Estate planning for unmarried partners

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, Tod Lutsky and Susan Powers.

Speaker 2 (00:36):
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.

Speaker 3 (00:50):
How are you today? I am never better you, I'm great?
Thank you. What do you have for us this week?
Let's see a couple of cases. We're going to head
to DC where we've got an appellate court case dealing
with when are you common law married? And how do
you know? And does it matter if it's contested or

(01:10):
not if nobody challenges that you're actually married and everybody
just assumes you are, does that matter from every estate
planning perspective in this case, you're going to see how
it might impact social security benefits. You wouldn't think about it,
but folks lots to think about here, not just that
little piece, more about having a common law marriage, or

(01:32):
even if you're not married, being a significant other. Who
cares If I'm married, I still need to plan if
I love my significant other even more so, and again
if we're common law married, it'll be interesting to see
how that plays out. So that's step one. Then we
head over to Indiana and we've got an appellate court
case there that basically talks about the countability of trust

(01:56):
assets first and then whether or not there's a disqualifying
transfer involved at all. This is about medicaid. You set
up a trust, you get denied medicaid because they say
the assets are available based on the terms of the trust,
which obviously drafting is going to be an important element
that we discuss here. But more importantly than that, maybe

(02:17):
it doesn't matter whether they're available. What was there a
disqualifying transfer of assets getting them into the trust in
this case also deals with the personal care contract. So
there's a lot going on in this case, folks. We're
going to come back and we're going to explain all
of that to you, But before we do that, I
want to just make mention that this is the end
of the month. This is the last chance to get

(02:40):
what is really the new guide called the Simplicity of
joint revocable Trust. It's a guide that has never been
given away before. It's really been becoming more and more
in an attractive way of planning because of the passage
of the BBBA. It's really all about the base. It's
the simplicity of putting all your assets in one trust,
not separating them, cramming down assets on the first death,

(03:04):
not only getting more sheltered for estate tax purposes so
we can win on the estate tax front, but also
allowing you to get a full step up in basis
thereby eliminating capital gains taxes and winning on the capital
gains tax front on the income side, so we're winning
on both sides of the tax equation with this trust.

(03:26):
And yes, it also provides for the nice way of
leaving assets to your family, the dynasty, the divorce proofing.
It really gives you a good understanding of how estate
planning works. Basic estate planning. So you get your self
and gear here and it's the end of the year,
and figure out how to get your estate plan in order.
It's not yet the end of the year. It's getting there.

(03:48):
Eight six six eight four eight five six nine to
nine or Legal Exchange Show dot com and download the
guide again eight six six eight four eight five six
nine nine or Legal Exchange Show dot com. Back to DC.
Are we married? I don't know. Let's see we are.

(04:11):
Just to clarify, that's clear. That's crystal clear. Greg and
Peggy began a relationship in the nineteen nineties, living together
and they continued to do that throughout their relationship, but
they never married. Why ruin a good thing by getting married?
I guess held themselves out as married to their family,
to their friends, et cetera. Twenty fifteen, Peggy died without

(04:36):
a will, survived by Greg and several siblings, apparently no kids.
Greg petitioned and probate the court petitioned to probate the
will in court to be appointed personal representative as he
has a priority because he's a surviving spouse. They're not married,

(04:58):
are they married? So as the surviving spouse, he would
have priority if their common law married, not the siblings.
Greg then applied for and was granted social Security benefits. Okay,
But when he requested a different start date because he
wasn't happy with the start date of the Social Security benefits,

(05:20):
sometimes just keep your mouth shut and move forward is
the lesson, he was denied benefits and it was stated
that there was insufficient evidence to support that Greg was
a surviving spouse and ordered him to pay back eighty
five hundred bucks that he had gotten in Social Security benefits.

(05:41):
I know, weird. Well, the administrative law judge agreed, stating
that he did not have to adhere to the probate
court statement that Greg was a surviving spouse and Greg
failed to establish that he was in fact common law
married under DC law. Well, Greg didn't like that, solied.

(06:04):
He appealed, and this is all over eighty five hundred dollars.
I'm already scratching my head. He went to the appellate court.
The Appellate Court affirmed the administrative law judge is ruling
that Social Security Administration must adhere to state court decisions
if certain elements are met. One, did the court genuinely

(06:27):
contest the validity of the common law marriage and was
the court decisions was consistent with that law? And the
court said, there was no contesting the status of Greg's
common law marriage. Remember they just accepted it. Remember they

(06:48):
appointed him he are and accepted that he was the
common law Wow. So there was no contesting and thus
no evidence stating or showing that the court applied DC
law to conclude the validity of the claim. Therefore, since
no one contested that he was, it was never proven
that he was, that he was the common law married

(07:11):
and was the surviving spouse. So Social Security said, we
don't have to acknowledge it, and therefore we're not going
to pay you social Security benefits. Again, it's a silly case.
It's eighty five hundred dollars, but whatever the monthly benefit is,
I guess could have made a difference to them. So
that's how that got played out. I'm like, well that
was funny. I mean, it's a strange case, but it's

(07:34):
not about the eighty five hundred dollars, folks, it's not
about the Social Security benefits. I think he's still a
big winner here because he was deemed the surviving spouse
and therefore she died without a will. He's going to
get along for the estate. Yeah, because he'll be the
next closest next of ken yep if there's no will.

(07:55):
So I think that's really important that he still wins
even though he loses out on Social Security benefits. Folks,
let's learn some stuff from this. Second marriages significant others.
I don't care what you are married or not. You've
got to think about it right. You really need to
do planning if you if you're married or you're not married,

(08:15):
but you have a significant other and you want to
provide for that person first. If you want them to, like,
you know, enjoy some of the items in it that
you own, but not have them own it, then you
need a trust in order to do that. Right. The
trust is going to be designed where the spouses the
assets could be used by the significant other but not

(08:38):
owned by the significant other. The second spouse, even if
it's a second marriage, you could ensure that they are
preserved for that side of the you know, for that person,
but preserved for your family. Yep, you need the trust
to live on to do that. Example, day in the house, Yeah,
you could allow the significant other to live in the house,

(09:00):
pay the bills, the right to pay the income. But
you know they can get income from investments, but not principal,
not sell the house, but live there. And this allows
them to continue to enjoy and be provided for. But
make sure that they go to your side of the family,
you know, when when you pass away. Now remember here

(09:22):
there's a probate. There was a probated state, right, So
if you have a bunch of bank accounts and you
had them all set up with designated beneficiaries as the kids, well,
then the kids from the prior marriage would just take
it and the significant other would be excluded. Yep. So
be careful here because this even with no will, even
though you're the significant other, you're the deemed to be

(09:44):
the spouse. You don't just get stuff if it's not
going to probate. So if you had right, if she
had a bunch of stuff named with designated beneficiaries of kids,
it would go to those kids outside of her. So
folks need to think of all of this when you're
doing your planning. My advice get the Guide on the
Simplicity of Joint Revocable Trust and just throw everything in

(10:07):
there and then you don't have to worry about it.
It'll go the way you want it to go and
take care of your family eight six six eight four
eight five six ninety nine or Legal Exchange show dot com.

Speaker 2 (10:19):
You've been listening to Todd Lotski, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We've got
much more to come when we return after this quick
break on the Legal Exchange with Todd Lotski.

Speaker 1 (10:34):
The state planning isn't just about taxes, it's about peace
of mind. At Cushing and Dolan, we believe your plan
should protect your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your state stays
private and your family stays in control. Our new guide

(10:55):
the Simplicity of Joint Revocable Trusts also explains how a
trust can protect your true ldren's inheritance from creditors, divorce,
or bad financial decisions down the road. This guide makes
it easy to understand why a joint trust may be
the smart move for your family's future. Call eight six
six eight four eight five six nine nine right now
and ask for your free copy of the Simplicity of
Joint Revocable Trusts. That's eight six six eight four eight

(11:18):
five six ninety nine or requested online from our website
Legal exchange show dot com. The proceeding was paid for
in The music expressed are solely those of Cushing and Dolan.
Cushing and Dolan in or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other. In are not affiliated HI.
This is Chuck Zada from the Armstrong Advisory Group. Your
home is more than just a place to live. It's

(11:39):
part of your story in retirement. Real estate can play
a powerful role in how you manage your wealth and
plan for the next generation. Passing property to family members
isn't always easy. One child might want to keep the
home while another prefers to sell it. Maintenance costs taxes
and distance to healthcare services are all important factors that
need to be considered, which is why having a clear
plan can help prevent families stress while keeping your wishes

(12:01):
front and center. Our new guide Owning Real State and
Retirement is designed to help you fit your property into
a long term strategy that supports your life today and
preserves what matters most for your future. Get your free
copy right now by calling eight hundred three nine three
four zero zero one. That's eight hundred three nine three
four zero zero one a request the guide at Armstrong
Advisory dot com. The proceeding was paid for by Armstrong

(12:23):
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
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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

(13:48):
sixty six eight four eight five, six ninety nine.

Speaker 2 (13:53):
Welcome back into the legal exchange with Todd Lutsky. I'm
Susan Powers of financial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Latsky, a partner with the
law firm of Cushing and Dolan with a masters in taxation.
Where are we headed now, Todd, We're going to head over.

Speaker 3 (14:09):
To Indiana an appellet court case there dealing with what
is countable for medicaid purposes in a medicaid trust and
does it matter whether or not there was a disqualifying
transfer to get the assets in there. Two separate things
to look at. Kind of interesting, right, and that's what
they kind of played with here in this case. So

(14:31):
here we have Natalie who was denied medicaid because the
irrevocable trust used apparently was deemed that the assets in
it were available to her. Remember that's the rule. If
there's any way in which you can get the principle
or any portion of it, then it's countable. It's a

(14:52):
drafting issue. It's a drafting issue. I didn't read the trust,
so I don't know the trust was established by Natalie's kis.
Now that's important because that makes it a third party trust,
which changes the rules. Right. Okay, So the trust was
established by Natalie's kids, but funded with payments Natalie made
for the servi for the services provided by the kids.

(15:15):
Personal care contract comes into mind. So apparently mom Natalie
is paying the kids some of the payments made and
the kids would then take the money and put it
in this trust trust that they created for Mom. Interesting play.
So the personal care contract, some of the payments were

(15:36):
made before the contract existed, and some of the payments
were made after the contract exists, after they got a
little advice. So that could be a big difference. And
that's going to make a difference between what's considered a
disqualifying transfer and what is it because if it's not
a disqualifying transfer, then you really need to read the

(15:58):
trust to see if they're count right. If it is
a disqualifying transfer, well then we don't need to read
the trust yet you're just denied, yes, okay. So Natalie
then argues that the state should first determine even if
the transfers were disqualifying transfers, rather than see if the
trust assets were accountable. That's what she's trying to argue

(16:20):
that's what we just said, right. If these are actually
payments for services, well then they're not disqualifying transfers, right,
So doesn't matter if the trust what it says it
it's not a disqualifying transfer. I gave it to my son,
m I earned it was it was for services rendered.

(16:40):
Very different than here. A disqualifying transfer is when you
give something away for less than fair market value in
exchange that otherwise could be used for your care. Right.
So if you instead pay for services, well that's not
a disqualifying transfer because I got fair market value in
return for what I gave away. I got services.

Speaker 2 (17:02):
But probably different if you pay a company to provide
that care versus a child.

Speaker 3 (17:08):
Right, But if you have a personal care contract, then
it's okay to pay the trust. So are lots going
on here, folks, the appellate court. So of course they
got all the way up to the appellate court and
they said, in order to determine if a transfer penalty applies,
one must first determine if the individual is ever eligible
for Medicaid benefits. So you've got to do that first.

(17:28):
So first you must determine if the assets in the
trust are even countable so if they are countable, well
that doesn't matter how they got there, they're still countable.
There's no waiting. You never get past the waiting period
because it's countable. So the rule is, does the trust
provide that there are any circumstances in which the principle
of the trust can be paid two or for the
benefit of Natalie. If so, it's countable. And so this

(17:52):
whole case, you're not going to like this got remanded
because they first, I tell.

Speaker 2 (17:57):
You about leaving us hanging with solutions.

Speaker 3 (18:00):
So they first said, yes, you got to go back
now to the court and say, first determine whether or
not this trust is even countable. Then we'll deal with
whether or not the transfers are disqualifying or I don't care.
I'm done listening to you.

Speaker 2 (18:12):
I like resolution, I like neat bos. I'm going to
get on these cases and stories.

Speaker 3 (18:16):
I'm going to give everybody resolution because when we go
through the tips and lessons of what we can learn,
I'm going to spell out everything for you, so you're
going to know how this is going to play out. Folks,
if you haven't done your estate planning, you want to
get your ducks in a row. The simplicity of joint
revocable trusts is a brand new guide. It's the end

(18:38):
of the month, so brand new in the sense it's
never been given away and now it's the last chance
to get it because it is the end of the month.
It teaches us how simple it is to fund a
trust rather than split assets. Between two talks about estate
tax savings. It also explains the step up in basis
where you can get a full step up on the
first death, and really helps us understand and winning on

(19:00):
both sides of the equation estate tax, income tax. Just
so much to offer and so easy to understand. Call
and get the guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.
It is the end of the month. It's going away
after this, folks eight six six eight four eight five

(19:24):
six nine nine or Legal Exchange Show dot com.

Speaker 2 (19:29):
Listen, I think you need to do a year end
wrap up show every year. Go back through all your
past show notes and give us resolution for all the
times you've left us hanging throughout the year.

Speaker 3 (19:40):
Well, I'm going to clear this one up for you,
all right. We're going to make it very clear what
is a disqualifying transfer right any action taken that makes
a formally available asset no longer available, meaning you didn't
get fair market value for what you gave away. So
I transfer of assets and do not get back fair

(20:01):
market value, then you have to calculate this penalty period. Why,
because it's a disqualifying transfer. Now, let's just say, for
the most part, you have when you make one of
these disqualifying transfers. We know generally speaking it's a five
year waiting period. I put it somewhere where I cannot
get it. Well, that you cannot get it part is

(20:23):
determined based on the language of the trust that you
put it in. So that's what this is all about, right,
So did these transfers get put into a trust that
were in fact available to the individual in this case, Natalie.
If they remain available, then it doesn't matter that it's
a disqualifying transfer right. Actually, it wouldn't be disqualifying because

(20:47):
you could still get it all right. Why that's important
is there was a personal care contract involved here. So
if you're going to provide services personal care services for
your loved one and you don't have a personal care
contract in place, then those will be considered disqualifying transfers

(21:12):
because they will be deemed made by you out of
love and affection. You need to go out of your
way to create a personal care contract to convert that
love and affection to a business transaction and make it real. Well,
what's probably wondering what's involved in doing that, Well, you

(21:34):
got to go get a personal You got to have
a contract setup. In the contract, it's between the care
provider and the person who's receiving the care. You need
to define the services that are being rendered exactly what
you're doing. You need to put down an hourly rate
of pay that you're going to get. You need to

(21:54):
determine the duration of the services. You need to say
how I'm going to get paid every week, two weeks monthly. However,
you want probably not a bad idea to set up
maybe even a payroll service to kick it out so
you get like a W two or ten ninety nine
at the end of the year. Yes, you must also

(22:17):
put that money you get on your personal income tax return.
It's income, Yep, you're acknowledging that it's income by paying taxes.
Those kinds of things make it a personal care contract
and then would prevent the money coming from Mom Natalie
in this case to the child from being a disqualifying

(22:40):
transfer and instead is a payment for services rendered. Big difference,
not a disqualifying transfer. But if you took the money
and stuck it in a trust that's available to the
person you just got it from, well then we don't

(23:02):
care whether it's a disqualifying transfer or not. The money
still available to go boomerang. So you got to be
very careful when you drafted to make sure that you've
accomplished that. So accountability versus whether or not it's a
disqualifying transfer. So that's what this is all about. But
that's really from a medicaid standpoint. Folks. You just want
to get your basic estate planning in the row in order.

(23:23):
It's the end of the month, call and get the
guide The Simplicity of Joint Revocable Trusts eight six six
eight four eight five six nine nine or Legal Exchange
show dot com. You can download it right there.

Speaker 2 (23:36):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your listener questions. When we return to the
Legal Exchange with Todd Lutsky, The.

Speaker 1 (23:52):
State planning isn't just about taxes, It's about peace of mind.
At Cushing and Dolan, we believe your plan should protect
your family, not implicate your life. A joint revocable trust
can help you do both. It lets you avoid probate,
which means no court delays, no public filings, and no
stress for your loved ones. Your state stays private and
your family stays in control. Our new guide, The Simplicity

(24:14):
of Joint Revocable Trusts also explains how a trust can
protect your children's inheritance from creditors, divorce, or bad financial
decisions down the road. This guide makes it easy to
understand why a joint trust may be the smart move
for your family's future. Call eight sixty six eight four
eight five six ninety nine right now and ask for
your free copy of the Simplicity of Joint Revocable Trusts.

(24:34):
That's eight sixty six eight four eight five six ninety nine,
or requested online from our website Legal Exchange show dot com.
The proceeding was paid for in The views expressed are
solely those of Cushing and Dolan. Cushing and Dolan in
or Armstrong Advisory may contact you offering legal investment services.
Cushing and Dolan in Armstrong Advisory do not endorse each
other in are not affiliated.

Speaker 4 (24:53):
Mark Vonner is the CEO of Veterans Development Corporation. Mark
faithfully served his country from nineteen eighty one to nineteen
eighty four and we're thrilled to have him as a
partner and presenting sponsor of the DAV five K Boston.

Speaker 3 (25:07):
Mark comes from a proud.

Speaker 4 (25:08):
Military family that includes his father, Victor and brother Timmy.
Mark talks often about how serving his country was one
of the greatest achievements of his life, and it's one
of the main reasons he chooses to give back to
this special community. Mark is honored to continue the legacy
that his father started when he built Veterans Development Corporation.
Working to help many disabled veterans and their families has

(25:29):
become a lifelong goal for Mark, and it's why he's
taken the time to fully support the Disabled American Veterans
Department of Massachusetts. You can join Mark and help our
great American heroes today by making a donation to support
the DAV Department of Massachusetts. Please visit DAV five k
dot Boston. That's DAV five k dot Boston.

Speaker 5 (25:53):
Your home has been the center of your life for years,
maybe decades, but as you enter retirement, its role starts
to change.

Speaker 3 (25:58):
Hi.

Speaker 5 (25:59):
This is Mike Armstrong from the Armstrong Advisory Group. The
focus shifts from what your home means to how well
it supports your lifestyle. For many people, the space that
once made sense for a busy family now requires more time, energy,
and money than it should. Retirement is about simplifying. Choosing
a home that's easier to maintain, closer to the people
and services that matter, and better aligned with how you
want to live may be the right move as you

(26:20):
head into your later years. Our new guide, called Owning,
Real Estate and Retirement, tackles a number of different issues
that may help you turn your home into a source
of flexibility and freedom, helping you plan for the years
ahead with comfort and confidence. Get your free copy today
by calling eight hundred three nine three four zero zero one.
That's eight hundred three to nine three four zero zero one,
or you can request the guide at Armstrong Advisory dot com.

Speaker 1 (26:41):
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 into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange and it's
time for Ask Todd, the segment where will answer your
questions about anything and everything that's included in the estate

(27:04):
planning process. Once again, here's Todd Lutsky and Susan Powers.

Speaker 3 (27:10):
Welcome back, Tod.

Speaker 2 (27:11):
We have a few questions from listeners who you first
question comes from Joan in Middleborough, mass And Joan writes,
my husband and I have two irrevocable trusts. Our niece
is currently the trustee, but has indicated that she no
longer wants to be the trustee. How do we go
about changing this? Are there any restrictions as to who

(27:34):
we can appoint?

Speaker 3 (27:36):
So let's let's sort of unpack that because I find
there's some things that I might need to know a
little more about.

Speaker 2 (27:43):
And this is my client, so I'm well aware of
her situation right now, So you give me this is
your trust By the way, oh, that was one of
my questions. That's probably helpful detailed that I left out. Yes,
so you don't give me resolutions. I don't give you
full questions, don't give me full facts.

Speaker 3 (27:57):
It's hard for me to answer full question. So in
this case, one with the fact that they that that
I now know it's a Cushing and Dole in trust
and and that there's two of them, two trusts. I'm
going to realize that they're over two million dollars in assets,

(28:18):
and that's important from an estate tax standpoint for me.
But they're irrevocable, so I know they're designed to protect
assets from the nursing home and shelter for a state
taxes at the same time. So that's good. Now, it's
interesting that there's a niece listed as trustee, which makes
me beg the question about children. They both have children,

(28:39):
but a little estranged. But are they providing for them?
They are, but they don't want them serving as trustee. Yeah,
that's not horribly uncommon. I guess it's not all the time,
but you know, and there's nothing wrong with that. The
niece can certainly serve as trustee. And again I always
tell people when you're setting up your your trusts, that

(28:59):
it's probably a good idea to just ask yourself that
you know. I always start with the premise that that
you know, the trust is irrevocable, but you have powers
to change things, so you know, do you I always
say which child do you want to serve, just assuming
it's going to be a child, and they'll tell us, oh,
you know, they're probably just not good at this, right,

(29:20):
or you know, I can't pick one and not the other,
and then even if I pick both, they fight with
each other. So there's just not a good dynamic. Fine,
don't put them on. Put the niece on now. Apparently,
like here, life changes, yep, and it might be a
change by the niece, Yeah, she's moving away, and it

(29:40):
might be a change by mom and dads of the world.
So either way, the control over that trustee remains with
the donors, the moms and dads of the world. So good.
They have what is known as the power to remove
and replace trust these anytime with no reason given. However,

(30:06):
they cannot replace with themselves anybody else, but not themselves.
Now in this case, of course, niece is certainly allowed
to resign. Don't have to remove her because she doesn't
want to serve anyway, so she would prepare a resignation. Well,
the attorney would prepare the resignation, she would sign it,

(30:28):
and you could also, by the way, trustees are also
able to appoint new trustees. So maybe it might be
even easier just to have the niece a point at
the direction of the donors.

Speaker 2 (30:41):
Would she's more than willing to do what she needs
to do from a paperwork perspective to sign things.

Speaker 3 (30:48):
Simply come in and say, you know. The donors come
in and say, you know, we want n we want
our nephew serve.

Speaker 2 (30:54):
So they don't have a big network of folks to
choose from, so they were thinking perhaps they might want
an attorney to serve as trustee. Is that possible perfectly?

Speaker 3 (31:04):
Okay, they can pick anybody they want as long as
it's not them. So again, the idea might be that
they come in and they tell you this, because we
still don't want Apparently the things haven't change for the sun,
they don't want the children in. They just simply say, fine,
why don't we have you know, the niece file an
appointment that says I appoint Todd Lutsky trustee or some

(31:25):
senior attorney at Cushing and Dolan trustee and then I
would accept, Then a resignation would be prepared and she
would resign, and the three pieces of paper later you've
got your new trustee. Easy peasy. So, folks, it's not
restrictive just because you have an irrevocable trust. However, the

(31:47):
real simplicity comes from this joint revocable trust. Again, these
are folks not interested necessarily in protecting assets from the
nursing home, but there's a whole host of people who
want basic estate planning done. This trust under the new
BBBA really has become more popular. It allows you to
completely fund it, not split assets, just throw everything in there.

(32:09):
You don't have to divide things between spouses. You stay
in control. You get full inclusion, so you're able to
shelter a lot more on the first death than you
ever could before with two trusts, getting a full step
up in basis on the first death, allowing for lots
of more flexibility by the surviving spouse in terms of
what they might give away and how they might use

(32:30):
the assets, and then of course even maybe a second
step up in basis when the survivor dies. Folks taking
advantage of both estate tax savings and income tax savings,
and winning on both sides of the equation is what
this guide is all about. Call and get it. It's
the end of the month eight six six eight four
eight five six nine to nine or Legal Exchange Show

(32:53):
dot com and download it there. It's going to go
away after this month eight six six eight four eight
five six nine or Legal Exchange Show dot com.

Speaker 2 (33:04):
Our last question comes from Ken in Nashville, New Hampshire,
and Ken writes, my wife and I are in our
early sixties and starting to think about nursing home protection.
How do we know when it's time to switch from
a revocable trust to an irrevocable one and what happens
if we wait too long. We have a total of
one and a half million, including our home worth six

(33:25):
hundred thousand, iris worth four hundred and other investments of
five hundred thousand. When do you start thinking about that
every vocable?

Speaker 3 (33:35):
Yeah, sixty, it's time. It's funny that you mentioned the sixties,
but yes, when I meet clients and there is no
rhyme or reason, I always tell people this is my
own rule. Please don't say, oh, that's what I heard
that's the rule. It's just my rule guideline. Yeah, I
think you know sixty sixty one too. It takes five

(33:57):
years to protect assets, so you know, on where you
are in life, if you're comfortable. If you need to
wait till sixty five, that's no harm done. You can
still do it at sixty five. Obviously you can do
it even later. Never hurts to get the clock running.
But at an early time I would think sixties. So now,

(34:18):
the other thing that you really need to look at
when you think about switching is you know, do I
what kind of assets? How much am I worth? Right?
So their net worth is sort of right in that
sweet spot of yes, I need to be protecting assets
from the nursing home. Whereas if they were in their

(34:38):
sixties and worth seven million, I might be saying, you
don't need to think about switching, right, So I think
there's an age function, sure, and an asset net worth function.
So if they say, well, geez, we were thinking about
switching to nursing home planning, I would say, why you're
the higher Yeah, the higher network exactly. If you're at
six seven million and up, you know, I'd be like bother.

Speaker 2 (35:00):
But at a lower networth. I think it can be
more important than ever to make sure those assets are
protected for your spouse so you're not going to impoverish
them if for one of you goes into a nursing home.

Speaker 3 (35:10):
Great point. I think people forget that. They think we're
always talking about the kids when we talk about these trusts. Right, No,
I've talked about the parents first. Yeah, then the kids.

Speaker 2 (35:19):
If there's something less for the kids, great.

Speaker 3 (35:21):
But there will be when yes, And I think you're
right here because how much of and when you look
at a one point five million dollar estate, I'm with
you that that's in the realm of yes, we should
be switching to irrevocable trusts. And then you've got to
look at the type of assets that make up that estate.
Like if these assets were switched and they had like

(35:44):
a million dollars in an IRA and like a couple
thousand dollars in a bank account and a house. Right,
it's a little harder because you can't protect the iry
in advance, right, not in advance, that's right. But but
you know, this is really a great set of facts
because of the one point five one point one can

(36:08):
be protected m and you're going to live off the
four hundred thousand dollars IRA anyway. Yep, that's a great
asset to spend down during life. It's better for taxes,
it's at risk for the nursing home. So please do
that and let's stick everything else in the trust, folks.
That's medicaid planning. This guide is about the simplicity of

(36:28):
joint revocable trust. It's the end of the month. Call
and get it eight six six eight four eight five
six nine nine or Legal Exchange show dot com and
download it there.

Speaker 2 (36:40):
If you have a question you would like to ask Todd,
visit his website Legal Exchange Show dot com. Click on
the ass tob 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 in Dolan sus Empowers, a financial

(37:01):
advisor with the Armstrong Advisory Group. We'll be back with
more after this quick break on a legal exchange with
Todd Lutsky.

Speaker 1 (37:09):
The state planning isn't just about taxes, It's about peace
of mind. At Cushing and Dolan. We believe your plan
should protect your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your state stays
private and your family stays in control. Our new guide,

(37:30):
The Simplicity of Joint Revocable Trusts also explains how a
trust can protect your children's inheritance from creditors, divorce, or
bad financial decisions down the road. This guide makes it
easy to understand why a joint trust may be the
smart move for your family's future. Call eight six six
eight four eight five six nine to nine right now
and ask for your free copy of the Simplicity of
Joint Revocable Trusts that's eight six six eight four eight

(37:53):
five six ninety nine, or requested online from our website
Legal exchange show dot com. The proceeding was paid for
in the UW. Expressed are solely those of Cushing and Dolan.
Cushing and Dolan in or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other. In are not affiliated HI.
This is Chuck Zada from the Armstrong Advisory Group. Your
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Advisory Group, a registered investment advisor. Nothing in the ad
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Speaker 1 (40:39):
For all you've done. Your tune to the Legal Exchange
with Todd Lutsky. If you are a loved one needs
a nursing homes day, call Todd right now at eight
sixty six eight four eight five six ninet nine and
let him make sure your assets are protected. That's eight
six six eight for eight 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 masters
in taxation. Todd, part of your guide for this month
is all about how to protect children and your future generations.

(41:22):
So I know a lot of parents worry about leaving
too much money too soon to their children. What tools
are available in a trust that can help control when
and how your kids actually receive their inheritance.

Speaker 3 (41:39):
What I like to tell people about that is when
they ask me, Okay, so how do we want to
leave assets when you die, I say it's like good
to be king because control from the grade, we can
write anything you want. Yeah, I mean, there really is
no parameters that you can't think of that might be
something we can't do.

Speaker 2 (42:00):
So I can dream up any kind of circumstance for
my kid's inheritance to be distributed, and then you your
job is to.

Speaker 3 (42:09):
Sort of really in if I think it's not.

Speaker 2 (42:11):
Gonna work, or get the legal legal language to fit
that need.

Speaker 3 (42:15):
Yeah. Yeah, because there's there's things where like people don't
they they think they can do certain things and then
it doesn't work like. I remember this one person. It
was Greek and he wanted to you know, they're big
on marrying Greek and that's just keep it that way.
That's how they are. And and he's like, my one
daughter's not married yet, she only gets her inheritance if

(42:36):
she's married to a Greek guy. I'm like, oh boy,
how are we going to do that? I mean, I
could write that, but you need to understand the reality
writing and what's really going to happen in life. And
that's my point. Is I going to guide people? Right,
I'm like, you have to understand what this person was.
If she gets married, no, no one, she will hate you. Two.
She will simply say, I know, I got my Greek friend.

(42:59):
What if she doesn't like bull You're going down many
different scenarios. But in this case, my point was simply,
what she'll simply do is find her friend. Yes, put
an agreement together that says we're going to get married.
I'm then going to get this much money. I'm going
to give you this little piece, and we're going to

(43:19):
file for divorce. And this is what's going to happen.
And this is not what you want to leave as
a legacy. So when I say yeah, you can do
it anyway you want, you sort of need to guide
people reason, you know, So I think the general rule
just give you some ideas, right, obviously outright is certainly allowed. Again,
no right or wrong answer here, Oh, I'll just give

(43:39):
it to them. In staggered distributions not uncommon. When they
reach twenty five or thirty or thirty five years of age,
you can have one third paid out incrementally.

Speaker 2 (43:48):
Five years to think about what you've done. If you've
blown it all in the first sweep.

Speaker 3 (43:52):
Exactly, it's sort of a maturation process for them. That's
not a bad idea. And if they remember during that
time period, distributions can still be made for health, education, welfare,
and sports, so it can come out for good reason.
It's just the lump sums come out incrementally so that
you kind of learn about it. Nothing wrong with that.

(44:14):
If you die in the interim, meaning after mom and
dad are dead, but you die before reaching thirty but
left kids, well then that piece is going to go
to those kids, the grand kids, right, So that's okay.
It stays in the bloodline, so you even have some
bloodline planning with this staggered distribution idea again, okay way
of doing it and maybe the again no right or

(44:38):
wrong answer. The better way The krem the la creme
is why don't I just hold it in trust for them?
Allow them to be trustees, manage and invest the money,
but not take it. If they want to take it,
they have to appoint an independent trustee. Again, smart kids,
level head kids. Give them the power to remove and
replace that person anytime. So now they control them aspects.

(45:03):
Here they control the outcome of this trust. They ask
the independent trustee for distributions. The independent trustee gets to
say yes or no. And it's that form of ownership
that protects it from future divorces, creditors of any kind,
therefore keeping it in the bloodline, protecting it from creditors.
And even if there's never a divorce, it skips a

(45:25):
generation for estate taxes because when they die, if they
have not taken it yet, they don't own it. Therefore
it passes down to the grandkids generation skipping tax free.
This is generational building wealth that you can't fathom tax
free yep.

Speaker 2 (45:43):
So that covers divorce, creditor protection, dependency issues.

Speaker 3 (45:50):
All of them are just preparing with money. Yeah, whatever
you want. Yeah, really a wonderful way of doing it.
So those are kind of some three general ideas, but
you're really not limited. Can pick and choose what you
want to do, folks. That part of a trust is
the same, whether it's a simplicity of a joint revocable trust,
or whether it's an irrevocable medicaid trust, or whether it's

(46:13):
you know, a single or two separate irrevocable medicaid trust.
How we leave things is the same, but you should
get the guide. This simplicity of joint revocable trust is
to kick off your estate planning and help you understand
putting everything in one trust, cramming everything down on the
first death, getting a step up in basis on more

(46:33):
assets than you could if you split everything separately, and
ultimately how you leave it. This guide explains all of that,
as well as the actual tax savings that goes on.
So call and get the guide. End of the month,
Last chance to get it eight six six eight four
eight five six nine to nine or Legal Exchange Show

(46:56):
dot com. One more time eight six six eight four
eight five six nine nine or Legal Exchange Show dot com.

Speaker 2 (47:05):
So Todd staying on that line of protecting your beneficiaries
from themselves. So someone who might have dependency issues, whether
it's drug addiction or gambling, whatever it is. That's fine
for things that are in your trust and you're creating
that share. But what do you do with your iras?

(47:26):
Because people can have some substantial iras and if they say, okay,
the trust is protected, we've got shares for the kids,
what happens with the iras?

Speaker 3 (47:36):
Great? Great question. So the iras. While I'm sitting here
just explaining a minute ago the simplicity of a joint trust,
and I'm sitting here telling you throw everything in there.
Throw everything in there Stept.

Speaker 5 (47:47):
Four.

Speaker 3 (47:47):
You're right, except for the iras, folks. Irase cannot go
in there, which again is why you do a joint
trust because there might be a large portion of assets
that are not able to be sheltered on the first death.
But the joint trust allows you to shelter all of
the non qualified assets on the first AaTh, which is
really important. And so this piece would just flow to

(48:10):
the spouse. But then when the spouse dies, where does
the IRA go? So it's let's talk for a minute.
As a general rule, when you're doing a state planning
and I tell this to my paralegals who fund these
trust for my clients. If it's a revocable trust, I
we'll just use a joint revocable trust. For now. The

(48:31):
standard rule will be the primary beneficiary for a married
couple will be the spouse. It's the best from an
income tax standpoint, and that's going to carry the day today,
not necessarily the best from an estate tax standpoint. But
if I've got a joint trust, I'm okay, right, all right,

(48:55):
The contingent beneficiary will be two choices. Make a look
at the trust. If the trust says, as you just said, Susan,
we're trying to control it. We're trying to protect it
for creditors, for divorces, for kids with bad money, that
divorce protection language is in the trust. All they have

(49:15):
to do is look. If it's there, the contingent beneficiary
will be the trust. If it just says, divide it
equally to the kids and give it to them because
we're not worried about it paid out, we don't want
to control it from the grave, then the contingent beneficiary
will be the kids. Because it can go right out.
There's no reason to run it through the trust. Right,

(49:39):
So those are your two choices. So in this case, Susan,
we would make the primary the spouse the contingent the trust.
The trust iras cannot get there while you're alive, but
they can get to your trust when you're dead.

Speaker 2 (49:53):
Yeah, and you're like life insurance that can just go
straight right to.

Speaker 3 (49:57):
The trust primary beneficiary all the time. And there's good
If a trust is designed right, there's not going to
be any adverse required minimum distribution problems. Remember, if you
leave it to a trust, I'm sorry. If you leave
it to the kids, it's going to come out over
ten years. If you leave it to the trust, it
still has to come into the trust over ten years.

(50:19):
At the end where folks call and get the guide
the Simplicity of joint revocable trust, it's the end of
the month, last chance to get it eight six six
eight four eight five six ninety nine or Legal Exchange
show dot com again eight sixty six eight four eight
five six ninety nine. It is the end of the month,

(50:42):
call and get the guide.

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

Speaker 3 (50:47):
Always a pleasure Susan thank you.

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

Speaker 1 (51:00):
The state planning isn't just about taxes, It's about peace
of mind. At Cushing and Dolan, we believe your plan
should protect your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your estate stays
private and your family stays in control. Our new guide,

(51:21):
The Simplicity of Joint Revocable Trusts, also explains how a
trust can protect your children's inheritance from creditors, divorce, or
bad financial decisions down the road. This guide makes it
easy to understand why a joint trust may be the
smart move for your family's future. Call eight six six
eight four eight five six ninety nine right now and
ask for your free copy of the Simplicity of Joint
Revocable Trusts. That's eight sixty six eight four eight five

(51:44):
six ninety nine, or requested online from our website Legal
Exchange show dot com. The proceeding was paid for in
The views expressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you
offering legal investment services. Cushing and Dolan in Armstrong Advisory
do not endorse each other in or not affiliated.

Speaker 5 (52:00):
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AHI.

Speaker 5 (52:05):
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(52:27):
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That's eight hundred three nine three four zero zero one,
or you can request the guide 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 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 sarch.

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