Estate planning for special needs

Episode Transcript

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

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

Speaker 2 (00:37):
Welcome into 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. Welcome Todd.
How are you today?

Speaker 3 (00:53):
I'm never better and you I'm great? Thank you.

Speaker 2 (00:55):
What do you have for this week?

Speaker 3 (00:56):
Got a couple We're actually going to go to Virginia.
It's a federal fourths circuit case, and we're going to
talk about Norman Rockwell drawings. I know, you wouldn't think
that it's all centers around the fact that there were
four rock Well illustrations of people visiting and waiting in
the West Wing for an audience with FDR, and then

(01:17):
those were gifted away and then where do they end
up years and years later Because people don't do their planning,
You wouldn't think about these things. But we're going to
talk about this.

Speaker 2 (01:27):
A lot of people ask about the stuff, and.

Speaker 3 (01:29):
We're going to talk about how planning is yet very important,
not just for stuff, but for everything. And then we're
going to head over to Maryland. We got a Pellet
court case there. We're dealing really strictly with special needs children,
and you know the importance of having a special needs
child and the need to do estate planning with special

(01:50):
needs children and the type of planning you might do,
how to ensure they keep their governmental benefits, and more importantly,
how you don't need to make them treated and differently
than the non special needs children when the language we
use can accommodate the same thing for all kids, but
for different reasons. So I think there's a lot to

(02:10):
think about when you have special needs children and planning,
and speaking of planning in general, you know the kind
of planning you do is also imperative to understand when
you're starting your estate plan. This guide or given away
really answers all the questions regarding irrevocable Medicaid trust. It's
thirty years of frequently asked questions, question answer, How does

(02:34):
it work? What can I put in? Are there tax problems?
What kind of control can I have over the trust?
What do I have to file each year? What can
come in and what can come out? I mean, folks,
if you ever wondered about an irrevocable Medicaid trust, this
is the guide unlocking the power of Medicaid irrevocable trust.
It's the guide for you. It will help you determine
whether you need one, want one, or even care to

(02:56):
have one. Get the guide eight six six eight 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 and download it
right there. Let's head over to Virginia Federal Fourth Circuit.

(03:19):
So in this case we had four rockwell illustrations again
of people waiting in the West Wing for an audience
with FDR. Well in nineteen forty three. These Rockwell paintings
were then gifted to the Press Secretary Stephen Early. Okay,
Stephen then died in nineteen fifty one without a will,

(03:43):
not even an didn't even do any estate planning at all,
and in the estate accounting which we talked about, this
is what goes on in the probate world, right, There's
lots going on here. There was no mention in the
inventory about these paintings. Then Stephen's wife, Helen had possession

(04:04):
of them, and she had possession of them till nineteen sixty,
which is probably where they would have gone under the
Interstate six. But we'll talk about that. But during that
time the family began to disagree about who really had
possession of these illustrations. Well Helen's daughter of course, to
make it complicated, Helen. Helen's daughter, Helen Elam, received the

(04:28):
illustrations at some point and then loaned them to the
White House in nineteen seventy eight. The Lone Agreement obligated
the return of these photo or these illustrations to Helen
Elam's son, William the Third, upon request Well in two
thousand and nine, Helen Early, which is the wife of Stephen,

(04:53):
who actually got it. Helen Early, which is the mother
of Helen Elam, died and actually devised these illustrations via
her will to her daughter Drew and son William the third,
but Drew disclaimed her interest. She didn't want them. We'll
talk about disclaimers. In twenty twenty one, relatives claimed ownership

(05:18):
over these assets. Well, Bill the third said, wait a minute,
these are really mine. That the will said that they
come to me, and so he files a declaratory judgment
and so does the family, basically to quiet title. Well,
the Superior Court grants William's motion based on the presumption

(05:38):
of ownership based on Helen had having possession. Plus Helen
was really the only one that actually mentioned the illustrations
in her estate plan, so that kind of makes sense.
They weren't happy, so, as you might imagine, the family
appealed and the Appellate Court affirmed, saying that there was

(05:59):
no need to confirm the validity of the gift of
the Rockwell paintings to Stephen. We don't We can start there,
but we don't have to. We know that gift took place.
And then Therefore, the presumption of ownership or possession really
stood with the wife who actually devised these assets or
these illustrations, and there was no counter evidence to the

(06:21):
contrary of that presumption of ownership. So looks like William
the Third has these Norman Walkwell paintings, which kind of cool. Actually,
I'd like to see them.

Speaker 4 (06:32):
Uh.

Speaker 3 (06:32):
And so what do we what do we really learned
from this? Obviously, folks, it's not it's not so much
about the Rockwell paintings as it is the first thing
that comes to my mind is, wonderful gift tax return
was filed by Stephen when he when he gifted these two.

Speaker 2 (06:47):
Uh, well, he would have given in to his wife, right.

Speaker 3 (06:49):
No, not not Stephen. I'm sorry when when the uh
when they were gifted to Stephen. Oh so the Press secretary,
wonderful gift tax return was filed. I'm not really sure
that happens.

Speaker 2 (07:02):
Let's pull the files on that.

Speaker 3 (07:04):
So that was interesting. But really, when you think about it,
what are some of the key ingredients that's going on
here that we want to avoid? What is intestate?

Speaker 4 (07:11):
Right?

Speaker 3 (07:11):
You die without a will, that means, you know, there's
a full probate and the statute is going to leave
the assets. And likely I don't know what the Virginia
statute is, but likely if it's a first marriage and
there's no and whether there's kids or there's no kids,
if it's a first marriage, likely it would all go
to the spouse. So I could see how Stephen, dying

(07:31):
without a will, these items listed or not in the
inventory end up with Helen. Now remember here there was
also no accounting. Remember when you die without a will,
you don't direct where assets go. So not a good idea. Well,
inside the probate process is this accounting. You got to
put assets, You got to do an inventory, you got

(07:52):
to list assets, right, and and the fact that they
didn't list these assets that wasn't helpful.

Speaker 2 (07:57):
I wonder how valuable they were.

Speaker 3 (08:00):
Yeah, I mean back then maybe you know it probably
gained value over time. I don't know if those were
valuable at the time, who knows. But in any event,
you know, you basically have to list all assets when
you die with a probate asset in your name, no
designated beneficiary, And the lack of detail here in that

(08:20):
accounting wasn't helpful. So you, again, as much as you
want to avoid probate. If you're in it, do it right,
you know, hire someone to get it done. What's the
disclaimer all about?

Speaker 5 (08:32):
Right?

Speaker 3 (08:32):
And people can do this?

Speaker 2 (08:33):
Her daughter said no, thanks.

Speaker 3 (08:35):
Yeah, I mean what happens there? So I mean Helen
died at least she had a will that directed where
these assets go, and that was the estate planning that
although basic saved the drawings. So do your estate plan
direct where your assets go, folks, and you're going to
be in much better shape. And so here the daughter.
You know, if she disclaimed it, you'd have to look

(08:55):
to the will to see where her portion would go. Now,
in all fairness, when you disclaim, you can't direct where
it goes. You just basically say I don't want it.
Therefore treat me as if I died first. Okay, Well
you have to look if the will said equally to
the kids, if living otherwise to their kids, and Drew

(09:15):
had kids, and they would go to her kids, then
that piece would go to Drew's kids. If there were
no kids, but there were siblings, then it would go
to the other siblings. Then the question is is there're
more siblings than just build the third But this is
just an example for you folks to understand how the
intestate succession works.

Speaker 2 (09:35):
And get very messy.

Speaker 3 (09:36):
Yeah, but really you've got to be clear here, right.
Make sure you put together your trust. Put the items
you want to protect items like this, You want to
put them in a trust. You want to direct where
they go. You want to stay out of probate. You
don't want to be I mean something as little as
this causes all this headache, and don't do that. Folks.
Learn about your estate plan. Get your ducks in a row.

(09:57):
Get this guide Power of Unlocking the irrevocable Medicaid trusts.
It will help you once and for all figure out
whether or not an irrevocable medicaid trust is right for you,
works for you, meaning you can tolerate living with it
eight six six eight four eight five six nine nine

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

Speaker 2 (10:20):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. We've got much
more to come when we return to the Legal Exchange
with Todd Lutski.

Speaker 1 (10:34):
Elder life planning can be overwhelming, so be sure you're prepared,
or you could make costly mistakes that affect your overall plan.
Cushing and Dolan are experts in elder lawn taxation, and
they can devise a plan that covers you in every
area where issues can rise. Irrevocable trust so the most
common type of trust that folks use for financial protection,
and while they can be complicated to create, they help

(10:56):
keep your assets safe because they contain specific protections that
many of us need, like the possibility of eliminating your
estate taxes. Their new guide is called Unlocking the Power
of Irrevocable Medicaid Trusts. Learn more about how these trusts
can benefit you and your family by calling eight six
six eight four eight five six ninety nine right now
and asking for your free guide today. That's eight six

(11:17):
six eight four eight five six nine nine, or you
can request the guide right now by visiting legal exchange
show dot com. The proceeding was paid for and the
views expressed are solely those of Cushing and Dolan. Cushing
and Dolan Indoor Armstrong Advisory may contact you're offering legal
or investment services. Cushing and Dolan in Armstrong Advisory do
not endorse each other and are not affiliated. Summer in
New England is nearly upon us. The kids are home

(11:38):
from school, the sun doesn't set until after eight. It's
likely time for you to relax.

Speaker 4 (11:43):
Well.

Speaker 1 (11:43):
While you're relaxing, take a few minutes to check out
visit USVII dot com and research your next vacation in
the United States Virgin Islands. The USVII has something for everyone.
Be it the rich history of Saint Croix, the spectacular
beaches of Saint Thomas, or the tranquil quiet of Saint John.
Is it one island or all three, and enjoy the
vacation of a lifetime. From the moment you arrive, you'll

(12:05):
fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Whether you're looking for a romantic
getaway or a family vacation, the US Virgin Islands is
the perfect place for your next adventure. Go to visit
USVII dot com right now for more information and to
book your trip. The USVII is America's Caribbean paradise. Go

(12:28):
to visit USVII dot com to make your reservation today.
That's visit USVII dot com.

Speaker 6 (12:36):
There are many different elements to a complete retirement plan,
and it takes time to make sure you've covered all
your bases. Hi, this is Mike Armstrong from the Armstrong
Advisory Group. Our new guide is called your Retirement Preparation Checklist,
and it may offer you the guidance you need to
make the right decisions about your retirement plan, from deciding
on a specific date to retire, to reviewing your income
sources to picking a place to live. This guide discusses

(12:58):
numerous topics that are important to your own overall planning.
Many other issues need to be considered as well, like
solidifying your estate plan and establishing lifestyle goals. Call us
right now at eight hundred three nine three four zero
zero one and ask for your free guide today. That
number again is eight hundred three nine three four zero
zero one, or you can request it online at Armstrong
Advisory dot com. That's Armstrong Advisory dot com.

Speaker 1 (13:20):
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. You're listening to the Legal Exchange with Todd Lunsky,
an expert in elder life planning and taxation. Need help

(13:42):
with your estate plan cam Todd right now and make
an appointment. Eight sixty six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.

Speaker 2 (13:52):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm I'm joined by Todd Letsky, a partner with
a law firm of Cushing and Dolan, with a master's
in taxation. Special Needs Trust, Special Needs Trust.

Speaker 3 (14:09):
And let's let's run through this and talk about a
Maryland appellate case. So Bill, the parents were appointed guardian
for him in two thousand and six. So then comes
twenty twenty three and the parents decided to file to
modify the guardianship. I don't know if the child got

(14:30):
better or you know, what have you, but to modify
the guardianship to allow Bill the child the right to vote.
Apparently might not have known this, but the rule in
Maryland is that folks under a guardianship retain the right
to vote unless the court finds under clear and convincing

(14:52):
evidence that the individual cannot communicate with or without accommodations
desire to participate in the voting process, unless they can't
communicate a desire to participate in the voting process. So
that's the rule. So the court, upon asking for this modification,

(15:17):
asked Bill, So, Bill, can you name for me a
Republican and a Democratic candidate? So the attorney for Bill
rephrased the question and then Bill said, I want to
participate to vote? Which is the standard. The court denied

(15:41):
the child the parents request to allow Bill to vote.
Said no, no, you need to have a basic level
of understanding of the political process. I got to tell you,
I'm not sure I understand the politics.

Speaker 2 (15:58):
Have a basic understanding the political process.

Speaker 3 (16:01):
So not to get political here, No, just in general.
Just in general, and said okay. So they appealed. The
appellate court reversed, which I think they should have. Yeah,
they reversed, stating that they added this additional requirement of
a basic understanding of the political process erroneously and that

(16:22):
that standard is not required clearly, and therefore, yeah, clearly
it's not that standard is definitely not required. And so
apparently he's he's going to be allowed allowed to vote,
which you know, good for him. So again, I you know,
I don't know that anyone really has a complete understanding

(16:45):
of our political process. But at the end of the day,
we're going to talk a little bit about what you
what we learned from this. This this case is obviously
I didn't present this to talk about, you know, whether
or not we have the right to vote. There's all
about the guardianship, what jumped off the page here for me,
all about the special needs child, and all about how
we can educate people to plan for their special needs children.

(17:09):
So we're going to do that. But first I just
want to remind you about the guide this month, the
power of unlocking irrevocable Medicaid trusts. And by the way,
when you're doing special needs planning for children, the kind
of trust you might want to have is an irrevocable trust,
especially if you want to protect these assets so they're
there for that child when you die. So keep that

(17:32):
in mind when you're requesting the guide. If you want to,
it's a thirty years of most frequently asked question answer
question answer format helping you understand how this works from
putting a house in, selling a house, living there, filing
income taxes, taking money in and out. Everything you need
to know about how these trusts operate. To help you

(17:54):
understand whether they're right or wrong for you, call and
get the guide, say 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. And so let's go to

(18:15):
understanding about preparing things for special needs children. Right, when
you have special needs children, the goal is to you know,
it's extra important for you to do your estate planning.

Speaker 2 (18:31):
You can just give them the assets directly. They can
lose their benefits, right.

Speaker 4 (18:35):
That's right.

Speaker 3 (18:36):
And you don't have to disinherit.

Speaker 2 (18:38):
Which is a lot of people think they do.

Speaker 4 (18:40):
Right.

Speaker 3 (18:41):
Yeah, and so that's really you know the thing, it's
a combination of what you said you don't. It's that balance, right,
don't disinherit, but don't give it to them do something either.
So folks think about that, but we we don't need
to do that. So the way the way to sort
of take care of this is to put together a trust.
In the trust, you'll want to make sure that the

(19:02):
assets are protected. The kind of trust you would do
right if you're thinking about this planning, but I think
would probably be an irrevocable trust depending on your net worth,
right for sure, But I would think if if you know,
if you're four million in under and a couple of
that is a house you know, or houses, you want
to make sure the assets are available for the special

(19:24):
needs child.

Speaker 2 (19:25):
And just to clarify, Toddy, are you talking about creating
an irrevocable trust, an irrevocable special needs trust before you
pass away?

Speaker 3 (19:32):
Good question. The answer is no, we're going to be talking.
We're going to come to that in a minute. This
is going to be one I'm thinking of that would
be built in to your trust. So your own estate plan,
got it, Like, if you had a trust, you would
do an estate plan for you and your family in
that trust.

Speaker 2 (19:47):
With language to accommodate for the creation of that one
I die.

Speaker 3 (19:50):
For that child, correct, And so remember these trusts are as,
as Susan just said, they're designed for you know, the
mom and dads of the world, and they're going to
tech from the nursing home, reduced taxes, avoid probate, and
make sure as many of these assets are available as
possible for the family, especially a special needs child. Exactly
right now, Susan, You're right to say, well, what kind

(20:13):
of special needs share? This is a share established inside
the trust, so it's known as a third party special
needs trust, which allows the assets to be available for
the benefit of the special needs child, but not be
owned by the special needs child, therefore preserving the governmental

(20:35):
benefits that the child might be receiving currently or even
in the future. Now, remember the important thing here is
because it's a third party trust, when that child dies,
there's no payback to the state, which is really critical. Right,

(20:56):
and I'm going to talk about self settled trusts in
a minute, but understand why I'm doing this.

Speaker 4 (21:02):
Right.

Speaker 3 (21:04):
You can set this up so that you don't have
to treat children differently. Some people say, well, geez, you know,
I got three kids, and I have one special needs
child and two non special needs children. I just want
my special needs child to be protected, So I'm going
to put together language, but I don't want to make
my special needs child feel treated differently. So you can

(21:30):
use the same language for all your kids. They're just
accomplishing different things. So example, the language you might want
to use, or if you're trying to figure this out
for your family, is language that is sole discretionary distribution. Language.
Put together three buckets, dump the assets in there after
you're dead, and the language will say the trustee can

(21:53):
make distributions in the disinterested trustee sole discretion to the
child or that child's children. Mm hmm, and on it goes.
Leave it in there for the whole life. So that
language works great to protect assets for the special needs child.
Child doesn't own it, child can still enjoy it. It's

(22:17):
not going to cause governmental problems or loss of benefits.
I could put that same language in for the other
two children in my example that are non special needs,
exactly the same language. Why am I doing that well
in this case? Not because they're special needs, but because
if there's a future divorce or a credit or chance
they can't get it. Why because they don't own it,

(22:38):
but they can enjoy it.

Speaker 2 (22:40):
So same language covers a big umbrella of real yeah.

Speaker 3 (22:44):
And makes everybody feel like they're treated equally, but for
different reasons. And in all of these cases it also
helps to provide a generational skipping tax benefit. So have
the assets in these trusts not actually subject to a
state tax when that child dies.

Speaker 2 (23:01):
We love that it can get to the next generation.

Speaker 3 (23:04):
Yeah, and just quickly. The difference is a self settled
trust if you have to set it up the kid
sets it up. Like you have an accident, you become disabled,
and you get a judgment. Well that's the kid's money.
That's a self settled trust. They put it in a
D four A trust. That trust will have a payback provision.
So a little different there, folks. But learn about trust
in this case, the irrevocable Medicaid trust. Learn how they work.

(23:28):
Soup to nuts eight six six eight four eight five
six nine nine or Legal Exchange show dot com.

Speaker 2 (23:36):
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, and Todd
will be answering your listener questions when we return to
the Legal Exchange with Todd Lutski.

Speaker 1 (23:51):
Elder life planning can be overwhelming, so be sure you're
prepared or you could make costly mistakes. That affect your
overall plan. Cushing and Dolan art experts in elder lawn taxation,
and they can devise a plan that covers you in
every area where issues can rise. Irrevocable trust so the
most common type of trust that folks use for financial protection,
and while they can be complicated to create, they help

(24:13):
keep your assets safe because they contain specific protections that
many of us need, like the possibility of eliminating your
estate taxes. Their new guide is called Unlocking the Power
of Irrevocable Medicaid Trusts. Learn more about how these trusts
can benefit you and your family by calling eight six
six eight four eight five six ninety nine right now
and asking for your free guide today. That's eight six

(24:34):
six eight four eight five six nine nine, or you
can request the guide right now by visiting legal.

Speaker 4 (24:39):
Exchangshow dot com.

Speaker 1 (24:40):
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan ind
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan in Armstrong Advisory do not endorse each
other and are not affiliated.

Speaker 7 (24:52):
Planning for retirement is much like cramming for a final exam,
and no stone should be left unturned before you're ready
to take that step. Hi, this is Chuckzada from the
Armstrong Advisory Group and we help folks just like you
plan for retirement every day. Our new guide is called
your Retirement Planning Checklist, and in it will remind you
of the various issues that may be most important to
your planning process. Let's start with the date you choose

(25:13):
to retire. That'll depend on a variety of factors, including
your income and your health. You may also want to
modify your investment portfolio to create ways to maintain the
wealth you've already earned. And you'll also want to make
sure that you're prepared for major unexpected expenses. Life moves
quickly and you'll need to know if you can cover
that cost.

Speaker 4 (25:30):
Call us today at eight.

Speaker 7 (25:31):
Hundred three nine three four zero zero one. That's eight
hundred three nine three four zero zero one. Are requested
online at Armstrong Advisory dot com.

Speaker 1 (25:39):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or any Armstrong
guide is specific financial, legal or tax advice. Consult your
own financial, tax intestate planning advisors before making any investment decisions.
Armstrong may contact you to offer investment advisory services. Summer
in New England is nearly upon us. The kids are
home from school, the sun doesn't set until after eight.
It's like time for you to relax. Well, while you're relaxing,

(26:03):
take a few minutes to check out visit USVII dot
com and research your next vacation in the United States
Virgin Islands. The USVII has something for everyone, be it
the rich history of Saint Croix, the spectacular beaches of
Saint Thomas, or the tranquill quiet of Saint John. Visit
one island or all three and enjoy the vacation of
a lifetime. From the moment you arrive, you'll fall naturally

(26:24):
in rhythm with the heartbeat of the islands. There's no
money to exchange, and travel from New England could not
be easier. Whether you're looking for a romantic getaway or
a family vacation, the US Virgin Islands is the perfect
place for your next adventure. Go to visit USVII dot
com right now for more information and a book your trip.
The USVII is America's Caribbean Paradise.

Speaker 4 (26:46):
Go to visit.

Speaker 1 (26:47):
USVII dot com to make your reservation today. That's visit
USVII dot com. You're listening to the Legal Exchange and
it's time for Ask Todd, the segment where Todd will
answer your questions about anything and everything that's included in
the estate planning process. Once again, here's Todd Lutsky and

(27:07):
Susan Powers.

Speaker 2 (27:10):
Welcome back, Todd. We have a few questions from listeners.
First question comes from Jeff in Biddeford, Maine, and Jeff writes,
I am sixty two and have been with my partner
for about twenty seven years. We own two properties together
and I own a two unit apartment building. We would
like to do a trust for the properties. Do all
the properties need to be in both of our names?

Speaker 3 (27:32):
So I have to ask the question that is being screamed.

Speaker 4 (27:36):
At me here.

Speaker 2 (27:37):
Not married partner, Yeah, not married, they've been together for
twenty seven years.

Speaker 3 (27:42):
I just want to check, yeah, that that wasn't any
kind of a typo that we need to know that
they're married or not married, because that makes a big
difference in what I'm about to say. So they said,
you know, do all the properties need to be in
both our names. Well, you gotta be careful right now.
So first and foremost, if you're not married, and you're
going to say to me, well, it says I own
a two unit.

Speaker 2 (28:02):
So they own two properties together. And then he also
owns two unit apartment building.

Speaker 3 (28:08):
Jeff owns that two unit, two unit apartment building. So Jeff,
if you wanted to put it in both names, I
want to address that. First. You first have to understand
you'd be making a taxable gift for half the value
to your partner. It may not be a problem. I mean,

(28:28):
you have a thirteen point nine million dollar gift tax
exemption and Maine doesn't have a gift tax as far
as I know, so you could do it. It'll be
a carryover basis, so that whatever gain is built into
that property will remain built in for your partner. So
if it sells, you know there's a capital gain there.
Is it doable? Yes, but be careful because you're not married.

(28:52):
So if she walks away, she walks away and there
goes that half of that building. You don't own it anymore,
and so there's no so that would be a concern.
Maybe it's not for you guys, you've been together twenty
seven years, who.

Speaker 2 (29:08):
Knows, But you don't have to do just one trust
for the two of them? Are would you not do
one trust for the two of them if they're not married?

Speaker 3 (29:15):
Yeah, because then it says would you like to do
a trust for the property? So I definitely would probably
stay away from one trust. I would say you should
each do your own estate plan, after all, you're not married.
If you were married and the assets are under ten
million dollars, I'd be back with that joint trust idea
that we talk a lot about, the joint revocable trust,
perhaps depending on their age sixty two I mean. And

(29:37):
then then you got to think about what kind of trust. Well,
let's assume we stick with the idea of two trustsah,
which I think is right, one for Jeff and one
for the partner. Then the kind of trust, Well, if
we're both sixty two ish, you know, are we concerned
about protecting these assets for each other in case one
goes into a nursing home, because again, not being married,

(29:59):
you have no protection if one gets sick. Whatever that
one owns, those are at risk. And if it's a
house that the partner's living in that that could be
a problem for the partner.

Speaker 4 (30:10):
So you have to think.

Speaker 3 (30:13):
You have to now think about probate. You have to
think about taxes, you have to think about not being married.
You have to think about Medicaid, nursing home protection, so
lots to think about. So I would say two trusts.
Once you decide if nursing home protection is important, then
we know they're going to be irrevocable, and I would
probably suggest that the apartment building. Again, I don't know

(30:35):
that you want to give it away, but if it's
a rental, I'd suggest throwing it into an LLC, even
a single member LLC, and just have the shares owned
by Jeff's trust, whichever kind of trust we create, And
that way, at least you don't have to file an
income tax return for that entity, Jeff. But if there's
a lawsuit from the tenant, they're not suing you personally,

(30:59):
and of course, since you're not married and you've got
two separate trusts, the lawsuit would be against the LLC
and the partner would never have to worry.

Speaker 2 (31:06):
And they could take care of each other if they
had rentals and they wanted the other to get the
income in the meantime, or stay in the house that
they owned together.

Speaker 3 (31:14):
And draft the trust to live on after you die
and take care of each other. Yes, but lots to
think about here, Jeff. I think you both need to
go in and sit down with an estate planning attorney
and try to figure this one out. But there's a
lot of issues, but certainly helpful. Speaking of issues, the
kind of trust we were talking about in this particular
case might have been an irrevocable medicaid trust, which is

(31:35):
exactly what the guide is. It's really one of my
favorite because it does explain everything from question to answer,
question to answer as to how these trusts work, from
putting houses into selling to living there, to paying income
taxes to access you name it. If you ever wondered
how they work, get the Guide You'll know eight six

(31:57):
six eight four eight five six nine or Legal Exchange
Show dot com again eight sixty six eight four eight
five six nine nine or Legal Exchange Show dot com.

Speaker 2 (32:10):
Our last question comes from Michael and Marymack, New Hampshire,
and Michael writes, I want to avoid losing my assets
to a nursing home. My New Hampshire attorney is recommending
a revocable trust because they said that my primary residence
mortgage will be called up if we go the irrevocable route.
Is this true?

Speaker 3 (32:31):
Yes and no. It really depends. It doesn't depend folks.
Let me tell you if you know the answer right.
So he's right to warn them that if you just
put it into an irrevocable trust, directly outright transfer the
whole property into the irrevocable trust, that if the financial

(32:56):
institution that loaned the money ever checked the registry. Again,
not sure that happens a lot, but if it did,
they would have, you know, the potential right to say
I want to call the note. It's called a duon
sale or a duon transfer clause that many uh many loans,

(33:18):
almost every loan has in it, Like if you die,
they're going to call the note. Sure, okay, it's that
duon transfer cost. I believe this Garn Saint Germain Act
when it I know it deals with protecting it when
you transfer it to a grant or revocable trust. It's
not clear on the irrevocable trust, so I think it

(33:38):
still applies. What mean the answer is no, they're not
going to call it because of the Garn Saint Germain Act,
which is a banking law that deals with mortgages, and
that is.

Speaker 2 (33:49):
Just talking specifically about an outright.

Speaker 3 (33:53):
Exactly outright. So what what I tell people is in
there's a I don't have the section, it's a USC,
it's forty two USC something, I forget the exact section
of the code that says, well, a way to not
play this guessing game in a way to still be
able to do irrevocable trusts even though your house is

(34:16):
mortgaged if it's your primary residence. Here, yes, primary residence
is that you can do this planning. Just don't need
the entire property into the trust. Explain what you mean
by that deed the remainder interest to the trust, and
reserve a life estate.

Speaker 2 (34:34):
Got it.

Speaker 3 (34:35):
So as much as we've done these programs, Susan and
talk about how much I don't.

Speaker 2 (34:40):
Like estate as a planning solution as.

Speaker 3 (34:45):
A planning tool, it's not my favorite. I've all and
we've talked about the pros and cons of them. I
did and do always mention the three times that I
do reserve a life estate and how I do it,
and this would be one of them.

Speaker 2 (35:00):
If someone has a mortgage or any debt on the property.

Speaker 3 (35:02):
Yeah, if you got a mortgage on the property of
any kind. It could be a first mortgage, it could
be a second mortgage, it could be a helock, a
home equity line of credit if you have one and
it's on your primary residence. I would then suggest deeding
the property to the trust, not to the kids. Right,
that's the bad way. This is way less bad. Deed

(35:22):
it to the irrevocable trust, and in the deed say
I hereby reserve a legal life estate. That's all.

Speaker 2 (35:28):
And what's the downside of that?

Speaker 3 (35:30):
First of all, the upside is it will prevent the
mortgage from being called. Yeah, why because you didn't give
it away. You are considered the current owner on the property.
You are considered the current owner, So no triggering. That
is there really a downside? I guess if you ever
go to sell it, depending on how old you are,

(35:52):
a little piece based on your age and the IRS
table will tell you how much of the proceeds from
that sale actually go to the lifetime tenance pocket and
how much go to the irrevocable trust.

Speaker 2 (36:04):
Okay, so you protect everything, but that little little.

Speaker 3 (36:06):
Piece would be at risk again if you were to
sell it. You're right, so that piece would hit their pocket,
but usually it goes down. The amount that you get
goes down as the value of the property goes.

Speaker 2 (36:16):
Up, so and you age.

Speaker 3 (36:17):
Yeah, so, folks, that's the answer, reserve the life estate.
But again that's in the guide understanding how these irrevocable
trusts work from soup to nuts. Call and get the
guide and you'll learn whether it's right for you or not.
Eight six six eight four eight five six nine to
nine or Legal Exchange Show dot com.

Speaker 2 (36:39):
If you have a question you would like to ask Todd,
visit his website Legal Exchange Show dot com and click
on the ass 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

(37:00):
Powers of financial Advisor with the Armstrong Advisory Group, and
we'll be back with more after this quick break on
the Legal Exchange with Todd Lutsky.

Speaker 1 (37:10):
Elder life planning can be overwhelming, so be sure you're
prepared or you could make costly mistakes that affect your
overall plan. Cushing and Dolan are experts in elder lawn taxation,
and they can devise a plan that covers you in
every area where issues can rise. Irrevocable trust so the
most common type of trust that folks use for financial protection,
and while they can be complicated to create, they help

(37:31):
keep your assets safe because they contain specific protections that
many of us need, like the possibility of eliminating your
estate taxes. Their new guide is called Unlocking the Power
of Irrevocable Medicaid Trusts. Learn more about how these trusts
can benefit you and your family by calling eight six
six eight four eight five six ninety nine right now
and asking for.

Speaker 4 (37:50):
Your free guide today.

Speaker 1 (37:51):
That's eight sixty six eight four eight five six nine nine,
or you can request the guide right now by visiting legal.

Speaker 4 (37:57):
Exchange show dot com.

Speaker 1 (37:58):
The proceeding was paid for if youse expressed our solely
those of Cushing and Dolan. Cushing and Dolan into or
Armstrong Advisory may contact you're offering legal or investment services.
Cushing and Dolan in Armstrong Advisory do not endorse each
other and are not affiliated.

Speaker 5 (38:10):
This is Michael Valila, adjudent of the Disabled American Veterans
Department of Massachusetts. We focus on the people returning from service,
not their specific illness or injury.

Speaker 4 (38:20):
Our number one goal is.

Speaker 5 (38:21):
To make sure our veterans have the necessary services they need,
be it physical, emotional, or financial, so that their transition
can be seamless. You can help our great American heroes
as well by making a donation today by visiting dav
five k dot Boston. That's dav five k dot Boston.

Speaker 1 (38:40):
Summer in New England is nearly upon us. The kids
are home from school, the sun doesn't set until after eight.
It's likely time for you to relax.

Speaker 4 (38:48):
Well.

Speaker 1 (38:49):
While you're relaxing, take a few minutes to check out
visit USVII dot com and research your next vacation in
the United States Virgin Islands. The USVII has something for everyone,
be it the richestory of Saint Croix, the spectacular beaches
of Saint Thomas, or the tranquil quiet of Saint John.
Visit one island or all three and enjoy the vacation
of a lifetime. From the moment you arrive, you'll fall

(39:11):
naturally in rhythm with the heartbeat of the Islands. There's
no money to exchange, and travel from New England could
not be easier. Whether you're looking for a romantic getaway
or a family vacation, the US Virgin Islands is the
perfect place for your next adventure. Go to visit USVII
dot com right now for more information and to book
your trip. The USVII is America's Caribbean paradise.

Speaker 4 (39:33):
Go to visit.

Speaker 1 (39:34):
USVII dot com to make your reservation today. That's visit
USVII dot com.

Speaker 6 (39:41):
There are many different elements to a complete retirement plan,
and it takes time to make sure you've covered all
your bases. Hi, this is Mike Armstrong from the Armstrong
Advisory Group. Our new guide is called your Retirement Preparation Checklist,
and it may offer you the guidance you need to
make the right decisions about your retirement plan. From deciding
on a specific date to retire, to reviewing your income
sources to picking a place to live. This guide discusses

(40:03):
numerous topics that are important to your overall planning. Many
other issues need to be considered as well, like solidifying
your estate plan and establishing lifestyle goals. Call us right
now at eight hundred three nine three four zero zero
one and ask for your free guide today. That number
again is eight hundred three nine three four zero zero one,
or you can request it online at Armstrong Advisory dot com.

(40:23):
That's Armstrong Advisory dot com.

Speaker 1 (40:25):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong 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 of 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 tod we were talking in our
last segment. Someone had a question about the mortgage and
if you sell your house and what happens to the

(41:24):
life estate money. So I want to talk about selling
your house because for a lot of people, that's the
only asset they'll end up putting into their trust, and
their life sure doesn't change when it's just a house
in there.

Speaker 3 (41:36):
That's right.

Speaker 2 (41:37):
They don't even have to file a tax return if
that's just their primary residence. Correct.

Speaker 3 (41:41):
I like to tell them before I start my lengthy
explanation of how the trust works. I say, if we've
decided to only put your home and or let's say
a non rental vacation home in the trust, let me
begin by telling you the set it and forget it.
Ida there will be absolutely nothing you need to do

(42:04):
unless or until you sell. With that said, then I'll
go do the explanation and prove it out right. And
it's that easy, that clear, that's the forest for the trees.

Speaker 2 (42:15):
So I want to talk about that process because a
lot of people do end up selling their house when
they are older. They might want to downsize, they want
to relocate for whatever reason. So, if you have your
home in an irrevocable trust, what's the process you have
to go through to sell that home because you don't
technically own it.

Speaker 3 (42:35):
No, you don't. And so I think when people say
the process, my quick answer is always, if you were
to sell your house today and it's not at and
it's not in a trust, what's the process. And they
would tell me, oh, you got to list the house
on the market, you got to get an offer, you
got to sign a purchase and sale agreement, you got

(42:57):
to prepare a deed transfer the property. And then I say,
that's exactly the process when it's in an irrevocable trust.
No additional paperwork, no additional legal fees, same same.

Speaker 2 (43:11):
Same, same, So except if you're not I mean likely
you're not your own trustee, right, So.

Speaker 3 (43:17):
So the one difference is you have to tell the
trustee you're right, that's the one difference. Okay, you have
to tell the trustee that you want to sell the property.
You're directing the show.

Speaker 2 (43:32):
So they're going to sign the listing paperwork, the trustee, correct,
They're going to sign the p and s, they're going
to sign the closing documents. Your people will take care
of these.

Speaker 3 (43:43):
Things, absolutely, right, that's exactly what you tell them.

Speaker 2 (43:46):
What if they say no, What if it's a I
want to sell the vacation home and your trustee child says, yeah,
I really like.

Speaker 3 (43:53):
That house, so I know I I don't want to right, I.

Speaker 2 (43:56):
Don't want to sell that. I want to inherit that
if they say no.

Speaker 3 (43:59):
And I think that's the other difference. Right, when you
don't have it in a trust, you don't need anyone's permission.
You can just sell it. Well, when it's in a trust,
people think that's a difference because you do have to
ask the trustee. But we also arm the donor or
the moms and dads of the world that create these
trusts with the power of removal, the power to remove

(44:25):
and replace the trustee any time for no reason, just
not with themselves. You.

Speaker 2 (44:34):
So my son says, no, I'm not signing this because
I want to keep this house. I want to inherit it.
And I go, yeah, that's nice, you're fired.

Speaker 3 (44:42):
But don't you have a twin point? I do I have.

Speaker 2 (44:44):
That's why I had to have a backup for he's
one of them. For the leg or something so then
I remove my current trust son one, and I go
to plan B, and now my other child to the trustee.
He gets all the inheritance because the other one disobeyed me.

Speaker 3 (45:02):
Well, that that's a whole another.

Speaker 2 (45:04):
Right, you really do keep the power.

Speaker 3 (45:06):
Yeah, you have two powers. You have the power to
remove and replace, and then you have the power to punish.

Speaker 2 (45:10):
And I do have two powers. Two powers.

Speaker 3 (45:12):
Boys, that's a really good point. Yes you do, Yes
you do. And so, uh, that is exactly how it works.
So really, what we've just learned from this, folks, is
one of the questions about how these trusts operate in
this guide is that their trusts are not really that
restrictive and not really that cumbersome, if that's the right word. So, folks,

(45:32):
get the guide Power to Unlock irrevocable Medicaid trusts. How
they work, question and answer, just like this one with examples.
You get to know what you can put in, how
you can put it in. You know, living there, selling houses,
buying houses, renting houses, investing your money, paying income taxes,
you name it. You're going to learn how these trusts

(45:55):
work from the inside out. Get the guide eight six
six eight for eight five six nine nine or Legal
Exchange Show dot com. The Power of Irrevocable Medicaid Trusts
eight six six eight for eight five six nine nine
or legal Exchange show dot com.

Speaker 2 (46:14):
Okay, so someone decides to comply, decides he wants to
have an inheritance someday from me, So he signs the paperwork.
So out goes the house. Yes, what happens to the money?

Speaker 3 (46:26):
It would all be written to the trustee of the trust.
And then you would open a bank account in the
name of the trust under an ID number for the trust. Okay,
all of which we help get for our clients. And
you deposit the check.

Speaker 2 (46:38):
And then if I want to buy another house.

Speaker 3 (46:40):
So then you got to go find another house like
you normally would no say a difference if it was
not in there. Once you do, the trustee then like
selling the house, is taking all the steps to buy
the house.

Speaker 2 (46:56):
So in the name of the trust.

Speaker 3 (46:57):
Offer P and sded doesn't sign the d but then
the deed just gets written. He writes a check out
to the seller, the seller's attorney prepares a deed transferring
it in to the irrevocable trust.

Speaker 2 (47:13):
So we've changed houses here, So does that do anything
to your five year clock.

Speaker 3 (47:17):
You know it does not. And it's a great question
because I always tell clients that, you know, look, we
didn't put anything new in, and they're like, oh, yes,
we did, right, We just put a new house in,
didn't we Like, yeah, but you really didn't put a
new house in. What you did is you just changed
investments that were already inside.

Speaker 2 (47:36):
The trust from one house still owned by the trust
to a new house.

Speaker 3 (47:40):
You basically went from real estate investment to cash investment,
and then from cash investment to another house investment.

Speaker 2 (47:48):
And it never went to your procket personally.

Speaker 3 (47:50):
Never. And that is the key, Susan. That is the
absolute key to preventing the clock from resetting. Which is
why I tell people, please call us when you're selling
your house if you've used us, or call your estate
planning attorney who set it up. The realtor's going to
tell you, I've got my real estate attorney, guy, let's

(48:13):
use him. I get it, but they don't always understand
these medicaid rules. No offense to them, they just don't
understand the medicaid rules. So use your estate planning attorney
to prevent that. And I make one last example, it's
like if you had an investment portfolio in the trust
and they talked to you, Susan, and you decide to

(48:33):
liquidate ten stocks and buy ten new stocks. Yes, did
we put anything new in?

Speaker 2 (48:38):
Nope, we just changed investments.

Speaker 3 (48:40):
Exactly the same analysis that helps people understand the difference.

Speaker 2 (48:45):
So what about if I sell my house personally, I
get that primary residence capital gains tax exclusion. What happens
to that if my primary residence is in the trust?

Speaker 3 (48:56):
And that's a fair question. So this is where under
standing the grand or trust rules are so important. So
when you get your your irrevocable trust drafted, that you
explain to them and your accountant that these are taxable
to that you are the owner for income tax purposes.

(49:17):
So in English, that means if you get a five
hundred thousand dollars capital gains exclusion when you sell your
house not in a trust, you get that same capital
gains exclusion when you sell the house if it's in
the trust because of its grant or status, which means
the gain, even though it doesn't come out of the trust,

(49:38):
will be picked up on your personal return less the
five hundred thousand dollars exclusion if you're married, two fifty
if you're single.

Speaker 2 (49:48):
Got it and then the same process. I'm assuming if
it were a rental property and not your primary right.

Speaker 3 (49:54):
So if it's a rental property, there is no capital
gains exclusion. Right, You're gonna have to pay the capital
gains tack, but.

Speaker 2 (50:02):
The taxes would be the same whether I owned it
myself personally or get where in my trust.

Speaker 3 (50:07):
That's right, exactly right. You'll calculate the capital gains tax
the same way, the same basis will be used, and
then the capital gain will be reported on your ten
forty at the same rate it would have been. Folks,
these are some questions about selling living paying taxes. You
will learn all the ins and outs of medicaid, irrevocable

(50:28):
trust and frequently ask question answer format. Call and get
the guide and learn if it's right for you eight
six six eight four eight five six nine nine or
Legal Exchange show dot com and you can download it
right there.

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

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

Speaker 2 (50:49):
I'm Susan Powers, a financial advisor with the Armstrong advisory Group.
We thank you for joining us today and we'll be
back again next week on the Legal Exchange with Todd Lutske.

Speaker 1 (51:00):
Elder life planning can be overwhelming, so be sure you're
prepared or you could make costly mistakes that affect your
overall plan. Cushing and Dolan are experts in elder lawn
taxation and they can devise a plan that covers you
in every area where issues can arise. Irrevocable trusts so
the most common type of trust that folks use for
financial protection, and while they can be complicated to create,

(51:21):
they help keep your assets safe because they contain specific
protections that many of us need, like the possibility of
eliminating your estate taxes. Their new guide is called Unlocking
the Power of Irrevocable Medicaid Trusts. Learn more about how
these trusts can benefit you and your family by calling
eight six six eight four eight five six ninety nine
right now and asking for your free guide today. That's

(51:42):
eight six six eight four eight five six nine nine,
or you can request the guide right now by visiting Legal.

Speaker 4 (51:47):
Exchange show dot com.

Speaker 1 (51:49):
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan INDO
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan in Armstrong Advisory do not endorse each
other and are not affiliated.

Speaker 7 (52:00):
Planning for retirement is much like cramming for a final exam,
and no stone should be left unturned before you're ready
to take that step. Hi, this is Chuck Zauta from
the Armstrong Advisory Group and we help folks just like
you plan for retirement every day. Our new guide is
called your Retirement Planning Checklist, and in it will remind
you of the various issues that may be most important
to your planning process. Let's start with the date you

(52:20):
choose to retire. That'll depend on a variety of factors,
including your income and your health. You may also want
to modify your investment portfolio to create ways to maintain
the wealth you've already earned, and you'll also want to
make sure that you're prepared for major unexpected expenses. Life
moves quickly and you'll need to know if you can
cover that cost. Call us today at eight hundred three
nine three four zero zero one. That's eight hundred three

(52:42):
nine three four zero zero one are requested online at
Armstrong Advisory dot com.

Speaker 1 (52:47):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or any Armstrong
guide is specific financial, legal or tax advice. Consult your
own financial, tax and to state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisories services. Summer in New England is nearly upon us.
The kids are home from school, the sun doesn't set
until after eight. It's likely time for you to relax.

Speaker 4 (53:08):
Well.

Speaker 1 (53:08):
While you're relaxing, take a few minutes to check out
visit USVII dot com and research your next vacation in
the United States Virgin Islands. The USVII has something for everyone,
be it the rich history of Saint Croix, the spectacular
beaches of Saint Thomas, or the tranquil quiet of Saint John.
Visit one island or all three and enjoy the vacation
of a lifetime. From the moment you arrive, you'll fall

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

(53:54):
visit USVII dot com to make your reservation today. That's
visit USVII dot com and