How to stop the fighting after you pass

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, Tod Lutsky and Susan Powers.

Speaker 2 (00:37):
Welcome into Legal Exchange with Todd Latsky. 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 are you today?

Speaker 3 (00:52):
Well, I've been better, but we'll get through it.

Speaker 2 (00:55):
First time in what twenty years? You haven't said never better? Yeah,
all this does, You'll just have to keep your voice
up a little bit I'll turn your microphone up to.

Speaker 3 (01:03):
Wear a microphone up and hopefully you folks can struggle
through my voice challenge day. But we're gonna go to Iowa, nevertheless,
where we have an appellate tax court case, and we
went head over to Mississippi. In Iowa, there's a case
where there's a no contest clause, but was the challenge
in good faith or not in good faith? It involves

(01:24):
eight children and a will, and three of the children
had a little problem, and so they thought they'd challenge
the will. Good thing. There was a no contest clause
in or or was it a good thing? We'll see.
But we're also going to learn about no contest clauses,
how to use them, when to use them, how to

(01:45):
draft them. All of that is very important in drafting
your trusts and estates. Head over to Mississippi. Guardianship conservatorship
versus a power of attorney and a health care proxy
sounds like it's a heavyweight title fight, but it really isn't.
But they started off with health care proxies and powers

(02:09):
of attorney. Husband wife married fifty two years, yet one
of the children had a problem with how care was
being provided. Wow, So then they flipped it to guardianships
and conservatorships, and why would you do that when you
have a health care proxy and a power of attorney.
Will stay tuned because those are documents we don't talk

(02:29):
a lot about, but you know what, they're important, important
enough to go to court and litigate over. So folks,
that's one aspect of planning. The guide we're giving away
this month is balancing assets and protecting assets from a
state taxes at the same time. It's going to have

(02:50):
a whole set of documents in here about portability, how
to use it. Calculating your estate tax through revocable trusts.
Put in your own formula, put in your own estate
assets rather and do the calculation because we give you
all of the tables to do it. And you can
also learn how the trusts actually shelter assets on the

(03:12):
first death to provide protection and reduce taxes on the
second death. And then we have a whole similar thing,
but for irrevocable trusts and calculating how to save the
taxes while at the same time protecting the assets from
the nursing home. Those are for folks that have assets
maybe four million or less. Anyways, brand new guide for

(03:35):
the month. Call and get it. It's a great way
to understanding both revocable and irrevocable trusts. 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. Iowa, Iowa.

Speaker 2 (03:58):
Sounds good, Let's go.

Speaker 3 (03:59):
To Iowa, folks. There's no contest clause here. So Eugene
had eight kids Jeane, Diane, Karen, Leon, Lee, Cheryl, Lynn
and Roberts.

Speaker 2 (04:12):
For the family tree. There will not be a test
later will There.

Speaker 3 (04:14):
No, But I wanted to get those out there for you.

Speaker 2 (04:16):
Uh huh.

Speaker 3 (04:18):
Why the will provided for all the kids. Now, I
don't know if it's equal or not, but provided for
all the kids. Leon and Lee are the executors. So
the will also had a no contest clause in it
that said if you challenge it, you only get five
thousand dollars. Well that's interesting, okay, Well, Gene, Diane, and Karen,

(04:43):
three of the kids. They decided to file a contest
against the will, claiming that there was lack of capacity
by Eugene.

Speaker 2 (04:55):
And Eugene was the dad, the dad and.

Speaker 3 (05:00):
Object to undue influence from the other kids. All three
of them filed AFFI David's indicating that family members were
gossiping and making offhand gestures or suggestions that Leon and Lee,
remember they're the executors, they were involved in a scheme

(05:23):
to induce Eugene the dad to act on his estate
plan in ways that he didn't want to. Well, gossiping
and off hand suggestions is that enough? Well, Leon and
Lee filed motions to dismiss the claim and to enforce
the no contest clause. Well, the district court granted both motions,

(05:48):
and Jeane and Diane and Karen, of course were not happy, right,
so they appealed. The appellate court affirmed, stating that they
didn't challenge the will in good faith and they didn't
challenge the no contest clause in good place. They said
that they presented no genuine issue that Eugene lacked capacity

(06:12):
or was unduly influenced by his other kids. Therefore they lose,
which I think is probably right. If you don't you know,
if you have any proof of anything, If you can't
come up with good reasons, I think you got a problem.
But this is more about First of all, you have
eight kids and you only did a will. Scratching my head. Right,

(06:36):
But since the case is about no contest clauses, what
we're going to learn is about no contest clauses. First
of all, what are they? They're basically designed to say
that if you challenge the will or the trust. Folks,
let's pause here for a minute. If you're doing a
state planning and you have a will and a trust,

(06:57):
please make sure that you put the no contest language
in both the will and the trust. Don't forget one, right, Okay.
So once you put it in there, it's designed from
that point over to say you get nothing or, as

(07:17):
is the case here, some reduced them out if you
challenge it. Okay, now we know what it is drafting them. Well,
you can draft them in a way that says you
get a reduced amount or you get nothing. Both ways
are solid ways to draft it. Now, note if a
person challenging it is out altogether anyway, yep, Well, then

(07:40):
arguably they've got nothing to lose by trying.

Speaker 2 (07:42):
Right, So if you're not leaving things equally, then you
really need one of these no contest clauses.

Speaker 3 (07:48):
Right, we look at that, Susan, you jumped right to
my nextst.

Speaker 2 (07:51):
We've been doing this for twenty years together or something.

Speaker 3 (07:53):
The next question I have is, now that we understand
what it is and how to draft it, when do
you use it? Well, there's no harm in just using
it all the time. Just throw it in the trust
or in the will, because you just never know when
one kid might just you know, have a tiff and

(08:15):
aren't happy with something, and they might want to challenge.

Speaker 2 (08:20):
You might think your kids get along great, everyone's wonderful,
great relationships, but everything changes when you die and you
put that bag of money on the table. We've seen
it time and time again. You're right, yep, sad.

Speaker 3 (08:31):
So it's very true, and so I think anytime is fine. However,
absolutely use it if you're treating them differently in any way,
even if there's no harm here, Like you're saying, Look,
I want this particular house to go to this particular child,
but you know what, this other child can have this

(08:52):
vacation home, and this kid can have this rental home.
Even though your goal and your heart is not to
cause a fuss, those houses might not all be equal.
They would never be equal in value exactly, you know,
And so someone might say, well, you've got a bigger
house than I got. You know, that could cause a problem. So,

(09:13):
even when you're not thinking it's designed to be harmful
to any one kid or or love them any less,
it put the no contest cross in to prevent it,
and especially if you start putting different percentages on, right, Yeah,
then please put the no contest clause in. Now, some

(09:34):
questions exist, Do they work all the time? Mostly they do.
But you know what if somebody challenges the will simply
because they said you didn't have capacity, and it turns
out that no, you really didn't have capacity, well then
the will is invalid, right, And if the will is invalid,
that's not the donor's intent, and then the donor never
intended to have a no contest claus. Yeah, so you

(09:55):
got to be key, know, so I think that's an option.
But folks, get the guide. Learn about how both revocable
trusts and irrevocable trusts work in reducing your estate taxes,
and how to calculate your own estate tax liability. Call
and get the guide eight six six eight four eight
five six nine nine or Legal Exchange show dot com

(10:18):
and you can download it 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 Powers, a
financial advisor with the Armstrong Advisory Group. We've got much
more to come when we return to the legal exchange
with Todd 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 tax is 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 cushingan Dolan at eight six six eight four eight
five six ninety nine. That's eight sixty six eight four

(11:19):
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 expressed or so. Leaders of Cushing and Dolin, 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.

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Speaker 1 (12:33):
Today.

Speaker 6 (12:36):
At the Armstrong Advisory Group, we know that retirement might
not be the end of a career, but rather the
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to build together. Hi, this is Mike Armstrong, and the
way you plan as a team can make all the difference.
That's why we're offering a brand new free guide called
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(12:56):
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(13:18):
four zero zero one, or you can 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, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange with Todd Lunsky,
an expert in elder life planning and taxation. Need help

(13:43):
with your estate plan? Comp Todd right now and make
an appointment eight six six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.

Speaker 2 (13:53):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advice 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,
welcome back, Todd. Where are we headed now?

Speaker 3 (14:09):
We are going to head over to Mississippi. We have
an appellate court case there. Here it says we're dealing
with guardianships, conservatorships versus powers of attorney and healthcare proxies.
You don't really hear this much, but I thought this
was interesting. So Maddie and Willie Mayberry. Yeah, I know.

Speaker 2 (14:31):
This sounds completely made up, Just so you know.

Speaker 3 (14:35):
They're married for fifty two years. Twenty sixteen, they travel
to California to stay with their daughter, Lisa. I assume
it's a first marriage. While Willie participated in some trial
tests for Alzheimer's. Well, Maddie and Willie while they were there,
they executed a healthcare directive and a power of attorney.

(14:59):
Not sure why after fifty two years of Mary's they
decided finally to do that, but that's.

Speaker 2 (15:04):
Probably advice from doctors at that point. I would think.

Speaker 3 (15:07):
That's neither here nor there. Yeah, and they appointed Lisa
as their attorney. In fact, right off the bat, that
scratch makes me scratch my head. Right, Why is it
not each other?

Speaker 2 (15:17):
Right? First, well, I could understand not him because he's declining.

Speaker 3 (15:21):
But maybe she should be his. I think early Alzheimer's
still good. Yeah, I mean it doesn't mean anyways. First
head scratcher. Next, Maddie continued to serve as Willie's primary caregiver.
Makes sense. They've been married fifty two years. Matty and
Lisa started having disagreements over Willie's care, and it got

(15:44):
so bad that that they moved back to Mississippi. The
disagreements continued, but Maddie continued to be Willie's primary care provider.
Mattie then filed a petition to become Willie's guardian and
conative because she just wanted she was going to continue
to be the primary caregiver because she sees him every

(16:05):
day and wanted more control over what was happening in
her own home. Hmm, okay, so she gets rid of
the health care proxy and the power of attorney by
becoming a conservator and a guardian. Lisa objected to this approach,
which you're allowed to object to this, and Willy's brother

(16:29):
and sister, who by the way, also had tough relationship
with Maddie really fifty two years of marriage, they joined
in the court found Willie. Remember Willie's the wife. I'm
sorry Mattie's the wife husband. Yeah, the court found Willie
needed a guardian and a conservator, and Maddie was in

(16:53):
the best position to provide care and make financial decisions. Yeah,
so the court said you get to be his provider
for financial and medical decisions, Maddie, which makes sense. It's
been married for fifty two years. The appellate court affirms, saying
basically saying that Maddie was in the best position and

(17:16):
found it to be problematic that Lisa was actually making
decisions without consulting Maddie.

Speaker 2 (17:24):
Yeah her, Yeah, maybe not Lisa's mother. It sounds like
it might have been even though it was fifty two years,
might have been a second marriage, but.

Speaker 3 (17:33):
Maybe there's no indication of that in the fact.

Speaker 2 (17:35):
Actually, you to do more digging on the tea so
you can spill the tea properly. I need some juicy
details on the backstory of these cases.

Speaker 3 (17:42):
I don't have the backstory for this one, but I
do think we have the right decision, and I think
we need to spend a few minutes and we're going
to sort of learning why we have powers of attorney
healthcare proxies and how they compete with guardianships and conservator ships.

(18:02):
Before we do that, we're going to let you call
and get the guide for your balancing, asset protection and
avoiding estate taxes. It basically gives you the pros and
cons of portability, helps you understand what these exemptions are
that we talk so much about. It explains the remainder
share and the marital share. We talk about those shares

(18:24):
sheltering assets for a state taxes all the time, but
you really need to understand how they do it. This
guide will do that for you. It does the exact
same thing for irrevocable trusts and explains the differences Those
marital shares and remainder shares work, but they're drafted a
little differently and in both cases. It gives you all

(18:46):
the tables to calculate your estate tax, so you can
find out exactly how much your own estate tax is
and then pick which trust is right for you. Revocable
or irrevocable. Call and get the guide eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com again eight sixty six eight four eight

(19:07):
five six nine nine or Legal Exchange Show dot Com.

Speaker 2 (19:13):
Let's start with powers of attorney very important documents.

Speaker 3 (19:16):
It is very It allows somebody to appoint somebody else
to make all kinds of financial decisions. Pay bills, make gifts,
change powers, change designated beneficiaries, on iras, transfer real estate,
you name it. You generally appoint each other husband and wife.

(19:39):
Why Willie and Maddie didn't appoint each other. I get it,
he had alzheimerspends how bad it is, But all right,
so they put Lisa on. It's okay to have a
child as an alternate. But again, it's good to trust.

Speaker 2 (19:50):
That your backup.

Speaker 3 (19:51):
It's a backup. Yeah, But in this case, as you
pointed out, Susan, that maybe you needed to you know,
Lisa on as the primary.

Speaker 2 (20:04):
Well, I would think Lisa for the wife, not the husband,
like the wife being the primary for the husband.

Speaker 3 (20:09):
I was just thinking, that's a really good point. Why
wouldn't So this whole Lisa thing is a misunderstanding for me.
So I guess my advice to you is, don't do that, right,
put husband and wife on and put a child as
an alternate, and remember they're changeable. You can change them.
Anytime you start having problems with a child, remove them. Yep.

Speaker 2 (20:31):
Okay, And these documents like you can do stuff for
people financially. Anything they can do financially, you can do
within reason if it's in the document, but they are.
You don't have to be incompetent. So if you're my
power of attorney Todd, you can step in. Even if
I'm competent. You really gotta trust the person. That's exactly no,

(20:53):
that they can act on your behalf.

Speaker 3 (20:55):
With the power of attorney. They take effect immediately. Yeah,
you're absolutely right, Susan. And they survive you're incapacity, but
not your death. So so many people think they'll come
in and they'll say, my dad just died, but I'm
going to run down to the bank with my power
of attorney and change. No, they end immediately when you end. Okay,

(21:18):
healthcare proxy a little different. You can only have one
at a time. Certainly it should have been each other
or at least not les for him. And you make
medical decisions for this person, all kinds of medical decisions,
not just you know, pulling a plug, all kinds which

(21:42):
apparently he needed.

Speaker 2 (21:44):
Yeah here, and does that take effect immediately, like the
power of attorney Todd.

Speaker 3 (21:48):
Yeah, And that's very different than the power of attorney
So the great point there is that those do not
actually take effect until the person who needs the care
has lost capacity.

Speaker 2 (22:00):
Okay, so you're unable to make a decision for yourself.

Speaker 3 (22:02):
Always want to be making it yourself first. Perhaps he's
gotten to that point right and she could make the decisions,
and you always want somebody close by local when you're
doing geographically local. Okay, So those are two great.

Speaker 2 (22:20):
To both of those, the healthcare and the power of attorney.

Speaker 3 (22:23):
You got a little more leeway with the power of
attorney because today with phones and facts is and emails,
you can do all kinds of stuff. Guardianships and conservatorships.
In this case you got to go to court. A
guardianship is something that you get over the individual, over
the person to make decisions for the person, Like health care.

(22:46):
Conservatorships are designed to make financial decisions for the person. Okay.
So the conservatorship would sort of kick out the power
of attorney. You'd overrule the power of attorney, and the
guardianship would overrule the healthcare proxy. Why would you do it?
You don't do this generally. You do it though, if

(23:06):
you've got a contentious situation, if she's worried that every
time she makes a financial decision, this daughter might be
challenging her. Better to have the court supervision to protect you, folks,
Call and get the guide. Learn how to protect yourself
from a state taxes and understand how these trusts work

(23:26):
eight six six, eight four, eight, five six nine nine,
or go to our website Legal Exchange Show dot com
and you can download it right there.

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

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. 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

(24:13):
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

(24:35):
four eight five six nine nine, or you can request
it online at Legal exchangshow dot com. That's Legal exchange
show dot com. The proceeding was paid for in the
use expressed or so lead those 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 6 (24:52):
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 gues 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

(25:13):
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

(25:35):
request it online at Armstrong advisory dot com.

Speaker 1 (25:38):
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
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Speaker 1 (27:25):
You're listening to the Legal Exchange, and it's time for
Ask Todd, the segment where Tod 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 (27:40):
Welcome back, Todd. We have a few questions from listeners
for you. First question comes from Susan in Wooster, mass
So not me. Susan writes, my husband and I are
thinking about retiring to Florida.

Speaker 3 (27:54):
We are I do right.

Speaker 2 (27:57):
We have irrevocable trusts. Now if we move, will we
need to start over with a new trust? What happens
if we moved to Florida. Will our property in Massachusetts
still be protected for the nursing home and taxes? So
it sounds like they're going to be snowbirds and keep
the property in mass and a property in Florida.

Speaker 3 (28:16):
So there's a lot of stuff going on in this
in this question. You know, first residency issues, second ongoing
state planning, Yeah, tax issues. So can you move? Sure?
Good idea, We promoted that earlier. The irrevocable trust tells

(28:38):
me that the value of their overall estate was probably
under four million, if I had to guess, sure, because
they did these irrevocable medicaid trusts. So now when they move,
just should they? You know, when you're moving, you've got
to think about changing residency and how do you effectively
do that?

Speaker 2 (28:58):
Right, because when they did their trust, there mass Chusetts
residents and now they're going to be Florida residents.

Speaker 3 (29:03):
So because you don't want to be taxed in mass
you want to make sure you're a Florida resident, Okay,
and so change your voter registration, driver's license, you know,
file your tax returns with that address. Federally, everything been
six months in a day and by the way, just
not in mass You can be other places, just not

(29:24):
in mass six months in a day, because you might
go to Europe for a month, you might go to
visit your family day. Yeah, so just make sure you
meet the requirements of the state that you're in. Yeah,
for residency. Another thing you might want to change as
another arrow in your quiver would be these are state

(29:46):
planning documents, but not the trusts. So basically the will,
the health care proxy, the power of attorney, you know, hippa.
There's forms that are state specific. So everybody's power of
attorney is different. They have every state is yeah, very different.
Some fall under the uniform uniform Durable Power of Attorney Act,

(30:09):
but most of them are different. And so that shows
your intent to be a Florida resident and they're inexpensive.
That's not a big change. The trust, on the other hand,
can stay, It goes with you. It doesn't have to
be modified.

Speaker 2 (30:28):
So more built on federal than state specific.

Speaker 3 (30:31):
Right, you could leave that state. You could leave it
governed by the laws of Massachusetts if you want, doesn't.

Speaker 2 (30:37):
Matter, that doesn't make it taxable.

Speaker 3 (30:39):
Or you could simply change the situs of the trust.

Speaker 2 (30:42):
What state governs it.

Speaker 3 (30:44):
Right, just saying governed by the laws of you know, Florida,
Florida whatever. Yeah, non important. The important thing is your
trust goes with you now that you've got your residency changed,
and you now know that you kept your irrevocable trust,
so that tells us that you don't reset your five
year waiting period and you're still protected from the nursing

(31:04):
home because it's the same trust. And for medicaid purposes,
the laws are federal Medicaid implemented by the states. So
I think you're fine. There. A little bit more to
talk about on the residency side. If you're keeping your
house in Massachusetts, even though it's in an irrevocable trust,

(31:27):
still kind of deemed yours, Massachusetts will tax you on
property in the state you're a Florida resident, even if
you're a non resident, it is. But you can fix
that by putting that house in a limited liability.

Speaker 2 (31:46):
Company, so into an LLC.

Speaker 3 (31:48):
Okay, And now you've converted it into an intangible, which
is stock, and Massachusetts cannot tax non residents on intangibles,
only on estate, so that will get you there, and
that will solve the problem. So please do that when
you when you make that switch. Now, that said, I

(32:12):
think they're they're in good shape. Now you're now you're
a non resident, You're not going to be taxed in
mass and that's all you need to know. Excellent, But
you do need to know one other thing, protecting assets
from the nursing home and balancing your estate taxes, which
is what this guy is all about this month. It
explains to you what portability of exemptions are, the pros

(32:32):
and cons. It explains to you how these exemptions work.
We talk about them and we throw out words like
marital shares and remainder shares, but this actually explains how
those buckets work, how they protect assets from taxation in
the when the surviving spouse dies, and so it helps

(32:53):
you understand that. And it does the same thing with
irrevocable trusts and explains how to draft and how those
remainder shares and marital shares differ but also provide the
protection from state taxes while also protecting it from nursing homes.
So call and get the guide and then you can
also show you all the guides to calculate your tax

(33:14):
in there 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 (33:29):
Our last question comes from Jennifer and fall River, and
Jennifer writes, if we put our home and investments into
an irrevocable trust for medicaid planning, do we lose all control?
Can we still live in the house and manage the investments?
Can our kids kick us out of the house if
they decide to sell it. People are truly afraid of
having no control and just handing over the reins.

Speaker 3 (33:53):
They are susan and I'm going to say they are.
But I'm also going to tell you that over the years,
I'm finding it better of finding clients coming in a
little less.

Speaker 2 (34:05):
Because our listeners about it.

Speaker 3 (34:07):
Maybe maybe also, I think our discussion to everybody about
the Foinier case, which came down maybe in twenty sixteen
or twenty twenty, rather somewhere around there where the Supreme
Court of the State, you know, blessed these trusts and
that they do work. It's been helpful and helpful, and

(34:31):
so in this case, you're not going to lose control, right,
You're going to still be ninety eight percent in charge.
If I had to throw out a number to help
people understand. So let's run through and tick off what
the questions were. It's one thing to say you're in control.

(34:51):
It's another to give an example. Can we still live
in the house, Yes, as long as you want and
manage the invent Yes. And maybe you can tell them
even though you're not trustee on the trust, as donor,
you can get some kind of limited trading.

Speaker 4 (35:09):
Yeah.

Speaker 2 (35:10):
Yeah, yeah, So we still work with the moms and
dads of the worlds the donors of the trust, to
do reviews and talk about investments and so forth. Now
the trustee typically the kids or whomever, they're the ones
signing the paperwork to just set up the accounts. But
we're still meeting with mom and dad, right, So that
doesn't absolutely so so so.

Speaker 3 (35:33):
Then the answer is right, you heard it from Susan. Yes,
you're still in charge of managing your investments. You're in
charge of living in your house. And then you know,
they come back and they say, you know, can you
kick us out if they decide to sell.

Speaker 2 (35:46):
It, Because if they get that tax bill, they get
the real estate tax bill or the water and sewer bill,
and their child the trustee's name is on that bill.
And they think, oh, my son owns the house.

Speaker 3 (35:58):
They do. I get to call all the time that
I see my name. No, keep reading, it's got the
name Comma trustee. Yeah, so that's just the title that
they have. They are not the owner of the assets
and the trust, the trust is the owner. And you've
got to make that clear when you talk to clients.

(36:19):
The trust is the owner. And so that said, yes,
you can live in your house, and no, they can't
kick you out. So let's go through this example. What
if they want to sell it, Well, if they can
sell it, they're the trustees, but you just remove them
as trustee and that would be the end of the sale.

(36:41):
As soon as you see the for sale sign go up,
you're done. So, folks, you really are in control. But
call and get the guide you can learn about revocable trusts.
An irrevocable trust really explains to you how these buckets work,
the marital share, the remainder share, and help you understand
how to calculate your own estate eight six six eight

(37:02):
four eight five six nine to nine or Legal exchange
show dot com.

Speaker 2 (37:08):
If you have a question you would like to ask Todd,
visit his website Legal Exchange show dot Com and click
on the ask Tod tab. Maybe I'll be able to
read your question on the air, and hopefully his answer
will stop you from becoming one of his next real
life stories. You've been listening to Todd Lutsky, a partner
with the law firm of Cushing and Dolan. I'm Susan

(37:28):
Power as a financial advisor with the Armstrong Advisory Group.
We'll be back with more after this quick break on
the Legal Exchange with Todd Lutsky.

Speaker 1 (37:37):
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. Cushian 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 clear picture of your estate tax exposure. The guide
also breaks down real options that may help you reduce
or even eliminate your estate tax is 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 exchangshow
dot com. The proceeding was paid for in the views
expressed or so leados 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 4 (38:38):
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(39:17):
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Speaker 4 (39:32):
Please visit DAV five k dot Boston to show your
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Speaker 6 (39:39):
At the Armstrong Advisory Group, we know that retirement might
not be the end of a career, but rather the
start of a new chapter. You and your spouse get
to build together. Hi, this is Mike Armstrong and the
way you plan as a team can make all the difference.
That's why we're offering a brand new free guide called
Retirement Planning for Spouses. It covers real issues couples face,
how much income you'll need, where you want to live,

(39:59):
how you'll spend your time, and how to make sure
the surviving spouse is protected long term retirement planning isn't
one size fits all, and this guide may help you
start building a plan that fits both partners, both goals,
and both futures. Call the Armstrong Advisory Group 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

(40:21):
four zero zero one, or you can request it online
at Armstrong Advisory dot com.

Speaker 1 (40:25):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. Your tune to the Legal Exchange with Todd Lutsky.
If you were a loved one needs a nursing homestay,
call Todd right now at eight six six eight four

(40:47):
eight five six nine nine and let him make sure
your assets are protected. That's eight six six eight for
eight five six nine nine, or visit him online at
Legal Exchange Show dot com.

Speaker 2 (40:59):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers of financial Advisor with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with a law firm of Cushing and Dolan, with a
master's in taxation. Todd, your guide this month is all
about balancing, asset protection and avoiding estate taxes. So let's

(41:21):
start with the first part of that, which is the
avoiding the estate tax part. Two things you need to
consider can consider when it comes to a state taxes.
You've got the federal estate tax and then you've got
state a state tax R which is different in every state. Yes,
some of them are the same, but it's different for
every state, and some most have none right, which is

(41:42):
nice except for here in Massa Chusetts tax a chuse it.

Speaker 3 (41:45):
We got the taxes.

Speaker 2 (41:46):
Let's start with the federal. How large of an estate
do you have to have before you pay federal estate taxes?

Speaker 3 (41:55):
So the guide always and we always talk a lot
about exemptions, right and how they work and what they are.
But in this case this guide really explains them. But
let me let me explain what they are. The federal
exemption as of January one, twenty six, twenty twenty six
will be fifteen million. Now, what is an exemption. An

(42:21):
exemption is the amount of assets that you're able to
pass to someone other than a spouse and not pay tax.
So fifteen million to kids, go over that, and there's
a forty percent tax.

Speaker 2 (42:38):
Hit on anything over the fifteen million correct.

Speaker 3 (42:41):
Worth correct, But to a spouse it's unlimited, okay, okay,
which isn't helpful. It's unlimited, okay.

Speaker 2 (42:51):
So if you don't do anything, it goes to your
spouse basically, I mean just for if you're not planning, Yeah,
without any formal planning.

Speaker 3 (43:00):
Jointly held, it'll probably go to the spouse.

Speaker 2 (43:02):
So does that mean if you do your trust planning
you're put in a state plan in place. You could
have a married couple worth thirty million before you're paying
federal estate taxes if you do things right.

Speaker 3 (43:15):
You could, and you're absolutely right. You've got to make
sure that you actually do some trust planning in order
to actually get the use of the exemption. There's things
called portability, and but you know, you still have to
do something to take advantage of portability, so it doesn't
happen automatically. So if you don't use your exemption. You

(43:35):
could poured it over to the surviving spouse, but it
does not happen automatically. You're going to have to make
an election when you when one spouse dies, and if
you've never done any planning, likely you don't even know
to make that election.

Speaker 2 (43:49):
Right, there are things. I mean, you're that high net worth,
you would hope, but yeah, I'm sure you've seen folks
that are that high net worth that have nothing in place.

Speaker 3 (43:56):
Yeah, I have, I have. Yeah, So that's a that's
an issue. That's okay, that's federal.

Speaker 2 (44:02):
For most people, Federal will never be an issue inconceivable
to them that they would even come close for most
folks listening. So let's talk about state estate taxes because
that's something that we all need to consider. So here
in Massachusetts, how much money can you have in your
estate without paying any Massachusetts estate taxes?

Speaker 3 (44:26):
So the exemption in mass is now higher than it
used to be, but it's two million, okay, and that's
two million again per person, right, per per spouse, Not
so I say per spouse, but it's per person. But
you kind of need to be married in order to
get the exemption. Same federally right to double the exemption.

(44:48):
Yeah right, So if you're married and you do the
planning that you talk with which is key, which is
the trust planning, then this will work and you can
shelter four million, share one real life story with you.
Client comes in and it works for federal too. Remember
thirty nine million. He has two kids, brings his significant

(45:11):
other of thirty years, not married, two kids. I explained
to him in no uncertain terms that if you get married,
I can save you about twenty million dollars in a
state taxes. Wow, we're going to the courthouse, he we are.

Speaker 2 (45:31):
And the kids are going to give me away.

Speaker 3 (45:33):
But that's that's what matters, right. That marriage made a
difference to them in being able to double these exemptions
federally fifteen to thirty and then to the state four.
So folks get the guide. This is what this guide
is about. It discusses portability, It discusses the pros and
cons of it. It describes how you get it right,

(45:56):
what elections you have to make, and it really helps
you understand the exemptions both federal and state. It talks
about the marital share and the remainder share inside a
revocable trust, so you can learn about that. It gives
you the tax calculations. It gives you the tables to
calculate your own estate tax. Put your own formula in

(46:16):
and your own assets and you could learn how to
calculate what tax would be for you both federal and state.
And it also explains these exact shares under a remainder
share marital share for a irrevocable trust. So folks, great idea,
learn which trust is right for you and what your
tax liability is. Get this guide eight sixty six eight

(46:40):
four eight five six nine nine or Legal Exchange Show
dot com. You can download it there eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com.

Speaker 2 (46:52):
I think one of the most important takeaways for listeners
today Todd is in order to maximize the amount of
your estate that you are not paying taxes on, you
need to have a plan in place. So can we
walk through an example of a married couple. Let's put
them right at that max at four million dollars four million?

(47:13):
What does it look like if they do no planning
and the one spouse dies and then things move, and
then the second spouse dies. Can you walk through that
example no planning in place? Whatsoever, and just assume everything's
joint beneficiaries each other and so forth.

Speaker 3 (47:32):
And for all of you listening, this might affect a
lot of you. You say, yeah, I'm married, Yeah, I
own everything joint my house, my vacation home, our investment account,
I have my IRA that designated beneficiaries, my spouse.

Speaker 2 (47:44):
Life insurance, the spouse.

Speaker 3 (47:46):
Yeah, these are all normal, typical things that you would have.
And so one spouse dies, I haven't done anything, you said, geez,
I didn't even do a will. That's okay, you avoided.

Speaker 2 (48:01):
He wants to go to probate nobody.

Speaker 3 (48:03):
Big kudos to you. But all the assets went to
the spouse. Remember earlier, when I was describing the exemption,
I said that you can leave an unlimited amount of
assets to a spouse. The exemption really applies to leaving
assets to someone other than a spouse. Okay, so we
certainly don't want to disinherit a spouse, and that's where

(48:24):
the trust going. But in this case, you can leave
the whole four million to your spouse or two million.
However it's set up yep, and there's no Massachusetts of
state tax and no federal state tax.

Speaker 2 (48:37):
So convenient and you avoided no hassle, no probate, no
tax returns. Absolutely right, everything goes to the spouse. What's
the problem with that?

Speaker 3 (48:46):
So now the spouse lives a while, and let's say
the estate grows to five million and the espouse dies
orth five million. What's the Massachusetts exemption two million? There
is two million that you had for your first spouse,
but you wasted that. You didn't use it, and for

(49:07):
state purposes, and this is important, portability does not apply.

Speaker 2 (49:12):
So you don't get that coupon.

Speaker 3 (49:14):
You don't get there if nothing was Yeah, you don't
get a coupon to come over. Yeah. So the old
adage is if you don't use it, you lose it.
For mass And so now four million five million minus
two million is three million. The tax on three million
is every bit of ten percent, So call it three

(49:35):
hundred thousand dollars. Wow, So there's a three hundred thousand
dollars liability to the state.

Speaker 2 (49:40):
And how is that different if they did their trust planning?

Speaker 3 (49:44):
So with the trust planning, we want to carve out
two million on the first death. We don't want to
disinherit our spouse, we don't want to leave it to
the kids, but by pulling it into this remainder share,
which again we talk about it all the time. This
remainder share holds the asset for the benefit of the
surviving spouse, but includes it in the estate of the

(50:07):
first to die, subjecting it to tax, but not having
a taxed when the survivor dies. So no tax on
the first death because you have a two million dollar
exemption to gobble up, and no tax on the second
death if she dies with the other two million. So
folks call and get the guide and really understand how

(50:27):
these exemptions work and calculate your own estate tax and
figure out which trust revocable or your vocal is right
for you eight six six eight four eight five six
nine nine or Legal Exchange show dot com.

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

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

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

Speaker 1 (51:00):
If you're retired or getting close, now's the perfect time
to take a fresh look at your estate.

Speaker 3 (51:04):
Plan.

Speaker 1 (51:04):
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 clearer picture of your estate tax exposure.
The guide also breaks down real options that may help

(51:26):
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 four eight five six nine nine, or you
can request it online at legal exchainshow dot com. That's

(51:49):
legal exchange show dot com. The proceeding was paid for
in the use expressed or so legos of Cushing and Dolin.
Cushing and Dolan in or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other and are not a fit.

Speaker 6 (52:00):
If 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,

(52:20):
being aware 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

(52:43):
you can request it online at 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 may contact you to offer investment
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