.
I want to talk about what happens if, like we said,

(41:25):
you know, you got the people who aren't doing any planning, right,
But you know, it's good to have done a will
at least, but relying on just a will as your
whole estate plan, I mean, there's definitely some pitfalls to that.
So I want to kind of talk things through with
folks who haven't planned and say, wholl I'm gonna get

(41:45):
my will done at least.

Speaker 3 (41:46):
Yeah, And I don't mean to completely pooh pooh the will.
I know I do a lot.

Speaker 2 (41:51):
It's a little it's just pooh yeah. Not planning as
pooh pooh. You're having just a will.

Speaker 3 (41:56):
As poop just pooh. So and so you know, look
at the examples we had in this show today. You
know the two cases we had actually both of them
had no planning. So that's the no will, no nothing,
And that's clearly worse ye than doing at least a will.

(42:16):
So if you're going to do nothing, at least do
a will. Do I think relying on a will as
an estate planning pothole? I do, I do, But it
better than nothing. So what does it do?

Speaker 2 (42:29):
Yeah, so let's talk about what it does what it doesn't.
So if you have a will, you don't have to
go to probate.

Speaker 3 (42:35):
Right, it's exactly wrong, right, It's exactly what people think though, Susan.
They think the will is going to be the estate
plan that saves everything. Well, a will does not do that.
So the will being the won't right like we say,
is it won't avoid probate because it's the one estate
planning document that you must file with the probate court.

(42:58):
I think the bigger issue is what does it address. Well,
if you've done no will, but you're married and you
own all your assets jointly.

Speaker 2 (43:09):
Which most people do if they haven't done.

Speaker 3 (43:11):
Any planning, including their home.

Speaker 2 (43:13):
The home they'll own a joint with survivorship.

Speaker 3 (43:15):
Yeah, so you can at least say, on the first death,
you likely avoided probate and the will addressed no.

Speaker 2 (43:24):
Assets because the house goes to the spouse, the I
raised account, carry the joint accounts, the bank accounts all
own jointly. So easy, psy convenient.

Speaker 3 (43:35):
And it's super easy and you don't have to do anything.
And that's that's exactly true. However, now you wasted so
from an estate tax planning standpoint, if that's part of
your concern, whether it be federal or state, you've wasted
the exemption. So if you are at four million dollars.
Just to use the state numbers, you will have wasted

(43:58):
two million dollar exemption on the first death because everything
went to the spouse, spouse saying, oh that was easy,
I didn't have to do anything, and now you're worth
four million.

Speaker 2 (44:08):
I know you said before though, that you can do
some post mortem planning, like on the federal estate tax level.
Can you do anything on the state state tax level.

Speaker 3 (44:20):
If you disclaim, if you were like the disclaimer we
did right, next course she's not going to do that.
Where would it go to the kids? Then you know
you're not going to do that. So but it's a
good question, fair question.

Speaker 2 (44:33):
So from an estate tax perspective, you probably wasted it. Yeah,
probably on the state level.

Speaker 3 (44:38):
But again you avoided probate. Great, but you've now you've
wasted the estate tax. So it really didn't help you
avoid probate only because the will would still be filed,
but there'd be no assets and you have no estate
tax planning benefits. And now, of course when you die
you have four million minus the two million dollar exemption,
you pay tax or the kids pay tax, and you

(45:00):
don't avoid probate. So on the second death, if you
don't plan, which likely, if you didn't plan on the
first death, you're not going to plan on the second death. Well,
then you are going to have a probate problem.

Speaker 2 (45:14):
What are the state estate taxes on a four million
dollar estate?

Speaker 3 (45:18):
Todd about two hundred thousand.

Speaker 2 (45:21):
So you created that tax because the tax it would
be paid if you'd done even just a simple revocable
trust on a four million dollars state from Mary couple,
what would you pay then?

Speaker 3 (45:32):
None?

Speaker 2 (45:32):
None? You created a gift unnecessary voluntary taxes.

Speaker 3 (45:38):
I would say, that's a pothole i'd want to avoid.

Speaker 2 (45:40):
Yeah, yeah, I would say.

Speaker 3 (45:41):
So, that's exactly what this guide is about, folks. It
mentions things about potholes and how to avoid them, and
one of them is that relying on a will. There's
a whole section in there about what happens when you
rely on a will. There's a section in there that says, oh,
I've got a nomine realty trust, I'm all set. No,
how do they work? That's not always the way to go, folks.

(46:02):
You know, maybe I want to leave my asset's a
different way than I've left them before. If you've done
your planning, get the guide because there's things in there
that might make you rethink what you've done, and if
you haven't done your planning, it'll give you things to
look out for when you go to your lawyer to
learn how to do your planning. So call and get
the guide State Planning Potholes to Avoid eight six six

(46:26):
eight four eight five six nine nine or Legal Exchange
Show dot com again eight six six eight four eight
five six nine nine or the website Legal Exchange Show
dot com.

Speaker 2 (46:39):
So, most married couples that have done a well, typically
it's just a I love you, honey, here's the money.
When we both die, it goes to the kids. Equally,
they haven't done you know, a fancy well if you will, Yeah,
they're just it's a basic, well basic, I love you honey,
here's the money. So in terms of that bloodline planning,
I mean today we've already talked about special needs, someone

(47:02):
getting a divorce, someone who isn't good with money, someone
might have dependency issues. So how do you protect from
that perspective? How do you plan for that with just
a will?

Speaker 3 (47:11):
So a couple of things and one I just wanted
to mention because I was thinking about it be based
on what you said, and I'm going to answer that
next one. So the other thing that this isn't doing
is not only did we not avoid a state taxes
or probate on the second death, don't forget the nursing
home in case that's a concern. So it's not doing
that either. Just to throw out another thing that a

(47:32):
will is not doing. But but how do you leave.

Speaker 2 (47:37):
Assets kids to the case you have a simple will,
you're not going to protect them from any of that stuff.

Speaker 3 (47:42):
Right, Yeah, So it depends what the will says. I mean,
can you build a trust inside the will? Yes, but
probably if you've not done any planning and all you
thought was I'm doing a simple will, I leave everything
to each other. Likely the will is simply going to
say divide it up and give it to the kids
and paid out.

Speaker 2 (48:00):
Because a lot of people I can I mean, they're
doing the will saying I don't want my kids to
go to probate, so I'm definitely gonna do a will,
right right, I mean, which doesn't even avoid the probate
part of it. But they're doing basic.

Speaker 3 (48:11):
Stuff, and I think without the guidance. So you know,
whether you're getting this guide or really going to an
attorney is what I'm suggesting, is that the attorney is
going to provide you with some guidance, some ideas, some
options that you might not have thought about. Right, You
might not have thought about, Yeah, you wanted to avoid probate,

(48:32):
and you think you're doing it even though you're not
doing it, But you might not have thought about maybe
my kids aren't good with money, or maybe I don't
maybe I want to get something directly to a grandchild,
or maybe I want to skip a generation for tax
purposes or protect from a divorce, or things that you're
not really thinking about as a layperson.

Speaker 2 (48:52):
That family and unless you have that conversation with someone,
because I've been in the room when you've had those
meetings with folks and you go down a whole list
of objectives to make them think about what they haven't
thought about because they don't know what they don't know.

Speaker 3 (49:05):
That's right, And I think that's why you go to
an attorney to get counseling, as you said, when you're
doing this to learn about those things. So I think
pretty much relying on a will, I think we've we've
addressed that issue that is not really any state planned.

Speaker 2 (49:24):
I want to ask you one other question, Todd, because
a lot of people when they think oh it's a will,
it's a simple thing. The healthcare proxy, all those basic documents.
I can just do them online. There's a lot of
websites out there, So yeah, what do you know? What
kind of insight can you give about those sites where
people you know, the DIY legal stuff.

Speaker 3 (49:45):
Yeah, I just don't understand them fully. I don't know
how they always operate. But I did have some clients
that came in recently a couple. The last one that
came in wanted to sit down and do an estate plan,
but kind of brought with them some stuff and I said, well,

(50:06):
do you already have your plan done? Because you know,
I don't want to recreate the reel if you already
have it. And they've been working on it for a
year online. Yeah, every time I hit print, I get charged.
There's no one to talk to. I got no guidance.
I feel like I'm going nowhere with this. There are documents,
but they were just frustrated a year of this, Susan,

(50:26):
So I don't think you're going to end up with
what you need, folks. So to avoid all these potholes.
Just get the guide eight six six eight four eight
five six nine nine, or go to our website. You
can download it there Legal Exchange show dot com.

Speaker 2 (50:43):
Todd Letski from the law firm of Cushing in Dolan,
thank you so much.

Speaker 3 (50:47):
Thank you, Susan, always a pleasure.

Speaker 2 (50:48):
I'm Susan Powers, 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 Leutski.

Speaker 1 (51:00):
Eating in the state plan can be a difficult process
if you aren't working with an expert who can make
sure your plan is secure. Cushing and Dolan can help.
Call them today at eight six six eight four eight
five six nine nine. Estate Planning is their business and
their new monthly guide is called Detour a head estate
planning blunders to avoid. Don't put your assets at risk
and open yourself up to severe tax consequences. Even if

(51:22):
you already have a plan, this guide may correct an
issue that could come back to haunt you in the
years to come. Proper estate planning is crucial to you
being able to enjoy your later years, and it may
be the difference between retiring comfortably or living under incredible
financial pressure. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninet nine and
get your free guide today. That's eight six six eight

(51:44):
four eight five six nine nine, or request an online
from their website Legal exchange show dot com. The proceeding
was paid for in The views expressed are solely those
of Cushing and Dolan. Cushing and Dolan ind or Armstrong
Advisory may contact you are offering legal or investment services.
Cushing and Armstrong do not endorse each other and are
not affiliated.

Speaker 6 (52:00):
Trust can play a key role in your financial strategy,
and understanding the different kinds and their purpose may help
you make the right decisions for your overall plan.

Speaker 3 (52:08):
Hi.

Speaker 6 (52:08):
This is Chuck Zada from the Armstrong Advisory Group. Trusts
are utilized for a variety of reasons, but the most
basic use is to make settling in a state easier.
Trust have the ability to bypass probate, which can save
you significant time and money while allowing your assets to
be distributed directly to your beneficiaries. Our new guide this
month is called Trusts in your Financial Plan, and you
can get it by calling eight hundred three nine three

(52:30):
for zero zero one. Learn about trust and their possible
benefits to your financial strategy by requesting your free guide today.
That number again is eight hundred three nine three for
zero zero one, or request it online at Armstrong Advisory
dot com. That's Armstrong Advisory dot com.

Speaker 1 (52:46):
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. The United States Virgin Islands has consistently voted
one of the Topcribbean destinations, and recently two of their beaches,

(53:08):
Trunk Bay and Saint John and Magan's Bay and Saint Thomas,
were voted at top ten best Beach in the Caribbean
at the twenty twenty five Travelers Choice Best of the
Best awards. From the pristine beaches to its world class dining,
rich history, incredible golf and perfect weather, the USVII has
everything you need to make memories that will last a lifetime.
From the moment you arrive, you will fall naturally in

(53:30):
rhythm with the heartbeat of the Islands. There's no money
to exchange, and travel from New England could not be easier.
Whether you're looking for a romantic getaway or a family vacation,
the US Virgin Islands is the perfect place for your
next adventure. Go to visit USVII dot com right now
for more information and to book your trip. The USVII
is America's Caribbean paradise. Go to visit USVII dot com today.

(53:55):
That's visit USVII dot com.