Incorporating your business into your estate plan

Episode Transcript

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

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

Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Latsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation.

Speaker 3 (00:50):
Welcome Todd. How are you today?

Speaker 4 (00:52):
I'm never better in you.

Speaker 3 (00:53):
I am great? Thank you. What do you have for
us today?

Speaker 4 (00:56):
I got two things. We've got a Missouri case out
of an appellate case in Missouri, basically, when do you
exercise your option to purchase real estate and how to
go about doing it. Basically, it's a great case about
how to deal with real estate in your estate plan,
giving somebody a first right of refusal, giving somebody a

(01:18):
purchase option, making sure you actually exercise and if you
don't do it, what happens? I mean, there's right, But
it's a really great case to learn not only from
this fact pattern, but how we can make sure you
take care of your real estate with your family and
a lot of people along the way. So really I
found it to be an interesting case. And then I

(01:39):
have one an Illinois appellate court case undue influence by
a spouse really or not? And then basically what's the
attorney's role in drafting this and is the attorney responsible
for the undue influence aspects of it? So it's just
an interesting case where where you know, the husband leaves

(02:01):
assets in a business which is important to you know,
siblings because the spouse wasn't involved in and later leaves
it to the spouse, and you know, is that the
best thing to do with a business interest? Right? And
we're going to talk about the problems that arose in
this case. But more importantly, how do we fix those problems? So,

(02:22):
especially when you have a business and leaving that in
your family's estate plan, what's the best way to transition
to business? Not always easy either way, folks, lots to
talk about today, and we, of course, we are dealing
with our brand new guide. The guide has never been
given away before. It's except for last week, exce for

(02:42):
last week in the week before that week, but it
is new for the month, no month before this. It's
the simplicity of joint revocable trusts. And that's really the
key to the words simplicity. You can actually put all
your assets in one trust. You don't have to divide
them between a husband and wan life. You don't have
to worry about you know, when operating it, you're both

(03:05):
going to be trustees, one growing more than another. You
also are able to cram down a lot more assets
on the first death than you can if you separate
them between two trusts, therefore sheltering more assets for a
state tax purposes. There's also a way of getting a
full step up in basis on all the assets on
the first death, and then maybe depending on what you do,

(03:26):
a second step up in basis. So, folks, it's really
an easy way to do your estate plan and you
can get more really bang for your estate tax planning dollar.
Learn how to do this Get the guide eight six
six eight four eight five six nine nine or Legal
Exchange Show dot com again eight six six eight four

(03:49):
eight five six nine nine or Legal Exchange Show dot com.
Let's head over to Missouri.

Speaker 3 (03:58):
So what do we got have and some shady spouses.

Speaker 4 (04:02):
Well, now this one is the exercising the option to
purchase real estates first, but we're going to get to
the shady spouse too. So Ann died in May of
twenty sixteen, leaving five kids. June twenty sixteen, they admitted
the will to probate. The real estate was left equally
to the kids, but they gave Dennis the first option

(04:24):
to purchase the property, but he needed to provide timely
notice in writing of his desire to exercise the option,
which makes sense. You don't want to leave property lingering, sure, right,
the time was one year. Well, Dennis did provide timely
notice to exercise the option September twenty sixteen. A few
months later, two sisters, Cecil and Teresa, contested the will,

(04:48):
specifically the first right to purchase that Dennis had. They
didn't like that. The probate courts stayed the sale until
the outcome of the will context.

Speaker 3 (04:57):
What does that mean? They put a pin in it, put.

Speaker 4 (04:59):
A hold on it. Hold on if you can't, they're
going to stay the sale. You can't do anything until
we've finished this will contest. Okay, that's fine. October twenty
twenty two. Whoa wow, it's a lot of years later.
Years later, the will contest concludes. Okay, May twenty twenty four.
What row? The estate filed a hearing and a petition

(05:20):
to sell the property. The sisters objected, and they argued
that it was not done timely within one year. Court agreed. Yep. Well,
as you might imagine, Dennis appealed and the appellate court affirmed.
It stated that you do not need a separate order
to lift the stay on the sale of real estate.

(05:43):
The court order was clear. It said that the sale
will be held until the resolution of the will contest,
and that concluded in October of twenty twenty two. Thereby,
Dennis had until October of twenty twenty three to complete
the sale. Yeah, he failed to do so. Therefore the

(06:05):
power to buy.

Speaker 3 (06:06):
Failed after all that time and fighting, all.

Speaker 4 (06:08):
That time and fighting caused him to sort of get
off this. Yeah, get you get off track, right, yeah,
and so you forget about it. And then that many
years later. And so at the end of the day,
they lost, but they won, they sure did. Yeah, they
lost because there was you know, he did have this
right to do this. There was no problem with the will,

(06:29):
There was no will contact, there was no problem with
the drafting of the will, and so it should have
been allowed. But they ended up didn't do it. He
didn't do it, So they ended up losing but winning,
and he lost the whole way around. Right now, I mean,
we don't mean to laugh at that, but it's like,
this is what this is what happens when you have

(06:50):
problems with your estate plan. So we're going to take
a few minutes and learn from this.

Speaker 2 (06:55):
Yeah, because you have lots of clients that have said, hey,
I want, you know, Billy to be able to buy
this house because he's renting it from us now or whatever.

Speaker 3 (07:02):
There is a refusal. You have a lot of those.

Speaker 4 (07:05):
Or some kids just need a place to live, some
kids want a certain piece property. So property is really tricky, right,
and I say, you really need a trust for this, right,
and so let's just run through some options right here.
The will, you know, has to go to probate. But remember,
if you have real estate, you know, in multiple states,

(07:26):
you're now going to have to go to probate in
multiple states. You're going to have to file an ancillary
probate in every state where you own property. So when
I say a will is not the way to go
with real estate because a trust avoids probate, yeah, but
this particular asset could help you avoid probate in multiple places. Yeah,

(07:46):
so real estate is really a reason to have a
trust and avoid probate. Second option. You know, if you
simply want to treat all kids equally, well, then it's
pretty easy. You do our language that says all property
is sold unless you all want it.

Speaker 1 (08:01):
Right.

Speaker 4 (08:02):
If you all want it, then you get it. If
anyone doesn't want it, then that person. The people who
do want it, get to buy out the interest of
the people who don't at fair market value in a
set timetable.

Speaker 5 (08:16):
M hm.

Speaker 4 (08:18):
Again, the kids aren't fighting, and every bucket is filled equally,
no problem, no headache. You never know where the kids
heads are going to be at when you die. Now,
if you want one of them to get the house, well,
then yes, you need this first rate you know of
refusal to allow you know, but really make sure that
the child either has enough money to buy out the
others or to keep things equal. You know, you can

(08:41):
you can have that person qualify for a mortgage. So
when you're doing that, you got to make sure you
have the money.

Speaker 2 (08:47):
So in this case, Todd, the sisters can tested the will.
Would they still have that option if it weren't a trust.

Speaker 4 (08:56):
To contest the trust?

Speaker 3 (08:57):
The trust?

Speaker 4 (08:58):
You can always file a will contest, that's true. Yeah, always,
But when you start doing things like this, when you
start allocating things differently, you need a will. You need
a no contest clause. And that would be the way
to go because if you put the no contest clause in,
then they wouldn't contest because they're going to lose whatever
they would have got.

Speaker 3 (09:13):
Perfect.

Speaker 4 (09:13):
So that's a great, great idea. Now, another way to
do it is you know, and if you're not you know,
so that's the writer first refusal, and then you know,
if you're if it's not going to be held in trust,
Let's say one kid gets the right to live there. Well,
we just want that child to live there because they
have nowhere to live.

Speaker 3 (09:30):
Not necessarily own it.

Speaker 4 (09:31):
Yeah, they don't have to own it, but they got
to pay all the maintenance, all the upkeep, all the taxes, expenses,
and put teeth in there. You know, if you're over
ninety days, if you move out, if you have a
bill that's not paid for ninety days, you lose it.
If you move out for six consecutive months, if you die,
and then it gets added to the balance and everybody
shares equally. So there's plenty of ways to treat things

(09:51):
when you're dealing with real estate, but you need a
trust to do it, and you need to make sure
that you spell out how you're going to do it,
especially if going to leave one app one real estate
to one kit and one to another. Folks, call and
get the guide. The trust, the simplicity of joint revocable
trust will not only do your estate planning, it will
help you with your real estate eight six six eight

(10:12):
four eight five six ninety nine or Legal Exchange show
dot com and you can download the guide right there.

Speaker 2 (10:19):
You've been listening to Todd Lutsky a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. We've got much
more to come when we return to the legal exchange
with Todd Lutski.

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

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

(11:18):
five six ninety nine or requested online from our website
Legal Exchange Show dot com. The proceeding was paid for
in The views expressed are solely those of Cushing and Dolan.
Cushing and Dolan into or Armstrong Advisory may contact you
offering legal investment services. Cushing and Dolan in Armstrong Advisory
do not endorse each other in are not affiliated.

Speaker 5 (11:34):
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HI.

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(12:01):
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or you can request the guide at Armstrong Advisory dot com.

Speaker 1 (12:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
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Speaker 1 (13:35):
You're listening to the Legal Exchange with Todd Lunsky, an
expert in elder life planning and taxation. Need help with
your estate plan contid right now and make an appointment
eight sixty six eight four eight five six ninety nine.
That's eight sixty six eight four eight five six ninety nine.

Speaker 2 (13:52):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Power as a financial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Lahk, a partner with the
law firm of Cushing and Dolan with a Masters in taxation.

Speaker 3 (14:05):
Where are we headed now, Todd, We're.

Speaker 4 (14:07):
Going to go over to Illinois. We got an appellet
court case there that I found interesting. The undue influenced
by the spouse and maybe even the attorney's role attorneys too, Well,
maybe not. Let's see, so Mark owned a large portion
of shares in his family business, Kaufman Truck Sales, Inc. Okay,

(14:30):
and a one third interest in Kaufman Real Estate LLC,
which owned the land that the business operated. Out of
very common arrangement. Two thousand and one, Mark's estate plan
says upon his death his wife Dorothy, upon Dorothy's death,
so after the both of them die, upon Dorothy's death,

(14:54):
the Kaufman business assets, all of them would go to
his siblings or their kid which is interesting. Maybe they
were involved in the business. Keep that in mind when
you got a business interest. Well, Dorothy, as trustee had
the power to distribute to herself all the income and
principle from the trust except not from the assets comprising

(15:17):
of Mark's business or sale proceeds from the business assets.
So a little exception exclusion okay. Well, twenty eighteen, after
entering hospice due to having cancer, he did a new
will which distributed Mark's business interest to Dorothy outright and

(15:39):
authorized her to name and all the recipients of the
ownership interests of the business at her death.

Speaker 3 (15:47):
So she basically got everything, not as siblings.

Speaker 4 (15:51):
Not as siblings. Well, after Mark's death in twenty eighteen,
the will was admitted to probate, of course, to siblings.
A meetiate ly contested the will, stating that it was
a product of undue influence by the wife. Hmm. It's
a tough road to hoe when it's your wife or
your spouse. And as you might imagine, the court dismissed

(16:12):
us and found that there was no evidence of any
undue influence while the siblings during the case, while it
was pending with the Supreme Court, they sued the attorney
for malpractice, saying, you're not ensuring that it was Mark's
real wishes all. The attorney immediately filed a summary judgment
motion stating that, hey, we have no duty of care

(16:33):
to the siblings, right and as you might imagine, and
I agree. The court agreed, and they approved the summary judgment. Well,
the appellate court, of course, they didn't like that, so
they appealed. The appellate court affirmed, stating siblings would have
to have to prove that the will did not reflect
Mark's true intent, and they were unable to do that.

(16:56):
All evidence showed that Mark was competent. These were his
wishes and he was able to act the way he acted.
He changed his mind, changed his mind's my spouse right, right,
So at the end of the day, nobody everything worked out.
And again it's by doing your planning your wishes are going.

Speaker 3 (17:16):
To get on, yeah, rather than doing nothing right.

Speaker 4 (17:18):
And again, change your mind.

Speaker 2 (17:20):
They're your wishes until you're dead exactly.

Speaker 4 (17:23):
And folks, that's kind of what I want you to
think about when you let's say you've never done your
estate planning. The guide we're giving away might be the
easiest way for you to kick off your estate plan right.
I never understood trust. Well, this is a joint revocable
trust for a married couple. Your life doesn't change. You
remain in control, and it's simple to retitle. You don't
have to split assets. Everything goes into one trust. You

(17:46):
control it while you're both alive. The survivor controls that.
It explains the savings of the estate tax and the
real beauty is you get a full step up in
basis on the first death. You can shelter more assets
for a state taxes than you can if you divide
him between the two. And you can even have a
designed so that on the second death you can get
another step up in basis. I keep saying that because

(18:08):
you're winning on the estate tax front with this and
the income tax front with this. Remember the basis is
important because the exemptions are really high after the new
BBBA that passed. So folks get the guide The Simplicity
of Joint Revocable Trusts eight six six eight four eight
five six ninety nine or Legal Exchange Show dot com.

(18:31):
You can download it there eight six six eight four
eight five six nine nine or Legal Exchange Show dot com.
What are we going to learn from this?

Speaker 3 (18:43):
I think lots.

Speaker 4 (18:44):
I think lots too. Let's talk about it. It's really
more of a business. When you have a business, right
you really need to figure out what to do. So
he did. He had a trust plan done here, which
I like. Right, it was important, you know, from an
estate tax savings standpoint, you want to make sure that
you've got a trust in place to do your planning.
I know there's a business here too, and I want
to talk about both, you know, but also you know,

(19:07):
the important thing was when you have the business, you
need to make sure you have a trust in place.
Now here. The problem they did with this trust though
was in the beginning it's said that all income and
principle can be paid out to Dorothy excluding the business.
Well that's good, it preserves the business. But you really
need to limit the access to the principle or the

(19:29):
income subject to health, education, maintenance support, those standards that
we talk a lot about, Susan, And you need to
have a marital share and a remainder share to be
able to shelter these assets from a state taxes. If
you turn around and draft a trust and just say
and again he changed it, even giving her the business assets. Remember,
so if you change it and you have a document

(19:51):
that says, yeah, the surviving spouse can just take everything
with no standard, well that's called a general power of appointment,
and you really have nothing sheltered on the first death.
You really need to set up that marital share and
that remainder share inside the trust. So, while I know
the focus on this is how to handle a business,
which we're going to talk about in a minute, we

(20:12):
can't forget when we're drafting the basics you need. You
need the estate tax reduction and the savings and the
marital share and the remainder share and you can still
you know, control how the business goes. Boy, this drafting
just kind of yeah, kind of bling.

Speaker 2 (20:30):
That speaks volumes to why you need someone who has
that knowledge and expertise about the taxation part of your
estate planning.

Speaker 3 (20:38):
Yeah, truly.

Speaker 4 (20:39):
Yeah.

Speaker 3 (20:39):
People that just say, oh, I can draft you trust right?

Speaker 4 (20:42):
Maybe not? Yeah, And so it's really important folks to
make sure these are drafted properly to get you know,
the taxing side. And I know that's not part of
the case, but that's my point is to what can
we learn from this? And that's a lesson that wasn't
even brought up in the litigations. Switch gears to the business.

(21:02):
So on the business. Remember, it is important when you
have a business to control it. Maybe you do not
want control of the business in the hands of the
spouse if the spouse has never been involved in the business,
doesn't matter who it is. Yeah, it could be the husband,
the wife, doesn't matter. If you're not involved in the business,
you might not want that person running the business when
you're dead.

Speaker 2 (21:22):
I would think that let's say there's three siblings and
they all own the business together, that they would have
a business succession plan in place that would override whatever
their individual estate plans say.

Speaker 4 (21:36):
That's exactly what you would need, right, So the trust
is important. But in addition to the trust, you'll have
the shares held in the trust. But you put together
what you're referring to, I believe, Susan would be a
by sell agreement exactly. And here, if the siblings truly
were running the show, If the siblings were truly involved
in this, and they may have been, since Mark wanted

(21:58):
to leave this to them, it's all right. Then you
put a buy sell agreement that says on the date
of death, and there's other trigger events we won't get
into in the buy sell agreement, but on the date
of death you have life insurance in place. And this
way the kids or the siblings would receive the life
insurance on the life of Mark when he dies. They

(22:20):
get that money income tax free because it's life insurance. Meanwhile,
Mark's trust owns the shares of the business, so they
get a step up in basis on the date of
Mark's death. And then what Mark is under this buy
sell agreement, His estate is forced to sell the stock

(22:42):
based on the valuations done in the buy sell agreement
to the siblings. The siblings take the life insurance money
and give it to the spouse. There's no capital gains
tax on the sale by the estate because of the
step up in basis. The money is available to the
siblings to buy out and the family got money instead

(23:04):
of controlling the company for a sibling, for a spouse
to have a stock in a business that they can't run,
it's not helpful. They rather have the money cash. Yeah,
So there's so many ways to help your family folks
figure it out. Get this guide. It's called the Simplicity
of Joint Revocable Trusts. It so it makes the state
planning so much easier for you. You put assets into

(23:26):
one trust and you can give it away easier eight
six six eight four eight five six nine to nine
or Legal Exchange show dot com.

Speaker 2 (23:36):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers of
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 (23:52):
The state planning isn't just about taxes, It's about peace
of Mind. At Cushing and Dolan, we believe your plan
should protect your family complicate your life. A joint revocable
trust can help you do both. It lets you avoid probate,
which means no court delays, no public filings, and no
stress for your loved ones. Your estate stays private and
your family stays in control. Our new guide, The Simplicity

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

(24:34):
that's eight six six eight four eight five six ninety nine,
or requested online from our website Legal exchange show dot com.
The proceeding was paid for in The views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal investment services.
Cushing and Dolan in Armstrong Advisory do not endorse each
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Speaker 4 (26:23):
Hi.

Speaker 7 (26:24):
This is Chuck Zada from the Armstrong Advisory Group. Your
home is more than just a place to live, it's
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(26:45):
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(27:07):
four zero zero one. A request the guide at Armstrong
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Speaker 1 (27:11):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. You're listening to the Legal Exchange and it's
time for Ask Todd, the segment where Todd will answer
your questions about anything and everything that's included in the

(27:33):
estate planning process. Once again, here's Todd Lutsky and Susan Powers.

Speaker 2 (27:40):
Welcome back, Todd. I have a few questions from listeners
for you. First question comes from Lisa in Rehoboth, Mass
and Lisa writes, my husband and I just crossed the
eight million mark in assets, and we're totally confused. Should
we be using one joint trust instead of two separate ones?
What actually makes more sense. We're family like ours.

Speaker 4 (28:02):
This is perfect because this is when you think about
starting to do your estate plan, which is really what
this is all about. You know, what kind of trust
do you need? You start with the size of someone's estate.
So that's why I'm focused on the eight million here, folks,
So you look at your own assets, right, eight million

(28:22):
puts us at a place where, regardless of their age,
I'm going to assume their retirement age. Right. Sure, you know,
probably not worried about nursing home planning. I say that
because most people I meet in this you know, five
million and up six million in up range, probably have
enough money that they're self insured, meaning sure they're generating

(28:46):
interest dividends with their investments, they have social Security, they
have pension, they add all that together or required minimum distributions,
et cetera, and there's probably enough money coming in to
cover the cost private pay, private pay, So your your
principle is already protected anyway, So you don't you don't

(29:06):
care about that, and you're more focused on a state taxes. Well, great.
Then when you focus on a state in probate, you say, well,
we have a fifteen million call it January one exemption
federally and a two million for the state. Well, I
need a revocable trust. And because my estate is what
I like to call a moderate estate. And again, don't

(29:28):
look at this and say, oh, eight millions moderate, No,
eight millions great, But it's moderate because the federal exemption
is fifteen million from.

Speaker 2 (29:35):
A tax perspective, from the federal tax perspective, and that's.

Speaker 3 (29:38):
Eight so fifteen each, so thirty thirty.

Speaker 4 (29:41):
Yeah, So when we're talking, you know every bit of
a state's you know, under fifteen million for sure, you
know you could do a joint revocable trust. So I
finally answer the question for them, a joint revocable trust
would be better. Now why again, usually you can't you
know a lot of that could be IRA money. Well,

(30:02):
IRA money can't go into even if you had a
husband and wife trust, you can't put money from an
IRA into the trust. So the amount of assets you
might have there might only be six million available for
that are non IRA money, right, And so if I
have six million dollars and I have two trusts, I'm
going to have to say, well, I'm going to put
three in each trust. That's okay. It kind of gets

(30:25):
me to where I need to be for the estate
tax purposes for mass. But you know what, I can
only shelter three if I have a joint trust. I
put the all six in the joint trust. And now
there's language in the joint trust that's called a general
power of appointment, which means it doesn't matter who contributed.

(30:45):
There's language that says the first to die has the
power to direct where the other ones half goes, including
to themselves and vice versa. In English, that means that
not only what you contributed is included in your estate
when you die, but what your spouse contributed is included
in your estate when you die. And so now you

(31:07):
get full inclusion of the six million dollars in my example,
assuming you could only put six in, and it will
now be fully stepped up in basis, so everything is
included on the first death, and therefore everything is a
step up on the first death, and federally, the whole
six million is sheltered first eight taxes, So if she

(31:29):
dies the next day, she's worth two million, which is
the ira money. Wow. Right, So you're really able to
cram down a lot more on the first death than
you can on the second. And if you read the guide,
you're going to learn a little bit about how you
could get maybe a second step up when the survivor
dies through using these joint trusts, and of course all

(31:52):
the other benefits folks, This guide, the simplicity of joint
trusts really is exactly what I was just describing in
in this example. But it also don't forget, it also
lives on like any other trust, like a dynasty trust,
and it provides for divorce proofing and credit or protection
and everything else that your other trust would do. So

(32:12):
this might be for you, folks, if you've never started
your estate plan and are wondering what kind of trust
is right for you and something that's not going to
overly complicate your life. This guides for you, this Simplicity
of joint revocable trust, brand new guide for the month
and never given away before actually eight six six eight

(32:32):
four eight five six nine nine or Legal Exchange Show
dot Com again Simplicity of joint revocable Trust Call and
get it eight six six eight four eight five six
nine nine or Legal Exchange show dot com todd.

Speaker 2 (32:48):
Our last question comes from Kevin in Wallingford, Connecticut, and
Kevin writes, We've got two great kids, but one of
them married someone we're not so sure about. Can we
use a trust to protect our child's inheritance in case
that marriage goes sideways?

Speaker 3 (33:04):
Is there any we're down?

Speaker 4 (33:06):
Is there anyone that when our children marry that we're
very sure about.

Speaker 2 (33:11):
Listen, if you asked my mother in law, she would
say absolutely, I'm my mother in law's favorite child.

Speaker 4 (33:18):
There you go. You're the exception to the rule. You're
outside the bell curve. So but no, it's it's true.
I always tell people they say, oh, no, no, I
love my in laws, and I say, no, you only
think you do until something goes wrong.

Speaker 3 (33:32):
You trust him, but I don't.

Speaker 4 (33:34):
So so the answer is yes, obviously, And again the
type of trust isn't really going to matter. Just so
you know, I know we're kind of focusing this month
on these joint revocable trusts, but I want you to
understand that when you're talking about the dying part, when
you're talking about the trust living on after you're gone, right,

(33:57):
it doesn't matter what kind of trust you set up
while you're alive. It can be a joint revocable trust.
It can be a husband wife separate revocable trust. It
can be irrevocable medicaid trust. It can be joint irrevocable medicaid.
I mean, it doesn't matter the kind of trust, because
when you die, every trust is irrevocable.

Speaker 3 (34:21):
Because you're dead.

Speaker 4 (34:22):
Can't revoke it, can't revoke it. So it's it's like
an obvious thing, but until you say it, sometimes you
don't realize, oh, yeah, how did that happen while you're dead. Yes,
it's it's just one of those things.

Speaker 3 (34:31):
You're the only.

Speaker 2 (34:31):
One that can revoke it, and you cannot any longer.

Speaker 4 (34:34):
And so at that point, now you read the guts
of the trust right, and that those guts are going
to have to have special language in it in order
to do this. And when I tell clients this all
the time, I say, okay, now we're at the dying part.
I always preface it by saying there is no right
or wrong answer to these questions. These questions are simply

(34:56):
a function of how you feel about your children and
whether they're good kids, level headed, bad spenders, horrible with money,
on drugs, have problem marriage. I mean, I don't know
that you guys tell us about.

Speaker 3 (35:12):
Your family and that dynamic.

Speaker 4 (35:14):
That dynamic is what's going to dictate, you know, how
we draft this part of the trust. So staying with
Kevin's question, and I say all that for everybody else
that's listening, because you might have your own situation. Now,
staying with Kevin's example, this case, we would say, since

(35:37):
you know it says our child's inheritances, is there only
one child?

Speaker 3 (35:41):
I'm concerned about the one that's married.

Speaker 4 (35:43):
And that's a great point. I wouldn't want to treat
one differently than the other. So if I'm going to
be doing it for one, I'd be doing it for
the other so that they don't feel ostracized.

Speaker 3 (35:53):
So even if the other one's not married.

Speaker 4 (35:54):
Yeah, even if they're not married. Because of the flexibility
that's built in, it'll be irrevocable. You could put both
kids on as trustees. There's two, it's okay, you don't
have to, and they would be the general trustees, managing
and investing their buckets. I don't know however, much money's
in there.

Speaker 1 (36:11):
Right.

Speaker 4 (36:12):
Let's use the eight million dollar example above and say
four million in each bucket. Okay, they're managing and investing
the money, but they can't get it. The only way
they get it is they appoint an independent trustee who
they can remove and replace again. If you love them,
if you think they're level headed, give them the power.
It's great power. So they can appoint and remove an

(36:33):
independent trustee whose only job is to decide whether or
not distribution should be made to them or their children
out of their respective buckets, and they can't steal from
each other. That power means that when the divorce comes,
they don't own it, and if they don't own it,
they can't get it. It's not subject to the marriage.

(36:54):
That's the simplicity of it. Folks, call and get the
guide learn how that can be drafted into this as
well eight six six eight four eight five six nine
to nine or Legal Exchange Show dot com and you
can download it right there.

Speaker 2 (37:09):
If you have a question you would like to ask Todd,
visit his website Legal Exchange Show dot com and click
on the as Tod tab. Maybe I'll be able to
read your question on the air, and hopefully his answer
will stop you from becoming one of his next real
life stories. You've been listening to Todd Lutsky, a partner
with the law firm of Cushing and Dolan. I'm Susan Powers,

(37:30):
a financial advisor with the Armstrong Advisory Group. We'll be
back with more after this quick break on the legal
exchange with Todd Lutski.

Speaker 1 (37:38):
The state planning isn't just about taxes, It's about peace
of mind. At Cushing and Dolan, we believe your plan
should protect your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your state stays
private and your family stays in control. Our new guide,

(38:00):
The Simplicity of Joint Revocable Trusts, also explains how a
trust can protect your children's inheritance from creditors, divorce, or
bad financial decisions down the road. This guide makes it
easy to understand why a joint trust may be the
smart move for your family's future. Call eight six six
eight four eight five six ninety nine right now and
ask for your free copy of the Simplicity of Joint
Revocable Trusts. That's eight six six eight four eight five

(38:22):
six ninety nine, or requested online from our website Legal
exchange show dot com. The proceeding was paid for in
The views expressed are solely those of Cushing and Dolan.
Cushing and Dolan in or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other in are not affiliated.

Speaker 5 (38:39):
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Speaker 4 (38:44):
HI.

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(39:05):
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Speaker 1 (39:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide is specific financial, legal or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
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eight four eight five six ninety nine and let him
make sure your assets are protected. That's eight six six

(40:54):
eight four eight five six nine nine, or visit him
online at Legal Exchange show dot com.

Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd 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 a law firm of Cushing and Dolan with a
master's in taxation. So Todd today, I have a real
life story for you.

Speaker 4 (41:19):
I'm all, heres, I'm a little worried, but go ahead.

Speaker 3 (41:21):
Nope, don't be worried.

Speaker 2 (41:22):
I met with clients this past week and they actually
have scheduled to come and meet with you. But I
thought maybe we could do a sneak peak of forcial situation. Yes, Execs,
you'll be so prepped for their meeting.

Speaker 4 (41:35):
You don't get to use the word foreshadowing a lot
in English. How about that I do, We're foreshadowing.

Speaker 3 (41:40):
Yeah, you got it? Okay.

Speaker 2 (41:43):
Husband and wife, they just turned sixty. They have not
done any planning yet. They have two I arrays about
two million total. They have other investments in bank accounts
of about five hundred thousand. They have two houses, one
in my one in Florida. Total is around three million.

(42:04):
They have two kids, a daughter and a son. The
son has dependency issues and the daughter runs the husband's
business with him. So they're both very much involved in
his very successful business. And I would say the business
is probably worth I'm guessing here it's got to be

(42:26):
five million.

Speaker 4 (42:27):
Wow.

Speaker 3 (42:27):
Yeah, it's an international business that he runs small but
big Okay, no, that's true. So for them, what would
you recommend?

Speaker 4 (42:38):
So they're looking at about ten million, ten point five
ten million, ten point five million.

Speaker 2 (42:43):
Yeah, their biggest concern is not putting money in the
hands of their son because of his dependency issues. They
just think nothing good will come of that. That's fine,
that's that's their overwriting concern.

Speaker 4 (42:56):
We'll probably treat both kids the same though. But yeah,
protection wise, yeah, it's always good. Even when we talk
about protecting assets for children, you know, one might be
because they're a dependency. One might just because we're worried
about divorces. So it doesn't matter the reason for the protection,
the language is the same. And another note, just to

(43:17):
help people remember if they are residents of mass in
this case, Massachusetts cannot tax out of state property. Okay,
so the good news is at least the Florida property
would not be subject to tax in Massy Okay at all,
assuming they remain residents of mass But so what federally
they're worth ten million, ten point five million. So when

(43:41):
I look at that, the first thing we say is, well,
we don't need nursing home planning. We're self insured. Secondly,
we're worried about a state taxes. We have a fifteen
million dollar exemption each, So we need a trust not
just for taxes and probate. And by the way, Florida
multiple states of probate. If we don't put the real
estate inside of trust, you're going to be looking at
probated in multi utiple states. So we certainly want probate

(44:02):
to be avoided everywhere. And of course we focus on
the state taxes. And then of course the bloodline planning
piece seems to be our important part. And I can't
ignore a business. When you have a business, you really
have to spend a little extra time sort of focusing
on the business side of things. So with that said,

(44:23):
let's take a peek. I would suggest probably the joint
trust would be the way to go in this case.
And I would start with the joint trust, which is interesting.
That's what we're doing in our guide, and the beauty
of it. Part of the beauty of it is we can
now start to put everything in it, right, everything except

(44:45):
the iras. And I still have clients. They always come
to me and they say, well, I got this one
investment account over here I use for this, and I
have this other one I use for this, and there's
our special name for this one. Yeah, doesn't matter, folks,
Every non IRA bank and investment account, everyone retitle it
to the trust. Okay, name owner, trust, not the IRA.

(45:07):
The beneficiary though, will also be important to title that
to the trust. We will take that and we will
make the primary the spouses always and the contingent the
trust yep, Okay important. Why because we're thinking about how
we're going to leave things when we're both done as well.
That's to protect the kids. That's why I want to

(45:28):
put that in the trust. Okay, it's not going to
cause an RMD problem as long as we draft the
trust appropriately. So now I've helped, and of course the
real estate directly in the trust. You don't have to
split anything. It's beautiful. That's the simplicity of the joint trust.
Put everything in there, avoid probate in both states. Now
we got it funded. Before I talk about that, I

(45:48):
want you to understand this is exactly how you would
fund the joint trust, which is what our guide is
about the simplicity of joint trusts. It explains not only
how to fund it, it explains the estate tax savings.
It explains to you how you can now both be
donors and trustees of one trust. It explains how everything

(46:09):
gets crammed down on the first death, and that's really
the key. You're gonna see it in this example. We're
gonna shelter more assets on the first death than we
ever could with two, and we're gonna get a full
step up in basis. Folks, with the high estate tax
exemptions in play for at least the next three years.
This is a wonderful way to take advantage of both

(46:30):
estate tax savings and income tax savings. Call and get
the guide eight six six eight four eight five six
nine nine or Legal Exchange Show dot com. You can
download it. Get there again, the Simplicity of joint Revocable
Trust Brand New Guide eight six six eight four eight

(46:51):
five six nine nine or Legal Exchange Show dot com. Now,
now we got this joint trust all funded first and foremost, folks,
Mom and dad, husband and wife here. Their life's not
going to change at all, and not so many people
coming in his house. It's so complicated and overwhelmed. This
document is sixty pages long, God matter, no matterity page

(47:15):
as long as is. It's a revocable trust and your
life's going to go on exactly the same. You're gonna
run the business. You're gonna do all that. Oh, by
the way, and the business would have been titled to
the trust. The shares of the business would have also
been titled to the trust. Okay, so our life goes on.
We don't have any disruption, and no separate income tax
return is needed. So life just runs along really unchanged

(47:39):
until someone dies. So now as when you cram down
everything on the first death, and all these assets get
valued and held in the marital share remainder, share bypass share.
We've talked about these lots of times on the show,
and it would be continuing for the benefit of the spouse. Now,
it does seem to say that the business is something
you might need to think about on the first death.

(48:02):
You know, do we want the daughter to start getting
shares of the business while we're alive. Do we want
to have non voting shares transferred over to the daughter
while we're living? Do we want to keep voting shares
in the business in the trust for the wife to run.
You're going to have to talk to the family about that, right,
I don't know. It might be that you keep you know,
ninety percent of the non voting shares in the business,

(48:25):
So the mom can have you know, revenue from the business,
but give the voting control to the daughter so she
could run the business continue to run it. Yeah, so
you're going to have to figure out the dynamics of
the business. But that needs to be designed in this trust.
Not sure how well she would do it, but you
got to learn how involved the wife is.

Speaker 3 (48:46):
Can I ask a question Todd there right now? I
think we said what ten million?

Speaker 4 (48:50):
Yeah, ten million?

Speaker 2 (48:52):
So what happens now because they've just recently turned sixty,
if they live until you know, they're eighties, if they're
a grew above the thirty million whatever the state taxes
at that time, would you do additional planning for them
along the way as their net worth?

Speaker 4 (49:10):
Yeah? I think what happened is when you have clients
that are higher net worth, they usually call me, you know,
sometimes depending on how high their net worth is, you know,
sometimes once every November December, at the end of the year,
should we do do any of them? Or you know
if depending on this size, maybe every three years. You know,
they might check in and say, you know, what's our state,

(49:30):
what's the net worth, and so you kind of keep
track of that. Sure, Planners like you would probably call
me and tell me my client's assets grew, so we know,
and so we would be planning for it before they die,
and it would likely be that they will and everybody
needs to know that. You will never outgrow this. But
you might need to, as you said, susann ad to it.

(49:51):
You might say, all right, let's keep this the way
it is, but maybe we set up some kind of
gifting trust, maybe we set up a spousal lifetime access trust.
Maybe we move assets out of the estate. So there's
things to do.

Speaker 3 (50:01):
And this would still work.

Speaker 2 (50:02):
Oh, but you just might need to add things on
to further reduce taxes.

Speaker 4 (50:07):
For everything you keep. This still works, okay, and just
quickly don't forget to put the language in there to
protect the assets from the divorces and the dependency child
and the special needs stuff. Folks, call and get the
guide The Simplicity of Joint Revocable Trusts eight six six
eight four eight five six nine nine or legal exchange

(50:30):
show dot com. You can download it right there one
more time eight six six eight four eight five six
nine nine or Legal exchange Show dot com and you
can download the guide right there.

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

Speaker 4 (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 Lutski.

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

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

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

Speaker 7 (52:00):
This is Chuck Zada from the Armstrong Advisory Group. Your
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(52:21):
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(52:44):
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Speaker 1 (52:48):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory server.

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