Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
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 (00:38):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor the Armstrong Advisory Group, and I'm joined
by Todd Lutsky, a partner with the law firm of
Cushing and Dolan with a master's in taxation. Welcome Todd,
How are you today?
Speaker 3 (00:53):
Almost never better?
Speaker 2 (00:54):
Almost little more than last time, A.
Speaker 3 (00:56):
Little better than last time.
Speaker 2 (00:58):
What do you have for us this week?
Speaker 3 (00:59):
Couple of things. I got two cases a Montana Superior
or Supreme Court case. Basically, this is going to shock you.
It shocked me. A state recovery way beyond first impression
is sort of my title. I can't understand how this
estate recovery worked in Montana. I'm gonna explain Montana. I'm
(01:20):
gonna explain Massachusetts and other states as to a state recovery.
What is that? Folks? That's when you get sick, going
to nursing home, get on medicaid, and then they come
back after you later in this case, can they come
back after you or after the person who got your money? Interesting?
Speaker 2 (01:38):
Huh?
Speaker 3 (01:39):
Stay tuned, because I think if we do a little planning,
maybe we can avoid all of that. Yeah, state recovery thing,
because there was none done there. Off to Connecticut, Connecticut
Appellate Court case, very poor drafting. They did drafting where
they tried to put together a revocable trust to take
care of the kids, but they didn't take care of
the grand case kids. But then they decided to take
(02:02):
care of the grandkids by referencing the irrevocable life insurance
trust that they had in place that ended up not
staying in place because the estate tax exemptions.
Speaker 2 (02:13):
Went lots to learn.
Speaker 3 (02:16):
About this case and drafting. But again Kudo's trusts were done,
but they have to be done right. That's the whole point. Well, folks,
this guide this month is figuring out how to balance
asset protection and estate taxes. It gives you both trusts
revocable and irrevocable, and it helps you understand exactly how
(02:37):
to calculate the taxes. So you understand you can put
your own numbers in and then calculate the tax for
your own estate. It really explains portability and how these
marital shares and remainder shares operate. We talk about them
all the time, but this gives you really the detail
of how the shares work, both in a revocable trust
(03:00):
and in an irrevocable trust. In case nursing home planning
is on your mind. Little something for everybody in this guide, folks,
call and get it eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
again eight six six eight four eight five six nine
nine or Legal Exchange Show dot Com. Let's head back
(03:26):
to Oklahoma. No, sorry, we are in Montana, not Oklaho, Montana.
So in this case we've got a situation where Florence
died intestate. This is that estate recovery case.
Speaker 2 (03:44):
So no state documents.
Speaker 3 (03:46):
Yeah, she dies intestate, so no no will, no nothing.
April twenty twenty three, she received a whopping fifty three
hundred dollars of medicaid benefits. Keep that in mind because
it would seem to me that the litigation costs involved
here are going to far exceed fifty three hundred dollars.
But that's not the point. Medicaid benefits were received Minta.
(04:12):
The daughter was then appointed personal representative and published in
a local newspaper for three weeks, three consecutive weeks to
get the creditor's notice. Who's a creditor a nursing home?
The state exactly well, Montana Department of Health and Human
Services filed a claim on nine thirteen, twenty twenty three.
(04:35):
She died in April, one day late after the four
month claim period expired. Okay, well, the probate court rightfully
so denied the state's claim, said in March twenty twenty four,
and in April twenty twenty four approved Mena's final accounting
for the estate and the soul heirs got two hundred
(04:58):
thousand dollars from the estate, so that makes me scratch
my head on terms of how you got eligible for medicaid,
if you had two hundred thousand dollars in the estate.
We'll come back to that. These are all things that
make me scratch my head. Maybe so, the Department of
the State and Human Resources files a personal claim against
(05:21):
Minta who got the two hundred thousand dollars to recover
the Medicaid benefits paid to Florence her mom. Well, the
district court dismissed that complaint and said, look, you're time barred.
You're precluded from filing that claim against Minta personally.
Speaker 2 (05:38):
Were they hope and Minta didn't know better and just
paid it?
Speaker 3 (05:42):
I don't know, but they filed it. They appealed to
Montana Supreme Court reversed, Yeah, reversed and said the Medicaid
Statute in Montana creates two separate claims, one against the
estate and one against a person who receives property from
(06:05):
the deceaseds estate and also missing the first claim deadline
does not foreclose you from filing a claim against the
individual personally to recover. So too bad for you, Minta.
Speaker 2 (06:18):
It's a little safety knit for them again.
Speaker 3 (06:21):
Two hundred thousand dollars. You got to give fifty three
hundred dollars back. My question is how much did you
spend in legal fees to get to the Montana Supreme Court.
Speaker 2 (06:30):
It was probably five hours, and that would have eaten
up the five grand way.
Speaker 3 (06:34):
More than fifty three hundred dollars.
Speaker 2 (06:36):
Oh yeah, they're probably trying to set some precedent and
not have that.
Speaker 3 (06:41):
Boy, this has just shocked me, right, because let's learn
about a state recovery.
Speaker 2 (06:45):
Yeah, that's crazy because if you miss it one day
a deadline by a day with the state that you're denied, Well.
Speaker 3 (06:50):
They're making it sound like they're two separate claims and
the other claim maybe didn't have a four month deadline.
Speaker 2 (06:55):
That's crazy.
Speaker 3 (06:56):
That's Montana. So let's talk about this. First of all,
there was no will. We got to learn a lot
of lessons here. There's no will. No planning was done. Well,
perhaps had an irrevocable trust been done in advance, maybe
the result would have been different. I don't know, because
I'm not convinced I understand Montana's laws. I mean, ultimately,
(07:19):
somebody would have got that money from the estate from
the trust. Could they pursue a distribution from the trust
to the individual or is that not considered from the
estate again probta state versus gross estate. So maybe that's
how it would work, and I would think so, I
would think there's a distinction in this case, there was
(07:40):
a distribution from the probata state.
Speaker 2 (07:43):
Will estate. They couldn't have gotten anything anyway.
Speaker 3 (07:46):
Right, Well, that's my point if there was no probatea state,
and that's the only thing that's in my head that's
sort of saving me my understanding of this case. Well,
let's let's play it out. So the estate had two
hundred dollars dollars. I already said, I'm not sure how
they got on medicaid other than that two hundred thousand
dollars had to be placed in a Medicaid annuity, which
(08:09):
converts these excess assets over two thousand dollars into an
income stream. Stay with me, Susan, I already know what
you're thinking, right, Okay, Well, that would convert it into
an income stream, so you could get on Medicaid. Generally,
you would have a beneficiary listed and the state for
at least the amount of Medicaid benefits paid on behalf
(08:29):
of that individual. We know in Massachusetts, you have to
list the state as a beneficiary. I don't know every state,
but that's a federal medicaid law. I think it's I
think it's a federal well it is. It is a
federal medicaid law. So that is what it says in
the federal statute as well. And again this is always
important because you can get on Medicaid. Instead of paying
(08:52):
sixteen thousand dollars a month, you're paying sixty five hundred
less Social Security and pension. You stretch out the money
for the family if there's an anything left, well, if
the state was listed as the beneficiary, then they would
have been paid there were, none of this litigation would
have been needed. So I'm really confused as to how
two hundred thousand dollars.
Speaker 2 (09:11):
Had to be living in go with a sudden surprise
inheritance in the last month of her life.
Speaker 3 (09:17):
I just it's just shocking. So just a little bit
about for you guys to understand how these annuities work. Well,
a state recovery in Massachusetts at least can only be
against the probate estate right. So keep that in mind,
because when we set up our trusts and we put
assets in them, then they no longer avoid I mean
they're no longer a probate asset. So when you die,
(09:41):
even though you there'll be a distribution to you family,
it doesn't matter that the individual went on medicaid because
the estate can only recover against probate assets and not
against somebody who got the assets from the estate.
Speaker 2 (09:56):
So you're planning, do.
Speaker 3 (09:58):
Your planning, folks, In fact, do your planning all and
get the guide Rebalancing Asset Protection and Avoiding Estate Taxes.
Learn how the trusts irrevocable and revocable marital share and
remainder share work eight six six eight four eight five
six nine nine or Legal Exchange show dot com and
you can download the guide right there.
Speaker 2 (10:20):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We've got
much more to come when we return to the Legal
Exchange with Todd Lutsky.
Speaker 1 (10:35):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate plan. Doing
your planning early can help you protect your assets and
keep more of your wealth in your family. Cushing and Dolan,
the leaders in elder lawn taxation, have put together a
new guide called Balancing, Asset Protection and Avoiding Estate Taxes,
and in it you'll learn how to secure your assets
if you ever need long term care, how to avoid
having everything tied up in probate, and how to get
(10:56):
a clearer picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate taxes when you plan the
right way and plan early. Whether you have an existing
estate plan or starting from scratch, this guide makes it
easy to understand what steps could help you and your
family in the long run. To get your free copy,
call Cushion Dolan at eight six six eight four eight
five six nine nine. That's eight six six eight four
(11:19):
eight five six nine nine, or you can request it
online at legal exchainshow dot com. That's Legal exchange show
dot com. The proceeding was paid for in the use
expressed or so leados of Cushing and Dolin, Cushian, Dolan
In or Armstrong Advisory may contact you offering legal or
investment services. Cushingon Dolan in Armstrong Advisory do not endorse
each other and are not affiliated. When the holidays roll
in and the cold settles over New England, find your
(11:39):
escape in the US Virgin Islands. Trade the freezing tempts
and gray skies for warm sun, turquoise water, and that
easy island energy you can feel the second you land.
This December through early January, Saint Croix ignites with the
Khrushian Christmas Festival, a celebration over a century old. Frederickstead
comes alive with colorful parades, live reggae, and streets filled
with the sites and flavor of real Caribbean culture. It's
(12:01):
the holiday season with a tropical beat. From there, they
explore Saint Thomas with its duty free shopping and the
legendary views at Maggan's Bay, or slow down on Saint John,
where quiet beaches and National Park trails make every day
feel like your own private adventure. Getting there could not
be easier. No passport is needed, and there's no money
to exchange. Just pack light and step out of the
cold into pure sunshine. This holiday season, let yourself fall
(12:24):
naturally in rhythm with the heartbeat of the islands. Visit
America's Caribbean paradise. The US Virgin Islands. Go to visit
USBI dot com and book your trip today. That's visit
USBI dot com.
Speaker 4 (12:36):
The Armstrong Advisory Group understands retirement planning and when it
comes to married couples, it can be about more than money. Hi,
this is Mike Armstrong and our new guide called Retirement
Planning for Spouses tackles many issues that couples face as
they're preparing for later life. This guide keeps things simple,
focusing on important matters such as making sure both partners
understand where their money's coming from in retirement, being aware
(12:57):
of scams, how to stay organized if one spouse outlives
the other, and ways to handle gifts, donations or legacy
goals as a team. It's a straightforward look at the
steps every couple can take to feel confident about retirement.
Call the Armstrong Advisory Group right now at eight hundred
three nine three for zero zero one to get your
free copy of Retirement Planning for Spouses. That's eight hundred
three nine three for zero zero one, or you can
(13:19):
request it online at Armstrong Advisory dot com.
Speaker 1 (13:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange with Todd Lunsky,
an expert in elder life planning and taxation. Need help
(13:43):
with your estate plan? Con Todd right now and make
an appointment. Eight six six eight four eight five six
nine nine. That's eight six six eight four eight five
six nine 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 joined by Todd Latsky, a partner with the
law firm of Cushing and Dolan with a master's in taxation.
Where are we headed now, Todd?
Speaker 3 (14:07):
We are headed over to Indiana. We have an appellate
court case there where we are interpreting a trust for
grandkids and to show how this drafting arrangement wasn't so good. Right.
So in this case we've got Janet who creates a
revocable trust in two thousand and an irrevocable life insurance
(14:28):
trust to pay the estate taxes. So these are the
two trusts that she drafted. Janet had two kids, Dennis
and Sondra, and one child, Trudy, who had predeceased her,
but left three grandkids. Keep that in mind when you're
drafting folks. So Janet in two thousand and four, four
(14:50):
years later, amended her revocable trust to state that if
there was a surplus left in the irrevocable life insurance
trust after paying the federal and state death tax, then
the trust would pay a separate payout from the revocable
trust to the grandkids. Okay, if there was a surplus. Well,
(15:12):
in twenty sixteen, as we all know, the laws changed
pretty dramatically and it made the payment of the state
taxes for her unnecessary. So she terminated the life insurance
trust because she just let it in till it last
she needed. Well. In twenty three she died well, Dennis
and Saunder, the kids each got one hundred and seventy
(15:33):
one thousand dollars and nothing to the grandkids. Well, remember
they were both living and only one had predeceased and
left the two kids that were out, well, the grandkids,
as you might imagine petitioned the court to distribute the
assets pursued to the first Amendment of the revocable Trust. Well,
the trial court concluded, based on extrinsic evidence, that Janet's
(15:57):
intent was for those grandkids to get some of the
one hundred and seventy one thousand dollars prior to distribution.
So there you go, grandkids. Yeah, the kids weren't happy
with that.
Speaker 1 (16:09):
Can you imagine?
Speaker 2 (16:10):
These are parents and the uncles.
Speaker 3 (16:13):
The kids are the answer. The kids are the aunts
and uncles. Yeah, are getting sued by their niece and nephew.
Speaker 2 (16:19):
Yeah.
Speaker 3 (16:21):
Well, the kids appealed and the court reversed, basically saying
that the language of the first Amendment was clear, if
there are any remaining funds in the irrevocable trust after
the taxes are paid, then the grandkids are to take. However,
(16:41):
the islet did not exist, it was terminated. Therefore there
could have been no surplus, no funds, and therefore there
is nothing for the kids. I mean that's pretty clear, right, Sorry, grandkids,
you're out.
Speaker 2 (16:55):
Which seems like it was the right path.
Speaker 3 (16:59):
It's definitely the right decision. Yeah, following the law.
Speaker 2 (17:04):
Is it what she really wanted?
Speaker 3 (17:06):
Can't really tell, but.
Speaker 2 (17:08):
I bet you did this without talking to her attorney.
Speaker 3 (17:11):
Well, this is going to come back, and this is
the tips we're gonna learn about, folks. We're gonna come
back to what we can learn from this in a minute,
but ultimately, just to give you a little heads up drafting, drafting, drafting.
How have you not learned how to draft the document
to take care of grandkids? Right? It seems like it
should be a natural if you want them in. I
(17:31):
don't know that you do, right. That's again a donors
intent issue. So in any event, before we get there,
learned for all of you folks that even if you
haven't started estate planning right, this guide is balancing asset
protection and avoiding a state taxes. It gives you the
formulas and the charts to calculate your own estate tax liability.
(17:54):
Then you can pick between whether you look at the
revocable or the irrevocable trust that's listed in this guide
talks about portability and really explains better than we can
do on the radio, how the remainder share and the
special marital share work to shelter a state taxes. Put
your own numbers in and you'll see how it works,
(18:16):
and see how it fits, and then you can decide
compare that to the irrevocable remainder share and marital share
there and here as well, folks, a little something for everyone.
It is that time of year. Call and get the
guide eight six six eight four eight five six nine
nine or Legal Exchange Show dot com again eight six
six eight four eight five six nine nine or Legal
(18:40):
Exchange Show dot com.
Speaker 2 (18:41):
What a better Christmas gift than no estate taxes for
your children?
Speaker 1 (18:45):
Right?
Speaker 3 (18:46):
That's a that's a good Christmas for me.
Speaker 2 (18:48):
Die this year, but future Christmas.
Speaker 3 (18:50):
I think if I was the parent, it would be
a nicest, say.
Speaker 2 (18:52):
Taxes of future Christmas, get rid of them.
Speaker 3 (18:57):
Christmas is past taxes, Okay, tips and lessons. What do
we get from this case? Really, it's all about updating
your documents, right. It's not uncommon to review your documents
as laws changed. The laws changed you, right, and the
family dynamics might change. Well, here the estate tax exemption
(19:17):
went up. Well, we know that I send emails. We
as a Cushing and Dolan, We send emails to our
database all the time. And so it turned out that
because the estate tax went up, there was no need
to have the life insurance or the life insurance trust
also lost. You lost a child, well maybe that is
(19:39):
a red flag for you to take a look at
your plan and make sure the grandkids are covered and
see if it change is needed.
Speaker 2 (19:45):
So the grandkids of that child that predeceased, right, got it? Oh,
those are the ones that sued.
Speaker 3 (19:51):
Those are the ones that say, right, the predeceased child's
kids sued.
Speaker 2 (19:55):
Make sure you understand that plink goball.
Speaker 3 (19:57):
Right, and that's that's what's going on here, not the kid.
The kids were just the ants and the uncle. Right,
So okay, and I remember it's drafting, right, You got
to think about it when you're drafting. And my question
is why would the initial trust not include the grandkids.
Our language generally says equally to the kids, which it
sounds like it did if living otherwise to grandkids till
(20:22):
age thirty. Let's just say as an example, now, it
says up here that when Janet did her trust, one
of her kids was already deceased. So it would seem
to me, oh yeah, that you would have thought about
that child's children when you were drafting it.
Speaker 2 (20:40):
That the attorney would have had a conversation and counseled her.
Speaker 3 (20:44):
So what I'm thinking is maybe something changed, right, look
at the language in your trust and decide if it
needs updating. Maybe they felt one way about the grandkids
back then, but then when they updated their document, their
feelings changed yep about those grandkids. So even when you
updated your document, folks, And this is just a lessons
(21:05):
on drafting right for you to think about when you're
talking to your client. Your either your client if you're
an attorney listening, or you talk to the attorney if
you're the client. Think about this. When they changed the
trust to try and reference the irrevocable life insurance trust
and say, if there was money left in there, then
(21:28):
my revocable trust will pay out more. Because you probably
couldn't change the islet, so they tried to change it here. Okay, Well,
if you really wanted to take care of your grandchildren,
why would you make it a contingency. Why wouldn't you
just say I'm going to amend my revocable trust yep,
equally to all kids living, if not to their kids.
(21:53):
Now you've solved the problem.
Speaker 2 (21:55):
So you end up with three buckets, two for your
living children in one bucket for your grand children who's
lost their parent exactly.
Speaker 3 (22:02):
Yeah, and so that one third would break down into
as many kids as that deceased child left. Well, well,
that would be what I would have suggested. Why don't
we just do that. If you want to make it
more and still accommodate the islet, you could do that,
but it should be drafted in your document. And then
(22:23):
in addition, if this islet still exists, yeah, I want
to make an additional adjustment. Fine, Again, that would have
made sense because the islet would have not provided for
so those kids would have gotten more and the grand
kids wouldn't have gotten any So you give them a
little more in their revocable trust to make up for
what they're not getting in the irrevocable trust. Wow, folks,
(22:46):
it's all about drafting and communication and talking with your
with your attorney. And remember the irrevocable life insurance trust
is always designed to not be included in your estate,
so the assets in there the life insurance would have
been estate tax free and income tax free for the family.
It's a great way to leverage money to pay estate taxes. So, folks,
(23:09):
that's just a little update on how you draft This
guide will give you the information you need to calculate
your tax and fully understand how the sheltering occurs for
estate taxes in both the revocable and irrevocable trusts. See
which one's right for you. Get the guide eight six
six eight four eight five six nine nine or Legal
(23:33):
Exchange show dot com and 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 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 Lutsky.
Speaker 1 (23:51):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate plan. Doing
your planning early can help you protect your assets and
keep more of your wealth in your family. Ushingan Dolan,
the leaders in elder lawn taxation, have put together a
new guide called Balancing, Asset Protection and Avoiding Estate Taxes,
and in it you'll learn how to secure your assets
if you ever need long term care, how to avoid
having everything tied up in probate, and how to get
(24:12):
a clearer picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate taxes when you plan the
right way and plan early. Whether you have an existing
estate plan or starting from scratch, this guide makes it
easy to understand what steps could help you and your
family in the long run. To get your free copy,
call Cushion Dolan at eight six six eight four eight
five six nine nine. That's eight six six eight four
(24:35):
eight five six nine nine, or you can request it
online at legal exchange show dot com. That's Legal exchange
show dot com. The proceeding was paid for in the
views expressed or solegos of Cushing and Dolan, Cushian Dolan
and or Armstrong Advisory may contact you offering legal or
investment services. Cushingon Dolan in Armstrong Advisory do not endorse
each other and are not affiliated. When the holidays roll
end and the cold settles over New England, find your
(24:56):
escape in the US Virgin Islands. Trade the freezing tempts
and grace guys for warm sun, turquoise water and that
easy island energy. You can feel the Second u Land
this December through early January. Saint Croix ignites with the
Krucian Christmas Festival, a celebration over a century old. Frederickstead
comes alive with colorful parades, live reggae, and streets filled
with the sites and flavors of real Caribbean culture. It's
(25:18):
the holiday season with a tropical beat. From there, they
explore Saint Thomas with its duty free shopping and the
legendary views at Magan's Bay, or slow down on Saint John,
where quietbeaches and National Park trails make every day feel
like your own private adventure. Getting there could not be easier.
No passport is needed, and there's no money to exchange.
Just pack light and step out of the cold into
pure sunshine. This holiday season, let yourself fall naturally in
(25:41):
rhythm with the heartbeat of the Islands. Visit America's Caribbean
paradise the US Virgin Islands. Go to visit USBI dot
com and book your trip today. That's visit USBI dot com.
Speaker 5 (25:52):
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If you'd like to do your part, please visit DAVMA
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Speaker 6 (26:23):
At Armstrong Advisory Group, we understand that retirement planning for
couples is about making smart, coordinated decisions that support both partners. Hi.
This is Chuck Zada. We've got a brand new free
guide called Retirement Planning for Spouses that focuses on key
financial moves that every couple should understand, like how to
time your sol security benefits, how to prepare for healthcare
expenses and long term care needs, and how to manage
(26:45):
your investment withdrawals in a way that keeps taxes under
control while still maintaining the lifestyle that you want. Retirement
is a team effort, and this guide may show you
how to make the numbers work for both of you.
Call us right now at eight hundred three nine three
for zero zero one to get your free recopy. Of
our new guide called Retirement Planning for Spouses. That's eight
hundred three nine three four zero zero one, or he
(27:07):
can request it online Armstrong Advisory dot Com.
Speaker 1 (27:10):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, 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 and it's
time for Ask Todd, the segment where Todd will answer
your questions about anything and everything that's included in the
(27:33):
estate planning process. Once again, here's Todd Lutsky and Susan Powers.
Speaker 2 (27:39):
Welcome back, Todd. We have a few questions from listeners.
First question comes from Karen in Malden, mass And Karen writes,
my son lives in a group home and receives SSI.
His father recently passed away and my son is the
only beneficiary. I suspect he will receive an inheritance of
around five hundred thousand. Is there anything that we can
(28:00):
do with this inheritance so he won't lose his benefits.
It's really important that he be able to stay in
his group home.
Speaker 3 (28:07):
Yeah, that's so important when you have a special needs situation.
We talk about this all the time with clients, right,
even like when we were just discussing, you know, drafting
in the last case. You know, you know you want
to take care of a grandchild. I get that, but
more importantly, you really need to take care of a
special needs situation. Because the deal here is we don't
(28:31):
want that child to lose the governmental benefits of the
group home or or whatever SSI or s SDI they
might be entitled to. But we also don't want to
disinherit them. So if we don't want to disinherit them,
how do we do this in your drafting your trust?
Right now you're saying here though that it is the
(28:53):
planning already done or something.
Speaker 2 (28:55):
So his dad passed away. This is his mom asking
dad pasted. I'm assuming that they're there still, Oh, that
they're split up. All the dad passed away and the
son's the only beneficiary. So he's in a group home
on benefits. He's going to receive around a half a million.
Speaker 3 (29:12):
Oh, so the wife they're not married, I see that
was a big, big clear up there.
Speaker 2 (29:16):
Yeah.
Speaker 3 (29:16):
So now he's already in a position to get the inheritance.
So we really can't go back and change Dad's estate.
Speaker 2 (29:26):
Right, Mom could do that still because she's alive.
Speaker 3 (29:29):
Mom could take care of him. I think for Dad's estate,
the only thing you could really do here is allow
the child to receive the inheritance.
Speaker 2 (29:38):
When that push him off of his benefits.
Speaker 3 (29:40):
So I think there's a rule that says you have
like thirty days where it's treated as income.
Speaker 2 (29:46):
Oh so just like if you're in a nursing home. Almost, yeah,
I believe.
Speaker 1 (29:49):
So.
Speaker 3 (29:49):
I don't know the rules for group homes, but even
if it's not, I would probably then say, if you
can take it and put it directly into a sole
benefit trust. Remember we talked about these in the past,
but this would be the child creating it, or the
parent or a court if the child cannot, right, so
(30:11):
the mother might have to create this for him as
the guardian. If that's the case, where this is going
to be his money creating the trust. So it's what
is called a self settled trust, and so that just
means that the assets are his going into this trust
(30:31):
and there's no five year waiting period. It's immediately still protected.
He won't lose his benefits sole benefit meaning he's the
only one who can benefit from this trust while he's alive.
Speaker 2 (30:45):
And then what happens when he passes, And.
Speaker 3 (30:47):
That's the glitch, right, So in a self settled trust
like this, there needs to be a payback provision to
the state. But so what you you know, he's still
got his benefits. He gets his benefits while he's alive,
and he might end up using all the money in
the trust over his lifetime lifetime and there may be
(31:08):
nothing left for anybody else. But that's okay. It's his
money and it was designed for his benefit, and by
putting it in this trust, it's going to stretch out
these benefits over his lifetime, so he'll have better use
of the money over a longer period of time.
Speaker 2 (31:25):
God, if his mom is doing her planning now, she
could create her trust with this type of language in
there right to protect his inheritance, so they don't even
have to jump through those hoops.
Speaker 3 (31:36):
Right, Not only do they not have to jump through
those hoops, it'll have the same sole discretionary distribution type
language in mom's trust. But Mom's trust is a third
party trust, not a self settled trust. It is mom
creating it as a third party for son, and therefore
the big difference is no payback provision.
Speaker 2 (31:59):
So you're planning. That's the theme today.
Speaker 3 (32:01):
When the child dies, it's it's going to go to
the family the way they want it to. Folks. It
really is all about planning. The guide this month is
balancing asset protection and estate taxes, so it discusses things
like portability, which we don't get into a lot, mainly
the marital share and the remainder share of a revocable trust,
(32:22):
and how it works in an irrevocable trust in case
that's right for you. And then it even helps you
decide which one is right for you by you putting
your numbers in. It gives you the charts to calculate
your estate tax liability, so you'll know whether the revocable
or the irrevocable is the right way to go for you. Folks.
Something for everyone in this guide. Call and Get It
(32:44):
eight six six eight four eight five six nine nine
or Legal Exchange Show dot Com again eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com our.
Speaker 2 (32:58):
Last question comes from Julie and Dennisport, Mass and Julie writes,
my mother passed away recently and she had total assets
of around one point four million, and I am the
only beneficiary. I have a great pension and social security
and I really don't need the money because it will
push my estate up and make it taxable when I die.
Is there a way I can have this money go
(33:20):
directly to my kids instead?
Speaker 3 (33:23):
Okay, so this might require looking at the well, maybe
it will, maybe it won't looking at it. I was
gonna say, you know, mom's Mom's trust. But I mean,
I would think that there should be language. I know,
when we drafted at Cushing and Dolan, right, there is
language that we put in there called a beneficiary disclaimer.
Speaker 2 (33:47):
Okay, it's to English.
Speaker 3 (33:50):
Yeah, it's actually a separate paragraph right in our trust,
it's in all of them. It basically says that a
beneficiary can disclaim their interest in the trust before or
after they're entitled to it, Okay, as long as I
haven't taken it. So, and that means that a beneficiary
(34:12):
can say, like here, like Julie, you know I really
don't want it. Well, if I really don't want it
or need it, then I'm going to file this disclaimer.
And these disclaimers aren't necessarily limited to nine months after
the date of death of Julie in this case or
a decedent, So it's not a nine month what we
(34:36):
call a qualified disclaimer that's under twenty five to eighteen
of the Code. This is just a regular disclaimer built
in to the trust. So she could say, you know what,
I don't want it, I'm going to disclaim. Okay, Well
if I disclaim, where does it go?
Speaker 1 (34:56):
Right?
Speaker 3 (34:56):
And that's the key. So you'd want to make sure
that if you're if you're Julie and you're saying you
wanted to go to my kids. This makes us harken
back to that first case we did in this show,
this show drafting for grandkids. Yeah, right, that was very important.
(35:16):
So here it is again. She needs to and before
I would advise her to disclaim. One, you have to
look at the trust, make sure it's there the disclaimer language. Two,
you have to look at the trust and say what
happens if Julie predeceases the donor, Because folks, that's what
disclaiming means. Disclaiming means read the estate planning document as
(35:41):
if Julie died before mom.
Speaker 2 (35:44):
Okay, okay.
Speaker 3 (35:46):
So if the document says equally to my kids and
that's her one point four or she's the only child.
Speaker 1 (35:55):
We don't.
Speaker 2 (35:55):
Yeah, she's the only child.
Speaker 3 (35:56):
So either way we can do it. Whatever the piece
is that's going to Julie. It would say if living
otherwise to Julie's kids, or it would say otherwise to
my grandkids.
Speaker 2 (36:10):
So treat me as if I'm Dad and follow the.
Speaker 3 (36:13):
Chain, right, So if that if the correct, if that's
what's then I would say to you, Julie. Yes, if
the trust says you have the ability to disclaim, and
the language says all to Julie, if living otherwise to
my grandkids, which would be Julie's kids, maybe in trust
(36:35):
until there are a certain age or or something, then
you can disclaim. Because if you disclaim, your grand kids
will get it, or your kids will get it, her
grandkids will get nice. So folks, always things can be
done with planning, even post mortem. Call and get the guide.
Learn how to do your own estate planning, balancing, asset
protection and avoiding estate taxes. Both describing the revocable and
(37:00):
the irrevocable trust in terms of the tax situation eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com.
Speaker 2 (37:09):
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 Powers,
a financial advisor with the Armstrong Advisory Group, and we'll
(37:33):
be back with more after this quick break on the
Legal Exchange with Todd Lutsky.
Speaker 1 (37:38):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate plan. Doing
your planning early can help you protect your assets and
keep more of your wealth in your family. Cushing and Dolan,
the leaders in elder lawn taxation, have put together a
new guide called Balancing, Asset Protection and Avoiding Estate Taxes,
and in it you'll learn how to secure your assets
if you ever need long term care, how to avoid
having everything tied up in probate and how to get
(37:59):
a clearer picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate taxes when you plan the
right way and plan early. Whether you have an existing
estate plan or starting from scratch, this guide makes it
easy to understand what steps could help you and your
family in the long run. To get your free copy,
call Cushing and Dolan at eight six six eight four
eight five six ninety nine. That's eight six six eight
(38:21):
four eight five six nine nine, or you can request
it online at legal exchainshow dot com. That's Legal exchange
show dot com. The proceeding was paid for and the
use expressed or sole leaders of Cushing and Dolin cushiingan
Dolan and or Armstrong Advisory may contact you offering legal
or investment services. Cushing and Dolin in Armstrong Advisory do
not endorse each other and are not affiliated.
Speaker 4 (38:38):
The Armstrong Advisory Group understands retirement planning and when it
comes to married couples, it can be about more than money. Hi,
this is Mike Armstrong and our new guide called Retirement
Planning for Spouses tackles many issues that couples face as
they're preparing for later life. This guide keeps things simple,
focusing on important matters such as making sure both partners
understand where their money's coming from in retirement, being aware
(38:59):
of scams, how to stay organized if one spouse outlives
the other, and ways to handle gifts, donations or legacy
goals as a team. It's a straightforward look at the
steps every couple can take to feel confident about retirement.
Call the Armstrong Advisory Group right now at eight hundred
three nine three for zero zero one to get your
free copy of Retirement Planning for Spouses. That's eight hundred
three to nine three for zero zero one, or you
(39:22):
can request it online at Armstrong Advisory dot com.
Speaker 1 (39:24):
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. When the holidays roll end and the cold
settles over New England, find your escape in the US
Virgin Islands. Trade the freezing tempts and grace guys for
(39:47):
warm sun, turquoise water, and that easy island energy you
can feel the second you land. This December through early January,
Saint Croix ignites with the Krucian Christmas Festival, a celebration
over a century old. Frederickstead comes alive with colorful parades,
live reggae, and streets filled with the sites and flavors
of real Caribbean culture. It's the holiday season with a
tropical beat. From there, they explore Saint Thomas with its
(40:09):
duty free shopping and the legendary views at Maggin's Bay.
Or slow down on Saint John, where quiet beaches and
National Park trails make every day feel like your own
private adventure. Getting there could not be easier. No passport
is needed, and there's no money to exchange. Just pack
light and step out of the cold into pure sunshine.
This holiday season, let yourself fall naturally in rhythm with
the heartbeat of the islands. Visit America's Caribbean paradise the
(40:33):
US Virgin Islands. Go to visit USBI dot com and
book your trip today. That's visit USBI dot com. Your
tune to the legal exchange with Todd Lutsky. If you
are a loved one needs a nursing homestay, call Todd
right now at eight six six eight four eight five
six nine nine and let him make sure your assets
are protected. That's eight six six eight four eight five
(40:54):
six nine nine, or visit him online at Legal Exchange
show dot com.
Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd Letsky. I'm
Susan Powers of financial advice with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with the law firm of Cushing and Dolan with a
master's in taxation. So Todd, we talk a lot about
married couples and how easy it is for them to
(41:21):
reduce and sometimes even eliminate their estate taxes because they
do their trust planning. You get the metal share, the
remainder share, all that good stuff.
Speaker 3 (41:29):
Yeah right, yeah, that's right.
Speaker 2 (41:30):
But then I think about people like Julie you sent
in the question single person. Yeah, is there anything that
a single person can do to reduce and even eliminate
potentially their estate taxes?
Speaker 3 (41:47):
Well? There is, there is. It's not as easy and
you have to maybe part with a little more control
than you might want to though. That's the thing. Okay,
it does involve gifting, and again, remember folks, when we.
Speaker 2 (41:59):
Start gift giving it away, Yeah okay, I.
Speaker 3 (42:02):
Mean that's kind of the way to get it out
of your estate right now. With a married couple, right
we talk a lot about these spousal lifetime access trust
In fact, slats are starting to become, even on our show,
a little better, a more regular term that we've been using. Now.
They are for higher net worth clients, especially with the
(42:23):
exemption federally being so high. I get it, but still useful.
But I'm telling you this to compare and contrast for
your question. For those folks, though, they're able to give
away large chunks of assets but still enjoy and control
what they gave away because one spouse does it for
(42:44):
the other spouse. So as long as they're married, yep,
they're able to, you know, take out of each other's trust.
But you can't take out directly from the trust you
give it to. So while that works great, Todd, but as.
Speaker 2 (42:56):
You're saying, marry people, yeah.
Speaker 3 (42:58):
This person single, what do we do? So I'm actually
doing this for someone right now. They're worth a lot
of money and so rather than give to these irrevocable
gifting trusts we'll call them. They are Grand Tour trusts.
You're able to sell the asset. So you would take
(43:19):
like ten million dollar investment portfolio, put it in an LLC,
take back voting and non voting share. So now I
own the voting and non voting I'm the manager. I
control this LLC. I continue to work with you, Susan,
you manage my money. Nothing's changed, yep. I control distributions.
(43:41):
I take the non voting shares and sell them to
this Grand Tour trust. It's a Grand Tour trust. So
this sale is disregarded for capital gains tax purposes. You
can't sell to yourself since I'm the owner. For income
tax purposes, the government says this sale quotes sale is disregarded.
Speaker 2 (44:02):
Beautiful.
Speaker 3 (44:03):
Okay, So now I got you know this non voting
shares could be nine million dollars in there. It's going
to pay me back a private annuity just between me
and the trust. Of course, distributions will have to come
out of the LLC to the trust to pay me.
(44:24):
But you know that private annuity depending on how old
you are. I think the one I did was resulting
at about four hundred thousand, four hundred and fifty thousand
a year. Coming back. Well, that's okay because I like
this stream of income. I'm living on it.
Speaker 2 (44:37):
I'm usual and it comes back to you. When you're
generating the income from the regardless of the bucket, you're
still at the same tax rate as you would before.
Speaker 3 (44:45):
It's right, everything's grant toward trust everything. I'm paying taxes
on money I may not even be getting, although I
am getting the four hundred, right, the LLC could be
generating far more than that. You got ten million, that's
seven percent, that's seven hundred thousand, so it might only
be kicking out four hundred. Well what the rest is growing?
And I'm not letting this build up in my estate
because I need that to live on and enjoy. Because
(45:06):
if you have that kind of money, your lifestyle is
high sure wonderful way of doing it. And when you die,
the private annuity automatically ends. Nothing is included in your estate.
That annuity is has zero value.
Speaker 2 (45:18):
So only lived you know in a couple of years.
What have you lived a couple of months and you
set up this new YEA doesn't matter.
Speaker 3 (45:26):
Zero value when you die.
Speaker 2 (45:28):
Huh.
Speaker 3 (45:29):
It's a home run for for single people. Wow. So
that's a great way of doing it. I'm doing it
now for someone a single person worth about twenty five million,
So you know they need to understand that can be done.
But folks, I understand that's not for everybody, right for
people who that might make sense to. If you find
yourself in that position, you know, give us a call.
I can't say it any other way that that's an
(45:50):
important piece of information. But folks, a lot of us
just need to do basic state planning. That's what this
guide's about, bancing, asset protection, planning and avoiding state taxes.
It explains portability of exemptions, It explains what these exemptions are.
It actually talks to you about and explains how the
(46:12):
remainder share and the special marital share work to shelter taxes.
We talk about it all the time, but this you
could actually see it in action. It also allows you
to put your own numbers in, gives you the tax
guide to calculate the tax on your estate, and it
does the same thing for irrevocable trusts in case you
(46:33):
want to use those and actually protect assets and avoid
a state taxes. Call and get it folks, something for
everyone eight six six eight four eight five six nine
nine or Legal Exchange Show dot com again eight six
six eight four eight five six nine nine or Legal
Exchange Show dot com.
Speaker 2 (46:54):
So let's keep wiping out of state taxes for people.
Here the story that you totally, the case of the
life insurance and the life Insurance trust. Can we explore
how those work? Because there are a lot of folks
out there that don't realize that it could be just
their life insurance policy that's causing them to have a
taxable estate. And how can you actually eliminate that from happening.
(47:19):
You've got a big insurance policy, how do we get
that out of that taxable estate?
Speaker 3 (47:24):
Yeah, So when we talk about estate tax is, the
first thing we need to ask is how much are
we worth? Right? Right? And this is the part I
think you're sort of driving at, Susan, is we oftentimes
don't consider the death benefit of a life insurance policy
as part of the estate.
Speaker 2 (47:43):
Because it's tax free, tax free, are right?
Speaker 5 (47:45):
Right?
Speaker 3 (47:46):
Except that's income tax free only, not a state tax rates.
Speaker 2 (47:50):
A lot of people are surprised to hear that.
Speaker 3 (47:52):
I think so. I think so, And because that oftentimes
it's sold to you, but they just use the word
or tax free. They don't describe what tax free it
is in this case, not a state tax free. Now,
remember that's important because even though you might have term
insurance right now, you might be saying, oh, well, my
(48:15):
insurance policy is worth nothing because you're alive.
Speaker 2 (48:19):
That's right.
Speaker 3 (48:20):
But when you die, which is when the government values
your estate, it's worth the death.
Speaker 2 (48:26):
Betal So the second you die, there's value to that.
Speaker 3 (48:28):
There you go death benefit value. So let's say you've
got like a two million dollar policy for Massachusetts that
throws you over the estate right there. But that two
million or three million dollar policy could be bumping you
up even in a federal side of the equation. So
a lot of times people will say, well, geez, if
I put it into an irrevocable life insurance trust, I
(48:50):
can make it income and estate tax.
Speaker 2 (48:54):
Is there a look back period for that life insurance trust?
If you do one yes and no no, Well it depends.
There is an attorney answer.
Speaker 3 (49:04):
No, if you have the life insurance policy, buy the
policy from the get.
Speaker 2 (49:11):
Go, so that the irrevocable life insurance trust buys the policy.
Speaker 3 (49:16):
Yes, So I don't know why I said if I
said that wrong. So the irrevocable life insurance trust purchases
the policy.
Speaker 2 (49:23):
So they're the owner from the get go.
Speaker 3 (49:25):
From the beginning, you put the money in to buy it,
but the trust buys it. So now you never owned it.
So now you can die the next day, no look back.
Speaker 2 (49:36):
But a lot of people they're going to already own
these life insurance policies when they're setting this up, because
that's maybe what's driving the conversation.
Speaker 3 (49:42):
That's right, that happens. So for all of you folks
who already own the policy and say, oh, this is
a great idea, I'd like to get it the heck
out of my estate. Is there going to be a
gift tax when I gift it to this trust? Generally
not so much, because the value when you're gifting it
might only be the cash surrender value, which is generally low.
(50:03):
So put it in now. When you put it in,
there is a three year rule. So if you happen
to die within the three years of you putting it
in the trust, then it will be pulled back into
your estate.
Speaker 2 (50:15):
Get your planning done.
Speaker 3 (50:16):
But there's no downside, folks, it will be included anyway,
So take it, take the shot, get it, get it
set up. Folks. Learn about revocable and irrevocable trusts and
how they work from an estate tax standpoint. Get this
guide it explains all of that eight six six eight
four eight five six nine nine or Legal Exchange show
(50:39):
dot com. You can download the guide right there.
Speaker 2 (50:42):
Todd Leutsky from the law firm of Cushing in Dolan,
thank you so much.
Speaker 3 (50:46):
Thank you, Susan, always a pleasure.
Speaker 2 (50:48):
I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
We thank you for joining us today and we'll be
back again next week on the Legal Exchange with Todd Leutsky.
Speaker 1 (51:00):
Retired or getting close. Now's the perfect time to take
a fresh look at your estate plan. Doing your planning
early can help you protect your assets and keep more
of your wealth in your family. Cushing and Dolan, the
leaders in elder lawn taxation, have put together a new
guide called Balancing, Asset Protection and Avoiding Estate Taxes, and
in it you'll learn how to secure your assets if
you ever need long term care, how to avoid having
everything tied up in probate, and how to get a
(51:21):
clearer picture of your estate tax exposure. The guide also
breaks down real options that may help you reduce or
even eliminate your estate taxes when you plan the right
way and plan early. Whether you have an existing estate
plan or starting from scratch, this guide makes it easy
to understand what steps could help you and your family
in the long run. To get your free copy, call
Cushing and Dolan at eight sixty six eight four eight
five six nine nine. That's eight six six eight four
(51:43):
eight five six nine nine, or you can request it
online at legal exchange show dot com. That's legal exchange
show dot com. The proceeding was paid for in the
use express or so legos of Cushing and Dolin. Cushian Dolan,
and 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 6 (52:00):
At Armstrong Advisory Group. We understand that retirement planning for
couples is about making smart, coordinated decisions that support both partners.
Speaker 1 (52:07):
HI.
Speaker 6 (52:07):
This is Chuck Zada. We've got a brand new free
guide called Retirement Planning for Spouses that focuses on key
financial moves that every couple should understand, like how to
time your sol security benefits, how to prepare for healthcare
expenses and long term care needs, and how to manage
your investment withdrawals in a way that keeps taxes under
control while still maintaining the lifestyle that you want. Retirement
(52:28):
is a team effort, and this guide may show you
how to make the numbers work for both of you.
Call us right now at eight hundred three nine three
for zero zero one to get your free copy of
our new guide called Retirement Planning for Spouses. That's eight
hundred three nine three for zero zero one, or you
can request it online Armstrong Advisory dot com.
Speaker 1 (52:46):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. When the holidays roll in and the cold
settles over New England, find your escape and the US
Virgin Islands. Trade the freezing temps and gray skies for
(53:08):
warm sun, turquoise water and that easy island energy. You
can feel the second u Land. This December through early January,
Saint Croix ignites with the Krucian Christmas Festival, a celebration
over a century old. Frederickstead comes alive with colorful parades,
live reggae, and streets filled with the sights and flavors
of real Caribbean culture. It's the holiday season with a
tropical beat. From there, they explore Saint Thomas with its
(53:30):
duty free shopping and the legendary views at Magan's Bay.
Or slow down on Saint John, where quiet beaches and
National Park trails make every day feel like your own
private adventure. Getting there could not be easier. No passport
is needed and there's no money to exchange. Just pack
light and step out of the cold into pure sunshine.
This holiday season, let yourself fall naturally in rhythm with
the heartbeat of the islands. Visit America's Caribbean paradise, the
(53:53):
US Virgin Islands. Go to visit USBI dot com and
book your trip today. That's visit USBI dot com.
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 (00:38):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor the Armstrong Advisory Group, and I'm joined
by Todd Lutsky, a partner with the law firm of
Cushing and Dolan with a master's in taxation. Welcome Todd,
How are you today?
Speaker 3 (00:53):
Almost never better?
Speaker 2 (00:54):
Almost little more than last time, A.
Speaker 3 (00:56):
Little better than last time.
Speaker 2 (00:58):
What do you have for us this week?
Speaker 3 (00:59):
Couple of things. I got two cases a Montana Superior
or Supreme Court case. Basically, this is going to shock you.
It shocked me. A state recovery way beyond first impression
is sort of my title. I can't understand how this
estate recovery worked in Montana. I'm gonna explain Montana. I'm
(01:20):
gonna explain Massachusetts and other states as to a state recovery.
What is that? Folks? That's when you get sick, going
to nursing home, get on medicaid, and then they come
back after you later in this case, can they come
back after you or after the person who got your money? Interesting?
Speaker 2 (01:38):
Huh?
Speaker 3 (01:39):
Stay tuned, because I think if we do a little planning,
maybe we can avoid all of that. Yeah, state recovery thing,
because there was none done there. Off to Connecticut, Connecticut
Appellate Court case, very poor drafting. They did drafting where
they tried to put together a revocable trust to take
care of the kids, but they didn't take care of
the grand case kids. But then they decided to take
(02:02):
care of the grandkids by referencing the irrevocable life insurance
trust that they had in place that ended up not
staying in place because the estate tax exemptions.
Speaker 2 (02:13):
Went lots to learn.
Speaker 3 (02:16):
About this case and drafting. But again Kudo's trusts were done,
but they have to be done right. That's the whole point. Well, folks,
this guide this month is figuring out how to balance
asset protection and estate taxes. It gives you both trusts
revocable and irrevocable, and it helps you understand exactly how
(02:37):
to calculate the taxes. So you understand you can put
your own numbers in and then calculate the tax for
your own estate. It really explains portability and how these
marital shares and remainder shares operate. We talk about them
all the time, but this gives you really the detail
of how the shares work, both in a revocable trust
(03:00):
and in an irrevocable trust. In case nursing home planning
is on your mind. Little something for everybody in this guide, folks,
call and get it eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
again eight six six eight four eight five six nine
nine or Legal Exchange Show dot Com. Let's head back
(03:26):
to Oklahoma. No, sorry, we are in Montana, not Oklaho, Montana.
So in this case we've got a situation where Florence
died intestate. This is that estate recovery case.
Speaker 2 (03:44):
So no state documents.
Speaker 3 (03:46):
Yeah, she dies intestate, so no no will, no nothing.
April twenty twenty three, she received a whopping fifty three
hundred dollars of medicaid benefits. Keep that in mind because
it would seem to me that the litigation costs involved
here are going to far exceed fifty three hundred dollars.
But that's not the point. Medicaid benefits were received Minta.
(04:12):
The daughter was then appointed personal representative and published in
a local newspaper for three weeks, three consecutive weeks to
get the creditor's notice. Who's a creditor a nursing home?
The state exactly well, Montana Department of Health and Human
Services filed a claim on nine thirteen, twenty twenty three.
(04:35):
She died in April, one day late after the four
month claim period expired. Okay, well, the probate court rightfully
so denied the state's claim, said in March twenty twenty four,
and in April twenty twenty four approved Mena's final accounting
for the estate and the soul heirs got two hundred
(04:58):
thousand dollars from the estate, so that makes me scratch
my head on terms of how you got eligible for medicaid,
if you had two hundred thousand dollars in the estate.
We'll come back to that. These are all things that
make me scratch my head. Maybe so, the Department of
the State and Human Resources files a personal claim against
(05:21):
Minta who got the two hundred thousand dollars to recover
the Medicaid benefits paid to Florence her mom. Well, the
district court dismissed that complaint and said, look, you're time barred.
You're precluded from filing that claim against Minta personally.
Speaker 2 (05:38):
Were they hope and Minta didn't know better and just
paid it?
Speaker 3 (05:42):
I don't know, but they filed it. They appealed to
Montana Supreme Court reversed, Yeah, reversed and said the Medicaid
Statute in Montana creates two separate claims, one against the
estate and one against a person who receives property from
(06:05):
the deceaseds estate and also missing the first claim deadline
does not foreclose you from filing a claim against the
individual personally to recover. So too bad for you, Minta.
Speaker 2 (06:18):
It's a little safety knit for them again.
Speaker 3 (06:21):
Two hundred thousand dollars. You got to give fifty three
hundred dollars back. My question is how much did you
spend in legal fees to get to the Montana Supreme Court.
Speaker 2 (06:30):
It was probably five hours, and that would have eaten
up the five grand way.
Speaker 3 (06:34):
More than fifty three hundred dollars.
Speaker 2 (06:36):
Oh yeah, they're probably trying to set some precedent and
not have that.
Speaker 3 (06:41):
Boy, this has just shocked me, right, because let's learn
about a state recovery.
Speaker 2 (06:45):
Yeah, that's crazy because if you miss it one day
a deadline by a day with the state that you're denied, Well.
Speaker 3 (06:50):
They're making it sound like they're two separate claims and
the other claim maybe didn't have a four month deadline.
Speaker 2 (06:55):
That's crazy.
Speaker 3 (06:56):
That's Montana. So let's talk about this. First of all,
there was no will. We got to learn a lot
of lessons here. There's no will. No planning was done. Well,
perhaps had an irrevocable trust been done in advance, maybe
the result would have been different. I don't know, because
I'm not convinced I understand Montana's laws. I mean, ultimately,
(07:19):
somebody would have got that money from the estate from
the trust. Could they pursue a distribution from the trust
to the individual or is that not considered from the
estate again probta state versus gross estate. So maybe that's
how it would work, and I would think so, I
would think there's a distinction in this case, there was
(07:40):
a distribution from the probata state.
Speaker 2 (07:43):
Will estate. They couldn't have gotten anything anyway.
Speaker 3 (07:46):
Right, Well, that's my point if there was no probatea state,
and that's the only thing that's in my head that's
sort of saving me my understanding of this case. Well,
let's let's play it out. So the estate had two
hundred dollars dollars. I already said, I'm not sure how
they got on medicaid other than that two hundred thousand
dollars had to be placed in a Medicaid annuity, which
(08:09):
converts these excess assets over two thousand dollars into an
income stream. Stay with me, Susan, I already know what
you're thinking, right, Okay, Well, that would convert it into
an income stream, so you could get on Medicaid. Generally,
you would have a beneficiary listed and the state for
at least the amount of Medicaid benefits paid on behalf
(08:29):
of that individual. We know in Massachusetts, you have to
list the state as a beneficiary. I don't know every state,
but that's a federal medicaid law. I think it's I
think it's a federal well it is. It is a
federal medicaid law. So that is what it says in
the federal statute as well. And again this is always
important because you can get on Medicaid. Instead of paying
(08:52):
sixteen thousand dollars a month, you're paying sixty five hundred
less Social Security and pension. You stretch out the money
for the family if there's an anything left, well, if
the state was listed as the beneficiary, then they would
have been paid there were, none of this litigation would
have been needed. So I'm really confused as to how
two hundred thousand dollars.
Speaker 2 (09:11):
Had to be living in go with a sudden surprise
inheritance in the last month of her life.
Speaker 3 (09:17):
I just it's just shocking. So just a little bit
about for you guys to understand how these annuities work. Well,
a state recovery in Massachusetts at least can only be
against the probate estate right. So keep that in mind,
because when we set up our trusts and we put
assets in them, then they no longer avoid I mean
they're no longer a probate asset. So when you die,
(09:41):
even though you there'll be a distribution to you family,
it doesn't matter that the individual went on medicaid because
the estate can only recover against probate assets and not
against somebody who got the assets from the estate.
Speaker 2 (09:56):
So you're planning, do.
Speaker 3 (09:58):
Your planning, folks, In fact, do your planning all and
get the guide Rebalancing Asset Protection and Avoiding Estate Taxes.
Learn how the trusts irrevocable and revocable marital share and
remainder share work eight six six eight four eight five
six nine nine or Legal Exchange show dot com and
you can download the guide right there.
Speaker 2 (10:20):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We've got
much more to come when we return to the Legal
Exchange with Todd Lutsky.
Speaker 1 (10:35):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate plan. Doing
your planning early can help you protect your assets and
keep more of your wealth in your family. Cushing and Dolan,
the leaders in elder lawn taxation, have put together a
new guide called Balancing, Asset Protection and Avoiding Estate Taxes,
and in it you'll learn how to secure your assets
if you ever need long term care, how to avoid
having everything tied up in probate, and how to get
(10:56):
a clearer picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate taxes when you plan the
right way and plan early. Whether you have an existing
estate plan or starting from scratch, this guide makes it
easy to understand what steps could help you and your
family in the long run. To get your free copy,
call Cushion Dolan at eight six six eight four eight
five six nine nine. That's eight six six eight four
(11:19):
eight five six nine nine, or you can request it
online at legal exchainshow dot com. That's Legal exchange show
dot com. The proceeding was paid for in the use
expressed or so leados of Cushing and Dolin, Cushian, Dolan
In or Armstrong Advisory may contact you offering legal or
investment services. Cushingon Dolan in Armstrong Advisory do not endorse
each other and are not affiliated. When the holidays roll
in and the cold settles over New England, find your
(11:39):
escape in the US Virgin Islands. Trade the freezing tempts
and gray skies for warm sun, turquoise water, and that
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comes alive with colorful parades, live reggae, and streets filled
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(12:01):
the holiday season with a tropical beat. From there, they
explore Saint Thomas with its duty free shopping and the
legendary views at Maggan's Bay, or slow down on Saint John,
where quiet beaches and National Park trails make every day
feel like your own private adventure. Getting there could not
be easier. No passport is needed, and there's no money
to exchange. Just pack light and step out of the
cold into pure sunshine. This holiday season, let yourself fall
(12:24):
naturally in rhythm with the heartbeat of the islands. Visit
America's Caribbean paradise. The US Virgin Islands. Go to visit
USBI dot com and book your trip today. That's visit
USBI dot com.
Speaker 4 (12:36):
The Armstrong Advisory Group understands retirement planning and when it
comes to married couples, it can be about more than money. Hi,
this is Mike Armstrong and our new guide called Retirement
Planning for Spouses tackles many issues that couples face as
they're preparing for later life. This guide keeps things simple,
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(12:57):
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Call the Armstrong Advisory Group right now at eight hundred
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(13:19):
request it online at Armstrong Advisory dot com.
Speaker 1 (13:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange with Todd Lunsky,
an expert in elder life planning and taxation. Need help
(13:43):
with your estate plan? Con Todd right now and make
an appointment. Eight six six eight four eight five six
nine nine. That's eight six six eight four eight five
six nine 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 joined by Todd Latsky, a partner with the
law firm of Cushing and Dolan with a master's in taxation.
Where are we headed now, Todd?
Speaker 3 (14:07):
We are headed over to Indiana. We have an appellate
court case there where we are interpreting a trust for
grandkids and to show how this drafting arrangement wasn't so good. Right.
So in this case we've got Janet who creates a
revocable trust in two thousand and an irrevocable life insurance
(14:28):
trust to pay the estate taxes. So these are the
two trusts that she drafted. Janet had two kids, Dennis
and Sondra, and one child, Trudy, who had predeceased her,
but left three grandkids. Keep that in mind when you're
drafting folks. So Janet in two thousand and four, four
(14:50):
years later, amended her revocable trust to state that if
there was a surplus left in the irrevocable life insurance
trust after paying the federal and state death tax, then
the trust would pay a separate payout from the revocable
trust to the grandkids. Okay, if there was a surplus. Well,
(15:12):
in twenty sixteen, as we all know, the laws changed
pretty dramatically and it made the payment of the state
taxes for her unnecessary. So she terminated the life insurance
trust because she just let it in till it last
she needed. Well. In twenty three she died well, Dennis
and Saunder, the kids each got one hundred and seventy
(15:33):
one thousand dollars and nothing to the grandkids. Well, remember
they were both living and only one had predeceased and
left the two kids that were out, well, the grandkids,
as you might imagine petitioned the court to distribute the
assets pursued to the first Amendment of the revocable Trust. Well,
the trial court concluded, based on extrinsic evidence, that Janet's
(15:57):
intent was for those grandkids to get some of the
one hundred and seventy one thousand dollars prior to distribution.
So there you go, grandkids. Yeah, the kids weren't happy
with that.
Speaker 1 (16:09):
Can you imagine?
Speaker 2 (16:10):
These are parents and the uncles.
Speaker 3 (16:13):
The kids are the answer. The kids are the aunts
and uncles. Yeah, are getting sued by their niece and nephew.
Speaker 2 (16:19):
Yeah.
Speaker 3 (16:21):
Well, the kids appealed and the court reversed, basically saying
that the language of the first Amendment was clear, if
there are any remaining funds in the irrevocable trust after
the taxes are paid, then the grandkids are to take. However,
(16:41):
the islet did not exist, it was terminated. Therefore there
could have been no surplus, no funds, and therefore there
is nothing for the kids. I mean that's pretty clear, right, Sorry, grandkids,
you're out.
Speaker 2 (16:55):
Which seems like it was the right path.
Speaker 3 (16:59):
It's definitely the right decision. Yeah, following the law.
Speaker 2 (17:04):
Is it what she really wanted?
Speaker 3 (17:06):
Can't really tell, but.
Speaker 2 (17:08):
I bet you did this without talking to her attorney.
Speaker 3 (17:11):
Well, this is going to come back, and this is
the tips we're gonna learn about, folks. We're gonna come
back to what we can learn from this in a minute,
but ultimately, just to give you a little heads up drafting, drafting, drafting.
How have you not learned how to draft the document
to take care of grandkids? Right? It seems like it
should be a natural if you want them in. I
(17:31):
don't know that you do, right. That's again a donors
intent issue. So in any event, before we get there,
learned for all of you folks that even if you
haven't started estate planning right, this guide is balancing asset
protection and avoiding a state taxes. It gives you the
formulas and the charts to calculate your own estate tax liability.
(17:54):
Then you can pick between whether you look at the
revocable or the irrevocable trust that's listed in this guide
talks about portability and really explains better than we can
do on the radio, how the remainder share and the
special marital share work to shelter a state taxes. Put
your own numbers in and you'll see how it works,
(18:16):
and see how it fits, and then you can decide
compare that to the irrevocable remainder share and marital share
there and here as well, folks, a little something for everyone.
It is that time of year. Call and get the
guide eight six six eight four eight five six nine
nine or Legal Exchange Show dot com again eight six
six eight four eight five six nine nine or Legal
(18:40):
Exchange Show dot com.
Speaker 2 (18:41):
What a better Christmas gift than no estate taxes for
your children?
Speaker 1 (18:45):
Right?
Speaker 3 (18:46):
That's a that's a good Christmas for me.
Speaker 2 (18:48):
Die this year, but future Christmas.
Speaker 3 (18:50):
I think if I was the parent, it would be
a nicest, say.
Speaker 2 (18:52):
Taxes of future Christmas, get rid of them.
Speaker 3 (18:57):
Christmas is past taxes, Okay, tips and lessons. What do
we get from this case? Really, it's all about updating
your documents, right. It's not uncommon to review your documents
as laws changed. The laws changed you, right, and the
family dynamics might change. Well, here the estate tax exemption
(19:17):
went up. Well, we know that I send emails. We
as a Cushing and Dolan, We send emails to our
database all the time. And so it turned out that
because the estate tax went up, there was no need
to have the life insurance or the life insurance trust
also lost. You lost a child, well maybe that is
(19:39):
a red flag for you to take a look at
your plan and make sure the grandkids are covered and
see if it change is needed.
Speaker 2 (19:45):
So the grandkids of that child that predeceased, right, got it? Oh,
those are the ones that sued.
Speaker 3 (19:51):
Those are the ones that say, right, the predeceased child's
kids sued.
Speaker 2 (19:55):
Make sure you understand that plink goball.
Speaker 3 (19:57):
Right, and that's that's what's going on here, not the kid.
The kids were just the ants and the uncle. Right,
So okay, and I remember it's drafting, right, You got
to think about it when you're drafting. And my question
is why would the initial trust not include the grandkids.
Our language generally says equally to the kids, which it
sounds like it did if living otherwise to grandkids till
(20:22):
age thirty. Let's just say as an example, now, it
says up here that when Janet did her trust, one
of her kids was already deceased. So it would seem
to me, oh yeah, that you would have thought about
that child's children when you were drafting it.
Speaker 2 (20:40):
That the attorney would have had a conversation and counseled her.
Speaker 3 (20:44):
So what I'm thinking is maybe something changed, right, look
at the language in your trust and decide if it
needs updating. Maybe they felt one way about the grandkids
back then, but then when they updated their document, their
feelings changed yep about those grandkids. So even when you
updated your document, folks, And this is just a lessons
(21:05):
on drafting right for you to think about when you're
talking to your client. Your either your client if you're
an attorney listening, or you talk to the attorney if
you're the client. Think about this. When they changed the
trust to try and reference the irrevocable life insurance trust
and say, if there was money left in there, then
(21:28):
my revocable trust will pay out more. Because you probably
couldn't change the islet, so they tried to change it here. Okay, Well,
if you really wanted to take care of your grandchildren,
why would you make it a contingency. Why wouldn't you
just say I'm going to amend my revocable trust yep,
equally to all kids living, if not to their kids.
(21:53):
Now you've solved the problem.
Speaker 2 (21:55):
So you end up with three buckets, two for your
living children in one bucket for your grand children who's
lost their parent exactly.
Speaker 3 (22:02):
Yeah, and so that one third would break down into
as many kids as that deceased child left. Well, well,
that would be what I would have suggested. Why don't
we just do that. If you want to make it
more and still accommodate the islet, you could do that,
but it should be drafted in your document. And then
(22:23):
in addition, if this islet still exists, yeah, I want
to make an additional adjustment. Fine, Again, that would have
made sense because the islet would have not provided for
so those kids would have gotten more and the grand
kids wouldn't have gotten any So you give them a
little more in their revocable trust to make up for
what they're not getting in the irrevocable trust. Wow, folks,
(22:46):
it's all about drafting and communication and talking with your
with your attorney. And remember the irrevocable life insurance trust
is always designed to not be included in your estate,
so the assets in there the life insurance would have
been estate tax free and income tax free for the family.
It's a great way to leverage money to pay estate taxes. So, folks,
(23:09):
that's just a little update on how you draft This
guide will give you the information you need to calculate
your tax and fully understand how the sheltering occurs for
estate taxes in both the revocable and irrevocable trusts. See
which one's right for you. Get the guide eight six
six eight four eight five six nine nine or Legal
(23:33):
Exchange show dot com and 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 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 Lutsky.
Speaker 1 (23:51):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate plan. Doing
your planning early can help you protect your assets and
keep more of your wealth in your family. Ushingan Dolan,
the leaders in elder lawn taxation, have put together a
new guide called Balancing, Asset Protection and Avoiding Estate Taxes,
and in it you'll learn how to secure your assets
if you ever need long term care, how to avoid
having everything tied up in probate, and how to get
(24:12):
a clearer picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate taxes when you plan the
right way and plan early. Whether you have an existing
estate plan or starting from scratch, this guide makes it
easy to understand what steps could help you and your
family in the long run. To get your free copy,
call Cushion Dolan at eight six six eight four eight
five six nine nine. That's eight six six eight four
(24:35):
eight five six nine nine, or you can request it
online at legal exchange show dot com. That's Legal exchange
show dot com. The proceeding was paid for in the
views expressed or solegos of Cushing and Dolan, Cushian Dolan
and or Armstrong Advisory may contact you offering legal or
investment services. Cushingon Dolan in Armstrong Advisory do not endorse
each other and are not affiliated. When the holidays roll
end and the cold settles over New England, find your
(24:56):
escape in the US Virgin Islands. Trade the freezing tempts
and grace guys for warm sun, turquoise water and that
easy island energy. You can feel the Second u Land
this December through early January. Saint Croix ignites with the
Krucian Christmas Festival, a celebration over a century old. Frederickstead
comes alive with colorful parades, live reggae, and streets filled
with the sites and flavors of real Caribbean culture. It's
(25:18):
the holiday season with a tropical beat. From there, they
explore Saint Thomas with its duty free shopping and the
legendary views at Magan's Bay, or slow down on Saint John,
where quietbeaches and National Park trails make every day feel
like your own private adventure. Getting there could not be easier.
No passport is needed, and there's no money to exchange.
Just pack light and step out of the cold into
pure sunshine. This holiday season, let yourself fall naturally in
(25:41):
rhythm with the heartbeat of the Islands. Visit America's Caribbean
paradise the US Virgin Islands. Go to visit USBI dot
com and book your trip today. That's visit USBI dot com.
Speaker 5 (25:52):
We're proud to announce that circle K is now the
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If you'd like to do your part, please visit DAVMA
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Speaker 6 (26:23):
At Armstrong Advisory Group, we understand that retirement planning for
couples is about making smart, coordinated decisions that support both partners. Hi.
This is Chuck Zada. We've got a brand new free
guide called Retirement Planning for Spouses that focuses on key
financial moves that every couple should understand, like how to
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(26:45):
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Call us right now at eight hundred three nine three
for zero zero one to get your free recopy. Of
our new guide called Retirement Planning for Spouses. That's eight
hundred three nine three four zero zero one, or he
(27:07):
can request it online Armstrong Advisory dot Com.
Speaker 1 (27:10):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, 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 and it's
time for Ask Todd, the segment where Todd will answer
your questions about anything and everything that's included in the
(27:33):
estate planning process. Once again, here's Todd Lutsky and Susan Powers.
Speaker 2 (27:39):
Welcome back, Todd. We have a few questions from listeners.
First question comes from Karen in Malden, mass And Karen writes,
my son lives in a group home and receives SSI.
His father recently passed away and my son is the
only beneficiary. I suspect he will receive an inheritance of
around five hundred thousand. Is there anything that we can
(28:00):
do with this inheritance so he won't lose his benefits.
It's really important that he be able to stay in
his group home.
Speaker 3 (28:07):
Yeah, that's so important when you have a special needs situation.
We talk about this all the time with clients, right,
even like when we were just discussing, you know, drafting
in the last case. You know, you know you want
to take care of a grandchild. I get that, but
more importantly, you really need to take care of a
special needs situation. Because the deal here is we don't
(28:31):
want that child to lose the governmental benefits of the
group home or or whatever SSI or s SDI they
might be entitled to. But we also don't want to
disinherit them. So if we don't want to disinherit them,
how do we do this in your drafting your trust?
Right now you're saying here though that it is the
(28:53):
planning already done or something.
Speaker 2 (28:55):
So his dad passed away. This is his mom asking
dad pasted. I'm assuming that they're there still, Oh, that
they're split up. All the dad passed away and the
son's the only beneficiary. So he's in a group home
on benefits. He's going to receive around a half a million.
Speaker 3 (29:12):
Oh, so the wife they're not married, I see that
was a big, big clear up there.
Speaker 2 (29:16):
Yeah.
Speaker 3 (29:16):
So now he's already in a position to get the inheritance.
So we really can't go back and change Dad's estate.
Speaker 2 (29:26):
Right, Mom could do that still because she's alive.
Speaker 3 (29:29):
Mom could take care of him. I think for Dad's estate,
the only thing you could really do here is allow
the child to receive the inheritance.
Speaker 2 (29:38):
When that push him off of his benefits.
Speaker 3 (29:40):
So I think there's a rule that says you have
like thirty days where it's treated as income.
Speaker 2 (29:46):
Oh so just like if you're in a nursing home. Almost, yeah,
I believe.
Speaker 1 (29:49):
So.
Speaker 3 (29:49):
I don't know the rules for group homes, but even
if it's not, I would probably then say, if you
can take it and put it directly into a sole
benefit trust. Remember we talked about these in the past,
but this would be the child creating it, or the
parent or a court if the child cannot, right, so
(30:11):
the mother might have to create this for him as
the guardian. If that's the case, where this is going
to be his money creating the trust. So it's what
is called a self settled trust, and so that just
means that the assets are his going into this trust
(30:31):
and there's no five year waiting period. It's immediately still protected.
He won't lose his benefits sole benefit meaning he's the
only one who can benefit from this trust while he's alive.
Speaker 2 (30:45):
And then what happens when he passes, And.
Speaker 3 (30:47):
That's the glitch, right, So in a self settled trust
like this, there needs to be a payback provision to
the state. But so what you you know, he's still
got his benefits. He gets his benefits while he's alive,
and he might end up using all the money in
the trust over his lifetime lifetime and there may be
(31:08):
nothing left for anybody else. But that's okay. It's his
money and it was designed for his benefit, and by
putting it in this trust, it's going to stretch out
these benefits over his lifetime, so he'll have better use
of the money over a longer period of time.
Speaker 2 (31:25):
God, if his mom is doing her planning now, she
could create her trust with this type of language in
there right to protect his inheritance, so they don't even
have to jump through those hoops.
Speaker 3 (31:36):
Right, Not only do they not have to jump through
those hoops, it'll have the same sole discretionary distribution type
language in mom's trust. But Mom's trust is a third
party trust, not a self settled trust. It is mom
creating it as a third party for son, and therefore
the big difference is no payback provision.
Speaker 2 (31:59):
So you're planning. That's the theme today.
Speaker 3 (32:01):
When the child dies, it's it's going to go to
the family the way they want it to. Folks. It
really is all about planning. The guide this month is
balancing asset protection and estate taxes, so it discusses things
like portability, which we don't get into a lot, mainly
the marital share and the remainder share of a revocable trust,
(32:22):
and how it works in an irrevocable trust in case
that's right for you. And then it even helps you
decide which one is right for you by you putting
your numbers in. It gives you the charts to calculate
your estate tax liability, so you'll know whether the revocable
or the irrevocable is the right way to go for you. Folks.
Something for everyone in this guide. Call and Get It
(32:44):
eight six six eight four eight five six nine nine
or Legal Exchange Show dot Com again eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com our.
Speaker 2 (32:58):
Last question comes from Julie and Dennisport, Mass and Julie writes,
my mother passed away recently and she had total assets
of around one point four million, and I am the
only beneficiary. I have a great pension and social security
and I really don't need the money because it will
push my estate up and make it taxable when I die.
Is there a way I can have this money go
(33:20):
directly to my kids instead?
Speaker 3 (33:23):
Okay, so this might require looking at the well, maybe
it will, maybe it won't looking at it. I was
gonna say, you know, mom's Mom's trust. But I mean,
I would think that there should be language. I know,
when we drafted at Cushing and Dolan, right, there is
language that we put in there called a beneficiary disclaimer.
Speaker 2 (33:47):
Okay, it's to English.
Speaker 3 (33:50):
Yeah, it's actually a separate paragraph right in our trust,
it's in all of them. It basically says that a
beneficiary can disclaim their interest in the trust before or
after they're entitled to it, Okay, as long as I
haven't taken it. So, and that means that a beneficiary
(34:12):
can say, like here, like Julie, you know I really
don't want it. Well, if I really don't want it
or need it, then I'm going to file this disclaimer.
And these disclaimers aren't necessarily limited to nine months after
the date of death of Julie in this case or
a decedent, So it's not a nine month what we
(34:36):
call a qualified disclaimer that's under twenty five to eighteen
of the Code. This is just a regular disclaimer built
in to the trust. So she could say, you know what,
I don't want it, I'm going to disclaim. Okay, Well
if I disclaim, where does it go?
Speaker 1 (34:56):
Right?
Speaker 3 (34:56):
And that's the key. So you'd want to make sure
that if you're if you're Julie and you're saying you
wanted to go to my kids. This makes us harken
back to that first case we did in this show,
this show drafting for grandkids. Yeah, right, that was very important.
(35:16):
So here it is again. She needs to and before
I would advise her to disclaim. One, you have to
look at the trust, make sure it's there the disclaimer language. Two,
you have to look at the trust and say what
happens if Julie predeceases the donor, Because folks, that's what
disclaiming means. Disclaiming means read the estate planning document as
(35:41):
if Julie died before mom.
Speaker 2 (35:44):
Okay, okay.
Speaker 3 (35:46):
So if the document says equally to my kids and
that's her one point four or she's the only child.
Speaker 1 (35:55):
We don't.
Speaker 2 (35:55):
Yeah, she's the only child.
Speaker 3 (35:56):
So either way we can do it. Whatever the piece
is that's going to Julie. It would say if living
otherwise to Julie's kids, or it would say otherwise to
my grandkids.
Speaker 2 (36:10):
So treat me as if I'm Dad and follow the.
Speaker 3 (36:13):
Chain, right, So if that if the correct, if that's
what's then I would say to you, Julie. Yes, if
the trust says you have the ability to disclaim, and
the language says all to Julie, if living otherwise to
my grandkids, which would be Julie's kids, maybe in trust
(36:35):
until there are a certain age or or something, then
you can disclaim. Because if you disclaim, your grand kids
will get it, or your kids will get it, her
grandkids will get nice. So folks, always things can be
done with planning, even post mortem. Call and get the guide.
Learn how to do your own estate planning, balancing, asset
protection and avoiding estate taxes. Both describing the revocable and
(37:00):
the irrevocable trust in terms of the tax situation eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com.
Speaker 2 (37:09):
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 Powers,
a financial advisor with the Armstrong Advisory Group, and we'll
(37:33):
be back with more after this quick break on the
Legal Exchange with Todd Lutsky.
Speaker 1 (37:38):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate plan. Doing
your planning early can help you protect your assets and
keep more of your wealth in your family. Cushing and Dolan,
the leaders in elder lawn taxation, have put together a
new guide called Balancing, Asset Protection and Avoiding Estate Taxes,
and in it you'll learn how to secure your assets
if you ever need long term care, how to avoid
having everything tied up in probate and how to get
(37:59):
a clearer picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate taxes when you plan the
right way and plan early. Whether you have an existing
estate plan or starting from scratch, this guide makes it
easy to understand what steps could help you and your
family in the long run. To get your free copy,
call Cushing and Dolan at eight six six eight four
eight five six ninety nine. That's eight six six eight
(38:21):
four eight five six nine nine, or you can request
it online at legal exchainshow dot com. That's Legal exchange
show dot com. The proceeding was paid for and the
use expressed or sole leaders of Cushing and Dolin cushiingan
Dolan and or Armstrong Advisory may contact you offering legal
or investment services. Cushing and Dolin in Armstrong Advisory do
not endorse each other and are not affiliated.
Speaker 4 (38:38):
The Armstrong Advisory Group understands retirement planning and when it
comes to married couples, it can be about more than money. Hi,
this is Mike Armstrong and our new guide called Retirement
Planning for Spouses tackles many issues that couples face as
they're preparing for later life. This guide keeps things simple,
focusing on important matters such as making sure both partners
understand where their money's coming from in retirement, being aware
(38:59):
of scams, how to stay organized if one spouse outlives
the other, and ways to handle gifts, donations or legacy
goals as a team. It's a straightforward look at the
steps every couple can take to feel confident about retirement.
Call the Armstrong Advisory Group right now at eight hundred
three nine three for zero zero one to get your
free copy of Retirement Planning for Spouses. That's eight hundred
three to nine three for zero zero one, or you
(39:22):
can request it online at Armstrong Advisory dot com.
Speaker 1 (39:24):
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. When the holidays roll end and the cold
settles over New England, find your escape in the US
Virgin Islands. Trade the freezing tempts and grace guys for
(39:47):
warm sun, turquoise water, and that easy island energy you
can feel the second you land. This December through early January,
Saint Croix ignites with the Krucian Christmas Festival, a celebration
over a century old. Frederickstead comes alive with colorful parades,
live reggae, and streets filled with the sites and flavors
of real Caribbean culture. It's the holiday season with a
tropical beat. From there, they explore Saint Thomas with its
(40:09):
duty free shopping and the legendary views at Maggin's Bay.
Or slow down on Saint John, where quiet beaches and
National Park trails make every day feel like your own
private adventure. Getting there could not be easier. No passport
is needed, and there's no money to exchange. Just pack
light and step out of the cold into pure sunshine.
This holiday season, let yourself fall naturally in rhythm with
the heartbeat of the islands. Visit America's Caribbean paradise the
(40:33):
US Virgin Islands. Go to visit USBI dot com and
book your trip today. That's visit USBI dot com. Your
tune to the legal exchange with Todd Lutsky. If you
are a loved one needs a nursing homestay, call Todd
right now at eight six six eight four eight five
six nine nine and let him make sure your assets
are protected. That's eight six six eight four eight five
(40:54):
six nine nine, or visit him online at Legal Exchange
show dot com.
Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd Letsky. I'm
Susan Powers of financial advice with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with the law firm of Cushing and Dolan with a
master's in taxation. So Todd, we talk a lot about
married couples and how easy it is for them to
(41:21):
reduce and sometimes even eliminate their estate taxes because they
do their trust planning. You get the metal share, the
remainder share, all that good stuff.
Speaker 3 (41:29):
Yeah right, yeah, that's right.
Speaker 2 (41:30):
But then I think about people like Julie you sent
in the question single person. Yeah, is there anything that
a single person can do to reduce and even eliminate
potentially their estate taxes?
Speaker 3 (41:47):
Well? There is, there is. It's not as easy and
you have to maybe part with a little more control
than you might want to though. That's the thing. Okay,
it does involve gifting, and again, remember folks, when we.
Speaker 2 (41:59):
Start gift giving it away, Yeah okay, I.
Speaker 3 (42:02):
Mean that's kind of the way to get it out
of your estate right now. With a married couple, right
we talk a lot about these spousal lifetime access trust
In fact, slats are starting to become, even on our show,
a little better, a more regular term that we've been using. Now.
They are for higher net worth clients, especially with the
(42:23):
exemption federally being so high. I get it, but still useful.
But I'm telling you this to compare and contrast for
your question. For those folks, though, they're able to give
away large chunks of assets but still enjoy and control
what they gave away because one spouse does it for
(42:44):
the other spouse. So as long as they're married, yep,
they're able to, you know, take out of each other's trust.
But you can't take out directly from the trust you
give it to. So while that works great, Todd, but as.
Speaker 2 (42:56):
You're saying, marry people, yeah.
Speaker 3 (42:58):
This person single, what do we do? So I'm actually
doing this for someone right now. They're worth a lot
of money and so rather than give to these irrevocable
gifting trusts we'll call them. They are Grand Tour trusts.
You're able to sell the asset. So you would take
(43:19):
like ten million dollar investment portfolio, put it in an LLC,
take back voting and non voting share. So now I
own the voting and non voting I'm the manager. I
control this LLC. I continue to work with you, Susan,
you manage my money. Nothing's changed, yep. I control distributions.
(43:41):
I take the non voting shares and sell them to
this Grand Tour trust. It's a Grand Tour trust. So
this sale is disregarded for capital gains tax purposes. You
can't sell to yourself since I'm the owner. For income
tax purposes, the government says this sale quotes sale is disregarded.
Speaker 2 (44:02):
Beautiful.
Speaker 3 (44:03):
Okay, So now I got you know this non voting
shares could be nine million dollars in there. It's going
to pay me back a private annuity just between me
and the trust. Of course, distributions will have to come
out of the LLC to the trust to pay me.
(44:24):
But you know that private annuity depending on how old
you are. I think the one I did was resulting
at about four hundred thousand, four hundred and fifty thousand
a year. Coming back. Well, that's okay because I like
this stream of income. I'm living on it.
Speaker 2 (44:37):
I'm usual and it comes back to you. When you're
generating the income from the regardless of the bucket, you're
still at the same tax rate as you would before.
Speaker 3 (44:45):
It's right, everything's grant toward trust everything. I'm paying taxes
on money I may not even be getting, although I
am getting the four hundred, right, the LLC could be
generating far more than that. You got ten million, that's
seven percent, that's seven hundred thousand, so it might only
be kicking out four hundred. Well what the rest is growing?
And I'm not letting this build up in my estate
because I need that to live on and enjoy. Because
(45:06):
if you have that kind of money, your lifestyle is
high sure wonderful way of doing it. And when you die,
the private annuity automatically ends. Nothing is included in your estate.
That annuity is has zero value.
Speaker 2 (45:18):
So only lived you know in a couple of years.
What have you lived a couple of months and you
set up this new YEA doesn't matter.
Speaker 3 (45:26):
Zero value when you die.
Speaker 2 (45:28):
Huh.
Speaker 3 (45:29):
It's a home run for for single people. Wow. So
that's a great way of doing it. I'm doing it
now for someone a single person worth about twenty five million,
So you know they need to understand that can be done.
But folks, I understand that's not for everybody, right for
people who that might make sense to. If you find
yourself in that position, you know, give us a call.
I can't say it any other way that that's an
(45:50):
important piece of information. But folks, a lot of us
just need to do basic state planning. That's what this
guide's about, bancing, asset protection, planning and avoiding state taxes.
It explains portability of exemptions, It explains what these exemptions are.
It actually talks to you about and explains how the
(46:12):
remainder share and the special marital share work to shelter taxes.
We talk about it all the time, but this you
could actually see it in action. It also allows you
to put your own numbers in, gives you the tax
guide to calculate the tax on your estate, and it
does the same thing for irrevocable trusts in case you
(46:33):
want to use those and actually protect assets and avoid
a state taxes. Call and get it folks, something for
everyone eight six six eight four eight five six nine
nine or Legal Exchange Show dot com again eight six
six eight four eight five six nine nine or Legal
Exchange Show dot com.
Speaker 2 (46:54):
So let's keep wiping out of state taxes for people.
Here the story that you totally, the case of the
life insurance and the life Insurance trust. Can we explore
how those work? Because there are a lot of folks
out there that don't realize that it could be just
their life insurance policy that's causing them to have a
taxable estate. And how can you actually eliminate that from happening.
(47:19):
You've got a big insurance policy, how do we get
that out of that taxable estate?
Speaker 3 (47:24):
Yeah, So when we talk about estate tax is, the
first thing we need to ask is how much are
we worth? Right? Right? And this is the part I
think you're sort of driving at, Susan, is we oftentimes
don't consider the death benefit of a life insurance policy
as part of the estate.
Speaker 2 (47:43):
Because it's tax free, tax free, are right?
Speaker 5 (47:45):
Right?
Speaker 3 (47:46):
Except that's income tax free only, not a state tax rates.
Speaker 2 (47:50):
A lot of people are surprised to hear that.
Speaker 3 (47:52):
I think so. I think so, And because that oftentimes
it's sold to you, but they just use the word
or tax free. They don't describe what tax free it
is in this case, not a state tax free. Now,
remember that's important because even though you might have term
insurance right now, you might be saying, oh, well, my
(48:15):
insurance policy is worth nothing because you're alive.
Speaker 2 (48:19):
That's right.
Speaker 3 (48:20):
But when you die, which is when the government values
your estate, it's worth the death.
Speaker 2 (48:26):
Betal So the second you die, there's value to that.
Speaker 3 (48:28):
There you go death benefit value. So let's say you've
got like a two million dollar policy for Massachusetts that
throws you over the estate right there. But that two
million or three million dollar policy could be bumping you
up even in a federal side of the equation. So
a lot of times people will say, well, geez, if
I put it into an irrevocable life insurance trust, I
(48:50):
can make it income and estate tax.
Speaker 2 (48:54):
Is there a look back period for that life insurance trust?
If you do one yes and no no, Well it depends.
There is an attorney answer.
Speaker 3 (49:04):
No, if you have the life insurance policy, buy the
policy from the get.
Speaker 2 (49:11):
Go, so that the irrevocable life insurance trust buys the policy.
Speaker 3 (49:16):
Yes, So I don't know why I said if I
said that wrong. So the irrevocable life insurance trust purchases
the policy.
Speaker 2 (49:23):
So they're the owner from the get go.
Speaker 3 (49:25):
From the beginning, you put the money in to buy it,
but the trust buys it. So now you never owned it.
So now you can die the next day, no look back.
Speaker 2 (49:36):
But a lot of people they're going to already own
these life insurance policies when they're setting this up, because
that's maybe what's driving the conversation.
Speaker 3 (49:42):
That's right, that happens. So for all of you folks
who already own the policy and say, oh, this is
a great idea, I'd like to get it the heck
out of my estate. Is there going to be a
gift tax when I gift it to this trust? Generally
not so much, because the value when you're gifting it
might only be the cash surrender value, which is generally low.
(50:03):
So put it in now. When you put it in,
there is a three year rule. So if you happen
to die within the three years of you putting it
in the trust, then it will be pulled back into
your estate.
Speaker 2 (50:15):
Get your planning done.
Speaker 3 (50:16):
But there's no downside, folks, it will be included anyway,
So take it, take the shot, get it, get it
set up. Folks. Learn about revocable and irrevocable trusts and
how they work from an estate tax standpoint. Get this
guide it explains all of that eight six six eight
four eight five six nine nine or Legal Exchange show
(50:39):
dot com. You can download the guide right there.
Speaker 2 (50:42):
Todd Leutsky from the law firm of Cushing in Dolan,
thank you so much.
Speaker 3 (50:46):
Thank you, Susan, always a pleasure.
Speaker 2 (50:48):
I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
We thank you for joining us today and we'll be
back again next week on the Legal Exchange with Todd Leutsky.
Speaker 1 (51:00):
Retired or getting close. Now's the perfect time to take
a fresh look at your estate plan. Doing your planning
early can help you protect your assets and keep more
of your wealth in your family. Cushing and Dolan, the
leaders in elder lawn taxation, have put together a new
guide called Balancing, Asset Protection and Avoiding Estate Taxes, and
in it you'll learn how to secure your assets if
you ever need long term care, how to avoid having
everything tied up in probate, and how to get a
(51:21):
clearer picture of your estate tax exposure. The guide also
breaks down real options that may help you reduce or
even eliminate your estate taxes when you plan the right
way and plan early. Whether you have an existing estate
plan or starting from scratch, this guide makes it easy
to understand what steps could help you and your family
in the long run. To get your free copy, call
Cushing and Dolan at eight sixty six eight four eight
five six nine nine. That's eight six six eight four
(51:43):
eight five six nine nine, or you can request it
online at legal exchange show dot com. That's legal exchange
show dot com. The proceeding was paid for in the
use express or so legos of Cushing and Dolin. Cushian Dolan,
and 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 6 (52:00):
At Armstrong Advisory Group. We understand that retirement planning for
couples is about making smart, coordinated decisions that support both partners.
Speaker 1 (52:07):
HI.
Speaker 6 (52:07):
This is Chuck Zada. We've got a brand new free
guide called Retirement Planning for Spouses that focuses on key
financial moves that every couple should understand, like how to
time your sol security benefits, how to prepare for healthcare
expenses and long term care needs, and how to manage
your investment withdrawals in a way that keeps taxes under
control while still maintaining the lifestyle that you want. Retirement
(52:28):
is a team effort, and this guide may show you
how to make the numbers work for both of you.
Call us right now at eight hundred three nine three
for zero zero one to get your free copy of
our new guide called Retirement Planning for Spouses. That's eight
hundred three nine three for zero zero one, or you
can request it online Armstrong Advisory dot com.
Speaker 1 (52:46):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. When the holidays roll in and the cold
settles over New England, find your escape and the US
Virgin Islands. Trade the freezing temps and gray skies for
(53:08):
warm sun, turquoise water and that easy island energy. You
can feel the second u Land. This December through early January,
Saint Croix ignites with the Krucian Christmas Festival, a celebration
over a century old. Frederickstead comes alive with colorful parades,
live reggae, and streets filled with the sights and flavors
of real Caribbean culture. It's the holiday season with a
tropical beat. From there, they explore Saint Thomas with its
(53:30):
duty free shopping and the legendary views at Magan's Bay.
Or slow down on Saint John, where quiet beaches and
National Park trails make every day feel like your own
private adventure. Getting there could not be easier. No passport
is needed and there's no money to exchange. Just pack
light and step out of the cold into pure sunshine.
This holiday season, let yourself fall naturally in rhythm with
the heartbeat of the islands. Visit America's Caribbean paradise, the
(53:53):
US Virgin Islands. Go to visit USBI dot com and
book your trip today. That's visit USBI dot com.
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