How to protect assets last minute from the nursing home

Episode Transcript

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

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

Speaker 2 (00:36):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Lutsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Welcome Todd, How.

Speaker 3 (00:50):
Are you today? I am never better on you? I
am great? Thank you.

Speaker 2 (00:54):
What do you have for us this week?

Speaker 3 (00:55):
So a couple of real life stories to share. So
first one is a siblings owning a home together, one
living upstairs, one living downstairs, and they have their own
families yep, and someone goes to the nursing home. Yeah,
so we got to talk about how that kind of
planning can cause problems, but there might be a silver lining.

Speaker 2 (01:16):
There's a lot of people like that that have those
two families and sealthy and the parents leave it to
the kids and then.

Speaker 3 (01:22):
They just live into one unit or the other. Nothing
wrong with that. The second one is a little more interesting.
It's selling versus keeping property last minute. So in this case,
the children came in and dad was like eighty five,
didn't have a lot of money, but had a nice
three family that he's had forever in Summerville and lived

(01:43):
on little one little floor and rented everything else and
basically was told he has to sell the house and
because he's going on medicaid, maybe not hard stop, right, folks,
there are things that can be done last minute, and
these are actually going to become two really good examples
of last minute things that can be done to save
houses or rental properties, or how do you save vacation

(02:07):
homes or what about you know, life insurance. There's countable
and non countable assets and there's even some last minute
ways of transferring an asset and not having a five
year waiting period and saving it. These are the information
that's in this guide. Folks. It's the end of the month.
It's the last chance to get this. It is perfect

(02:29):
for people who have done planning or have not done planning,
because either way, when you're entering a nursing home, there's
assets that need to be protected last minute, So call
and get the guide. End of the Month eight six
six eight four eight five six nine nine or Legal
Exchange Show dot com eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.

(02:52):
Last minute Medicaid eligibility Techniques. Let's take a look at
Jim and Sally siblings. So well, Jim and Sally are
married and they came in to do planning because they
were prompted by the fact that Sally's sister, Jane, was
headed to the nursing home. Jane is a widow but

(03:14):
has two kids. The home for the sister was a
duplex co owned by Jane and Sally. They both lived
there but obviously on separate floors, and Jane also had
about five hundred thousand dollars of investments and was seventy
eight years old. Jim and Sally also had two kids,

(03:35):
and they had of course the half interest in the home,
which is about two million dollars so million for them,
along with a rental property worth about a million. And
they both had five hundred thousand in iras and investments
that were and a million dollars of investments that were
not qualified. So it looks like Jim and Sally are
worth about one million, rental two million, three they're worth

(03:58):
about four million. So they then said, you know, we
want to do our planning. That they were told that
they were going to have to lose their house, their home.
They said Jane was going to have to lose her home,
sell it because she's going to the nursing home, and
no planning was done. And Jim and Sally said, well,
we also want to do our own planning. We want
to protect our own assets, so we're not faced with

(04:20):
what Sally's faced with, I'm sorry with Jane is faced
with right now. So this was the tall order that
walked walked in the door.

Speaker 2 (04:28):
A lot of money to protect last minute.

Speaker 3 (04:31):
That's what's so interesting about what I do is that
you know who knew this, this kind of thing would
walk in the door. But these are the facts you're
faced with. So what do we do? Well, we take
a look first. I think Jane is the priority. Then
we'll come back and talk about Jim and Sally. Jane's
sort of the priority because she's going in the nursing home.
So Jane's one half home would be safe for now.

(04:52):
Why because she could simply check the box and say
I intend to return home. That would be the first
thing you would think about, right, But the state would
still play a lien on that house. Well that's okay though, right,
it would at least be not countable now, but then
you know, there would be a recovery from it later on,
So the lian would be on the house and it

(05:14):
would be for the for to be taken care of
and paid off after Jane dies.

Speaker 2 (05:20):
But nursing home monthly costs at a much lower rate
in the meantime.

Speaker 3 (05:24):
Yeah, but the lean, like you say, the lian is
kind of your friend, right, It's you know, when you're
on Medicaid, it pays about sixty five hundred dollars a
month versus fifteen thousand dollars a month for a private
pay rate. So let's say she's got three thousand a
month in Social Security coming in, right, that's not bad,
but there's still going to be a lean, so it
would be sixty five minus to three, and the lien

(05:46):
is twenty five yep. Third, Yeah, thirty grand a year.
Not horrible at the end of the day. However, there's
something called a sibling exception. I love loopholes. It might
work better here. So I said, if you own property
with a sibling and you have an equity interest in

(06:06):
that property and you live there for one year prior
to the other sibling entering a nursing home, which it
sounds like they have. They certainly have. They have the
equity interest, they both own it, and they've been living
there a long time. Then you can transfer the home
to the healthy sibling and there is no five year

(06:28):
waiting period. It's a freebie. You can also transfer it,
which is what I would recommend with a retained life estate,
so that when the person in the nursing home this case,
Jane passes away, it's in her half is still included
in her estate. You get a step up in basis

(06:50):
to eliminate the capital gain, but it's not recovered against
because it's avoids probate. So it's a great additional way
of doing this. So you get to step up in
basis and no lean on a state recovery. The downside
is there's always a downside. Jane's got two kids, right.

Speaker 2 (07:11):
It's just going to ask you how do they solve
for that?

Speaker 3 (07:15):
That's the problem. Right, So Jane has two kids that
obviously could be disinherited. Now we'll come back to that,
but also remember there's a five hundred thousand dollars money
that Jane had that we have to deal with. So
while we can make the house non countable and non
leanable by making this transfer, Jane still has to buy
an annuity for the five hundred thousand dollars. The annuity,

(07:39):
you simply converts the asset into an income stream that
you go through a financial person, an insurance person, and
you buy this annuity converts it to an income stream
that goes to pay the nursing home. Which would be
interesting in this case because between the rent, social Security
and this Medicaid annuity saying, there might be very little

(08:01):
lean right on that house, and Jane's eligible for Medicaid,
so we can get Jane eligible for medicaid. The question
just is do we transfer the house under the sibling
exception or do we allow a lean to be placed
on Yeah, so it's something you'd have to think about
and talk about. Are these people close? Is it a

(08:22):
good face? Is Sally a good on?

Speaker 2 (08:24):
Is she gonna gift it back to those nieces and nephtgig?

Speaker 3 (08:27):
Well, remember she lives there too, so he keep that
in mind. All right, So let's go to Jim and
Sally so we can take care of Jane. There's some
last minute things we can do. Well they come in,
We're gonna set up two irrevocable trusts for them. We're
gonna transfer all the real estate in, leave the iras
outside the trust. They're gonna keep control over these assets.
They're going to avoid probate. They're gonna now not only
reduce but probably eliminate their Massachusetts to state tax because

(08:50):
they can shelter with the trust through the use of
the marital share and the remainder share about four million
dollars from a state taxes and they're worth about four
million dollars. So this is going to be a real
win for Jim and Sally. They're going to be able
to not be faced with this last minute problem that

(09:11):
they're learning from Jane in Jane's failure to plan. Now,
the real benefit is Jane did not give the house
to her right So if Jane did not give the
house to her, then they would have to, you know,
condominiumize it likely when Jane dies and buy out there,
you know, or they either have to buy out Jane's half,

(09:31):
or they have to condominimize it and say I'm going
to keep my half and live with some stranger. So
that that's the bad deal end of it. However, now
the trust you need to talk with you. If she's
a good aunt, this trust will simply say that when
they die, one half of that particular property goes to
the kid, goes to the nieces and nephews. You can

(09:52):
do that. If not, you might be able to transfer
it back to them while they're living so they can
share it. But remember that was how it was going
to be anyway they would have done that. If they
did their planning on their own, they each would have
taken care of both sides of the family anyway, and
you'd be faced with sharing this within laws with family.
So they just have to work that out. But folks,
this gives you options last minute and this is a

(10:13):
great example. There's more like this in the guide eight
six six eight four eight five six nine nine or
Legal Exchange show dot com.

Speaker 2 (10:22):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. We have much
more to come when we return to the Legal Exchange
with Todd Lutsky.

Speaker 1 (10:35):
Changes to Medicaid occur almost every year, and if you're
not informed, your assets could be at risk, especially if
you or your spouse need nursing home care. Cushing and
Dolan are experts in elder lam and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process, which is critically important if you're retired
or getting closer retiring. The guide has important information regarding

(10:56):
numerous strategies that can protect your assets from the nursing home,
be your primary home, a vacation home, or any rental
property you may own. You've worked hard to achieve wealth,
so don't take chances when it comes to protecting it.
Get your copy of Cushing and Dolan's brand new guide
called Last Minute Medicaid Eligibility Call right now eight sixty
six eight four eight five six nine nine. That's eight

(11:16):
six six eight four eight five six nine nine, Or
you can request it online by visiting Legal Exchange Show
dot com. That's Legal exchange show dot com. The proceeding
was paid for in the views exprest are solely those
of Cushing and Dolan. Cushing and Dolan and or Armstrong
Advisory may contact you offering legal or investment services. Cushing
and Dolan and Armstrong Advisory do not endorse each other
and are not affiliated. Summers here, New England, and it's

(11:39):
the perfect time to trade the daily routine for something extraordinary.
Say hello to the US Virgin Islands, America's Caribbean paradise.
Explore the vibrant history and flavor of Saint Croix. Lounge
on the stunning beaches of Saint Thomas, or find your
peace on the quiet shores of Saint John. From the
moment you arrive, you'll feel it. You're nctually in rhythm

(12:00):
with the heartbeat of the islands. There's no passport needed,
no currency to exchange just warm weather, clear blue water,
and unforgettable experiences waiting for you. Whether you're planning a
romantic escape, a family adventure, or a little of both,
this is the summer. To make it happen. Go to
visit USVII dot com to learn more and start planning.

(12:21):
That's visit USVII dot com. Your island getaway is closer
than you think, the US Virgin Islands where summer never ends.
Book your trip today at visit USVII dot com.

Speaker 4 (12:36):
Artificial intelligence isn't just the future, it's already shaping how
people think about their money. Hi, this is Chuck Zada
from the Armstrong Advisory Group. We've put together a new
guide called AI in your Financial Plan. In it, we
explore the ways that AI is being used in financial technology,
from apps the track spending to tools that can help
identify trends. It's a rapidly changing space. In this guy,

(13:00):
it is designed to help you understand some of the
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learn more, call eight hundred three nine three for zero
zero one and request your free copy of AI and
your Financial Plan. That's eight hundred three nine three for
zero zero one or visit Armstrong Advisory dot com.

Speaker 1 (13:21):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange with Toddlutsky,
an expert in elder life planning and taxation. Need help

(13:44):
with your estate plan? Comp Todd right now and make
an appointment. Eight sixty six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.

Speaker 2 (13:55):
Welcome back into the Legal Exchange with Todd Lotsky. I'm
Susan Powers of financial advice with the Armstrong Advisory Group,
and I'm joined by Todd Letsky, a partner with the
law firm of Cushing and Dolan with a master's in taxation.
Where we headed now, Todd, we.

Speaker 3 (14:10):
Are going to go to another real life story dealing
with selling a house versus keeping a house. Last minute,
when you're faced with nursing home care, what do we
want to do? Here because this person was given different advice.
So here's what happened. The kids come in and Dad's
about eighty five years old. He had just entered the

(14:32):
nursing home. And they said, likely he's going to be
their long term. Okay, he said, they really had. The
only asset Dad really has is this one three family
in Somerville. Okay, he lived upstairs but rented the two
floors below commercial and residential rental. Well now what Well,

(14:57):
he basically has no other money and just just this building.
And they said, what do you have to do? They
went to another attorney and the attorney said that you're
going to have to, you know, likely sell this building
to pay for the nursing home. Well, you know, he
had purchased a building long ago, so this was a problem.

(15:18):
This is why I tell people, right, you can't be
an elder law lawyer and not be a tax lawyer. Right.
Taxes drive everything. Right. So they had gone to this lawyer,
told me to have to sell it, then they're going
to pay the nursing home. But I said, well, you
have purchased it a long time ago, and it was
a very small price when you bought it. Not to
mention the fact that you've been renting it out for

(15:39):
like twenty five years. What that means in English is
you fully depreciated the basis, well except for the little
piece that you might own upstairs. But just for easy numbers,
let's ignore that you have a very low basis, which
means big taxes, big capital gain. Right, so if I
sell it, I'm going to get killed on capital gains taxes. Well,
it turns out that he gets he gets about twenty

(16:01):
five hundred dollars a month Social Security and about five
thousand dollars a month rent, So seventy five hundred dollars
a month is coming in, you know. So how can
we save the building and get on Medicaid and not
forget about taxes?

Speaker 1 (16:19):
Right?

Speaker 3 (16:21):
That's really where we are in this approach. But folks,
I just want to take a minute before I give
you the answer to tell you that this is exactly
the same kind of thing you're going to learn in
this guide. This is just one of the ways to
deal with a piece of property that might be that's
in the guide. There's other last minute techniques for other

(16:42):
types of assets, like a home or a vacation home
or life insurance. Along with possible transfers that avoid the
five minute of five minute. I wish it was five
minutes for the five year waiting period that goes along.
There's ways around that, but not many, but they're in here.

(17:05):
So if you're going to the nursing home, get this guide.
It's the end of the month, last chance to get it.
Don't just write the check 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. End of

(17:26):
the month. Folks that said, let's turn our attention back
to these folks and say, what are we going to do?
Are we going to sell the property like they were told?
Or is there a better way? So let's take a look.
In this case. It's interesting because there'd be two options
I would think of first and foremost. One, Well, he
lives there. It's one building, and that is home. The

(17:48):
whole building is really his home, even though he only
lives on one floor. You could argue, since it's all
on one deed, that that's his home. Well, if it's
your home, then all you do is check at I
intend to return home, and that would make it non countable. No,
in general, that will be the first step. However, you

(18:09):
got to worry about it for a single person, which
is what he is. And again the rules are different,
as I said, and the guy that explains this, single
people versus married couples have different rules. So the house
for a single person, by checking the box would ordinarily
make it non countable. But because it's worth about two
point five million, which is more than the valuation limitation

(18:32):
of a million thirty three thousand, give or take, well
that would be a hard stop. Nope, that would make
the house countable because it's over that amount. Because it's
over that amount as a single person. So all right,
that approach doesn't work in this case. Okay, let's make
it a rental property. Okay, well it already is, right,

(18:52):
so this is great. So if we treat it as
a rental property, and this is there's no value meation
with the rental property. And the reason it's non countable
is it generates income. He's sential to self support boom.
Non countable, but leanable. So we got to talk about that.

(19:13):
And remember long they've been renting it out for a
long time, so it's got really little basis now he's
got less than two thousand dollars of other assets, and
therefore he should be eligible for medicaid right away once
he's rented. Right, So what again, just to go back
and recap, he was told to sell it, right, What

(19:34):
horrible advice. I'm at a point now where I don't
feel like I need to sell this at all. Well,
let's explore this lean thing. Yeah, because how's it going
to work when he actually goes in? Yeah, that that's
kind of the issue. Right. So okay, now he's eligible
for medicaid. Now what happens. Well, instead of paying fifteen
thousand dollars a month, you're going to pay maybe sixty
five hundred. But wait a minute, Todd, he's got seventy

(19:57):
five hundred dollars a month coming in between rent and
Social Security, right, so he's already over Yeah, that's too
much income. Sixty five hundred dollars a month that the
nursing home would take for medicaid. Well, thankfully they have
this thing called a deductible, which is kind of neat.
It's a six month rule where you'll take your seventy

(20:19):
five hundred dollars a month and you'll pay the nursing
home at the private rate. So if the private rate
is fifteen and you're paying seventy five hundred a month,
at the end of six months, you will have paid
approximately three months of the nursing home bill at the
private rate. Well, since you're and they do this every

(20:39):
six months, so at the end of six months, they're
going to say, all right, on our books, we've paid.
You've paid us sixty you've paid us three months. You
still owe us for three months. The nursing home says, okay,
Medicaid says, we will now pay you for those three months.
But at the Medicaid rate, how it drops for three

(21:01):
months to sixty five hundred a month. Yeah, home run.

Speaker 2 (21:04):
So it's a little back and forth, little.

Speaker 3 (21:06):
Back, and you do it every six months, every six months, right,
So let's play out the string. So if you if
you took sixty five hundred a month times three, that's
about nineteen five that's twenty grand, right, So if you're
paying twenty grand times two years or twenty grand, it's
twenty grand. Because remember it's every six months, so you're

(21:28):
only paying forty thousand dollars at the end of at
the end of a year, at the end of two years. Yeah, wow,
that's not bad. You imagine what a nursing home would
cost if I was paying fifteen thousand a month for
two years.

Speaker 2 (21:43):
You do that in three months, you pay more than
that in three months.

Speaker 3 (21:46):
Three months, you're done. So now I've only paid forty
thousand dollars you know. Actually no, no, it's twenty thousand
times two. So that's forty a year. It's eighty for
two years, eighty thousand dollars. Ye, private pay. This is
a home run. So now at the end of the
time he lives in there for two years, I got

(22:07):
to pay the nursing home. Well, not the nursing home,
pay the state right back about eighty grand. Yeah, and
the building's worth now three million. It was worth two
five and it's worth three million. I'm writing that check
every day.

Speaker 2 (22:21):
I wonder if you could somehow say, okay, I'm not
going to live there anymore. I need to hire a
property management company so that you can bring yourself down
by one thousand a month to fit underneath that sixty
five hundred.

Speaker 3 (22:33):
Maybe I'm not going to go there because I'm comfortable.
I'm going there. I'm very comfortable with the savings. We
got here. Yes, and it gets better, folks, Just quickly
the capital gains now. Right, if the kids want to
sell this and it's worth three million dollars, they got
a full step up in basis. All that built in
gain is gone. The kids can say, we don't want

(22:54):
to be a landlord anymore. We're going to sell the building.
Take We've just saved probably nine one hundred thousand dollars
in capital gains tax. Wow. Happy to write a check
for eighty to the state and walk away all day
every day. And remember we only got to give Massachusetts
ten percent of the amount over two million, so we
got to pay a little mass tax. Who cares one

(23:14):
hundred grand? Home run folks, So just remember there are
things that can be done last minute better than writing
a check selling a building. Who knows what it's the
end of the month. Please get the guide eight sixty
six eight four eight five six ninety nine or Legal
Exchange show dot com.

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

Speaker 1 (23:53):
Changes to medicate occur almost every year, and if you're
not informed, your assets could be at risk, especially if
you were your spouse need nursing home care. Cushing and
Dolan are experts in elder lam and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process, which is critically important if you're retired
or getting close to retiring. The guide has important information

(24:13):
regarding numerous strategies that can protect your assets from the
nursing home. It could be your primary home, a vacation home,
or any rental property you may own. You've worked hard
to achieve wealth, so don't take chances when it comes
to protecting it. Get your copy of Cushing and Dolan's
brand new guide called Last Minute Medicaid Eligibility call right
Now eight six six eight four eight five six nine nine.

(24:33):
That's eight six six eight four eight five six nine nine,
or you can request it online by visiting Legal Exchange
Show dot com. That's Legal exchange show dot com. The
proceeding was paid for in the views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other and are not affiliated.

Speaker 5 (24:54):
Artificial intelligence is constantly evolving and can even be a
revolutionary asset to a financial strategy.

Speaker 2 (25:00):
HI.

Speaker 5 (25:00):
This is Mike Armstrong from the Armstrong Advisory Group. Our
new guide is called AI and your Financial Plan. In it,
we explain how artificial intelligence continues to make inroads into
our daily lives and how the advent of its technologies
may affect an existing or future financial plan. AI serves
the public in a variety of ways, from apps to
monitor personal finances to tools that analyze investments. AI is

(25:22):
not the future anymore. Its effect is felt by businesses
of all kinds on a daily basis. Call us today
at eight hundred three nine three four zero zero one
and ask for your free guide. That number again is
eight hundred three nine three four zero zero one, or
you can request the guide online by visiting us at
Armstrong Advisory dot com.

Speaker 1 (25:39):
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. Hi.

Speaker 6 (25:54):
I'm Michael Valila, adjedent of the Disabled American Veterans Department
in Massachusetts. Thea DA Massachusetts provides thousands of hours of
voluntary services at our VA medical centers and soldiers homes,
and is the only DAV department in the country to
lead a veterans housing initiative for both single veterans and
those with families. These programs are critical to serving our

(26:14):
veterans and their time and need. You can help our
great American heroes by making a donation today. Please visit
DAV fivek dot Boston. That's DAV fivek dot Boston.

Speaker 1 (26:28):
Summers here in New England and it's the perfect time
to trade the daily routine for something extraordinary. Say hello
to the US Virgin Islands, America's Caribbean Paradise. Explore the
vibrant history and flavor of Saint Croix Lounge on the
stunning beaches of Saint Thomas, or find your peace on
the quiet shores of Saint John. From the moment you arrive,

(26:48):
you'll feel it. You're naturally in rhythm with the heartbeat
of the islands. There's no passport needed, no currency to exchange,
just warm weather, clear blue water, and unforgettable experiences waiting
for you. Whether you're planning a romantic escape, a family adventure,
or a little of both, this is the summer. To
make it happen. Go to visit USBI dot com to

(27:09):
learn more and start planning. That's visit USVII dot com.
Your island getaway is closer than you think, the US
Virgin Islands where summer never ends. Book your trip today
at visit USBI dot com. You're listening to the Legal Exchange,

(27:29):
and it's time for Ask Todd, the segment where Todd
will answer your questions about anything and everything that's included
in the estate planning process. Once again, here's Todd, Lutsky
and Susan Powers.

Speaker 2 (27:42):
Welcome back, Todd. Have a few questions or listeners for you.
First question comes from Lori and Wooburn Mass and Laurie writes,
my husband and I created one irrevocable trust with you
around twelve years ago. Good my husband recently passed away.
Is there anything I need to do from a legal
perspective if our total assets are under the two million

(28:05):
dollar Massachusetts exemption amount. And this is a mutual client,
so if you need more info, I can certainly give
you that.

Speaker 3 (28:12):
So here's the key, folks. We've got one irrevocable trust.
Remember twelve years ago, so certainly twelve years ago they
were probably in order for me to have done one
irrevocable trust. Twelve years ago, when the Massachusetts estate tax
law was a million dollar exemption each, they were probably

(28:35):
under a million they were then, So even if that
grew a little now, so let's say they're at a
million eight under two.

Speaker 2 (28:44):
Yeah it's under two. It's a little less than that,
but yes, they are under two.

Speaker 3 (28:49):
Having the one trust that it's the same concept as
my point, because now two million is the exemption. So
even if they if they had come in today and
they worth a million five, I still would have done
the one trust trust, is my point. Ye, And so
because the exemption increased, so that that really matters. So
now the question I don't know, and maybe you can

(29:12):
fill me in on this, Susan, is like, what's actually
in the trust. Is it just a house question?

Speaker 2 (29:17):
The trust is a home worth about eight hundred thousand.
There is an investment account worth about one hundred and
fifty thousand, and that's it.

Speaker 3 (29:32):
So this is what changes the game.

Speaker 1 (29:34):
Right.

Speaker 3 (29:34):
If you were going to say, yeah, it was only
a home, there's no rent, there's nothing, it's just a house,
that changes the answer. But you added the fact that
there's money in it. Yes, So that means that this
trust has a tax ID number. Yes. So when someone
and this is why, folks, it's so important that you
call when someone dies just to check in. The answer

(29:56):
might be, yeah, there's very little to do on the
first death. Survivors still living, right, Yes, very little to
do on the first death, No problem, great, just check in.
But by checking in in this case, I'm going to say, yeah, yeah,
you're under the two million dollar threshold. So there's no
tax filing. So no estate tax return, no estate tax return.

(30:18):
Need wipe your brow. None, federally, none, state, wipe your brow.
But this trust that we put together has a marital
share and a remainder share built in it to shelter
half the assets that are in that trust on the
first death. Only half okay, because only one died and

(30:41):
it's an irrevocable trust. So in this case, if there's
nine hundred and fifty thousand, call it a million. Sure
for easy math nine, I'm going to put five hundred
thousand in the remainder share, and five hundred thousand is
going to remain in the q TIP share or just
in the main trust. And so that five hundred thousand

(31:02):
and the remainder share is going to need a new
ID number, and I'm going to shelter it. Why because
it has to file an income tax return every year.
Now again, well one of them will. So if I
was to put you know, in this case, four hundred thousand,
well it's still going to it's going to have some
money in it. So because the q tip's going to
have really nothing.

Speaker 2 (31:23):
Do you have to split it half house half investments
or could you do like just part of the house.
You couldn't be tax id so they wouldn't have to
file taxes.

Speaker 3 (31:33):
You could, except you are you're going to have to
put at least five hundred thousand in there, and half
the house is only four hundred, so you have to
put some of the money in. Got it? There would
be no way around it, right, you couldn't.

Speaker 2 (31:45):
Sheltered like two thirds of the house in now.

Speaker 3 (31:48):
I think the formula says you got to put in, okay,
the amount needed, so so you know, but so what,
you got to file an income tax return once a
year for that. You were filing one anyway for the
year of vocable trust. Every year it's different. You're just
going to continue to file one for that particular bucket.
The other bucket's probably only going to have real estate
in it and it won't have anything to file. But

(32:08):
you do need to just shelter those two transfer the assets.
Now that's sheltered, that five hundred thousand will never be
taxed again when passed when Lori passes, so we don't
have to worry about her creeping over the two million
dollar mark, right, and that five hundred thousand in there
now will file an income tax return each year and
life will go on. No tax is due on the

(32:31):
first death, no probate, no headache, and really the survivor
can just continue to live really just like they were before.
So she would still have access.

Speaker 2 (32:42):
She didn't happen to take the income off of the trust,
but she could if she wanted to just like now.

Speaker 3 (32:47):
Great question. Just like before, her access to the income
from the main trust is the same as her access
to the income from this remainder share for her benefits.
Got it, So there is no negative here. But the
phone call made sense because the trust is no longer
a Grand Tour trust. You get a new ID number
for a non Grand Tour trust and shelter the fill

(33:10):
the buckets. That's it, okay, But the call made sense
right because it did everything. It pushed the estate plan
across the goal line, and the nursing home plan is
still working. Wife, go about your business. Everybody's perfect comfortable, now, folks,
that's how it works when you do planning. But we
are at the end of the month and we are

(33:32):
giving away the last minute Medicaid eligibility. Right, So even
if this person went into the nursing home that did planning,
there's still going to be stuff outside the trust that
needs protected. People who have never done planning a lot
more is going to be outside the trust that needs
to be protected. So this guide is really for everyone
because if you've done planning or not done planning, you

(33:53):
need to know how to protect what's not protected. This
guide explains some last minute transfer techniques that you can
do to avoid the five year waiting period. Therein here
some examples on countable and non countable assets for married
couples versus single people. Also different and how they're treated
home vacation, home rental, life insurance four to oh one

(34:16):
case folks, they're treated differently and different ways of making
them countable and non countable. Don't write the check end
of the month. Get the guide eight six six eight
four eight five six nine nine or Legal Exchange Show
dot com. Last Chance to get it eight six six
eight four eight five six nine nine or Legal Exchange

(34:40):
Show dot com.

Speaker 2 (34:42):
Our last question comes from James and Medford, mass And
James writes, I would like to update my trust to
eliminate a beneficiary and add three others. Is this allowed
to happen if you have a trust without having to
rewrite the entire trust.

Speaker 3 (34:57):
There's a huge question that you that I have have
to answer. Ask you here. It depends. It's going to
depend on how you answer this question. Yes, because I
think there's a big piece of information that might be
missing from this client's question or this person's question. Excuse me,
It says, add three others, others.

Speaker 2 (35:17):
So we don't know who those others are.

Speaker 3 (35:20):
That's the real question, that's the burning question.

Speaker 2 (35:23):
So well explain why that makes a difference.

Speaker 3 (35:26):
So let's say this was set up by James, and
James has three kids and three grandkids, and we drafted
the document to say, upon James's death, I want to
treat my kids equally common, very common, or my grandchildren
if they're not living, and so it would divide into

(35:46):
three buckets, and then if they're not living, it would
go to the to the grandkids. Perfectly fine, And James
comes in and says, wait a minute, I really want
to leave more to my grandchildren. I like them a
little better. Yeah, they're more fun. I give them back.
I don't have to listen to them. So I'd like
to now leave ten or twenty percent to my grandkids

(36:07):
and the balance to my kids equally. Can I do that? Absolutely,
because you have a power of appointment, and that power
of appointment generally defines the class. That class would say,
you know, children of all generations and charity. Well, that's
the only changes I can make.

Speaker 2 (36:27):
So if it's cousin Vinnie right or buddy Fred right,
he can't add those folks into it with an airy
vocable right.

Speaker 3 (36:35):
So this the way I would complete this is I
would say, yes, I can make it different amounts among
kids and the grandkids or even charities, and I can
add any charity. But if you're saying Todd that three
people that I want to add is two cousins and
a niece and a nephew or something or a new wife, Oh,
that's definitely out, or my new wife, the answer would

(36:56):
be no, you can't do that because they're not in
the class. Yeah. So, folks, these trusts are flexible but
do have some limitations. But for all of you, have
not planned one last time. It's the end of the month, folks.
If you're faced with nursing home care, please call and
get the guide eight six six eight four eight five

(37:18):
six nine to nine or Legal Exchange Show dot com.
Don't just write the check.

Speaker 2 (37:23):
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 questions so you won't be his next real
life stories. We've got lots more to come when we
return after this quick break on the Legal Exchange with
Todd Lets.

Speaker 1 (37:40):
Key changes to Medicaid occur almost every year, and if
you're not informed, your assets could be at risk, especially
if you or your spouse need nursing homecare. Cushing and
Dolan are experts and elder lom and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process, which is critically important if you're retired
or getting closer at time. The guide has important information

(38:02):
regarding numerous strategies that can protect your assets from the
nursing home. It could be your primary home, a vacation home,
or any rental property you may own. You've worked hard
to achieve wealth, so don't take chances when it comes
to protecting it. Get your copy of Cushing and Dolan's
brand new guide called Last Minute Medicaid Eligibility call right
Now eight six six eight four eight five six nine nine.

(38:22):
That's eight six six eight four eight five six nine nine,
or you can request it online by visiting Legal Exchange
Show dot com. That's Legal exchange show dot com. The
proceeding was paid for in The views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other and are not affiliated. Summers here, New England, and

(38:45):
it's the perfect time to trade the daily routine for
something extraordinary. Say hello to the US Virgin Islands, America's
Caribbean paradise. Explore the vibrant history and flavor of Saint Croix.
Lounge on the stunning beaches of Saint Thomas, or find
your piece on the quiet shores of Saint John. From
the moment you arrive, you'll feel it. You're naturally in

(39:06):
rhythm with the heartbeat of the islands. There's no passport needed,
no currency to exchange, just warm weather, clear blue water,
and unforgettable experiences waiting for you. Whether you're planning a
romantic escape, a family adventure, or a little of both,
this is the summer to make it happen. Go to
visit USVII dot com to learn more. In start planning,

(39:27):
that's visit USVII dot com. Your island getaway is closer
than you think. The US Virgin Islands, where summer never ends.
Book your trip today at visit USVII dot com.

Speaker 4 (39:41):
Artificial intelligence isn't just the future, it's already shaping how
people think about their money. Hi, this is Chuck Zada
from the Armstrong Advisory Group. We've put together a new
guide called AI in your Financial Plan. In it, we
explore the ways that AI is being used in financial technology,
from apps the track spending to tools that can help
identify trends. It's a rapidly changing space, and this guide

(40:05):
is designed to help you understand some of the potential
benefits and risks that AI may present. Want to learn more,
call eight hundred three nine three for zero zero one
and request your free copy of AI and your Financial Plan.
That's eight hundred three nine three for zero zero one,
or visit Armstrong Advisory dot com.

Speaker 1 (40:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. Your tune to the legal exchange with Todd Lutsky.
If you are a loved one needs a nursing homestay.

(40:47):
Call Todd right now at eight sixty six eight four
eight five, six nine nine and let him make sure
your assets are protected. That's eight sixty six eight four
eight five six nine nine. Or visit him online at
Legal Exchange show dot com.

Speaker 2 (41:01):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor 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. Todd, this guy that you're giving away
this month is all about last minute medicaid eligibility.

Speaker 3 (41:23):
We've talked about the process.

Speaker 2 (41:25):
Kind of bits and pieces here and there and what's
at risk and how to protect things last minute.

Speaker 3 (41:30):
But I don't feel as if we.

Speaker 2 (41:32):
Have recently walked through the actual medicaid application process and
what that actually looks like. So I thought I could
make up my own scenario and say, I, Susan am
calling you, Todd the attorney because my husband just went into.

Speaker 3 (41:53):
The nursing home. Yeah, how does that? Where do we start? Yeah?
That's it? Really well, we probably don't talk about it
because of how complicated it is. Yeah, and I want
people to know that it's a process. Doesn't mean we
don't do it all the time, and we do. And
it's really more work for us, yes, than it is
for you. Although in the beginning it's going to feel

(42:15):
like you, Susan, are going to be doing a lot
more for the.

Speaker 2 (42:19):
Child that's yeah, getting their parents.

Speaker 3 (42:22):
You need to help me, help you, Yes, in the
beginning is really what it comes down to. Because you know,
the first thing you need to do obviously is find
a lawyer. I mean, you got to call somebody, So
just get that out of the way, because try to
do this on your own, No, it's not going to work. Yeah,
can you fill out the application? Sure? Then deal with
the state, right and you know, we'll also have to

(42:43):
talk a little bit about the new BBB that passed
that had some changes in the medicaid world as well. Now,
the first thing you do is you obviously come in
and you would tell them. I would say, Susan, you
need to tell me all the assets.

Speaker 2 (42:58):
So let me just back up for one quick second.
Do I come in because my husband's going to be
going into the nursing home or do we come in
once someone is in the nursing home.

Speaker 3 (43:08):
Yeah, you know it would be if you know someone's
going in in the next thirty days. Okay, you're looking
looking for that home, but you know it's happening. Yeah,
you could come in.

Speaker 2 (43:18):
Okay, perfect, but not Hey, I think my dad might
need something down.

Speaker 3 (43:22):
The road in a year medicaid no, okay, But again,
depending on how much time you have, you might want
to come in and say, geez, do we want to
set up a trust and get a five year O
clock right? Or do we want to do a personal
care contract and maybe save money for a year. There's
some things you can do in that year. If you
think you only have a year before someone needs nursing
home care, yeah, there still might be something you can

(43:45):
put in place. A personal care contract comes to mind.

Speaker 2 (43:48):
Okay, but let's say, for the sake of this demonstration,
my husband is in the nursing home and I'm sitting
down with you.

Speaker 3 (43:56):
Where do we start? So we would start with assets, right,
So what are your ass that's and how are they owned? Now?
If you had some in a trust, great, those all
sort of be off the table. Yeah, I won't need
to look at those, but the ones that are either
not in a trust or if there's no trust, everything, yeah,
would need to be looked at. And I say that's
important because for a married couple.

Speaker 2 (44:15):
Everything, everything is jumped on the table.

Speaker 3 (44:18):
Right. It doesn't matter that you say, Todd, I've got
I'm the financial planner and the family, and I've got
all the assets in my name. I don't let my
husband see that stuff. I've got a tax free roth.
They can't get that, right, No, no, not true, not true.
So it won't matter whose names on the investment account,
or whose names on the bank account, or whose names
on the house. It's all one bah pile on the table. Okay.

Speaker 2 (44:41):
So we go through all my assets and we figure
out what's at risk amongst that pile of assets, and
then it's an actual application.

Speaker 3 (44:50):
Right, So let's do that first and foremost, we would
say your home would be not at risk because you're
living there soon and we're married. You're married, and it's
a primary residents and they're not going to lean it
and they're not going to take it. And now we're
left with a big stack of money. Yep, Now we walk.
You would reach into that big stack of money and
pull out. I'm going to say it changes every year.

(45:12):
It's approximately one hundred and fifty four thousand dollars of
money that you could literally pull out of that pile
and put into your bank account.

Speaker 2 (45:22):
Okay, everything else is mine not at risk.

Speaker 3 (45:25):
That's yours not at risk, along with your house. It's
not much. Good luck mine, good luck the rest of
your life. Good luck. So everything else in that pile
of money belongs to your husband, the six bouse, and
now we have to figure out what are we going
to do with that in order to get eligibility for him? Yep.

(45:48):
But try to take care of you a little please
and thank you as well, folks. That's what this guide
is all about this month again, end of the month.
It's the last chance to get it. When you're faced
with this situation situation, what is it that you can
do last minute to save assets. That's what Susan and
I are talking about in this hypothetical. It's exactly this

(46:09):
types of assets, countable versus non countable, married people versus
single people. Are there any transfers that I can make
and somehow avoid the five year waiting period? Now, yes
to all of those things, but you need to call
and get the guide and learn how so for people
who have planned people who have not planned. If you're
faced with going in a nursing home, it's the end

(46:30):
of the month, get this last minute Medicaid Eligibility 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 Exchange
Show dot com. Okay, so the house, we know that's
not at risk for me.

Speaker 2 (46:52):
Let's say I have an IRA and then everything else
is in like an after tax investment account.

Speaker 3 (46:58):
Okay, so it's your IRA, my IRA. So we would
have to probably do after we've pulled out the one fifty,
there's still money in your ERA and there's still money
on the table, we would probably have to do two
separate annuities, depending on your age. So assuming you're you,
and you are so let's you know, again, somebody probably

(47:21):
under eighty five. Depending on the size of the dollars
that we're talking about, all that matters, right, we would
probably buy an annuity, and we have to buy two, right,
one inside your IRA and one outside your IRA. The
reason we do that is we don't want to take
all the money from your IRA out to buy an annuity,

(47:42):
because then you have a huge income tax.

Speaker 1 (47:45):
Right.

Speaker 3 (47:45):
But if we leave it in there and you just
reinvest inside there, only the payout is going to be
taxable home run. So we buy this medicaid annuity, one inside,
one outside. I'd convert these excess assets everything over the
one fifty. Oh yeah, and by the way, folks, this

(48:06):
excess assets, these could be sitting in a joint account,
so we have to move them to the spouse. Ah,
permissible transfer transfers between spouses have no five year waiting period.
So now we got to move all those assets first
to you, of course not your eye, right, it's already
in your name, and then buy the two annuities.

Speaker 2 (48:26):
Okay, So you get my assets positioned so that when
we go to apply for medicaid for my husband, he will.

Speaker 3 (48:34):
Qualify for that. He will look now like he's got
two grand in the bank, okay, And you've got everything
else the way you need to have it, so that
you look like you have a house and less than
one fifty.

Speaker 2 (48:45):
So you filled up this application, I've given you information
about my assets. We position them. How long does this
whole process take.

Speaker 3 (48:53):
So you can already. Imagine just gathering assets, removing assets
between names, and buying the annuity. That's going to take
thirty days, right, that's okay. But the quicker you get
that annuity purchase, that's the day you're eligible. Now what
now we file? Okay, Now we wait thirty more days

(49:14):
for what the state to sort of sniff over what's
what you gave them? And by the way, there's a
lot more. You got to give five years worth of
bank statements, five years worth of investment accounts. You got
to provide social Security card, bank social Security card, birth certificate.
You need to provide three years worth of tax returns.
I mean, there's a lot you're doing to help me

(49:36):
help you. First, Yeah, you got a two foot tall
applications becomes really large, So you got to then provide
me all that information to support everything I put on
that application. Yeah, then file it and then thirty days
later they sniff it over and they're going to come
back and say, here's what we really need. Great, here's

(49:59):
what else we need, and then we have thirty days
to get that from you, and then we submit it
and then we wait again, and usually another thirty days
goes by and at that point, if all has gone well,
likely we will get the letter of eligibility saying your
dad in this case, your your husband is approved for Medicaid. Okay,

(50:22):
it's it's a proper process, folks. To do it on
your own and deal with the state is tough. Don't
do it. Learn how to save your assets last minute
from Medicaid situations. Call and get the guide end of
the month eight six six eight four eight five six
ninety nine or Legal Exchange show dot com. It is
the last chance to get it.

Speaker 2 (50:44):
Todd Letsky from the law firm of Pushing in Dolan,
thank you so much.

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

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

Speaker 1 (51:00):
Changes to Medicaid occur almost every year, and if you're
not informed, your assets could be at risk, especially if
you or your spouse need nursing home care. Cushing and
Dolan are experts in elder lam and their new guide
is called Last Minute Medicaid Eligibility. It'll help you understand
the Medicaid process, which is critically important if you're retired
or getting close to retiring. The guide has important information

(51:20):
regarding numerous strategies that can protect your assets from the
nursing home. It could be your primary home, a vacation home,
or any rental property you may own. You've worked hard
to achieve wealth, so don't take chances when it comes
to protecting it. Get your copy of Cushing and Dolan's
brand new guide called Last Minute Medicaid Eligibility Call right
Now eight sixty six eight four eight five six nine nine.

(51:40):
That's eight six six eight four eight five six nine nine,
or you can request it online by visiting Legal exchange
Show dot com. That's Legal exchange show dot com. The
proceeding was paid for in The views expressed are solely
those of Cushing and Dolan. Cushing and Dolan and or
Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other and are not affiliated.

Speaker 5 (52:00):
Artificial intelligence is constantly evolving and can even be a
revolutionary asset to a financial strategy.

Speaker 6 (52:06):
HI.

Speaker 5 (52:06):
This is Mike Armstrong from the Armstrong Advisory Group. Our
new guide is called AI and your Financial Plan. In it,
we explain how artificial intelligence continues to make inroads into
our daily lives and how the advent of its technologies
may affect an existing or future financial plan. AI serves
the public in a variety of ways, from apps to
monitor personal finances to tools that analyze investments. AI is

(52:28):
not the future anymore. Its effect is felt by businesses
of all kinds on a daily basis. Call us today
at eight hundred three nine three four zero zero one
and ask for your free guide. That number again is
eight hundred three nine three four zero zero one, or
you can request the guide online by visiting us at
Armstrong Advisory dot com.

Speaker 1 (52:45):
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. Summer's here, New England, and it's the perfect
time to trade the daily routine for something extraordinary. Say

(53:08):
hello to the US Virgin Islands, America's Caribbean paradise explore
the vibrant history and flavor of Saint Croix, lounge on
the stunning beaches of Saint Thomas, or find your peace
on the quiet shores of Saint John. From the moment
you arrive, you'll feel it. You're naturally in rhythm with
the heartbeat of the islands. There's no passport needed, no

(53:28):
currency to exchange, just warm weather, clear blue water, and
unforgettable experiences waiting for you. Whether you're planning a romantic escape,
a family adventure, or a little of both, this is
the summer to make it happen. Go to visit USVII
dot com to learn more. In start planning, that's visit
USVII dot com. Your island getaway is closer than you think,

(53:50):
the US Virgin Islands where summer never ends. Book your
trip today at visit USVII dot com.