Protecting your kids from themselves

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 (00:41):
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. Welcome Todd.
How are you today?

Speaker 3 (00:57):
I am never better in you?

Speaker 2 (00:59):
I am great? Thank you. What do you have for
us this week?

Speaker 3 (01:01):
A couple of things. We are going to go to Idaho.
We have an appellet court case there, and then we're
going to stay right here for a real life story.

Speaker 2 (01:09):
Nice.

Speaker 3 (01:10):
So this Idaho case is set up where we have
an omitted child that we want to know if they
can still take under the will even though they're an
omitted child. So basically, Lisa had a child with Lowell
and Jane, but they weren't married at the time they

(01:31):
had her, so born out of wedlock, but they did
remarry the next year. But then there were several divorces
along the way and remarriages and new kids coming into
the picture. So this one's going to need a chart.
But ultimately we're wondering if Lisa is out or in,
and so we're going to find out when we go
through this, And of course we're going to learn lots
of lessons about drafting, about second marriages, about state planning,

(01:53):
how to leave assets, which again is exactly what our
guide is about this month, folks. And then we have
a real life story. Again. I think it's more of
a happy one, but it really kind of hit home
when I was preparing for this show because it really
made me think of how to leave assets to children,
because this was a family comes in worth about six million,

(02:16):
three kids, they got one disabled child, one crazy spending
child that's horrible with money, and one good child that
seems to be financially logical, married with kids child, and
so you know, we want to treat them equally, but
we're a little worried about what about how to leave
assets to beneficiaries? Folks? Which is the name of the guide.

(02:36):
It's the end of the month, it's the last chance
to get it. Really. It is one of my favorite
guides because it does offer something for everybody. Because when
you're doing an estate plan, no matter what you're doing
it because you're going to leave it to somebody, I
don't care if it's nieces, nephew, siblings, or.

Speaker 2 (02:52):
Children, someone other than the government.

Speaker 3 (02:54):
How you leave it to them is so important. And
how much your trust can do after you die is
so important. People don't understand that trusts live on sometimes,
but they do.

Speaker 4 (03:04):
So.

Speaker 5 (03:05):
Uh.

Speaker 3 (03:05):
If you've never done your planning, get the guide. Learn
how to leave your assets. If you've done it, maybe
there's some nuances you can learn here and amend or
change your wishes as your family dynamics may have changed
eight six six eight four eight five six nine nine
or legal exchange show dot com to get how to
leave assets to beneficiaries. It's the last chance folks, end

(03:28):
of the month eight six six eight four eight five
six nine nine or legal Exchange show dot com. So
where we go in Idaho. So in this case we
have Lisa, a child of Lowell and Gane. As I
said they were, they had the child before they got married,
but then they did the right thing and they got married,

(03:50):
which didn't matter because four years later they got divorced. Okay,
So then Lowell decides to remarry Carol mm hmm, with
whom she had he had to kill kids, Doug and Diane.
After Carol died, Louell executed a will, so now he's single, yep,
and he executes a will identifying Doug and Diane as

(04:13):
the only.

Speaker 2 (04:14):
Kids, not Lisa.

Speaker 3 (04:16):
Well, there's no disinheriting of Lisa Lowell. Then Mary's again
shocker to Mary, and they do that on May twenty sixteen,
and then Lowell dies on August of twenty twenty four

(04:38):
years later. Mary was then appointed PR Personal Representative in
June of twenty twenty one, and Diane the child appointed
successor PR in April of twenty twenty two. Well In
June of twenty twenty two, Lisa, remember sees the child
who might be this long lost child from way back,

(05:01):
filed a petition for airship to say I need to
be recognized as a child of loll and entitled to
a portion of the residue of the estate. Now what
does that mean? So sometimes these wills might say I
leave things to certain people and then the residue. Yeah,
but without that just whatever's left, right, and that if

(05:24):
it wasn't itemized as to who gets it, that is
the wild card here. So stay tuned and remember that piece. Okay, Well,
the magistrate court found that Lisa was a child, but
denied that she was entitled to any assets. So Lisa
appealed to the district court. The district court affirmed the

(05:47):
magistrate court. Well, Lisa appealed again to the appellate court,
and Lisa argued that she's a child and because not
expressly disinherited, she's entitled to share in the assets of
the residue of the estate. So not something that would
have been specifically.

Speaker 2 (06:05):
Given like this house goes to so and sane.

Speaker 3 (06:07):
Right, the residue of the estate. Well, the estate argued
that Lowell did not intend for Lisa to share in
the estate, and even if she was entitled to share,
that they would have had to prove that Lowell openly
and notoriously treated her as a child. Well, the appellate
court reversed and said the intestate Succession Statute says, and

(06:33):
again state by state, folks, this is Idaho says any
part of an estate not effectively disposed of by a
will passes to the decedent's heirs. The court said, an
heir disinherited by will is not prevented from sharing under
the intestacy laws, and therefore Lisa's in.

Speaker 2 (06:57):
But don't the intestacy laws only come into play.

Speaker 3 (07:00):
If you don't have a will, I know, but or
if you don't in this case, and again state by state,
so we can't be broad sweeping here. It's all about
this residue of the estate. Is the residue of the
estate is not direct, specifically directing where something goes, then
it's going to go according to the intestate Succession Statue.

Speaker 2 (07:22):
Not an attorney just FYI.

Speaker 3 (07:24):
Yeah, no, it's the details that will kill you for sure.
And so folks, let's just learn a little something from this,
right and it's again all about drafting, all about making
sure your wishes are carried out. So in this case
second marriages, Number one, always ask how close you are
to the other kids, right, prior relationships, prior marriage. If

(07:45):
they're in, they're in. If they're not, they're not. And
let's be clear about.

Speaker 2 (07:47):
It, because he could have specifically disinheritedly there and then
they wouldn't be all these issues for his ultimate beneficiaries, right.

Speaker 3 (07:55):
I would think that that would have would have been
very helpful. Again, how you draft things right. Number two
also a good idea to use a trust stay out
of the probate court. If you're not in the probate court,
the intestate succession statute can't apply, right, right, So that
would be would be really helpful. So and again I

(08:15):
think if you're dealing with if you're using a trust,
it'll also help you deal with the second marriage situation
because in here I'm not sure how that lost that
first spouse, the last spouse to Mary. Yep, how is
Mary treated? The will? The last will that was done
as I understand it was before he married Mary, right,

(08:37):
and it left it apparently to Doug and Diane, But
we don't.

Speaker 2 (08:40):
Know, and it could have disinherited Mary.

Speaker 3 (08:43):
So then there would have been the whole Mary issue.
So I'm not sure if that just wasn't addressed or
what in this case, but anyways, not the biggest issue.
So we can design a trust, you know, from a
prior marriage situation. We can provide for how the assets
can be held and take care of this, and then
take care of the kids from the prior marriage and

(09:04):
specifically which kids you know, and you can even design it,
as we say, to protect from divorces and skip generations.
So a trust was really the way to go here, folks.
And remember the language is important. Kids born out of
a marriage are kids of the mother only in our
trust unless they marry. But they married, so we have

(09:25):
definitional sections. So Lisa would be a kid in one
of our documents. So be careful how you draft your
documents right, and you can allocate as we said, to
specific kids and whatnot. I think the key here is
really to stay out of the probate court and stay
out of the intestacy statutes. And this way the court

(09:45):
or this way the trust can deal with the assets
however you want to leave them. In this case, a
trust simply leaving her out would have been enough to
keep her out.

Speaker 2 (09:56):
Right, because you don't have to leave your kid's asset.

Speaker 3 (09:58):
You do not have to. But folks, the guide we're
doing for the end of the month is how to
leave your assets to your kids. So if you care
to learn what the ways are to leave your assets
to your children, call and get the guide eight six
six eight four eight five six nine nine or Legal
Exchange show dot com because the ask the kids behind,

(10:20):
the family behind the estate plan is really more important
than anything you've.

Speaker 2 (10:24):
Been listening to. Todd Lutsky, a partner with the law
firm of Cushing in Dolan with a master's in taxation.
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 (10:41):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to Beneficiaries and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down

(11:04):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from

(11:26):
our website Legal Exchange Show dot com. That's the Legal
Exchange Show dot com. The proceeding was paid for and
the views expressed are solely those of Kushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you're
offering legal or investment services. Cushing and Dolan and Armstrong
Advisory do not endorse each other and are not affiliated.

Speaker 5 (11:41):
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Department of Massachusetts. We focus on the people returning from service,
not their specific illness or injury. Our number one goal
is to make sure our veterans have the necessary services
they need, be it physical, emotional, or financial, so that
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(12:02):
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Speaker 4 (12:12):
The breadth of the stock market sell off in recent
days hasn't been seen since the early days of the pandemic.
And while it's easy to say don't panic if you're
concerned about your portfolio, given the impact of these terriffs,
now's the time to have that conversation. Hi, this is
Mike Armstrong from the Armstrong Advisory Group. If the market
correction has you anxious or worse rattled, give us a
call at eight hundred three nine three four zero zero one.

(12:33):
Let's get together and talk through your financial strategy, evaluate
at strengths and weaknesses, and make decisions for the future
that are in your best interest. These are challenging times,
but we've dealt with them before and are prepared to
deal with them again. Our goal is to help you
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You can give us a call at eight hundred three
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obligation consultation. That number again is eight hundred three nine

(12:56):
three four zero zero one.

Speaker 1 (12:58):
The proceeding was paid for by Armstrongdadvisory 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.
Consistently voted one of the top Caribbean destinations the United States,
Virgin Islands is the perfect place for your next vacation.

(13:20):
Whether you're looking for romantic getaway, a long weekend with friends,
or a family vacation, Saint Croix, Saint Thomas, and Saint
John have everything you need to enjoy that special time
away from home. Take advantage of a variety of incredible
promotions that are available right now. Go to visit USVII
dot com slash promotions, where you'll find the details about
all of these amazing experiences, including a stay at the

(13:43):
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Saint Croix. From the moment you arrived, You'll fall naturally
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(14:06):
trip today. That's a visit USBI dot com slash promotions.
You're listening to the Legal Exchange with Todd Lutsky, an
expert in elder life planning and taxation. Need help with
your estate plan? Call Todd right now and make an appointment.
Eight sixty six eight four eight five six ninety nine.
That's eight six six eight four eight five six ninety nine.

Speaker 2 (14:33):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Lutsky, a partner with the
law firm of Cushing and Dolan with the Masters in Taxation.
Where we headed now, Todd, nowhere, nowhere, We're staying right here,
staying right here. In real life story.

Speaker 1 (14:52):
Action we do.

Speaker 3 (14:53):
And you know, I think it really Like I say,
it's just when I was preparing for the show, I
remember the case this family I met the prior week,
and it just said, you know, this is exactly what
we're talking about with this guy. This is exactly what
we need to explain that we can do for people.
So let's go through it. So we have a family
aged sixty five. They come in to do estate planning.

(15:15):
They're worth about six million, they have a home, a
vacation home, they have the standard investments in an IRA.
We discussed basic estate planning and the use of a
single joint revocable trust. They had long term care insurance,
so and they really had enough assets that they were
kind of self insured in addition to the help they're
getting from the long term care insurance. So you know,

(15:38):
nursing home planning was not really an issue in this case,
which is why we settled in on the joint one trust,
not too revocable trust for them. So the family has
a special needs child, they have a child horrible with money,
and they have a child who appears to be good

(15:59):
financially level headed and is married with kids. M So
we explained a little bit about the revocable trust which
I want to do here, right, we explain that we'll
keep them in control of everything, and that they'll be
the donors, they'll be the trustees, and that there's no
annual income tax returns are going to be needed for

(16:19):
this trust during their life, no separate returns, again giving
you folks the idea that this revocable trust is really
set it and forget it, and you're not doing anything
really different, just go about your day to day lives.
Then I explained how upon the death of one of them,
one of the spouses, that the trust does become irrevocable,

(16:40):
but that the surviving spouse is in charge. So again
the word irrevocable is not going to scare us off.
And let you know that as the surviving spouse, you're
still really in charge of all the assets. How are
they in charge? Well, this is where that marital share
is formed, the q TIP or special MARITALHI share, and

(17:00):
the remainder or credit shelter share are formed. You hear
us talk about those all the time. That's what happens
when one spouse dies. These shares then get funded with
the full five million dollars. One million was in an IRA,
all the other assets added up to five million. The
IRA is not in the trust, but the five million
are in the trust, and that whole amount gets to

(17:23):
be put in not half because of the joint trust.
Now that money passes. So now what happens. So the
joint trust allows all the assets, not half, to be
included in the estate of the first to die. Let's
allocate it amongst the shares. For you, if we've got
five million in the trust, the marital share is going

(17:43):
to get nothing. Why because the marital share gets the
amount of assets north of the thirteen point nine million
dollar federal exemption.

Speaker 2 (17:52):
So if you have lawer estates, you're never going to
have that.

Speaker 3 (17:54):
Merrital shares empag Ok. The q TIP or the special
marital share is going to to get two million because
out of the five it's going to get the amount
north of I'm sorry, it's going to get three million,
because it's going to get the amount north of the
two million dollar exemption for a state of mass for
the state of Mass because that's our mass to state tax.

(18:15):
So five minus two is three and that leaves the
two million into the remainder share, so that the marit'll share,
so that equals the Massachusetts state exemption. So this plan
is going to allow you to completely eliminate well not
quite because you're at six million, but we will be
able to fully use our four million dollar exemption amounts

(18:35):
for Massachusetts, and we will completely eliminate the federalistate tax
even if it lowers the exemption.

Speaker 2 (18:43):
Hey, you're substantially reducing the Massachusetts substantially liability, absolutely substantially
reducing it.

Speaker 3 (18:49):
So that's really it. During their life, they're comfortable, they're
in charge. One dies, the other ones in charge, and
we've managed to shelter all the assets for taxes as
much as we possibly.

Speaker 2 (18:58):
Can, no restrictions during life in and out as you wire.

Speaker 3 (19:01):
Then of course we're going to talk about how to
leave assets to beneficiaries, which is the next part of
the plan, which is exactly what this guide is about, folks.
It's the end of the month, it's the last chance
to get it. It really explains to you how to
leave your assets to your family and helps you understand
that these trusts can live on a long time after

(19:23):
you're gone. And if you've never done your planning, get
it before you do it. Learn get some ideas on
how you might want to leave assets and then look
at your family dynamics. If you've already done it, get
the guide. Several examples in there might give you an
idea how to change your estate plan, especially if your
family dynamics have changed. So call and get the guide
end of the month eight six six eight four eight

(19:46):
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. Now what are
we going to learn that the rest of this? Right now?
They said, Okay, well, Todd, we really want to treat
all three of our kids equally, but we couldn't have

(20:09):
three more different children.

Speaker 2 (20:11):
Yeah, and you can't put it in the hands of
two of them.

Speaker 3 (20:13):
Yeah, you don't want to do that. You don't want
to disinherit anybody. They don't want to know their first
Their first concerns are they got a special needs, they
got a spendthrift, and they've got seemingly a kid that
doesn't have any of these problems. Okay, so let's go
through this. So they very much, as I said, want
to treat the kids equally. Let's start at the beginning.
They're worried about the special needs child. They're saying, we're

(20:34):
going to lose benefits if we leave them the assets,
and we don't want that to happen. We've got one
kid that's bad with money, and we don't want them
to lose all the money overnight if we give it
to them. So I start to explain, you know, we
can do a share, a special share for the special
needs child, right called a special needs trust built in
for that kid's share, and the share for the child

(20:57):
that's that's bad or has difficulties with money could be
held in a sole discretionary trust, which, by the way
we're going to learn, is very similar language to the
special needs trust share. Then I said, well, you know,
if we want to treat all kids equally in terms
of the dollar amount that's in these trusts, then I said, well,

(21:21):
why not treat all the kids the same as to
how they get them, so no one feels ostracized.

Speaker 2 (21:26):
Because the daughter that's married, she could potentially go through
divorce later.

Speaker 3 (21:31):
Too, exactly. And so I said, if we're going to
treat why not treat all the kids the same way.
Even the one that's financially responsible can be held in
the same discretionary trust. But for different reasons. Right, So
let's run through them, right. And the beauty of this is,
although there are three different reasons to control the assets,

(21:55):
the language we use in the trusts will be the
same one stop shop language, but for different reasons.

Speaker 2 (22:04):
Yeah.

Speaker 3 (22:05):
So that language is this sole discretionary trust language that
we've spoken about over the course of the month, right,
allowing an independent trustee to make discretionary distributions out of
the trust to the kids so that they don't own
it right now and so, and by the way, for
the special needs trust, you don't really need an independent trustee.

(22:26):
You can have one of the siblings do it, okay,
because again for that reason, we don't care so much
about their creditors. We just don't want them to own it. Right,
So you could probably have a sibling serve and they
know the kids needs the best. So let's run through this, right.
The sole discretionary language first and foremost means that neither

(22:46):
benef neither child owns the asset, the trust does. So
for the special needs person, that's critical because then if
the special needs child doesn't own it, they don't lose
their governmental benefits. They're entitled to distributions and they keep
their better it's hooray. And when they pass, it goes
to the siblings, assuming they don't have any children any
grandchildren from that special needs child. For the other two,

(23:10):
same language, right, they don't own it. So if they
don't own it, the money comes out slowly to the
child who's bad with money and it lasts over his lifetime.
And the other child who also again using an independent
trustee who's good with everything, can distribute money out to
that child, the good child, so to speak, the one
that doesn't have any issues. But again, not owning it

(23:33):
means if they get divorced, it's not subject to their
creditors and all the while it can skip a generation
for a state tax is when they both pass. So, folks,
there is so many ways to leave assets to kids.
This is a dynamic, a family dynamic that might be
like yours. There's all of these examples and many more
are in this guide about how to leave assets to beneficiaries.

(23:57):
End of the month. Give a call eight six y
six eight four eight five six ninety nine or Legal
Exchange show dot com.

Speaker 2 (24:05):
You've been listening to Todd Lutski, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. Tod will be
answering your listener questions next on the Legal Exchange with
Todd Lutski.

Speaker 1 (24:19):
Beneficiary planning and asset protection go hand in hand. Cushing
in Dolan has a new guide out called how to
Leave Assets to Beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down

(24:42):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight six six eight four eight five
six nine nine, or you can request it online from

(25:04):
our website Legal Exchange Show dot com that's a legal
exchange show dot com. The proceeding was paid for and
the views expressed are solely those of Kirshman Dolan. Kirshingan
Dolan and or Armstrong Advisory may contact you're offering legal
or investment services. Kushing and Dolan and Armstrong Advisory do
not endorse each other and are not affiliated.

Speaker 6 (25:19):
One of the keys to enjoying a peaceful retirement is flexibility.

Speaker 3 (25:22):
Hi.

Speaker 6 (25:23):
This is Chuck's out of from the Armstrong Advisory Group today.
Retirement planning involves lots of possible changes and challenges given
all of the external factors that may affect your goals,
So creating a budget for your retirement is vital to
financial stability. Retirement comes with a number of monetary considerations,
from how much money you'll need every month to managing
your existing investments through market volatility. Our new guide is

(25:44):
called how to Build a Retirement Budget, and it will
offer a variety of options for your consideration that may
lessen your risks when it comes to your planning. Call
right now at eight hundred three nine three for zero
zero one and ask for our new guide today. That's
eight hundred three nine three four zero zero one one
or requested online from our website Armstrong Advisory dot com.
That's Armstrong Advisory dot Com.

Speaker 1 (26:06):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide to 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. Consistently voted one of the top Caribbean destinations
the United States, Virgin Islands is the perfect place for

(26:26):
your next vacation. Whether you're looking for romantic getaway, a
long weekend with friends, or a family vacation. Saint Croix,
Saint Thomas, and Saint John have everything you need to
enjoy that special time away from home. Take advantage of
a variety of incredible promotions that are available right now.
Go to visit USVII dot com slash promotions, where you'll
find the details about all of these amazing experiences, including

(26:50):
a stay at the Divvy Karina Bay all inclusive beach
resort and casino on Saint Croix. From the moment you arrive,
you'll fall naturally in rhythm with the heartbeat of the Islands.
There's no money to exchange, and travel from New England
could not be easier. Don't miss your chance to enjoy
America's Caribbean paradise the United States Virgin Islands. Head to
visit USBI dot com slash promotions for more information and

(27:12):
to book your trip today. That's visit USBI dot com
slash promotions. 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
estate planning process. Once again, here's Todd Lutsky and Susan Powers.

Speaker 2 (27:37):
Welcome back, Todd. I have a few questions from listeners
for you. First question comes from Jonathan in fair Field, Connecticut.
Jonathan writes, I am single and I have two children.
I created my trust and left my assets equally between
my two children. I would like to now include my grandkids.

(27:57):
Is there a way I can leave assets to them
as well, but not hand it to them when they
are too young?

Speaker 3 (28:06):
So questions let's be miners, yes.

Speaker 2 (28:08):
Or even teenagers if that matter.

Speaker 3 (28:11):
So one thing that I'm not sure is clear in
the in the callers question is are we are we
still treating our kids equally, meaning we want it, we
don't want to skip them right away. So when when
mom and dad die, we're not skipping the kids and
getting it to grandkids. We're still leaving it to kids

(28:32):
and then to grandkids.

Speaker 2 (28:34):
He's leaving to kids, but he wants to carve out
a chunk for his grandkids.

Speaker 3 (28:38):
Okay, that's the part I don't get. Yeah, so let's
say there's a pie of one hundred percent. Yes, maybe
we want to take twenty percent of the pie off
the top, off the top and tuck it down here
below to the grandkids and leave let's say eighty percent
to the kids. Certainly, by the way, folks, this is
a great question now because obviously it allows us to

(29:01):
elaborate on the fact that you can leave any percentage
amount to anybody you want, in any way you want. Right,
So this is certainly an option. There certainly is no
right or wrong answer here. So how does this play out? Well,
you're going to then say two buckets will be formed

(29:21):
and we'll put eighty percent of the assets in there. Now,
we'll have to make an issue regarding any houses that
might be there. Do they want to sell the house,
split the money up. We'll have to carve that out
and figure out how to do that. But we want
to drop twenty percent down into a bucket for the grandkids. Now,
they may be doing this because the eighty percent they
want to leave to their kids. They just wanted to
have it out right, which is again certainly okay. So

(29:43):
if you give it outright to the kids, then it's
theirs to do whatever they want with And why yes, yep,
they take it and go. And why that's important is
that money may or may not find its way back
to the grandkids. You hope they would take care of them,
but they could get divorced. They could spend.

Speaker 2 (30:04):
It, live a life right a large we're on the
same page. Sorry, kids, we're in our spend mode.

Speaker 3 (30:12):
So my point is that you know that may or
may not get there. So what I think this particular
family is saying is that we would like some piece
to be tucked away so the grandkids can say, yeah,
I remember grandma and grandpa, right, And so this twenty
percent then absolutely can be carved out into a share

(30:33):
for the grandkids. You could even have the parents, which
would be the children as trustee, and that's probably a
good idea, sure, And then you have language in there saying, well, look,
well they're miners, right most likely, and we don't want
these assets to go outright to them. So what we're
going to do is we're going to have it held

(30:56):
in trust. But in this case it might not be
sold to You won't need to get into that sole
discretionary language. If you don't want to. You can simply
put it in for health education, you know, welfare and support.
That way, the trustee must distribute it out to pay
for the prep school and the college.

Speaker 2 (31:13):
Would you, let's say you have three grandkids, would you
create three separate buckets for each of the grandkids?

Speaker 3 (31:19):
If it's yeah, again, especially it's a family issue, it's
not it's not generally mandated. You could do whatever you want.
But if you do one big pot for all the grandkids,
the risk you run is that one goes to a
fancier school than another, and then the.

Speaker 4 (31:38):
Right.

Speaker 3 (31:39):
So if you're concerned about equal treatment, then do three
separate buckets or however many grandkids there are separate buckets,
and then have it, you know, and then put an
agent so by the time they reach thirty whatever they
haven't spent on that education or that whatever they needed
during their life to that point, they can just take
it and go. So that's one example, folks, of how

(32:03):
to leave assets to beneficiaries. It's the end of the month,
Last chance to get This guide entitled that how to
leave assets to beneficiaries gives you multiple examples, from special
needs kids to incentives trusts, to skipping a generation like
we did in this example here, to divorce proofing, to

(32:23):
you know, stagger distributions for ages. Folks, There's so many
ways to leave assets to kids. And please know that
trust can live on after you die. So if you've
done planning. If you haven't done planning, this guide is
for you to help you understand how to leave assets
to your family eight six six eight four eight five

(32:45):
six nine nine or Legal Exchange Show dot com Again,
end of the month, Last chance to get it eight
six six eight four eight five six ninety nine or
Legal Exchange Show dot com.

Speaker 2 (32:57):
Todd. Our last question comes from John and where mass
and John writes, I am a fifty six year old
disabled veteran and I will be selling my home in
Massachusetts soon and relocating when I sell my home and
purchase a new one. Should I place one of my
children on the deed to protect it from probate, inheritance
taxes and the nursing home.

Speaker 3 (33:18):
Well, it's a lot to unpack here. So you're fifty six,
you're a veteran. You want to sell.

Speaker 2 (33:23):
Your disabled veterans. So maybe that's where the nursing home concerns.

Speaker 3 (33:27):
Yeah, to say, should could be something that you know,
and again he may have veterans benefits, but still you
want to be concerned. So but he's selling his home soon,
he's not, you know, and relocate, So I assume he's
going to buy another home. Yes, we can make that assumption.
So if he sells his home and he purchases the
new one, what says right there? You know, do I

(33:47):
want to place my children's name on the deed? While
I never I never liked that? Maybe fat ye right
out of the gate, Yeah, big no, right right out
of the gate, right, because what she's saying, I want
to I want to put the kid's name on to
secure it from probate and inheritance taxes in the nursing
home and the nursing home, Well, does it even do
all of that? Well, I guess if you don't own it. Yeah,

(34:11):
it's not going to go to probate because you don't
own it because I gave it to my child. Does
it protect it from a nursing home? Well, I guess
it does after five years because you don't own it.

Speaker 2 (34:21):
Doesn't protect it from your kids.

Speaker 3 (34:22):
Though, and yeah, and it's it's as you know. And
and does it save it from inheritance taxes? I guess so,
because you don't own it, so you know on the
what cost? Yeah, exactly, that you don't own it. Part
is easy to understand. The fact of the matter is
the cost is too great for the for the owner,
for the parent in this case, in this case for

(34:43):
John right, if a client came to me and said
that's in fact what I want to do, then I
wouldn't help them. He would have to find another lawyer.
So that's a pretty emphatic no from me. But I
would explain to the client, Look, I'm not just telling
you no. The education here is as you said, Susan,

(35:05):
what's the cost? Right? The cost to you is you
don't own the house anymore. And if you your kid
gets a divorce or has a financial problem, unbeknownst to you.
You can't control it. You could lose the house, divorce,
who knows. Secondly, what if you want to move again?

(35:27):
Here you are moving and you know.

Speaker 2 (35:28):
Right we now don't own that house. Your child does, so.

Speaker 3 (35:32):
You can't even sell it. The child has to sell
it and the child gets the money. The child, maybe
they'll give it back. It has to give it back
to the child. If the child doesn't live there, they're
gonna have adverse capital gains taxes that you wouldn't have
because of this thing called a capital gains exclusion that
you get for selling your primary residence. Ye, that you

(35:54):
wouldn't have because you don't own it.

Speaker 2 (35:55):
So what's a better alternative?

Speaker 3 (35:57):
That's a problem. I can go on with these, Yeah.

Speaker 2 (36:00):
What's a better what's the best way if he wants
to avoid probate, potentially reduce or eliminated inheritance taxes, and
protect from the nursing home.

Speaker 3 (36:09):
The good news is reading this fact pattern, I'm guessing
he's probably not worth thirteen point nine million, so we
don't have a federal estate tax problem already. You know,
if he's in Massachusetts, the exemption has gone up to
two million, So depending on what he's worth it. It may
not even be it may not even be a problem
for mass Yeah, and so to me, probably just the straight,

(36:31):
single person irrevocable trust would be the way to go.
Put the house in, put your kid on as trustee,
you live there, you control it, you pay the bills,
You could sell it. When you want to sell it,
just direct the trustee. You can buy another one. And
if the house is the only thing in there, you're
not going to have any any income tax filings either. Folks.

(36:53):
It's a great way to do it, but when you're
leaving assets to children, giving it out right is not
the way to go. Get the guy eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com.

Speaker 2 (37:06):
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 Powers,

(37:27):
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 (37:36):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to Beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down

(37:59):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from

(38:21):
our website Legal exchange Show dot com. That's Legal exchange
show dot com. The proceeding was paid for in the
views expressed are solely those of Kushingan Dolan. Cushing and
Dolan in or Armstrong Advisory may contact you're offering legal
or investment services. Cushing and Dolan and Armstrong Advisory do
not endorse each other and are not affiliated. Consistently voted
one of the top Caribbean destinations the United States, Virgin

(38:41):
Islands is the perfect place for your next vacation. Whether
you're looking for romantic getaway, a long weekend with friends,
or a family vacation. Saint Croix, Saint Thomas, and Saint
John have everything you need to enjoy that special time
away from home. Take advantage of a variety of incredible
promotions that are available right now. Go to visit USVII
dot com slash promotions, where you'll find the details about

(39:04):
all of these amazing experiences, including a stay at the
Divvy Karina Bay all inclusive beach resort and casino on
Saint Croix. From the moment you arrived, you'll fall naturally
in rhythm with the heartbeat of the islands. There's no
money to exchange, and travel from New England could not
be easier. Don't miss your chance to enjoy America's Caribbean Paradise,
the United States Virgin Islands. Head to visit USVII dot

(39:27):
com slash promotions from more information and to book your
trip today. That's visit USVII dot com slash promotions.

Speaker 4 (39:37):
The breadth of the stock market sell off in recent
days hasn't been seen since the early days of the pandemic,
and while it's easy to say don't panic if you're
concerned about your portfolio, given the impact of these teriffs,
now's the time to have that conversation. Hi, this is
Mike Armstrong from the Armstrong Advisory Group. If the market
correction has you anxious or worse rattled, give us a
call at eight hundred three nine three four zero zero one.

(39:58):
Let's get together and talk through your financial strategy, evaluate
at strengths and weaknesses, and make decisions for the future
that are in your best interest. These are challenging times,
but we've dealt with them before and are prepared to
deal with them again. Our goal is to help you
protect the assets that you've worked so hard to attain.
You can give us a call at eight hundred three
nine three four zero zero one and request a no
obligation consultation that number again is eight hundred thirtey nine

(40:21):
three four zero zero one.

Speaker 1 (40:23):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. Your tune to the Legal Exchange with Todd Lutsky.
If you are a loved one needs a nursing homestay,
call Todd right now at eight sixty six eight four

(40:45):
eight five six ninet nine and let him make sure
your assets are protected. That's eight six six eight four
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 Power as a financial advisor the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with the law firm of Cushing and Dolan with a
master's in taxation. Todd, I want to talk a little
bit about rental properties and kind of the impact of

(41:20):
having an LLC for those rental properties. So what exactly
is an LLC and why should someone consider using it?

Speaker 3 (41:28):
So, an LLC is a limited liability company, right like
an sque company, escorp, same thing, but you put the
you put the real estate in and it is designed
to protect you from the costs of creditors, really is

(41:48):
what it does.

Speaker 2 (41:49):
So like slip and falls, things like that.

Speaker 3 (41:51):
Right, So you put it in and you let you
know you if someone gets hurt on the property, instead
of suing you, which they would do. Now, So all
of you folks that have lots of rental properties or
even one, but if you have one rental property, but
you have a nice home, a nice vacation home, and
nice investment portfolio, I don't want to be sued personally.

(42:14):
I don't want them going after all those other things.
If it's in the LLC, they can only go after
what's in the LLC, and it limits your liability, which
is probably the easiest way to LLC limited liability company.

Speaker 2 (42:28):
So, if you have a rental property in your LLC,
would you be able to then give up your umbrella insurance?

Speaker 3 (42:37):
No? An emphatic no, you keep the umbrella insurance because
it's that insurance company that's going to basically hire their
lawyer to help settle the amount of money that this
claimant wants. And you're just happy you got to keep
your house and you didn't get sued, or your rental
property and you didn't get sued.

Speaker 2 (42:59):
What happens if you have more than one rental property?
If you have a bunch of them, do you need
a bunch you need a separate LLC for everything or
just throw it all into one?

Speaker 3 (43:08):
And do I do have clients that have you know,
multiples giving here like eighteen rental units. Right, Well, we're
not going to do eighteen LLC's. I mean you can,
there's no there's no law that says you can't. You
just have to be. There'll be an upfront cost to
get it in. But remember, at least in Massachusetts, and
each state has their own fees, mass is on the

(43:29):
high side. The other states perhaps not as much. But
you know, in mass you're going to pay five hundred
bucks a year for the privilege of having an LLC
for each LLC, each LLC, so you have that, but
that's tax deductible against the rent. So do I really care?
It's like free? So maybe I don't. If I've got
that many rental properties. So the answer to your question

(43:51):
is is really up to the client. So if the
client says, yeah, you know what I can afford it,
I'm going to set up eighteen LLC's and I want.
I love that individualized protection that I get. When I
say individualized protection, I mean when they get hurt on
LLC number one, they cannot sue LLC number two through seventeen,

(44:14):
and my example only that one. So that's great. Now,
if we're going to do that, and again you don't
have to you can group them, which we'll come back
to the grouping in a minute. If you're going to
do that, then what you want to do is you
want to set up a holding company and have all
these eighteen LLCs as subsidiaries of the holding company, so

(44:38):
that they become single member LLC's. Otherwise, you have to
file an income tax return for eighteen property.

Speaker 2 (44:46):
Eighteen the so in this case, would you only file
one for that holding company exactly.

Speaker 3 (44:51):
So now administratively this becomes a lot easier because now
I only have to file one ten sixty five go
through income tax return. Remember, these entities do not pay taxes.
They flow through to the individual, So here I would
now only have to file one ten sixty five, not eighteen. Yep. Now,

(45:13):
remember you're going to have to keep your quick books
for all your individual buildings. You still need to know
what building got new roof, got a new window, got
new expenses. You still have to keep rents and expensive same.

Speaker 2 (45:25):
Kind of record keeping you have to do anyway.

Speaker 3 (45:27):
Same kind of record keeping, but not administratively complicated. Folks,
that's exactly how you want to own rental property. But
then you have to decide how you want to leave
that rental property to your family or any other assets
you have to your family. And this guide how to
Leave Assets to your Beneficiaries is going to tell you that.

(45:49):
It has multiple examples of how to do it. It's the
end of the month, call and get the guide how
to leave Assets to beneficiaries. If you've not done your plan,
if you've done your planning, it's going to help you
learn or change the plan that you've done as life
events might have changed in your family. Eight six six

(46:10):
eight four eight five six nine nine or Legal Exchange
show dot Com. It's the end of the month, Get
the guide eight six six eight four eight five six
nine nine or Legal Exchange show dot com.

Speaker 2 (46:24):
So how does it work? Todd. Let's say you have
a rental property and you've set up an LLC and
you have it in there, and you're going along as normal,
and then you come to a point in your life
where you say, hey, I really need to have an
estate plan and now you're going to create whether it's
a revocable trust or an irrevocable trust. Do you need
to get rid of that LLC and just put the

(46:45):
property in your trust? How would that work with your
state plan?

Speaker 3 (46:49):
And that really really dovetails off of what we just
said for the guide, right when I said, now you've
got to figure out how to leave those assets, yeah,
to your family. Well, that's where the trust comes into place.
So you've created this. Let's go back to our example
with the holding company and the eighteen subs, and again
they don't need to be eighteen. You could group them
and make it, you know, instead of eighteen, make it

(47:11):
nine and put two buildings in each LLC. That's good too,
So you could do it any way you want. But
the point is that all of those subllcs will be
owned by the holding company. Stock will be owned by
the holding company. Now the stock or the membership interest
that they call the holding company has those shares will

(47:35):
be owned by the trust.

Speaker 2 (47:37):
Okay, so you only have to update that one holding company.

Speaker 3 (47:41):
The stock and that needs to go. Now again, if
you have an estate this large, likely there could be
a husband trust and a wife trust, and so you
would then take fifty percent of the shares and put
it in husband's trust and fifty percent of the shares
and wife's trust again balancing the estate for estate tax purposes,
and then the trust will explain where those shares go

(48:02):
when you die.

Speaker 2 (48:04):
So what happens now, let's let's not do the eighteen
LLC's example. It's a lot, but likely they would have
a revocable trust. But let's just say there's one rental
property and someone wants to do that nursing home planning
and they have an ere evocable trust. How does that
change how they can operate you know, that rental property

(48:25):
kind of on a day to day basis of you know,
collecting the rents and kicking out tenants and that kind
of stuff. How does that change if it's an irrevocable trust.

Speaker 3 (48:33):
Yeah, at good point, and you're right, oftentimes that you're
not doing this as often with medicaid planning, but you
could easily be in that situation. So they still want
the day to day creditor protection from from the tenant.
So we set up the LLC and then let's say
it's a small enough estate that maybe it's a joint

(48:54):
trust a joint earv. Well, the shares would be owned
by the joint ev okay and the shares can still
be owned there. And interestingly enough, it would be a
single member LLC in this example, so you wondn't even
have to file income tax returns for the LLC. But
the LLC the managers could be mom and dads of
the world. They just can serve as manager. They will

(49:17):
collect the rent deposited in a bank account in the
name of the LLC. They will then write checks out
of that bank account to pay bills for that LLC,
and then at the end of the month there might
be something called excess rent. We hope, so this is
the excess rent after we've paid our bills. Well, we
need that in our pocket to live. So as managers

(49:41):
of the LLC, they can make a distribution, write a
check to the shareholder, which is the irrevocable trust, deposit
the money into the bank account and the irrevocable trust
and it is now what rental income that the trust
just received. And these trusts are income only trust so

(50:04):
the income is required to be paid out to mom
and dad. So mom and Dad still get the rental
income just like they did before yep. And they will
pick it up on their own income tax returns just
like they did before. Because the trusts are grant to
our trust, so it works and property will be protected

(50:24):
from the cost of long term care in the future. Folks.
End of the month. Get the guide learn how best
to leave your assets to your beneficiaries eight six six
eight four, eight five six nine to nine or Legal
Exchange show dot com.

Speaker 2 (50:41):
Todd Lutsky from the law firm of Cushing in Dolan, thank.

Speaker 3 (50:44):
You so much, always a pleasure. Thank you.

Speaker 2 (50:46):
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 Lutsky.

Speaker 1 (50:59):
Beneficiary playing an asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down

(51:22):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six nine nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from

(51:44):
our website Legal exchange show dot com. That's Legal exchange
show dot com. The proceeding was paid for and the
views expressed are solely of those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact your
offering legal or investment services. Cushing and Dolan and Armstrong
Advisory do not endorse each other and are not affiliated the.

Speaker 6 (52:00):
Keys to enjoying a peaceful retirement is flexibility.

Speaker 3 (52:03):
Hi.

Speaker 6 (52:03):
This is Chuck's out of from the Armstrong Advisory Group Today.
Retirement planning involves lots of possible changes and challenges given
all of the external factors that may affect your goals,
so creating a budget for your retirement is vital to
financial stability. Retirement comes with a number of monetary considerations,
from how much money you'll need every month to managing
your existing investments through market volatility. Our new guide is

(52:24):
called how to Build a Retirement Budget, and it will
offer a variety of options for your consideration that may
lessen your risks when it comes to your planning. Call
right now at eight hundred three nine three for zero
zero one and ask for our new guide today. That's
eight hundred three nine three for zero zero one, or
requested online from our website Armstrong Advisory dot com. That's

(52:44):
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 is specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment Decisions. Armstrong may contact you to offer investment
advisory services. Consistently voted one of the top Caribbean destinations,
the United States Virgin Islands is the perfect place for

(53:07):
your next vacation. Whether you're looking for romantic getaway, a
long weekend with friends, or a family vacation, Saint Croix,
Saint Thomas, and Saint John have everything you need to
enjoy that special time away from home. Take advantage of
a variety of incredible promotions that are available right now.
Go to visit USVII dot com slash promotions, where you'll
find the details about all of these amazing experiences, including

(53:30):
a stay at the Divvy Karina Bay all inclusive beach
resort and casino on Saint Croix. From the moment you arrive,
you'll fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Don't miss your chance to enjoy
America's Caribbean paradise, the United States Virgin Islands. Head to
visit USVII dot com slash promotions from more information and

(53:53):
to book your trip today. That's visit USVII dot com
Slash Promotions,