Episode Transcript
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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, Tod Lutsky and Susan Powers.
Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor 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 (00:54):
I am great? Thank you. What do you have for
us this week?
Speaker 3 (00:56):
I tell you this week I've got two real life
stories which are to me sometimes better than cases because
these are things that I've experienced firsthand. So here's the situation.
The first one is really about full planning with a family,
things you don't think about. And this is a full
plan plus multiple LLCs with businesses, rental properties, and we're
(01:18):
going to learn about by sell agreements. We're going to
learn about holding companies. We're going to learn about family
planning and how important it is, especially when one of
the partners in this case is not a family member.
It's just a third party, so fifty to fifty, but
you've got to take care of you both sides of
the family and the businesses, so it becomes really important
to understand how the planning works. And then another one
(01:39):
was a second marriage situation which was kind of interesting
with one special needs child from the prior marriage and
the mother of the well not the mother, but the
second wife in this case, not the mother. Yes, stepmom
is not overly comfortable with this or good relationship, i
(02:01):
should say, with this special needs child of the other.
So there's some gifting ideas in advance. How do we
take care of everybody, How do we do the planning
so that you know, we can care for the child
and the you know, second wife. So lots to think
about in this case. But folks, not all the time
does everybody have the ability to plan, And lots of
(02:23):
times they'll find themselves faced with perhaps a nursing home
situation and don't know what to do. Please don't write
the check. Instead, call and get this guide Last minute
Medicaid eligibility planning. It's going to help you understand what's
countable and what's not. And every asset is different, a house,
a vacation home, even jointly owned accounts with a spouse
(02:44):
versus jointly owned accounts with individuals. What about life insurance?
Four to oh one ks, Folks, there are things that
can be done to protect these assets last minute. Some
are even not countable, some are accountable, different for married
couple versus a single person. Call get the guide learn
how to protect assets last minute from the Nursing Home
(03:06):
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 Exchange
Show dot Com. Okay, folks, this is an interesting case.
We have husband and wife. They needed full plan. They
have two kids, three grandkids. They also have a construction
(03:29):
company in about six LLCs generally own rental properties, and
of course they build rentals, and they build property and
then sell it, and some they keep a lot of
moving parts, a lot of moving parts here. The other
moving part is that not only is it commercial and
residential rental, but it's a fifty percent. The client owns
fifty percent and some third party owns fifty percent who
(03:52):
actually handed up bringing into the meeting to help at
a second meeting to do a stay planning for So
everybody needs to take care of everybody here. And so
with this we have to figure out they're worth about
fifteen million, this one client, and they want to do
a state plan. They obviously want to reduce their estate tax,
they want to avoid probate, They want to provide for
(04:14):
the kids, They want to divorce proof the assets for
the kids. They want a generation skip for the kids,
you know, save taxes that way. And of course finally
they need to make a plan for the business to
take care of the surviving partner, to make sure the
assets go to the surviving partner. But we don't disinherit
(04:35):
the family of the decendent. And interestingly enough, as you
might imagine in this particular case. I shouldn't say it's
all the time, but in this particular case, both spouses
are not involved in the business.
Speaker 2 (04:50):
So it's could be a nightmare if you don't have
your proper planning in place.
Speaker 3 (04:53):
Right, So they really want to make sure you take
care of you know, if owner one dies, owner one
spouse does not want to run or be involved with owner.
Speaker 2 (05:02):
She wants to get bought out.
Speaker 3 (05:03):
Yeah, and that's really what's important here. So let's take
a peek at tall order, but certainly handle you can
handle this right, So state planning side right. First thing is,
you know, we need to set up the basic estate
planning for the family. In this case, they still are
of the size that a one joint revocable trust would work.
We can put all the assets in. Most importantly, as
(05:26):
I say fund the trust, I have so many clients
that come in that even say, I listened to you
on the radio and you say fund the trust. We're
going to make sure we fund the trust. So apparently
I'm saying it.
Speaker 2 (05:35):
Learn lessons from other's mistakes.
Speaker 3 (05:37):
And so we would deed the house to the trust.
We would change the homeowner's insurance, we would add investment
property to the trust, retitle all the assets to the trust,
and we use their social Security numbers, so no need
to understand or worry about filing an income tax return
for this trust. Then, of course the LLC shares, we
have to take those and transfer them to the trust.
(05:59):
Got to put the shares of the LLC in. From
an estate tax standpoint, of course, we're simply going to
have the remainder share in the marital share set up.
And with this joint trust on a fifteen million dollar estate,
we're going to really be able to cram down the
whole thirteen point nine to nine million, which is the
current exemption. Although the BBB just passed, so we've got
(06:20):
new estate tax exemptions to talk about. And so in
this case, you know you're gonna put eleven point nine
million in the q TIP share, two million in the
remainder share. There's your thirteen point nine million sheltered for
federal tax and only one point one million goes in
the general marital share to be taxed later when the
spouse dies. So federally, when the spouse dies, she's worth
(06:41):
one point one wow wow.
Speaker 2 (06:44):
Because if they didn't do planning, they would have huge
estate taxes on the federal.
Speaker 3 (06:49):
Level, big problems. So and then from Massachusetts we would
just make an election for the eleven nine. Now, of
course we're going to treat the kids equally. We're going
to divorce proof the language in there where it's going
to be generation skipping. That's the basic part, folks. We
talk about that a lot. But I want to save
a little time for the corporate side here.
Speaker 2 (07:06):
And that works regardless of the size of your estate
if you have that, right.
Speaker 3 (07:10):
Yeah, it does. The basic plan, The basic plan is
going to work you small or larger. If you get
too large, I would probably go to two trusts. Yeah,
but under general Yeah, today we got the almost fourteen
million each, so you could shelter twenty eight million. Now,
corporate side very important, right, So what I suggested was
I had all these LLCs, all these single these these
(07:32):
LLCs which were two owners, right, two separate owners. And
so what I suggested is, why don't we set up
a holding company and put all of these sub all
these LLCs as subllc's.
Speaker 2 (07:45):
And what's the benefit of doing that time?
Speaker 3 (07:46):
So, now the six LLC's underneath are owned one hundred
percent by a holding company. So they're now all single member.
Speaker 2 (07:54):
LLC's tax returns.
Speaker 3 (07:56):
Yeah. Instead of filing six individual income tax returns for
those LLCs, now they only have to file one for
the holding company. Nice, and the holding company will be
owned fifty percent by my client and fifty percent by
the partner who might ultimately become a client, and so beautiful.
They would loved the efficiency of that. And then you
(08:16):
know again it's but you still have the individualized protection.
So if someone gets sued on property number one, they
can only sue LLC number one, even though it's a
sub of the holding company. They can't sue any of
the other companies or the shareholders personally. Home run win.
Speaker 2 (08:35):
And how do you address the spouses in buying them out?
Speaker 3 (08:38):
If so? Yeah, Now we explain we need to buy
sell agreement right across purchase agreement, and we know this
is the way to go. So you would set up
life insurance on owner one and owner two, so owner
one would own life insurance on owner two, and owner
two would own life insurance on owner one. Now, in
these buy sell agreements, there's an obligation to buy it out.
You can have other trigger evans. It's like selling or
(09:01):
retirement or it doesn't have to just be death, but
let's talk about the death one. So this way in case,
let's say my client who's a little older dies, say
he's Owner one, Owner one. Owner two has life insurance
on Owner one.
Speaker 2 (09:15):
And he owns that personally.
Speaker 3 (09:16):
Other business owns it personally. Absolutely important that we do that.
Now all the money flows to Owner one income tax
free because it's life insurance. Owner two, who died has
stock that got a step up in basis on the
date of death, and now Owner one buys out Owner
two obligation. But there's no capital gain because we had
(09:39):
to step up in basis and all you do is
swap the assets, so there's no double inclusion for state
tax purposes. And now you had money to take care
of the surviving n to take care of the deceit
and spouse whose decedents spouse the side of the family,
so you can still take care folks, these buy sell
agreements are important. So I know it a lot to
(10:00):
talk about in a short amount of time. And but
for folks that can't plan, I'm just going to let
you know, give a call, get the guide for the
last minute Medicaid eligibility. Don't write the check to the
Nursing Home eight six six eight four eight five six
nine nine or Legal Exchange show dot com and you
can download it there.
Speaker 2 (10:19):
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 have
much more to come when we return after this quick
break on the Legal Exchange with Todd Lutsky.
Speaker 1 (10:35):
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 eldir 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
(10:56):
regarding numerous strategies that can protect your assets from the
nursing home, 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 sixty 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. Exprest 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 do not endorse each
other and are not affiliated.
Speaker 4 (11:36):
This is Michael Valila, adjudent of the Disabled American Veterans
Department of Massachusetts. The DAVIA Massachusetts has helped me and
countless others adjust to civilian life through a variety of
incredible programs. Through our Local Veterans Assistance Program, we provide
necessary services to veterans in their communities, such as food, shopping, landscaping,
(11:56):
and companionship. But we need your support. You can help
by making a donator today. Please visit DAV fivek dot Boston.
That's DAV fivek dot Boston.
Speaker 5 (12:06):
Artificial intelligence isn't just the future, it's already shaping how
people think about their money. Hi, this is Chuck Zada
from the Armstrong Advisory Group. We've put together a new
guide called AI in your Financial Plan.
Speaker 3 (12:18):
In it, we.
Speaker 5 (12:19):
Explore the ways that AI is being used in financial technology,
from apps the track spending to tools that can help
identify trends. It's a rapidly changing space, and this guide
is designed to help you understand some of the potential
benefits and risks that AI may present. Want to learn more,
Call eight hundred three nine three for zero zero one
(12:40):
and request your free copy of AI and your Financial Plan.
That's eight hundred three nine three for zero zero one,
or visit Armstrong Advisory dot com.
Speaker 1 (12:51):
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. Summers here, New England, and it's the perfect
time to trade the daily routine for something extraordinary. Say
(13:14):
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 with
the heartbeat of the islands. There's no passport needed, no
(13:34):
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. That's visit
USVII dot com. Your island getaway is closer than you think,
(13:57):
the US Virgin Islands where summer never ends. Book your
trip today at visit USBI 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
Call Todd right now and make an appointment. Eight six
six eight four eight five six ninety nine. That's eight
(14:19):
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 masters in taxation.
Where are we headed down, Todd.
Speaker 3 (14:38):
We are going to talk about another real story, real
life story. I've got a second marriage situation and a
step mom and the father of this one child is
special needs. So he comes to the marriage with one daughter.
She's the stepmother doesn't get along well with this daughter.
(15:01):
So let's see. But in this case, you know, they
came in to do planning, you know, but it's the
second marriage. And again, this this special needs child is
not is highly functional by the way, not even getting
any governmental benefits at the moment, actually went to college,
but is learning disabled. There's there's issues, sure, and and however,
(15:21):
the problem we have here is that the feeling is
that the wife, the stepmother doesn't really care much for
this special needs child. And and the relationship isn't horrible,
but it doesn't appear that it's great either.
Speaker 2 (15:39):
Not something you'd have a good faith in after you.
Speaker 3 (15:41):
Pass yeah, I think that's what he's worried about. Right.
She she she didn't bring a lot to the marriage,
but you know he did. He did have some family member.
She did have some family members and siblings and nieces
and nephews that that you know, she would want to
provide for. But it's mainly this this daughter. So what
(16:01):
do they have. They've got a two million dollar home,
They've got another million dollar home that he's actually letting
the daughter live in now. And you know, he says,
he says that they have another eight million or so
of investments, so call it eleven million, okay, total assets,
(16:21):
and they had no estate planing done at all. Like okay,
well that's shocking in and of itself. And so he's saying,
I really want to gift away, you know, assets right
now to my daughter, like the house that she lives in,
and you know, maybe like four million dollars to give
it away now right now. I'm like, okay, Well, why
he goes Well, because I travel a lot, and every
(16:42):
time I get on the plane, I'm afraid if something
happens to me, my current wife, the stepmother of my daughter,
would not really care for her, try not really provide
for her and take care of her. So I'm I'm
worried about that. So I really want to get taken
care of by making a gift. So I said, okay,
(17:04):
well we can do that. And it's going to be
very important obviously to do your own basic estate planning
as well, take care of taxes and probate, and how
are we going to care for the surviving spouse and
her side of the family. So we have to deal
with this whole issue. And initially she wasn't at the meeting,
so I said, well, obviously we're going to need to
(17:25):
bring her in. We're going to have to explain all
this to her, and so what do we what can
we really learn from this? So this is a situation
where you know when not only is second marriage is important.
Anyone who's listening has second marriage, please do your estate planning.
But we have second marriages and special needs child potentially,
(17:47):
so we've got a lot of issues here and when
you're in that situation, you really need to do your planning. Now,
I say that before I give you what I think
the tips and lessons are on this, just want to
remind you about the guide for this month. Obviously, you've
got to do planning for something like this, but you
may need to plan to protect assets from the nursing home,
but unfortunately you don't always get to it, and so
(18:09):
people find themselves heading into a nursing home that haven't
done any planning. Or if you've done planning, you've always
leave stuff outside the trust like iras, et cetera that
need to be protected. So this guide is really for
anybody who did planning, who didn't do planning, but is
entering a nursing home. Don't just write the check. Learn
(18:30):
how each asset is treated differently. Married couples and single
people also treated differently, so from homes to rental properties
to four h one case to annuities to you know,
what is there that can be done with these assets?
And learn the few ways you can avoid the five
year waiting period on certain assets and certain situations. Get
(18:51):
the guide eight six six eight four eight five six
nine to nine or Legal Exchange Show dot com. It's
packed with information eight six six eight four eight five
six ninety nine or Legal Exchange Show dot com. Okay,
what are we gonna do for these people? So I
(19:11):
started to explain, you know, all right, do we want
to make a gift now, generally, when you have and
for everybody listening, if you generally just have a first
marriage and it's a special needs situation, you don't need
to set up a gifting trust now, right, Just provide
for it inside.
Speaker 2 (19:32):
You're the creation of it later.
Speaker 3 (19:34):
Yeah, in your trust, in your regular family trust that
you put together, simply just put in there, you know,
a share that is a special needs trust share built
in for that particular child, and you can do it.
So you don't. That's the first comment. You don't. Everybody listening,
you don't have to do it like this. But in
this case, I understand the position. Sure, I understand what
(19:54):
he's saying. Then of course you think, is it easy
to do this? Well, it's not always easy. You got
to think about how he wanted to make an outright gift.
I'm like, an outright gift is not a good idea.
Speaker 2 (20:04):
So he wanted to just give it to her her name,
that's into a gifting trust exactly.
Speaker 3 (20:10):
That's what it sounded like when he came in and
I said, oh, oh, slow down. You know this is where attorneys,
this is where your counsel really comes in. And I said,
you know, an outright gift is probably not going to
be a good idea. I mean, in this case, it
would prevent her from getting any governmental benefits that she
might be entitled to, either currently or or in the
future if she needs them, because I guess right now
(20:32):
she's not currently on any. I said, not to mention
the fact that there's creditor problems right if she gets married,
or or because she's got some level of disability.
Speaker 2 (20:44):
And advantage of very easily exactly.
Speaker 3 (20:46):
Where I was headed. I go, she could either get
married and get to force the divorce and to take
advantage that way, or someone manipulates her with money, you know.
So I can't say enough that an outright gift is
not wait.
Speaker 2 (21:00):
Not a great idea for sure.
Speaker 3 (21:02):
So I said, all right, let's do an irrevocable gifting trust.
And that's fine. We do this for clients all the time,
especially higher net worth clients. And then we need to
decide do we want to make it a completed gift
or an incomplete gift. Because we don't necessarily have to
make it an incomplete gift, I mean a completed gift,
it could still be an irrevocable trust set aside to
(21:23):
take care of this daughter. The reason I say that
is because they're worth about what I say, eleven million
or so. Yep, for a state tax purposes. When you
think about completed gifts, there's no benefit. This person's already
not going to pay any estate taxes if you just
did basic estate planning. Now, the reason I say that
(21:45):
is because if I if I give it away, I'm
trapping twenty eight percent capital gains taxes.
Speaker 2 (21:51):
Right and you have to imagine that for a million
dollar home that she's living in and another four or
five million in investments, there's got to be some capital.
Speaker 3 (21:59):
Gain there exactly. So I asked them about the investment portfolio.
I said, look, the difference is Massachusetts only has a
ten percent of state tax. I get it. If you
make a gift, it's going to help you for mass
for sure, because you can only shelter four million dollars
for mass right. But if you make a gift federally,
it's not going to help because you could keep everything,
(22:19):
pay no federal tax forty percent and increase the basis
to eliminate any twenty eight point eight percent capital gains tax. Yep.
That's a lot of tax. Sure is yeah, I'll give
Massachusetts ten percent any day of the week.
Speaker 2 (22:33):
Right on five million. You know, it's trusts a lot
of money.
Speaker 3 (22:36):
So in this case, we found out that there's a
there's a good chunk of assets in there that kind
of high basis. So I said, oh, well, those are
available for gifting. So and couple that with the fact
that you really want to just make sure that this
trust takes care of the daughter, and so I get it.
So we're probably gonna end up making it a completed
gift for gift tax purposes, but that's it's critical. But
(22:57):
then I explained to them during life, we'll make it
and a grant tor trust. So all the income that's
generated you can continue to pay the income taxes on
even though you're not earning it client at a lower
rate than the trust. And that's like gifting on steroids,
because the government doesn't call that payment of the tax
(23:20):
on money. You don't actually get a gift to the trust.
So now you're further reducing your estate and you're paying
lower income taxes at the same time. So, folks, these
are things to think about. And you know, it wasn't
obviously we have to do an entire estate plan for
him as well. I said, you got to bring your
wife in and we need to do an estate plan.
But now we've moved five million dollars out of the estate,
(23:43):
so their Massachusetts of state tax is now going to
be on the remaining five minus the four we can protect.
They're only paying taxes on one, So huge help folks. Again,
some people can't plan. If you're faced with nursing home care,
Last Minute get the guide eight six six eight four
A eight five six nine to nine or Legal Exchange
(24:03):
show dot com. You can download it right there.
Speaker 2 (24:06):
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. Todd will be
answering your listener questions when we return to the Legal
Exchange with Todd Lutsky.
Speaker 1 (24:21):
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
(24:42):
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 four eight five six nine nine. That's eight
(25:03):
six six eight four eight five six nine nine, or
you can request it online by visiting Legal exchangshow dot com.
That's Legal exchange show dot com. The proceeding was paid
for in the use 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.
Speaker 6 (25:23):
Artificial intelligence is constantly evolving and can even be a
revolutionary asset to a financial strategy.
Speaker 3 (25:29):
HI.
Speaker 6 (25:29):
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
(25:51):
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
thanks for your free guide. That number again is eight
hundred and three nine three four zero zero one, or
you can request the guide online by visiting us at
Armstrong Advisory dot com.
Speaker 1 (26:08):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide is specific financial, legal, or tax advice. Consult
your own financial, tax, and estate 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
(26:31):
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 with
the heartbeat of the islands. There's no passport needed, no
(26:51):
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 and start planning. That's visit
USVII dot com. Your island getaway is closer than you think,
(27:14):
the US 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,
(27:36):
here's Todd Lutsky and Susan Powers.
Speaker 2 (27:41):
Welcome back, Tod. I have a few questions from listeners
for you. First one's pretty simple, but I like this
question from Michael and Hubbardston Mass and Michael writes, my
wife and I are looking to get a will and
protect our assets from a nursing home. What is our
first step into this process? I think a lot of
people don't know where to say start.
Speaker 3 (28:00):
Yeah, obviously you need to find a lawyer. I would
say start there, but you know, I joke about it,
but start with a you know, an elder law lawyer
or an estate tax planning lawyer. You kind of kind
of find both. I mean, I mean I obviously happen
to do both, but you need both. You need someone
who understands nursing home rules, but you also need someone
(28:23):
who understands tax laws. You can't do really one without
the other. Every seminar I give, I start off by
telling the folks that are out there, and a lot
of them are lawyers, and I say, look, you know
so many of you are practicing elder law. But remember,
you can't do this if you don't understand the taxes.
You've got to make sure this trust is designed for
(28:45):
income tax purposes, capital gains tax purposes, gift a state
tax purposes. You've got to cover all those bases, because
let's face it, you may set the trust up, but
not everyone goes to the nursing home, but they all
and so you need to know how to handle that
side of it as well. So that would be my
(29:06):
first step in telling you to find a lawyer like that.
Speaker 2 (29:10):
So you find your attorney. What do you need to
consider when you're going into that meeting, Todd? What do
you have to bring a lot of stuff with you?
Do you need a list of stuff? Like what do
you do?
Speaker 3 (29:20):
Yeah? I would say gather You don't really have to
spend a lot of time, just in your mind a
good idea of what you own and how you own it,
meaning is it joint, is it in just one name,
is it in a trust? And then also the value
(29:40):
of what it is.
Speaker 2 (29:41):
That'll determine what your solution is, what your recommendation is correct.
Speaker 3 (29:45):
Yeah, it'll drive the estate plan. So again, what you own,
how you own it, and what it's worth roughly now
that's the basics. If, on the other hand, you happen
to have an exist trust in place, I'm not worried
so much about a will or a health care proxy
or popertaarty. I don't need to see those, but I
(30:08):
would need to see an existing trust, because again, once
we determine what your objectives are, then I generally look
at that existing trust and I say, is this trust
doing what you want to do today?
Speaker 2 (30:24):
So in the case of Michael, he if he had
a revocable trust in place, but now he's saying they
want to protect assets from a nursing home, that would
mean that revocable trust wouldn't meet those objectives correct.
Speaker 3 (30:37):
Right, So at the end of the day I would
have gone through this question and answer session, I would
have determined what their goals are today, what their estate's worth,
what the objectives are, and then in that list, obviously
I would have asked one of them would have been
do you want to protect assets from the nursing home?
So if that now is on the list, along with taxes,
(31:00):
obate and bloodline planning, then I can look at the
trust and if that trust is revocable, my first comment
would be I don't need to read it any further.
One minute I see the word revocable amendable, I'm going
to say we are not accomplishing your current objectives with
this document because it's revocable.
Speaker 2 (31:21):
And they change over time. Yeah, those objectives.
Speaker 3 (31:23):
That's right, that's exactly right. So you pick up the
phone and you say, hey, I got to follow up
on my existing estate plan. Call your lawyer, say I
want to review if you want to and see. Sometimes
the review takes five minutes and you're in good shape.
But in this case I would tell the client, no,
you would need to start over right and then likely
But if on the other hand, that wasn't on there
(31:44):
and I read the document and it said, hey, yeah,
it looks like it's doing what you wanted to do,
I send them on their way. No reason to recreate
the wheel if it's doing what it needs to be doing,
so it's practical for me, that's how I do it. So, folks,
that's a great, great question actually in terms of how
to get started. But you also might want to know
how do you get started? If you walk into a
(32:05):
nursing home and you're in that situation, now, what do
you do? Well, you might not have done any planning,
but this guide will help you face with that information
about that situation. Excuse me. You can simply learn about
how assets are treated, what's countable, what's not countable in
a married couple situation when one is sick and one isn't,
(32:26):
versus a single person situation. Sometimes these accountability assets accountable
and non countable. Asset status is different for married versus
single people. Rental properties, homes, vacation homes, four H one,
k's life insurance folks, they're treated differently, and there's even
(32:46):
some exceptions to the five year rule and some transfers
that can be made last minute. These are This kind
of information is in the guide eight six six eight
four eight five six nine or Legal Exchange Show dot com.
Just don't write the check. Get the guide first eight
six six eight four eight five six nine nine or
(33:10):
Legal Exchange Show dot com.
Speaker 2 (33:13):
Our last question comes from Dawn in Warwick, Rhode Island,
and Don writes, my mother passed away recently, and I'm
concerned about a substantial inheritance that I will be receiving
and the likelihood that I will be getting divorced. Is
there anything I can do now to protect those assets
if my mother's trust leaves the assets outright to me,
(33:33):
So mom's.
Speaker 3 (33:33):
Already passed Yeah, So in this case, mom's passed away.
So have they read the trust yet?
Speaker 2 (33:42):
It says it sounds like they're not sure.
Speaker 3 (33:45):
So if the trust. First of all, the first thing
you need to do when someone passes is, you know,
call the lawyer and get in front of them and
him or her and learn what the trust says. So
obviously that's what you need to do first. But yeah,
I mean, this is this could be a problem. So
if she's saying she doesn't know if she's getting divorced, but.
Speaker 2 (34:04):
She said it's likely she's going to be getting divorced,
sounds like maybe he's been waiting around for that.
Speaker 3 (34:10):
Oh kick, So yeah, you really hate to see that. Yeah,
you can't prove it, but it smells bad.
Speaker 2 (34:17):
Yeah, it's out there for sure.
Speaker 3 (34:19):
And so here's the problem. If mom has already died,
you're really going to have to read the trust. It'll
say and let's say you're right. It says that divide
everything you know equally and pay it out. If that's
the case, it's your asset. In fact, it's your asset
generally right away. Now, if you read the trust, there
(34:44):
might be language like we have in our documents. We
have something called bad behavior clause.
Speaker 2 (34:50):
Yeah.
Speaker 3 (34:50):
Yeah, and so there's this paragraph that sort of gives
the trustee discretion. It says if the trust the fields
it's not in the best interest of the beneficiary to
receive the asset, then they can hold it back, notwithstanding
(35:11):
the language in the document. So so this would not
necessarily bad behavior on her part, but there is bad
behavior going on and it's not in the best interest
of the beneficiary to get the asset.
Speaker 1 (35:25):
Now.
Speaker 3 (35:26):
It might not be because of a divorce. It could
be that it turns out that this child is a
drug addict now, or or a dependency of something, or
or you've just noticed over time that they're horrible with
money with money, you know, or manipulated easily, or you know.
There can be other reasons that you can you can
maybe do this hold back, but you're really going to
(35:49):
need to see the trust to see if that's in there.
Speaker 2 (35:53):
But if it's, if it's not hold it in trust,
then does that mean that that whole inheritance is going
to be subject to that divorce? They can't like drag
their feet and wait for a distribution.
Speaker 3 (36:07):
Probably not okay, because you know obviously it's there, right
and say the fact that you didn't take it and
put it in your bank yet doesn't matter because it's
really yours anyway, whether it's over here in this bank
and the trust or over here in your bank, over
here still really has your name all over it. Yeah,
(36:28):
and so, and that's important because, like I say, folks,
I deal with this all the time. And so when
somebody gets divorced, never let's let's say Mom was alive here.
If Mom was alive here, they would still be looking
at this trust even if Mom was alive to say,
is this an inheritance that's going to be subject to
(36:49):
the divorce.
Speaker 2 (36:49):
But she could try and divorce proof last minut.
Speaker 3 (36:51):
Yes, So, folks, there's I'm dealing with this right now
with a divorce proof language, and I've sent it over
to the other lawyer and I'm waiting for the response.
So it's it's really good to know that that could work.
But folks, for all of you faced with nursing home care,
last minute, don't just write the check, get the guide
eight six six eight four eight five six nine to nine.
Speaker 2 (37:12):
If you have a question you would like to ask Todd,
visit his website Legal Exchangshow 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 partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
(37:33):
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 (37:41):
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 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
(38:01):
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.
(38:21):
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 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. Summers here, New England, and
(38:45):
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, you'll feel it. You're naturally in
(39:05):
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 make it happen, go to
visit USVII dot com to learn more. In start planning,
(39:26):
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.
Speaker 5 (39:41):
Artificial intelligence isn't just the future, it's already shaping how
people think about their money. Hi, this is Chuck Zada
from the Armstrong Advisory Group. We've put together a new
guide called AI in your Financial Plan. In it, we
explore the ways that AI is being used in financial technology,
from apps the track spending to tools that can help
identify trends. It's a rapidly changing space, and this guide
(40:04):
is designed to help you understand some of the potential
benefits and risks that AI may present. Want to learn more,
call eight hundred three nine three for zero zero one
and request your free copy of AI and your Financial Plan.
That's eight hundred three nine three for zero zero one,
or visit Armstrong Advisory dot com.
Speaker 1 (40:26):
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, and estate planning advisors before making
any investment decisions. Armstrong may 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,
(40:47):
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 (41:01):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor 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 talking about that last minute
medicaid eligibility. We've covered the house for married people, single
(41:22):
people quite a bit. I want to talk about rental property. Oh,
is it possible to protect rental properties from the nursing home?
Last minute?
Speaker 3 (41:34):
Protect? Yes? Really? Delay is a better word.
Speaker 2 (41:41):
So let me explain this.
Speaker 3 (41:43):
Explain. So, a rental property is a countable asset. And
remember in the guide folks, it's all about countable assets
versus non countable assets. I've said it many times. This
is an example of what we would consider a non
countable asset, at least at the time of application.
Speaker 2 (42:04):
So it wouldn't stop you for you becoming qualified from
any case.
Speaker 3 (42:08):
Right, So if you have a million dollar rental property,
this would be okay, that's not going towards my one
hundred and fifty thousand dollars. You know, if I'm like
a community spouse, let's say that I can keep or
my two thousand dollars limits if I'm single, that's just
not going to be looked at. Yeah. Why because it's
(42:29):
generating income essential to self support. That's what the statute says. Okay,
So because of that, this will be noncountable but leanable.
Speaker 2 (42:41):
But leanable Okay.
Speaker 3 (42:42):
So there's the delay.
Speaker 2 (42:43):
Okay, So you have rental income coming in. That's income
that I would think that would the nursing home probably
wants to grab onto. But at the same time, you
still have to pay the taxes, pay the snow removal
all of the things, the expenses of that property. So
(43:04):
how do you do that if you have to send
the income to the nursing home.
Speaker 3 (43:07):
Yeah, great question. So in the beauty of this idea
that it's non countable and they're going to let you
keep it because they also say, well, we understand if
you're going to keep it, you have to maintain it.
So they're only going to demand that you give the
nursing home the net rent, Okay, which is great.
Speaker 1 (43:28):
Right.
Speaker 3 (43:29):
So if I need to pay the real estate tax, yeah,
I need to pay a utility bill or something. Yeah,
and you kind of know what your monthly expenses are,
and you kind of come up with that and you say, okay,
you know I'm earning three thousand a month in rent,
but my expenses are one thousand a month. I will
give the nursing home two thousand a month, okay, and
(43:50):
you got to keep the building home run. Yes, we're
at a lower rate.
Speaker 2 (43:55):
Okay. So that would be if you're talking about a
single individual. What happens if you own that with your spouse.
Do they get to keep half and then the nursing
home gets half?
Speaker 3 (44:03):
Yeah? I think I think it depends on how it's owned.
But but yeah, I would say that the at home
spouse is allowed is it really allowed an unlimited amount
of income? Right? It doesn't matter how much the at
home spouse makes. But if the property was owned jointly,
then you maintain the property and then split the net
(44:23):
rent yep right and allow the healthy spouse to keep half.
You could allocate more if they are not meeting their
minimum monthly maintenance needs allowance that a community spouse is
entitled to. So, folks, these are just some of the
ideas some of the topics that are in this guide. Right,
(44:44):
this was a great example so far of a noncountable asset.
You wouldn't think it, right, a big rental property non countable.
Same thing like with a house. What about a vacation home?
What about life insurance? Right? What about having an IR
or a four to oh one K? And folks, they're
different for married couples versus single people. And don't forget
(45:07):
there could be some last minute things you can do
to transfer assets, believe it or not, and not have
a five year waiting period. You got to get the
guide to learn how this works. So if you're faced
with nursing home care don't just write the check, get
the guide, learn what your options are, then go to
the lawyer and see if you can figure out what
(45:27):
to do eight six six eight four eight five six
nine nine or Legal Exchange show dot com. It's packed
with ideas and information on medicaid eligibility eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com.
Speaker 2 (45:47):
So, Todd, you just mentioned vacation homes. If you have
a vacation home that you have not previously rented out,
do you have to have rented it for a certain
amount of time? Time in order to do the same
thing that you we just talked about saving a rental
property last minute? Is there like a look back on that?
Or how does that? Hey? How is that treated?
Speaker 6 (46:09):
Yeah?
Speaker 3 (46:10):
I think what's what Susan's asking is, first and foremost,
how is a vacation home treated? First? Countable? You're right, Susan,
one hundred percent countable. You're gonna need to deal with this.
Speaker 2 (46:22):
Not your primary, not your primary, it's.
Speaker 3 (46:24):
Not your rental. It's a countable asset. It's going to
prevent you from becoming eligible for medicaid unless and that's
what you were leading into, Susan unless you do something
with it to transform it into a non countable asset
like what rented rental. You absolutely could. Does it have
to be rented in the past, No, there is no
(46:48):
look back period. You just have to say that I
am now going to rent it right, okay, But you
need to hurry up and actually rented, get it rented.
You can't just delay that, say you're doing it. You're
going to have to do it right, okay. And so
the answer is you can do it, and I would
look into that as a great way of saving the assets.
Speaker 2 (47:09):
Okay. So all right, so we go down the path.
They become eligible for medicaid and then ultimately they'll pass
away in the nursing home. What happens then to these
rental properties you mentioned there's a lean put on.
Speaker 3 (47:22):
Yeah, so let's talk about the lean, right, the lean
is really really your friend.
Speaker 2 (47:29):
He doesn't sound friendly, I know, I.
Speaker 3 (47:31):
Know, but let's explain why it is your friend. So
we'll go back to the you know, the single person
with the rental and they've got maybe two thousand dollars
a month coming in and social Security yep, and the
rent is three thousand a month and they have net
(47:54):
rent of two, so four. So they got four thousand
in income and they can only keep two thousand dollars
in the bank. So they we've gotten to that point,
and they have this rental property that's a million dollars.
But we've just learned that that's non countable. So it
(48:15):
doesn't go against the two thousand that I just said
they're only allowed to have in the bank. It's just
not countable. Wow, but leanable so great. They look at
all these assets, they say, that's non countable. You got
two thousand in the bank. You're eligible for medicaid. Assuming
you don't have a house, you're eligible for medicaid. Why
(48:36):
does that matter? Well, because if I didn't get on Medicaid,
I would be spending about fifteen grand a month on
the nursing home. If I get on Medicaid, I'm going
to be spending about sixty five hundred dollars a month
on Medicaid. Wow, that's a big difference. So not only
am I now paying the full pay for the nursing
(48:59):
home will be considered sixty five hundred, but I have
four thousand. Remember the rent is helpful here. I've got
four thousand a month coming in to give to the
nursing home.
Speaker 2 (49:12):
So that's part of the sixty five hundred, not on
top of the sixty five hundred, So that takes away
great point.
Speaker 3 (49:18):
So you go sixty five hundred minus four, leaving me
twenty five hundred a month of what we call a lean.
So there's your lean question. See why it's your friend?
So now I can live there? What if I stay
in the nursing home for two years? Right? Was there
a little over twenty four thousand a year? Sixty sixty grand?
(49:43):
Say we got sixty grand after two years of a
lean on a million dollar property? Are you kidding me?
Any day of the week? Right, happy to have it.
Now the kids get to keep the property. They got
to step up in basis, so if they want to
sell it, no capital gains tax to be paid by them,
and if not, it's a full step up in basis.
(50:05):
They can keep the property, mortgage it, pay off the
sixty to the state States made whole, and they now
have a house that they can rent and depreciate against
the high basis. Folks really need to get some guidance
before you go into a nursing home. The guide might
be at least a step in that direction, and of
(50:28):
course call your elder law attorney, but don't just write
the check to the nursing home. Learn what you can do.
Get this guide eight six' six eight four eight five
six nine nine Or Legal exchange show dot com and
you can download it right there for.
Speaker 2 (50:43):
Free Todd lutsky from the law firm Of cushing And,
dolan thank you so.
Speaker 3 (50:47):
Much thank, You, susan always a.
Speaker 2 (50:49):
Pleasure 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.
Speaker 1 (50:58):
Lutsky 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
(51:20):
information 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.
(51:40):
Nine that's eight six six eight four eight five six nine,
Nine or you can request it online 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.
Speaker 6 (51:59):
Affiliate artificial intelligence is constantly evolving and can even be
a revolutionary asset to a financial.
Speaker 4 (52:05):
STRATEGY.
Speaker 6 (52:06):
Hi this Is Mike armstrong from The Armstrong Advisory. Group
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it we explain how artificial intelligence continues to make inroads
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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.
Speaker 1 (52:45):
Com 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. Service summers, Here New, england and it's the
perfect time to trade the daily routine for something. Extraordinary
(53:08):
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
with the heartbeat of the. Islands there's no passport, needed
(53:28):
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
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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, Tod Lutsky and Susan Powers.
Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor 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 (00:54):
I am great? Thank you. What do you have for
us this week?
Speaker 3 (00:56):
I tell you this week I've got two real life
stories which are to me sometimes better than cases because
these are things that I've experienced firsthand. So here's the situation.
The first one is really about full planning with a family,
things you don't think about. And this is a full
plan plus multiple LLCs with businesses, rental properties, and we're
(01:18):
going to learn about by sell agreements. We're going to
learn about holding companies. We're going to learn about family
planning and how important it is, especially when one of
the partners in this case is not a family member.
It's just a third party, so fifty to fifty, but
you've got to take care of you both sides of
the family and the businesses, so it becomes really important
to understand how the planning works. And then another one
(01:39):
was a second marriage situation which was kind of interesting
with one special needs child from the prior marriage and
the mother of the well not the mother, but the
second wife in this case, not the mother. Yes, stepmom
is not overly comfortable with this or good relationship, i
(02:01):
should say, with this special needs child of the other.
So there's some gifting ideas in advance. How do we
take care of everybody, How do we do the planning
so that you know, we can care for the child
and the you know, second wife. So lots to think
about in this case. But folks, not all the time
does everybody have the ability to plan, And lots of
(02:23):
times they'll find themselves faced with perhaps a nursing home
situation and don't know what to do. Please don't write
the check. Instead, call and get this guide Last minute
Medicaid eligibility planning. It's going to help you understand what's
countable and what's not. And every asset is different, a house,
a vacation home, even jointly owned accounts with a spouse
(02:44):
versus jointly owned accounts with individuals. What about life insurance?
Four to oh one ks, Folks, there are things that
can be done to protect these assets last minute. Some
are even not countable, some are accountable, different for married
couple versus a single person. Call get the guide learn
how to protect assets last minute from the Nursing Home
(03:06):
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 Exchange
Show dot Com. Okay, folks, this is an interesting case.
We have husband and wife. They needed full plan. They
have two kids, three grandkids. They also have a construction
(03:29):
company in about six LLCs generally own rental properties, and
of course they build rentals, and they build property and
then sell it, and some they keep a lot of
moving parts, a lot of moving parts here. The other
moving part is that not only is it commercial and
residential rental, but it's a fifty percent. The client owns
fifty percent and some third party owns fifty percent who
(03:52):
actually handed up bringing into the meeting to help at
a second meeting to do a stay planning for So
everybody needs to take care of everybody here. And so
with this we have to figure out they're worth about
fifteen million, this one client, and they want to do
a state plan. They obviously want to reduce their estate tax,
they want to avoid probate, They want to provide for
(04:14):
the kids, They want to divorce proof the assets for
the kids. They want a generation skip for the kids,
you know, save taxes that way. And of course finally
they need to make a plan for the business to
take care of the surviving partner, to make sure the
assets go to the surviving partner. But we don't disinherit
(04:35):
the family of the decendent. And interestingly enough, as you
might imagine in this particular case. I shouldn't say it's
all the time, but in this particular case, both spouses
are not involved in the business.
Speaker 2 (04:50):
So it's could be a nightmare if you don't have
your proper planning in place.
Speaker 3 (04:53):
Right, So they really want to make sure you take
care of you know, if owner one dies, owner one
spouse does not want to run or be involved with owner.
Speaker 2 (05:02):
She wants to get bought out.
Speaker 3 (05:03):
Yeah, and that's really what's important here. So let's take
a peek at tall order, but certainly handle you can
handle this right, So state planning side right. First thing is,
you know, we need to set up the basic estate
planning for the family. In this case, they still are
of the size that a one joint revocable trust would work.
We can put all the assets in. Most importantly, as
(05:26):
I say fund the trust, I have so many clients
that come in that even say, I listened to you
on the radio and you say fund the trust. We're
going to make sure we fund the trust. So apparently
I'm saying it.
Speaker 2 (05:35):
Learn lessons from other's mistakes.
Speaker 3 (05:37):
And so we would deed the house to the trust.
We would change the homeowner's insurance, we would add investment
property to the trust, retitle all the assets to the trust,
and we use their social Security numbers, so no need
to understand or worry about filing an income tax return
for this trust. Then, of course the LLC shares, we
have to take those and transfer them to the trust.
(05:59):
Got to put the shares of the LLC in. From
an estate tax standpoint, of course, we're simply going to
have the remainder share in the marital share set up.
And with this joint trust on a fifteen million dollar estate,
we're going to really be able to cram down the
whole thirteen point nine to nine million, which is the
current exemption. Although the BBB just passed, so we've got
(06:20):
new estate tax exemptions to talk about. And so in
this case, you know you're gonna put eleven point nine
million in the q TIP share, two million in the
remainder share. There's your thirteen point nine million sheltered for
federal tax and only one point one million goes in
the general marital share to be taxed later when the
spouse dies. So federally, when the spouse dies, she's worth
(06:41):
one point one wow wow.
Speaker 2 (06:44):
Because if they didn't do planning, they would have huge
estate taxes on the federal.
Speaker 3 (06:49):
Level, big problems. So and then from Massachusetts we would
just make an election for the eleven nine. Now, of
course we're going to treat the kids equally. We're going
to divorce proof the language in there where it's going
to be generation skipping. That's the basic part, folks. We
talk about that a lot. But I want to save
a little time for the corporate side here.
Speaker 2 (07:06):
And that works regardless of the size of your estate
if you have that, right.
Speaker 3 (07:10):
Yeah, it does. The basic plan, The basic plan is
going to work you small or larger. If you get
too large, I would probably go to two trusts. Yeah,
but under general Yeah, today we got the almost fourteen
million each, so you could shelter twenty eight million. Now,
corporate side very important, right, So what I suggested was
I had all these LLCs, all these single these these
(07:32):
LLCs which were two owners, right, two separate owners. And
so what I suggested is, why don't we set up
a holding company and put all of these sub all
these LLCs as subllc's.
Speaker 2 (07:45):
And what's the benefit of doing that time?
Speaker 3 (07:46):
So, now the six LLC's underneath are owned one hundred
percent by a holding company. So they're now all single member.
Speaker 2 (07:54):
LLC's tax returns.
Speaker 3 (07:56):
Yeah. Instead of filing six individual income tax returns for
those LLCs, now they only have to file one for
the holding company. Nice, and the holding company will be
owned fifty percent by my client and fifty percent by
the partner who might ultimately become a client, and so beautiful.
They would loved the efficiency of that. And then you
(08:16):
know again it's but you still have the individualized protection.
So if someone gets sued on property number one, they
can only sue LLC number one, even though it's a
sub of the holding company. They can't sue any of
the other companies or the shareholders personally. Home run win.
Speaker 2 (08:35):
And how do you address the spouses in buying them out?
Speaker 3 (08:38):
If so? Yeah, Now we explain we need to buy
sell agreement right across purchase agreement, and we know this
is the way to go. So you would set up
life insurance on owner one and owner two, so owner
one would own life insurance on owner two, and owner
two would own life insurance on owner one. Now, in
these buy sell agreements, there's an obligation to buy it out.
You can have other trigger evans. It's like selling or
(09:01):
retirement or it doesn't have to just be death, but
let's talk about the death one. So this way in case,
let's say my client who's a little older dies, say
he's Owner one, Owner one. Owner two has life insurance
on Owner one.
Speaker 2 (09:15):
And he owns that personally.
Speaker 3 (09:16):
Other business owns it personally. Absolutely important that we do that.
Now all the money flows to Owner one income tax
free because it's life insurance. Owner two, who died has
stock that got a step up in basis on the
date of death, and now Owner one buys out Owner
two obligation. But there's no capital gain because we had
(09:39):
to step up in basis and all you do is
swap the assets, so there's no double inclusion for state
tax purposes. And now you had money to take care
of the surviving n to take care of the deceit
and spouse whose decedents spouse the side of the family,
so you can still take care folks, these buy sell
agreements are important. So I know it a lot to
(10:00):
talk about in a short amount of time. And but
for folks that can't plan, I'm just going to let
you know, give a call, get the guide for the
last minute Medicaid eligibility. Don't write the check to the
Nursing Home eight six six eight four eight five six
nine nine or Legal Exchange show dot com and you
can download it there.
Speaker 2 (10:19):
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 have
much more to come when we return after this quick
break on the Legal Exchange with Todd Lutsky.
Speaker 1 (10:35):
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 eldir 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
(10:56):
regarding numerous strategies that can protect your assets from the
nursing home, 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 sixty 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. Exprest 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 do not endorse each
other and are not affiliated.
Speaker 4 (11:36):
This is Michael Valila, adjudent of the Disabled American Veterans
Department of Massachusetts. The DAVIA Massachusetts has helped me and
countless others adjust to civilian life through a variety of
incredible programs. Through our Local Veterans Assistance Program, we provide
necessary services to veterans in their communities, such as food, shopping, landscaping,
(11:56):
and companionship. But we need your support. You can help
by making a donator today. Please visit DAV fivek dot Boston.
That's DAV fivek dot Boston.
Speaker 5 (12:06):
Artificial intelligence isn't just the future, it's already shaping how
people think about their money. Hi, this is Chuck Zada
from the Armstrong Advisory Group. We've put together a new
guide called AI in your Financial Plan.
Speaker 3 (12:18):
In it, we.
Speaker 5 (12:19):
Explore the ways that AI is being used in financial technology,
from apps the track spending to tools that can help
identify trends. It's a rapidly changing space, and this guide
is designed to help you understand some of the potential
benefits and risks that AI may present. Want to learn more,
Call eight hundred three nine three for zero zero one
(12:40):
and request your free copy of AI and your Financial Plan.
That's eight hundred three nine three for zero zero one,
or visit Armstrong Advisory dot com.
Speaker 1 (12:51):
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. Summers here, New England, and it's the perfect
time to trade the daily routine for something extraordinary. Say
(13:14):
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 with
the heartbeat of the islands. There's no passport needed, no
(13:34):
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. That's visit
USVII dot com. Your island getaway is closer than you think,
(13:57):
the US Virgin Islands where summer never ends. Book your
trip today at visit USBI 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
Call Todd right now and make an appointment. Eight six
six eight four eight five six ninety nine. That's eight
(14:19):
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 masters in taxation.
Where are we headed down, Todd.
Speaker 3 (14:38):
We are going to talk about another real story, real
life story. I've got a second marriage situation and a
step mom and the father of this one child is
special needs. So he comes to the marriage with one daughter.
She's the stepmother doesn't get along well with this daughter.
(15:01):
So let's see. But in this case, you know, they
came in to do planning, you know, but it's the
second marriage. And again, this this special needs child is
not is highly functional by the way, not even getting
any governmental benefits at the moment, actually went to college,
but is learning disabled. There's there's issues, sure, and and however,
(15:21):
the problem we have here is that the feeling is
that the wife, the stepmother doesn't really care much for
this special needs child. And and the relationship isn't horrible,
but it doesn't appear that it's great either.
Speaker 2 (15:39):
Not something you'd have a good faith in after you.
Speaker 3 (15:41):
Pass yeah, I think that's what he's worried about. Right.
She she she didn't bring a lot to the marriage,
but you know he did. He did have some family member.
She did have some family members and siblings and nieces
and nephews that that you know, she would want to
provide for. But it's mainly this this daughter. So what
(16:01):
do they have. They've got a two million dollar home,
They've got another million dollar home that he's actually letting
the daughter live in now. And you know, he says,
he says that they have another eight million or so
of investments, so call it eleven million, okay, total assets,
(16:21):
and they had no estate planing done at all. Like okay,
well that's shocking in and of itself. And so he's saying,
I really want to gift away, you know, assets right
now to my daughter, like the house that she lives in,
and you know, maybe like four million dollars to give
it away now right now. I'm like, okay, Well, why
he goes Well, because I travel a lot, and every
(16:42):
time I get on the plane, I'm afraid if something
happens to me, my current wife, the stepmother of my daughter,
would not really care for her, try not really provide
for her and take care of her. So I'm I'm
worried about that. So I really want to get taken
care of by making a gift. So I said, okay,
(17:04):
well we can do that. And it's going to be
very important obviously to do your own basic estate planning
as well, take care of taxes and probate, and how
are we going to care for the surviving spouse and
her side of the family. So we have to deal
with this whole issue. And initially she wasn't at the meeting,
so I said, well, obviously we're going to need to
(17:25):
bring her in. We're going to have to explain all
this to her, and so what do we what can
we really learn from this? So this is a situation
where you know when not only is second marriage is important.
Anyone who's listening has second marriage, please do your estate planning.
But we have second marriages and special needs child potentially,
(17:47):
so we've got a lot of issues here and when
you're in that situation, you really need to do your planning. Now,
I say that before I give you what I think
the tips and lessons are on this, just want to
remind you about the guide for this month. Obviously, you've
got to do planning for something like this, but you
may need to plan to protect assets from the nursing home,
but unfortunately you don't always get to it, and so
(18:09):
people find themselves heading into a nursing home that haven't
done any planning. Or if you've done planning, you've always
leave stuff outside the trust like iras, et cetera that
need to be protected. So this guide is really for
anybody who did planning, who didn't do planning, but is
entering a nursing home. Don't just write the check. Learn
(18:30):
how each asset is treated differently. Married couples and single
people also treated differently, so from homes to rental properties
to four h one case to annuities to you know,
what is there that can be done with these assets?
And learn the few ways you can avoid the five
year waiting period on certain assets and certain situations. Get
(18:51):
the guide eight six six eight four eight five six
nine to nine or Legal Exchange Show dot com. It's
packed with information eight six six eight four eight five
six ninety nine or Legal Exchange Show dot com. Okay,
what are we gonna do for these people? So I
(19:11):
started to explain, you know, all right, do we want
to make a gift now, generally, when you have and
for everybody listening, if you generally just have a first
marriage and it's a special needs situation, you don't need
to set up a gifting trust now, right, Just provide
for it inside.
Speaker 2 (19:32):
You're the creation of it later.
Speaker 3 (19:34):
Yeah, in your trust, in your regular family trust that
you put together, simply just put in there, you know,
a share that is a special needs trust share built
in for that particular child, and you can do it.
So you don't. That's the first comment. You don't. Everybody listening,
you don't have to do it like this. But in
this case, I understand the position. Sure, I understand what
(19:54):
he's saying. Then of course you think, is it easy
to do this? Well, it's not always easy. You got
to think about how he wanted to make an outright gift.
I'm like, an outright gift is not a good idea.
Speaker 2 (20:04):
So he wanted to just give it to her her name,
that's into a gifting trust exactly.
Speaker 3 (20:10):
That's what it sounded like when he came in and
I said, oh, oh, slow down. You know this is where attorneys,
this is where your counsel really comes in. And I said,
you know, an outright gift is probably not going to
be a good idea. I mean, in this case, it
would prevent her from getting any governmental benefits that she
might be entitled to, either currently or or in the
future if she needs them, because I guess right now
(20:32):
she's not currently on any. I said, not to mention
the fact that there's creditor problems right if she gets married,
or or because she's got some level of disability.
Speaker 2 (20:44):
And advantage of very easily exactly.
Speaker 3 (20:46):
Where I was headed. I go, she could either get
married and get to force the divorce and to take
advantage that way, or someone manipulates her with money, you know.
So I can't say enough that an outright gift is
not wait.
Speaker 2 (21:00):
Not a great idea for sure.
Speaker 3 (21:02):
So I said, all right, let's do an irrevocable gifting trust.
And that's fine. We do this for clients all the time,
especially higher net worth clients. And then we need to
decide do we want to make it a completed gift
or an incomplete gift. Because we don't necessarily have to
make it an incomplete gift, I mean a completed gift,
it could still be an irrevocable trust set aside to
(21:23):
take care of this daughter. The reason I say that
is because they're worth about what I say, eleven million
or so. Yep, for a state tax purposes. When you
think about completed gifts, there's no benefit. This person's already
not going to pay any estate taxes if you just
did basic estate planning. Now, the reason I say that
(21:45):
is because if I if I give it away, I'm
trapping twenty eight percent capital gains taxes.
Speaker 2 (21:51):
Right and you have to imagine that for a million
dollar home that she's living in and another four or
five million in investments, there's got to be some capital.
Speaker 3 (21:59):
Gain there exactly. So I asked them about the investment portfolio.
I said, look, the difference is Massachusetts only has a
ten percent of state tax. I get it. If you
make a gift, it's going to help you for mass
for sure, because you can only shelter four million dollars
for mass right. But if you make a gift federally,
it's not going to help because you could keep everything,
(22:19):
pay no federal tax forty percent and increase the basis
to eliminate any twenty eight point eight percent capital gains tax. Yep.
That's a lot of tax. Sure is yeah, I'll give
Massachusetts ten percent any day of the week.
Speaker 2 (22:33):
Right on five million. You know, it's trusts a lot
of money.
Speaker 3 (22:36):
So in this case, we found out that there's a
there's a good chunk of assets in there that kind
of high basis. So I said, oh, well, those are
available for gifting. So and couple that with the fact
that you really want to just make sure that this
trust takes care of the daughter, and so I get it.
So we're probably gonna end up making it a completed
gift for gift tax purposes, but that's it's critical. But
(22:57):
then I explained to them during life, we'll make it
and a grant tor trust. So all the income that's
generated you can continue to pay the income taxes on
even though you're not earning it client at a lower
rate than the trust. And that's like gifting on steroids,
because the government doesn't call that payment of the tax
(23:20):
on money. You don't actually get a gift to the trust.
So now you're further reducing your estate and you're paying
lower income taxes at the same time. So, folks, these
are things to think about. And you know, it wasn't
obviously we have to do an entire estate plan for
him as well. I said, you got to bring your
wife in and we need to do an estate plan.
But now we've moved five million dollars out of the estate,
(23:43):
so their Massachusetts of state tax is now going to
be on the remaining five minus the four we can protect.
They're only paying taxes on one, So huge help folks. Again,
some people can't plan. If you're faced with nursing home care,
Last Minute get the guide eight six six eight four
A eight five six nine to nine or Legal Exchange
(24:03):
show dot com. You can download it right there.
Speaker 2 (24:06):
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. Todd will be
answering your listener questions when we return to the Legal
Exchange with Todd Lutsky.
Speaker 1 (24:21):
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
(24:42):
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 four eight five six nine nine. That's eight
(25:03):
six six eight four eight five six nine nine, or
you can request it online by visiting Legal exchangshow dot com.
That's Legal exchange show dot com. The proceeding was paid
for in the use 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.
Speaker 6 (25:23):
Artificial intelligence is constantly evolving and can even be a
revolutionary asset to a financial strategy.
Speaker 3 (25:29):
HI.
Speaker 6 (25:29):
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
(25:51):
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
thanks for your free guide. That number again is eight
hundred and three nine three four zero zero one, or
you can request the guide online by visiting us at
Armstrong Advisory dot com.
Speaker 1 (26:08):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide is specific financial, legal, or tax advice. Consult
your own financial, tax, and estate 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
(26:31):
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 with
the heartbeat of the islands. There's no passport needed, no
(26:51):
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 and start planning. That's visit
USVII dot com. Your island getaway is closer than you think,
(27:14):
the US 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,
(27:36):
here's Todd Lutsky and Susan Powers.
Speaker 2 (27:41):
Welcome back, Tod. I have a few questions from listeners
for you. First one's pretty simple, but I like this
question from Michael and Hubbardston Mass and Michael writes, my
wife and I are looking to get a will and
protect our assets from a nursing home. What is our
first step into this process? I think a lot of
people don't know where to say start.
Speaker 3 (28:00):
Yeah, obviously you need to find a lawyer. I would
say start there, but you know, I joke about it,
but start with a you know, an elder law lawyer
or an estate tax planning lawyer. You kind of kind
of find both. I mean, I mean I obviously happen
to do both, but you need both. You need someone
who understands nursing home rules, but you also need someone
(28:23):
who understands tax laws. You can't do really one without
the other. Every seminar I give, I start off by
telling the folks that are out there, and a lot
of them are lawyers, and I say, look, you know
so many of you are practicing elder law. But remember,
you can't do this if you don't understand the taxes.
You've got to make sure this trust is designed for
(28:45):
income tax purposes, capital gains tax purposes, gift a state
tax purposes. You've got to cover all those bases, because
let's face it, you may set the trust up, but
not everyone goes to the nursing home, but they all
and so you need to know how to handle that
side of it as well. So that would be my
(29:06):
first step in telling you to find a lawyer like that.
Speaker 2 (29:10):
So you find your attorney. What do you need to
consider when you're going into that meeting, Todd? What do
you have to bring a lot of stuff with you?
Do you need a list of stuff? Like what do
you do?
Speaker 3 (29:20):
Yeah? I would say gather You don't really have to
spend a lot of time, just in your mind a
good idea of what you own and how you own it,
meaning is it joint, is it in just one name,
is it in a trust? And then also the value
(29:40):
of what it is.
Speaker 2 (29:41):
That'll determine what your solution is, what your recommendation is correct.
Speaker 3 (29:45):
Yeah, it'll drive the estate plan. So again, what you own,
how you own it, and what it's worth roughly now
that's the basics. If, on the other hand, you happen
to have an exist trust in place, I'm not worried
so much about a will or a health care proxy
or popertaarty. I don't need to see those, but I
(30:08):
would need to see an existing trust, because again, once
we determine what your objectives are, then I generally look
at that existing trust and I say, is this trust
doing what you want to do today?
Speaker 2 (30:24):
So in the case of Michael, he if he had
a revocable trust in place, but now he's saying they
want to protect assets from a nursing home, that would
mean that revocable trust wouldn't meet those objectives correct.
Speaker 3 (30:37):
Right, So at the end of the day I would
have gone through this question and answer session, I would
have determined what their goals are today, what their estate's worth,
what the objectives are, and then in that list, obviously
I would have asked one of them would have been
do you want to protect assets from the nursing home?
So if that now is on the list, along with taxes,
(31:00):
obate and bloodline planning, then I can look at the
trust and if that trust is revocable, my first comment
would be I don't need to read it any further.
One minute I see the word revocable amendable, I'm going
to say we are not accomplishing your current objectives with
this document because it's revocable.
Speaker 2 (31:21):
And they change over time. Yeah, those objectives.
Speaker 3 (31:23):
That's right, that's exactly right. So you pick up the
phone and you say, hey, I got to follow up
on my existing estate plan. Call your lawyer, say I
want to review if you want to and see. Sometimes
the review takes five minutes and you're in good shape.
But in this case I would tell the client, no,
you would need to start over right and then likely
But if on the other hand, that wasn't on there
(31:44):
and I read the document and it said, hey, yeah,
it looks like it's doing what you wanted to do,
I send them on their way. No reason to recreate
the wheel if it's doing what it needs to be doing,
so it's practical for me, that's how I do it. So, folks,
that's a great, great question actually in terms of how
to get started. But you also might want to know
how do you get started? If you walk into a
(32:05):
nursing home and you're in that situation, now, what do
you do? Well, you might not have done any planning,
but this guide will help you face with that information
about that situation. Excuse me. You can simply learn about
how assets are treated, what's countable, what's not countable in
a married couple situation when one is sick and one isn't,
(32:26):
versus a single person situation. Sometimes these accountability assets accountable
and non countable. Asset status is different for married versus
single people. Rental properties, homes, vacation homes, four H one,
k's life insurance folks, they're treated differently, and there's even
(32:46):
some exceptions to the five year rule and some transfers
that can be made last minute. These are This kind
of information is in the guide eight six six eight
four eight five six nine or Legal Exchange Show dot com.
Just don't write the check. Get the guide first eight
six six eight four eight five six nine nine or
(33:10):
Legal Exchange Show dot com.
Speaker 2 (33:13):
Our last question comes from Dawn in Warwick, Rhode Island,
and Don writes, my mother passed away recently, and I'm
concerned about a substantial inheritance that I will be receiving
and the likelihood that I will be getting divorced. Is
there anything I can do now to protect those assets
if my mother's trust leaves the assets outright to me,
(33:33):
So mom's.
Speaker 3 (33:33):
Already passed Yeah, So in this case, mom's passed away.
So have they read the trust yet?
Speaker 2 (33:42):
It says it sounds like they're not sure.
Speaker 3 (33:45):
So if the trust. First of all, the first thing
you need to do when someone passes is, you know,
call the lawyer and get in front of them and
him or her and learn what the trust says. So
obviously that's what you need to do first. But yeah,
I mean, this is this could be a problem. So
if she's saying she doesn't know if she's getting divorced, but.
Speaker 2 (34:04):
She said it's likely she's going to be getting divorced,
sounds like maybe he's been waiting around for that.
Speaker 3 (34:10):
Oh kick, So yeah, you really hate to see that. Yeah,
you can't prove it, but it smells bad.
Speaker 2 (34:17):
Yeah, it's out there for sure.
Speaker 3 (34:19):
And so here's the problem. If mom has already died,
you're really going to have to read the trust. It'll
say and let's say you're right. It says that divide
everything you know equally and pay it out. If that's
the case, it's your asset. In fact, it's your asset
generally right away. Now, if you read the trust, there
(34:44):
might be language like we have in our documents. We
have something called bad behavior clause.
Speaker 2 (34:50):
Yeah.
Speaker 3 (34:50):
Yeah, and so there's this paragraph that sort of gives
the trustee discretion. It says if the trust the fields
it's not in the best interest of the beneficiary to
receive the asset, then they can hold it back, notwithstanding
(35:11):
the language in the document. So so this would not
necessarily bad behavior on her part, but there is bad
behavior going on and it's not in the best interest
of the beneficiary to get the asset.
Speaker 1 (35:25):
Now.
Speaker 3 (35:26):
It might not be because of a divorce. It could
be that it turns out that this child is a
drug addict now, or or a dependency of something, or
or you've just noticed over time that they're horrible with
money with money, you know, or manipulated easily, or you know.
There can be other reasons that you can you can
maybe do this hold back, but you're really going to
(35:49):
need to see the trust to see if that's in there.
Speaker 2 (35:53):
But if it's, if it's not hold it in trust,
then does that mean that that whole inheritance is going
to be subject to that divorce? They can't like drag
their feet and wait for a distribution.
Speaker 3 (36:07):
Probably not okay, because you know obviously it's there, right
and say the fact that you didn't take it and
put it in your bank yet doesn't matter because it's
really yours anyway, whether it's over here in this bank
and the trust or over here in your bank, over
here still really has your name all over it. Yeah,
(36:28):
and so, and that's important because, like I say, folks,
I deal with this all the time. And so when
somebody gets divorced, never let's let's say Mom was alive here.
If Mom was alive here, they would still be looking
at this trust even if Mom was alive to say,
is this an inheritance that's going to be subject to
(36:49):
the divorce.
Speaker 2 (36:49):
But she could try and divorce proof last minut.
Speaker 3 (36:51):
Yes, So, folks, there's I'm dealing with this right now
with a divorce proof language, and I've sent it over
to the other lawyer and I'm waiting for the response.
So it's it's really good to know that that could work.
But folks, for all of you faced with nursing home care,
last minute, don't just write the check, get the guide
eight six six eight four eight five six nine to nine.
Speaker 2 (37:12):
If you have a question you would like to ask Todd,
visit his website Legal Exchangshow 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 partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
(37:33):
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 (37:41):
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 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
(38:01):
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.
(38:21):
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 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. Summers here, New England, and
(38:45):
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, you'll feel it. You're naturally in
(39:05):
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 make it happen, go to
visit USVII dot com to learn more. In start planning,
(39:26):
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.
Speaker 5 (39:41):
Artificial intelligence isn't just the future, it's already shaping how
people think about their money. Hi, this is Chuck Zada
from the Armstrong Advisory Group. We've put together a new
guide called AI in your Financial Plan. In it, we
explore the ways that AI is being used in financial technology,
from apps the track spending to tools that can help
identify trends. It's a rapidly changing space, and this guide
(40:04):
is designed to help you understand some of the potential
benefits and risks that AI may present. Want to learn more,
call eight hundred three nine three for zero zero one
and request your free copy of AI and your Financial Plan.
That's eight hundred three nine three for zero zero one,
or visit Armstrong Advisory dot com.
Speaker 1 (40:26):
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, and estate planning advisors before making
any investment decisions. Armstrong may 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,
(40:47):
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 (41:01):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor 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 talking about that last minute
medicaid eligibility. We've covered the house for married people, single
(41:22):
people quite a bit. I want to talk about rental property. Oh,
is it possible to protect rental properties from the nursing home?
Last minute?
Speaker 3 (41:34):
Protect? Yes? Really? Delay is a better word.
Speaker 2 (41:41):
So let me explain this.
Speaker 3 (41:43):
Explain. So, a rental property is a countable asset. And
remember in the guide folks, it's all about countable assets
versus non countable assets. I've said it many times. This
is an example of what we would consider a non
countable asset, at least at the time of application.
Speaker 2 (42:04):
So it wouldn't stop you for you becoming qualified from
any case.
Speaker 3 (42:08):
Right, So if you have a million dollar rental property,
this would be okay, that's not going towards my one
hundred and fifty thousand dollars. You know, if I'm like
a community spouse, let's say that I can keep or
my two thousand dollars limits if I'm single, that's just
not going to be looked at. Yeah. Why because it's
(42:29):
generating income essential to self support. That's what the statute says. Okay,
So because of that, this will be noncountable but leanable.
Speaker 2 (42:41):
But leanable Okay.
Speaker 3 (42:42):
So there's the delay.
Speaker 2 (42:43):
Okay, So you have rental income coming in. That's income
that I would think that would the nursing home probably
wants to grab onto. But at the same time, you
still have to pay the taxes, pay the snow removal
all of the things, the expenses of that property. So
(43:04):
how do you do that if you have to send
the income to the nursing home.
Speaker 3 (43:07):
Yeah, great question. So in the beauty of this idea
that it's non countable and they're going to let you
keep it because they also say, well, we understand if
you're going to keep it, you have to maintain it.
So they're only going to demand that you give the
nursing home the net rent, Okay, which is great.
Speaker 1 (43:28):
Right.
Speaker 3 (43:29):
So if I need to pay the real estate tax, yeah,
I need to pay a utility bill or something. Yeah,
and you kind of know what your monthly expenses are,
and you kind of come up with that and you say, okay,
you know I'm earning three thousand a month in rent,
but my expenses are one thousand a month. I will
give the nursing home two thousand a month, okay, and
(43:50):
you got to keep the building home run. Yes, we're
at a lower rate.
Speaker 2 (43:55):
Okay. So that would be if you're talking about a
single individual. What happens if you own that with your spouse.
Do they get to keep half and then the nursing
home gets half?
Speaker 3 (44:03):
Yeah? I think I think it depends on how it's owned.
But but yeah, I would say that the at home
spouse is allowed is it really allowed an unlimited amount
of income? Right? It doesn't matter how much the at
home spouse makes. But if the property was owned jointly,
then you maintain the property and then split the net
(44:23):
rent yep right and allow the healthy spouse to keep half.
You could allocate more if they are not meeting their
minimum monthly maintenance needs allowance that a community spouse is
entitled to. So, folks, these are just some of the
ideas some of the topics that are in this guide. Right,
(44:44):
this was a great example so far of a noncountable asset.
You wouldn't think it, right, a big rental property non countable.
Same thing like with a house. What about a vacation home?
What about life insurance? Right? What about having an IR
or a four to oh one K? And folks, they're
different for married couples versus single people. And don't forget
(45:07):
there could be some last minute things you can do
to transfer assets, believe it or not, and not have
a five year waiting period. You got to get the
guide to learn how this works. So if you're faced
with nursing home care don't just write the check, get
the guide, learn what your options are, then go to
the lawyer and see if you can figure out what
(45:27):
to do eight six six eight four eight five six
nine nine or Legal Exchange show dot com. It's packed
with ideas and information on medicaid eligibility eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com.
Speaker 2 (45:47):
So, Todd, you just mentioned vacation homes. If you have
a vacation home that you have not previously rented out,
do you have to have rented it for a certain
amount of time? Time in order to do the same
thing that you we just talked about saving a rental
property last minute? Is there like a look back on that?
Or how does that? Hey? How is that treated?
Speaker 6 (46:09):
Yeah?
Speaker 3 (46:10):
I think what's what Susan's asking is, first and foremost,
how is a vacation home treated? First? Countable? You're right, Susan,
one hundred percent countable. You're gonna need to deal with this.
Speaker 2 (46:22):
Not your primary, not your primary, it's.
Speaker 3 (46:24):
Not your rental. It's a countable asset. It's going to
prevent you from becoming eligible for medicaid unless and that's
what you were leading into, Susan unless you do something
with it to transform it into a non countable asset
like what rented rental. You absolutely could. Does it have
to be rented in the past, No, there is no
(46:48):
look back period. You just have to say that I
am now going to rent it right, okay, But you
need to hurry up and actually rented, get it rented.
You can't just delay that, say you're doing it. You're
going to have to do it right, okay. And so
the answer is you can do it, and I would
look into that as a great way of saving the assets.
Speaker 2 (47:09):
Okay. So all right, so we go down the path.
They become eligible for medicaid and then ultimately they'll pass
away in the nursing home. What happens then to these
rental properties you mentioned there's a lean put on.
Speaker 3 (47:22):
Yeah, so let's talk about the lean, right, the lean
is really really your friend.
Speaker 2 (47:29):
He doesn't sound friendly, I know, I.
Speaker 3 (47:31):
Know, but let's explain why it is your friend. So
we'll go back to the you know, the single person
with the rental and they've got maybe two thousand dollars
a month coming in and social Security yep, and the
rent is three thousand a month and they have net
(47:54):
rent of two, so four. So they got four thousand
in income and they can only keep two thousand dollars
in the bank. So they we've gotten to that point,
and they have this rental property that's a million dollars.
But we've just learned that that's non countable. So it
(48:15):
doesn't go against the two thousand that I just said
they're only allowed to have in the bank. It's just
not countable. Wow, but leanable so great. They look at
all these assets, they say, that's non countable. You got
two thousand in the bank. You're eligible for medicaid. Assuming
you don't have a house, you're eligible for medicaid. Why
(48:36):
does that matter? Well, because if I didn't get on Medicaid,
I would be spending about fifteen grand a month on
the nursing home. If I get on Medicaid, I'm going
to be spending about sixty five hundred dollars a month
on Medicaid. Wow, that's a big difference. So not only
am I now paying the full pay for the nursing
(48:59):
home will be considered sixty five hundred, but I have
four thousand. Remember the rent is helpful here. I've got
four thousand a month coming in to give to the
nursing home.
Speaker 2 (49:12):
So that's part of the sixty five hundred, not on
top of the sixty five hundred, So that takes away
great point.
Speaker 3 (49:18):
So you go sixty five hundred minus four, leaving me
twenty five hundred a month of what we call a lean.
So there's your lean question. See why it's your friend?
So now I can live there? What if I stay
in the nursing home for two years? Right? Was there
a little over twenty four thousand a year? Sixty sixty grand?
(49:43):
Say we got sixty grand after two years of a
lean on a million dollar property? Are you kidding me?
Any day of the week? Right, happy to have it.
Now the kids get to keep the property. They got
to step up in basis, so if they want to
sell it, no capital gains tax to be paid by them,
and if not, it's a full step up in basis.
(50:05):
They can keep the property, mortgage it, pay off the
sixty to the state States made whole, and they now
have a house that they can rent and depreciate against
the high basis. Folks really need to get some guidance
before you go into a nursing home. The guide might
be at least a step in that direction, and of
(50:28):
course call your elder law attorney, but don't just write
the check to the nursing home. Learn what you can do.
Get this guide eight six' six eight four eight five
six nine nine Or Legal exchange show dot com and
you can download it right there for.
Speaker 2 (50:43):
Free Todd lutsky from the law firm Of cushing And,
dolan thank you so.
Speaker 3 (50:47):
Much thank, You, susan always a.
Speaker 2 (50:49):
Pleasure 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.
Speaker 1 (50:58):
Lutsky 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
(51:20):
information 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.
(51:40):
Nine that's eight six six eight four eight five six nine,
Nine or you can request it online 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.
Speaker 6 (51:59):
Affiliate artificial intelligence is constantly evolving and can even be
a revolutionary asset to a financial.
Speaker 4 (52:05):
STRATEGY.
Speaker 6 (52:06):
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 financial. PLAN ai
serves the public in a variety of, ways from apps
to monitor personal finances to tools that analyze. INVESTMENTS ai
(52:28):
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 advisory dot.
Speaker 1 (52:45):
Com 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. Service summers, Here New, england and it's the
perfect time to trade the daily routine for something. Extraordinary
(53:08):
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
with the heartbeat of the. Islands there's no passport, needed
(53:28):
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 that's
VISIT usvii dot. Com your island getaway is closer than you.
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Think THE Us Virgin islands where summer never. Ends book
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