The importance of updating your estate plan after a divorce

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 Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Lutsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Welcome Todd,
How are you today?

Speaker 3 (00:52):
I am never better in you?

Speaker 2 (00:54):
I'm great? Thank you? What do you have for us
this week?

Speaker 3 (00:56):
As we welcome in a new month.

Speaker 2 (00:57):
I know it's crazy, isn't it? Moving along summer's half
over a.

Speaker 3 (01:01):
Couple of things.

Speaker 4 (01:02):
We've got a new Hampshire Supreme Court case about buttoning
up things when you're getting divorced. Way do you hear
how this case unraveled? A little bit of trickery, a
little bit of fraud mixed in here, but story today,
you're gonna we're gonna learn a little bit about that,
and then we're going to head over to the sixth

(01:24):
Federal Circuit, which is in Ohio, again my home state.
Understanding basically how revocable trusts work. I mean, the facts
here explain the setup of a revocable trust, but the
way it ended up working is just people just don't
understand how these revocable trusts work and the controls and

(01:44):
that you keep, and so stay tuned in this the case.
You might not love the result, but I think we
don't care about the result. We care about what we
can learn from this, which is all about revocable trust which,
interestingly enough, folks, since it's a new guide this month,
we are going to be demystifying the top seven estate
planning trusts, which is what this guide is about. This

(02:07):
is a guide where I try to put together what
I think are trusts that most people use. Nominee Realty
Trust tops the list. I don't like them, but they're
in there. We're going to learn about them. Revocable trusts, irrevocable,
different flavors. Many people don't realize there's irrevocable life insurance
gifting trusts, and medicaid trusts, things like special needs trusts,

(02:29):
pool trusts, things like that. When you're doing planning, not
just what they are, but all the different ways they're
taxed and how you control them. Folks, if you've never
done a state planning, this is certainly the guide for you.
If you've done estate planning, check it out and see
if there's any trust you might need to modify your
own trusts eight six six eight four, eight, five six

(02:53):
nine to nine or Legal exchange show dot com again
demystifying the top seven estate planning trusts eight six eight four, eight, five,
six nine nine or Legal exchange show dot com.

Speaker 2 (03:06):
Is this one of your favorites?

Speaker 3 (03:08):
It is, but I'm not allowed to say that. Susan
doesn't let me say that.

Speaker 2 (03:11):
They're all your faces.

Speaker 4 (03:12):
I love this one. Thank you for letting me get
that off my chest.

Speaker 3 (03:17):
So let's talk about the facts.

Speaker 4 (03:18):
Here, the Supreme Court case here out of New Hampshire.
So Carol and John get married, and remember the dates
here nineteen fifty eight. Okay, in March of nineteen seventy four,
John wanted a divorce. He's had enough, so he gives
her several pieces of paper to sign and says, I'm
going to go to the Dominican Republic to get the

(03:39):
divorce decree. Okay, already my eyebrowser going, and yours are crinkled.

Speaker 3 (03:44):
I see they are.

Speaker 4 (03:45):
He returned, and he said, I told her that I
did not obtain the divorce decree. But in preparing to
move to Taiwan, he tells Carol that, you know, you
should sign over the house to me, because it'll be
easier to sell if it's in my name than if
it's joint tenants. Yeah, so she does, and that was
in and so in July of nineteen seventy four. He

(04:08):
tells her then that, by the way, this was by
shortly after. You know, remember in March of seventy four
he started this divorce Shenanigan. In July of seventy four,
after the deed is signed over to him, to her
or to him, he tells her, oh, by the way,
I did get the divorce decree, and he files it

(04:28):
with New Hampshire. So they begin living apart, and eventually
they both remarried, and in twenty eighteen John died and
in November of twenty twenty one, Sally, the second wife,
decides to probate the estate and take the house. Carol,
the first wife, intercedes and tries to rescind the deed

(04:51):
and say the divorce decree is invalid. The lower court
grants the motion in favor of Sally and says to
Carol the second wife, Sally's Sally's the first the second wife. Yeah,
Carol the first wife. She says, you lose because the
you know, you're prohibited from claiming that the divorce decree

(05:14):
is void. You basically are time barred, and the doctrine
of latches applies, which I love. That's the thing where
it says you sit on your rights too long, you lose.
That's what latches means. Well, you can imagine. Carol didn't
like that, so Carol appealed to the Supreme Court, and
the Supreme Court affirmed. The lower court told Carol, Carol,

(05:38):
you should have known in July of nineteen seventy four,
that you were defrauded in designing that deed. You should
have known then, and when you learned about the divorce,
you should have acted. Instead, you relied on the divorce
and you got remarried.

Speaker 2 (05:58):
Plus you just let you time go by, y snooze,
you lose. What do you expect to happen?

Speaker 4 (06:03):
So, Carol, I think that the judge did the right
thing here. I think I'm not happy that you got
defrauded by your husband, but a little bit of shame
on you.

Speaker 3 (06:12):
Yeah, it's the same.

Speaker 2 (06:13):
You can't can advocate for yourself.

Speaker 4 (06:15):
Right, and relied on it and got married. So anyways, folks,
I just want to help you understand. We don't care
about the results so much as we do. You know,
what can we learn, you know from this and a
couple of things is, you know, don't let someone ever
tell you that it's easier to sell property because it's
in a single person's name, right versus two names? Remember,

(06:37):
two names is just one extra signature, The paperwork is
all the same, no extra effort, and the buyer certainly
doesn't care who he buys it from. Right makes no difference.

Speaker 3 (06:51):
Right.

Speaker 4 (06:51):
Plus remember jointly held property at least avoids probate, so
you always want to do that. It doesn't help from
an estate planning standpoint so much. It doesn't readose to
state taxes, but it does just pass to the surviving
spouse automatically.

Speaker 2 (07:04):
Because his whole spiel was it's easier for me to
sell it's in my name. So he never sold the house.

Speaker 4 (07:09):
He never sold the house because he wanted it transferred
to him, because he was getting a divorce.

Speaker 2 (07:14):
Right, So if she had actually not transferred to him,
it would have been in both their names with survivorship,
and she would end up getting it at the end
of the day when he died.

Speaker 4 (07:22):
Right, that might have happened as well. Again, that's where
I get to this whole idea of the divorce. I go,
what happened here? How how is this property? I mean,
didn't they deal with this property when the divorce came?
Remember all property gets divided at the time of the divorce.
It doesn't matter how it's owned right right, how it's

(07:43):
owned on the date of the divorce does not matter.
So why didn't she address this then? So to your point, Susan,
even if it was if it was left unaddressed right,
and it was joint and she never signed it over.
I wonder if it would have been left unaddressed right,
and then you're right, she would have got it when

(08:03):
when he died.

Speaker 2 (08:05):
I think I'm still stuck on how do you go
to the Dominican Republican to get divorced?

Speaker 3 (08:08):
I know I can't. I can't go there either.

Speaker 2 (08:11):
I'm gonna need some research on that one. Not for
me though, not for me personally.

Speaker 4 (08:14):
But you know, I think the important part is from
ann state planning folks. Standpoint, folks. You know if you
if you have husband or wife situation, you have separate trusts.
I don't care if they're revocable, irrevocable medicaid trusts, and
you get divorced, all those assets will be considered.

Speaker 3 (08:32):
It does not matter.

Speaker 4 (08:33):
Whose trust owns it. Right, So I always get this
with people. You know, I'm so worried I'm putting everything
in my husband's trust or I'm putting more in my
trust than my husband's trust.

Speaker 3 (08:44):
Is that a problem. It doesn't matter, folks.

Speaker 4 (08:47):
It doesn't matter whose trust owns it, just like it
doesn't matter if you get married and for whatever reason,
a lot of assets are in one spouse's name more.

Speaker 2 (08:57):
Than the other, and that happens very often. They may
have a giant in IRA because they worked their whole career.
Maybe you had to stay at home wife or you know,
so they very often.

Speaker 4 (09:06):
Yeah, you never know how these are owned. But I
don't think you need to fret about that.

Speaker 3 (09:10):
So that's it.

Speaker 4 (09:11):
You know, always just make sure that again, So that's
a little tip on funding your your estate planning trust.
Don't fret about it so much. The other thing is,
always make sure that after the divorce is over, especially
if you remarry, which these people did, right, Why wouldn't
you then sit down and make sure your estate plan
is in order, right, know what your assets are, know

(09:33):
how much they're worth, know how they're owned, and set
up a trust to take care of each other and
your kids from your prior marriage. Yeah. I mean, so
to me, a lot of a lot of miss you know,
mistakes were made here along the way.

Speaker 3 (09:49):
They just didn't.

Speaker 4 (09:50):
I mean, there were so many opportunities to review the
estate plan, sit down, look it over, make updates, and
none of them really did that at any stretch. So folks,
for you guys, if you've never done your planning certainly
the guides for you. Get this guide Demystifying the Top
seven estate planning trusts and figure out which trust is
right for you or if you need to change your

(10:13):
estate plan, which trust is right for you in that
change eight six six, eight four, eight five six nine
to nine or Legal Exchange show dot com.

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

Speaker 1 (10:37):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder law, estate planning and asset protection.
This month, they're offering a free guide called Demistifying the
Top seven estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(10:57):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules,
benefits and tax treatment and choosing the wrong one could
cost you. Learning the differences now can help you make
smarter decisions for your future and your loved ones. Trusts
are a critical part of any well designed estate plan,
but they can be complex. Don't guess your way through it.

(11:17):
Get the facts first. Call Cushing and Dolan now at
eight sixty six eight four eight five six ninety nine
to request your free copy, or visit legal exchange show
dot com. The proceeding was paid for in the views
exprest Or Sole, leaders of Cushing and Doolin. Cushing and Dolan,
ind or Armstrong Advisory may contact you're offering legal or
investment services. Cushing and Dolan and I'm Strong Advisory do
not endorse each other. In or not affiliated.

Speaker 5 (11:37):
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(11:57):
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Speaker 1 (12:08):
The holidays are just around the corner, so now is
the time to plan your winter escape. Trade in the
cold for sunshine, sea breezes and island vibes in the
US Virgin Islands, America's Caribbean paradise. Whether it's a romantic retreat,
a family celebration, or a solo recharge before the new year,
Saint Croix, Saint Thomas, and Saint John offer the ultimate

(12:31):
warm weather getaway. Lounge on sun drenched beaches, explore vibrant
culture and celebrate the holidays island style. No passport, no hassle,
just warm weather, clear blue water and unforgettable memories. This
is where the stress melts away and you find yourself
naturally in rhythm with the heartbeat of the islands. Go

(12:51):
to visit USVII dot com and book your trip today.
That's visit USVII dot com. The US Virgin Islands is
Caribbean Paradise. Your holiday escape starts here at visit USVI
dot com.

Speaker 6 (13:07):
The future doesn't plan itself. Hi, this is Mike Armstrong
from the Armstrong Advisory Group. Whether you've built a business,
grown your investments, or simply want to protect your family.
Your legacy deserves more than a generic estate plan. From
wills and trusts to beneficiary designations and beyond. True wealth
transfer is personal, powerful, and deeply strategic. That's why we

(13:28):
created Leaving a Lasting Legacy, a comprehensive guide to legacy
planning that puts your vision, values, and family first. Learn
how to protect your assets, avoid probate, minimize taxes, and
build a legacy that lasts for generations. Get your free
copy of Leaving a Lasting Legacy today by calling eight
hundred three nine three four zero zero one. That number

(13:48):
again is eight hundred three nine three four zero zero one,
or you can request the guide online by visiting Armstrong
Advisory dot com.

Speaker 1 (13:55):
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 make contact you to offer investment
advisory services. 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

(14:17):
an appointment eight six six eight four eight five six
ninety nine. That's eight six six eight four eight five
six ninety nine.

Speaker 2 (14:24):
Welcome back into legal exchange with Todd Latsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Latsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Where
we headed now, Todd, we.

Speaker 4 (14:39):
Are going to head to the sixth Circuit out of
Ohio and we're going to basically understand revocable trusts and
how they work. And this is I thought just so appropriate,
especially with this month's guide.

Speaker 3 (14:50):
That we have. So here are the facts.

Speaker 4 (14:54):
Lester, a surgeon, did a revocable trust in nineteen ninety.
He had five kids and they were all contingent beneficiaries.
Remember it's a revocable trust. Lester's daughter, Sarah predeceased him
but left two kids, Dan and Rachel, so they were
beneficiaries in her place.

Speaker 3 (15:14):
Well, that makes sense.

Speaker 4 (15:16):
Twenty eighteen, Lester names the son David Durable power of
attorney and trustee on the trust, which strikes me as
strange because I haven't gotten anything about David dying or
about Lester dying. Yet later in twenty eighteen, again I
assume Lester's still alive. The facts weren't clear. David started
distributing assets out of the trust, mostly equally to the

(15:41):
four kids living and a much smaller portion to the grandkids,
Dan and Rachel. Well, Dan and Rachel bring an action
right away. They're not happy about this. They say there's
a breach of fiduciary duty here. In the court agreed.
The lower court said, you know what, it is a
breach of duty. You cannot distribute assets out of the
trust without specific authorization letters from from Lester. So Lester's

(16:06):
still alive, and so this is a breach of fiduciary duty. Well,
the kids appealed and the court reversed, saying because Ohio
law doesn't give Dan and Rachel the right to sue
for breach of trust.

Speaker 3 (16:23):
Oh boy.

Speaker 4 (16:24):
Well, they didn't like that, so they appealed and Dan
and Rachel. Turns out that Dan and Rachel on they
appealed all the way to the Sixth Circuit. It turns
out that Dan and Rachel have a constitutional right to sue.
Those elements were satisfied, so they remanded the case. So
we get no answer.

Speaker 3 (16:43):
I know, I know, you know, I know you don't answer.
But I'm happy with it because this has just got so.

Speaker 4 (16:52):
Many problems with it right when I'm when I'm I'm
reading this, and the biggest problem I have is that,
you know, Lester created a revocable trust. He still alive,
he didn't die, So how is it and why is
it that we would put Dan on as trustee and

(17:16):
these distributions are being made and how does all that work?

Speaker 2 (17:19):
So and the kids are filing suits? He's not that
you don't have any beneficiaries till your dead.

Speaker 3 (17:25):
That's another problem. You're really I'm going to.

Speaker 2 (17:27):
Merely change and say, because you know, he's got to
be involved in this process.

Speaker 4 (17:31):
Yeah, I mean so, folks, I felt this case was
good because I think we can learn a lot about
these revocable trusts and how they actually work and what
you should do as a creator, a donor settler of
the trust. Before we do that, though, I just want
to let you know about the new guide, which again
is really spot on for this this month demystifying the

(17:53):
top seven estate planning trusts, one of which is revocable trust,
which is what we're talking about in this case. Certainly
those are used frequently, but you know what, there's also
irrevocable trust, many different kinds. We've got gifting and life
insurance trusts, which are very different irrevocable trusts than the
irrevocable medicaid trust that we talk a lot about. And

(18:16):
then there's you know, if you've got special needs children,
we've got special needs trusts in here. We've got pooled
trusts in here, so of course the least favorite nominee
realty trust. But more importantly how they operate your control taxes,
income taxes, estate taxes, gift taxes. They're addressed in here.

(18:37):
Get the guide learn how to get your estate in
place and what trust is right for you eight six
six eight four eight five six ninety nine or Legal
exchange Show dot com New Guide for the Month eight
six six eight four eight five six nine nine or
Legal exchange Show dot com. What are we going to learn?

Speaker 2 (18:58):
Don't put your kids on your revocable trust is trustee.

Speaker 4 (19:02):
So we talked about this already, right Generally, the donor
serves as trustee. Just so you know, right, you're the trustee,
you're the donor unless you lose capacity, right, and then
you have an alternate trustee. And so I cannot see
why anyone would ever have appointed dan or a child
to serve as trustee while the donor is still alive
and competent, and competent, the donor stays in control, folks,

(19:25):
And remember, distributions generally come out. It states that distributions
can come out of the trust to the donor without
written order, or if the donor loses capacity, then it
can come out to the donor or the spouse.

Speaker 3 (19:42):
That's how our trust reads.

Speaker 2 (19:43):
There's no restrictions on a revocable trust in it out right.

Speaker 4 (19:47):
Well to the donor or to the donor spouse while
the donor is living. The kids are not beneficiaries on
this trust. On our revocable trusts, while the donor is
living comes out to the donor and the donor spouse only,
which makes sense. If they want to make a gift
to the kid, then they can take the money and

(20:07):
give it to the kid. I mean, they're allowed to
do that if they want to. But I think you know,
people need to so that's another problem which I didn't
understand how that could even happen, which is why it's
a breach of fiduciary duty. Right, That's exactly what this
case is about. They're saying, WHOA, you can't do this?

Speaker 2 (20:26):
Was he distributing it to himself.

Speaker 4 (20:27):
Well to all four kids, and a little less to
the grandkids, So there was still no there was no
trying to be cheap here or devious, I don't think,
but I don't understand why they were even coming out, right,
So you know, I just don't understand how those distributions
come out to the kids while Lester's alive. Right now, now,

(20:52):
I just want to spend a minute before I share
a real life story with you on this. Now, remember
normally when a child dies, you don't have to race
back and amend your document. So in this case, if
one child died, remember the grandkids sort of stepped into
the shoes of the deceased child, so it was a
one fifth split to the kids. So here, you know,

(21:14):
there's no need to come back and amend the trust.
Just read the language and make sure it covers the grandkids.
You know, per stirpies usually not per capita. So here
the distributions would simply have been one fifth, and then
the one fifth that went to the deceased child would
have been split between those two kids, Dan and Rachel.

(21:37):
So it's possible that Dan and Rachel get a little
less individually because they have to share one fifth.

Speaker 2 (21:43):
Which is what they would still get if their parents
were still alive exactly.

Speaker 3 (21:47):
So I don't think you know.

Speaker 4 (21:49):
Just so it's just sort of a side note to
let you folks know that just because someone dies, you
don't have to change. You normally have still provided for
your grandchildren. I know we do that a lot. So
that's just to keep that in mind. So operationally again,
sort of a lot of strange stuff going on here,
and just so you understand why you don't want to change.

(22:10):
During life, I had a real life situation where another
attorney advised this donor, right, he was getting old, but
he was not incompetent, right, and he put the daughter
on as trustee, and apparently the donor said, Okay, you know,
we'll do that. Turns out the son, who was actively
involved in the business, had a one third non voting

(22:32):
interest in the property or in the company, and was
ultimately supposed to get control of the company later, and
so you know, because he's been working in it. Well,
what did you do, don Or? You gave by the way,
the controlling voting shares of the stock were in the

(22:52):
donors revocable trust. Well, when you turned over the trustee
power to your daughter, you don Or just gave up
all the control over your own business. Right now, it's
controlled by the trustee of the trust because that's where
your stock is owned. And this caused a tremendous ruckus.
I'm sure, Well, good news. We don't shy away from

(23:14):
tough cases. We simply looked at the revocable trust and
we went ahead and we said, we went ahead, and
we said, you know what, we're just going to remove
you as trustee daughter, because you're still alive and the
donor could do that. And we went ahead and did that,
so got him back in charge and fixed the whole situation.

Speaker 2 (23:34):
I just don't understand why you would put a child
on unless you're incompetent to be your trustee on a revocable.

Speaker 3 (23:40):
Yeah, no, that's exactly right. I wouldn't do that either.

Speaker 4 (23:43):
I would I would say, you know, just stay in
charge of your trust as much as you possibly can.

Speaker 3 (23:48):
Yeah, and folks.

Speaker 4 (23:50):
I think that's important here for you guys as well.
Learn how these trusts work, what controls you keep, what
controls you don't keep. Seven different kinds of trusts are
in the Guy eight six six, eight four, eight, five
six nine nine or Legal Exchange show dot com.

Speaker 2 (24:06):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group, and Todd
will be answering your listener questions when we return to
the Legal Exchange with Todd Lutsky.

Speaker 1 (24:21):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder law, estate planning, and asset protection.
This month, they're offering a free guide called Demistifying the
Top seven Estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(24:41):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules
benefits and tax treatment, and choosing the wrong one could
cost you. Learning the differences now can help you make
smarter decisions for your future and your loved ones. Trusts
are a critical part of any well designed estate plan,
but they can be complo don't guess your way through it.

(25:02):
Get the facts first. Call Cushing and Dolan now at
eight sixty six eight four eight five six ninet nine
to request your free copy, or visit legal exchange show
dot com. The proceeding was paid for in the views
exprest or sole lead those of Cushing and Dolan. Cushing
and Dolan, ind or Armstrong Advisory may contact you offering
legal or investment services. Cushing and Dolin and Armstrong Advisory
do not endorse each other. In or not affiliated HI.

Speaker 6 (25:22):
This is Mike Armstrong from the Armstrong Advisory Group. When
it comes to legacy planning, having a will is important,
but it may not be enough. A will only covers
probate assets, and the probate process can be slow, public,
and expensive. That's where trusts come in. Trust can help
you avoid probate, keep your wishes private, and control how
and when your assets are distributed. Whether you're looking to
support family, minimize taxes, or prepare for the unexpected. A

(25:45):
well designed plan can make a meaningful difference. Our new
free Guide, leaving a lasting legacy, covers wills, trusts and
other strategies to help you build a strong retirement plan.
Take the first step towards clarity by calling eight hundred
three nine three four zero zero one right now and
asking for your free guide today. That number again is
eight hundred three nine three four zero zero one, or

(26:06):
requested online at Armstrong Advisory dot com.

Speaker 1 (26:09):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal, or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. The holidays are just around the corner, so
now is the time to plan your winter escape. Trade
in the cold for sunshine, sea breezes and island vibes

(26:32):
in the US Virgin Islands, America's Caribbean paradise, whether it's
a romantic retreat, a family celebration, or a solo recharge.
Before the new year, Saint Croix Saint Thomas and Saint
John offer the ultimate warm weather getaway. Lounge on sun
drenched beaches, explore vibrant culture, and celebrate the holiday's island style.

(26:54):
No passport, no hassle, just warm weather, clear blue water
and unforgettable mine memories. This is where the stress melts
away and you find yourself naturally in rhythm with the
heartbeat of the islands. Go to visit USVII dot com
and book your trip today. That's visit USVII dot com,
the US Virgin Islands, America's Caribbean paradise. Your holiday escape

(27:18):
starts here at visit USVII dot com. 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 (27:39):
Welcome back talk. We have a few questions from listeners
for you. First question comes from Christine and Charlton Mass
and Christine writes, my father transferred his home to me
and my sister and he reserved a life estate. My
husband and I have been living with him for the
past eight years while caring for him. He is now
going into a nursing home, will be at risk for

(28:01):
the nursing home. My sister is trying to get us
to move from the house so she can sell it
once he does go into the nursing home. Is this legal?
So daughter moves.

Speaker 3 (28:12):
In with dad.

Speaker 4 (28:14):
But more importantly, my father transferred his home to me
and my sister, so she let's start with ownership. Yeah,
in the very beginning, folks, dad did a bad thing.
I don't care how this turns out. I mean, if
you know Dad had come into our office, I would
have said, we're not transferring the house to you know,

(28:35):
that doesn't make sense. You need to keep some control.
You did to a degree because you kept the life estate.
I get it, you get the right to live there,
but you've really given up more control than you need
to at this case. So what does that do? First
and foremost, from a nursing home standpoint, well, from a
nursing home standpoint, since it was done eight years ago,

(28:57):
this arrangement ultimately protects it from the nursing home. So
at least you can stop there and wipe your brow
and say, you know the house is protected from the
nursing home. But remember he reserved a nugget of ownership.
That's that life estate peace. It's the right to live there,
but it's also the present income interest in the property. Okay,

(29:19):
so at least we dodge the bullet about him going
into the nursing home. He can go in and they're
not going to take the house. However, they are going
to put a lean on the house. Okay, The lean
is there for people who foolishly enough, like the one
sister here, wants to sell the house before dad dies.

(29:42):
That's the problem, right, Why on earth would you want
to sell this house before dad dies? Never mind the
fact that it sounds like one sister wants to continue
to live there.

Speaker 2 (29:51):
And she owns half of it basically, right.

Speaker 3 (29:54):
Well, she owns half of the remainder interest.

Speaker 4 (29:57):
Yet and well she owns half the remainder interest the
child owned the other child. Sister owns half the remainder interest.
But Dad has this nugget. So if there's a big pie,
and depending on how old Dad is, Dad could still
own you know, twenty percent.

Speaker 2 (30:12):
So heed to sign on that if.

Speaker 4 (30:14):
He absolutely would need to sign off on it. So
first and foremost we have a capacity issue for dad.
We have to think about does Dad have the capacity
to sign off? Does Dad want to sell his house?
He might say, wait, I still intend to return home.
I still hope to come home. I want to I
don't want to give up that right to come home
if I have no house to come home to. So

(30:37):
Dad might not want to sign off. Nor might Dad
have capacity to sign off. Now, if there's a power
of attorney in place, they'll have they could do that
with the power of attorney sign for Dad. So I
get past all of that and I say, all right, now,
it's just up to you and your sister. You're going
to have to fight with each other to say, you know,
I don't want to sell. And again, if one of

(30:58):
the sisters doesn't want to sell, then you're going to
have to go to court. So this isn't an easy
sale for anybody here. Yeah, it's not going to be
like I put it on the market and it goes
in thirty days because one sister's knock signed right clearly,
is it legal? Well, it's legal. You could force each
other to sell. Whenever you own property like this, you're

(31:20):
able to go to court and get a petition to
partition and say hey, I want out of the property,
and then one sister would either have to buy out
the other sister or they force the sale.

Speaker 3 (31:29):
So I mean it could happen. So I'd say, is
it legal. Yes, it is.

Speaker 4 (31:34):
But there's a lot of other underlying issues to think
about here. The biggest one for all of them is
if Dad's in the nursing home and there's a lean
on it because he's on Medicaid, and they sell the property,
they're going to get paid back.

Speaker 3 (31:49):
So the state's going to get to the state.

Speaker 4 (31:52):
Yeah, whatever chunk Dad gets, that's going to the state,
not to the family.

Speaker 2 (31:58):
So if they wait to sell, that life estate goes
away when he dies and then they get the whole
trit split.

Speaker 3 (32:03):
The lien goes away.

Speaker 4 (32:04):
It's not subject to pro it's not subject to probate,
no estate administration, so the lean or state recovery excuse me,
the lien goes away. And don't forget, there's capital gains
taxes that might be paid that would be completely avoided
if you wait until Dad dies.

Speaker 3 (32:18):
To sell the property.

Speaker 4 (32:20):
Folks get some guidance when you're dealing with nursing home
admission situation and folks, get the guide Demystifying the Top
seven planning estate planning trusts when you're trying to do
your estate plan to get your ideas together to figure
out what kind of trust is right for you. This
guide offers them all, from nominee realty trust to revocable

(32:44):
to a series of different kinds of irrevocable trusts, and
how they all operate, your dues and don't and the
different types of income, gift and estate taxes that are
offered through these trusts. Yet the guide Get started eight
six six eight four eight five six nine nine or

(33:05):
Legal Exchange show dot com New for the month eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com.

Speaker 2 (33:15):
Our last question comes from Renee in Wooster, mass and
Renee writes, my mother passed away recently and named me
as the executor. In reviewing her account statements, it appears
that she gave a lot of money to my brother
over the past year. Can we deduct this amount from
his portion of his inheritance. I don't think my mother
fully understood what she was doing before she died, and

(33:38):
I think he may have taken advantage of that.

Speaker 3 (33:41):
Well, that's going to be. That's going to be a
tough call.

Speaker 4 (33:46):
So so let's just try to analyze this a little bit.
So Mom died, so now we have an estate administration.
First step in reviewing everything, you see that there were
gifts made from these accounts because you got to gather
all the statements. Remember, when someone dies, you've got to
do evaluation of everything you own on the date of death,
and in doing that you would definitely pull the bank statements.

(34:09):
So this is how they're going to see this now
when you say mother gave it away, so we have
to then look at the actual actions that were taken.
Did Mom write a check and sign it and give
it to son potentially? Did son just use a you know,
a code and went to the ATM machine and took
out money. I mean, you know, it becomes it becomes

(34:32):
a little harder to prove what happened. But you're going
to need to do that if you want to try
to prove this issue right. Then again, remember, folks, you
start doing this from a family perspective, and it's going
to get ugly. But if it needs to get ugly
because it's wrong, yes, sure, Now, before we go down

(34:56):
that ugly road, let's answer the question, can we deduct
this amount from his portion of the inheritance. No, you
don't get to decide. You know, children don't get to
decide how a decedent wishes to leave their assets. If
this decedent said all I have is a will and

(35:20):
I treat my kids equally, well that's her wish. If
it said, you know, I want to treat something as
an advancement, like we do in our trust.

Speaker 2 (35:30):
Johnny owes me some money.

Speaker 4 (35:32):
Or certainly Susan, it could be that someone owes me money,
or in this case like we have this this thing
in our trust called advancement language. If the don't or
the creator now the person who's deceased. If the creator
comes to us and says, you know what, I've given
my son one hundred thousand dollars recently or over his lifetime,

(35:55):
I want to treat that as an advancement. We have
special language in the trust that says, treat that as
an advancement, which in English means if you're dividing everything equally,
you have to give one hundred thousand dollars to the
other kids.

Speaker 2 (36:11):
First before you do this split.

Speaker 4 (36:13):
Then you split up everything equally so now, yes, that
would be a deduction from his inheritance, but.

Speaker 2 (36:20):
They would have to specifically say do here's what.

Speaker 4 (36:23):
It is, even though I have that language and the trust,
unless they come to me and give me in writing
the language, the amount of the and to treat it
that way, that language.

Speaker 2 (36:33):
Is doesn't do anything give because he's my favorite exactly.

Speaker 4 (36:37):
It's love and affection, it's it's whatever you want to
call it. So folks, you know, be careful there so,
but yes, can't can you do it?

Speaker 6 (36:45):
No?

Speaker 4 (36:45):
But if you want to bring an action and claim
undue influence, have at it. But it's going to be litigation, right,
and it's going to get ugly. But folks, to keep
things from getting ugly, get the guide This month it's
new top seven estate planning trusts and learn which trust
is right for you and begin your planning eight six, six,
eight four, eight, five, six, nine to nine.

Speaker 2 (37:08):
If you have a question you would like to ask Todd,
visit his website Legal Exchange Show dot com and click
on the ask Tod tab. Maybe I'll be able to
read your question on the air, and hopefully his answer
will stop you from becoming one of his next real
life stories. You've been listening to Todd Lutsky, a partner
with the law firm of Cushing and Dolan. I'm Susan 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):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder law, estate planning, and asset protection.
This month, they're offering a free guide called Demistifying the
Top seven estate Planning Trusts. This guy breaks down the
most common types of trusts, explains the pros and cons

(37:59):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules, benefits,
and tax treatment, and choosing the wrong one could cost you.
Learning the differences now can help you make smarter decisions
for your future and your loved ones. Trusts are a
critical part of any well designed estate plan, but they
can be complex. Don't guess your way through it. Get

(38:19):
the facts first. Call Cushing and Dolan now at eight
sixty six eight, four, eight, five, six, nine nine to
request your free copy or visit legal exchange show dot com.
The proceeding was paid for in the views exprest Or Sole,
leaders of Cushing and Dolan. Cushing and Dolan, d or
Armstrong Advisory may contact you offering legal investment services. Cushing
and Dolan and I'mstrong Advisory do not endorse each other
in or not affiliated. The holidays are just around the corner,

(38:42):
so now is the time to plan your winter escape.
Trade in the cold for sunshine, sea breezes, and island
vibes in the US Virgin Islands, America's Caribbean paradise. Whether
it's a romantic retreat, a family celebration, or a solo
recharge before the new year. Saint Croix, Say Thomas and
Saint John offer the ultimate warm weather getaway. Lounge on

(39:05):
sun drenched beaches, explore vibrant culture and celebrate the holiday's
island style. No passport, no hassle, just warm weather, clear
blue water and unforgettable memories. This is where the stress
melts away and you find yourself naturally in rhythm with
the heartbeat of the islands. Go to visit USVII dot
com and book your trip today. That's visit USVII dot

(39:28):
com the US Virgin Islands, America's Caribbean paradise. Your holiday
escape starts here at visit USVII dot com.

Speaker 6 (39:39):
The future doesn't plan itself. Hi, this is Mike Armstrong
from the Armstrong Advisory Group. Whether you've built a business,
grown your investments, or simply want to protect your family,
your legacy deserves more than a generic estate plan. From
wills and trusts to beneficiary designations and beyond, true wealth
transfer is personal, powerful, and deeply strategic. That's why we

(39:59):
created Leaving a Lasting Legacy, a comprehensive guide to legacy
planning that puts your vision, values, and family first. Learn
how to protect your assets, avoid probate, minimize taxes, and
build a legacy that lasts for generations. Get your free
copy of Leaving a Lasting Legacy today by calling eight
hundred three nine three four zero zero one. That number

(40:19):
again is eight hundred three nine three four zero zero one,
or you can request the guide online by visiting Armstrong
Advisory dot com.

Speaker 1 (40:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make 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

(40:48):
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 Legal Exchange with Todd Lutsky. I'm Susan Powers,
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. So, Todd,
we're talking about all the different types of estate planning
trusts that are out there, and in no particular order.

(41:21):
The nominee reality trust is the first one listed in there.
Not your favorite, yep. So I think that nominee reality
trusts are really misunderstood. The title says trust, but that's
not really the case.

Speaker 3 (41:38):
Correct, Yeah, it's not really a trust.

Speaker 4 (41:40):
It's it's more of a you know, a principal agency relationship.

Speaker 3 (41:46):
And what do I mean by that?

Speaker 4 (41:48):
Or or one way of looking at it as like
an employer employee relationship. And here's how I get there
in these documents. Unlike a regular I don't know how
to say it. Unlike let's call it a true trust,
a real trust, which could be revocable or irrevocable, or
you name it. Unlike a real trust, a nominee realty

(42:12):
trust is basically you have the trustee of the trust,
and then you have a schedule of beneficiaries, usually at
the end of the document. And by the way, it's
not really part of the trust, it's a separate attachment. However,
the document itself says that here are all the trustee powers,

(42:37):
and that's normal in a trust. You have a list
of powers. However, before that list of powers, it says,
the trustee can't do anything unless directed by the beneficiaries. So, yeah,
here are your powers, but you can't do anything unless

(42:59):
the beneficiary say it's okay, So is it.

Speaker 2 (43:01):
The mom and dads of the world that are typically
the trustees of anonymy nominee reality trust.

Speaker 4 (43:07):
So you yes, I would say you. If you create it, yeah,
likely you'll be the trustees. But you can't do anything
unless the beneficiaries whoever that is right, And we don't
know who that is till we look, and most of
the time most people don't even they can't even find
those half the time. But those people or entities listed

(43:33):
have to direct the trustee to act.

Speaker 3 (43:35):
There's your employer employee. You say, how that kind of meant?

Speaker 2 (43:38):
Got it? So? All right? So who is typically shown
as the beneficiaries? Like if I had one of these,
would it be my kids? Or who would the beneficiary be?

Speaker 3 (43:50):
Yeah?

Speaker 4 (43:50):
This is where mistakes come in, and this is where
the problem with these trusts come in, and and that
is not only do the beneficiaries have the power to
direct the trustee to act, they actually are the owners.

Speaker 3 (44:11):
Right away.

Speaker 2 (44:12):
So if you put your kids on as beneficiaries like
you would for a regular trust, or you would at
least they they own your house now.

Speaker 4 (44:21):
Yeah or whatever you put in the nomine realty trust. Yeah,
So that's what people The biggest misunderstanding or misconception of
these documents is that they don't realize that they gave
something away right.

Speaker 2 (44:40):
Then and there, So why would anyone ever consider using
these documents? What are they used for?

Speaker 3 (44:45):
I'm going to tell you.

Speaker 4 (44:46):
So we would we would typically in the old days
there were no trustee certificates. A trustee certificate today allows
us to describe the trust vehicle that I want as
a beneficiary. So I don't have to put my trust
on record, right, because that's I don't want to prepare
for your private So what you normally would do is

(45:07):
you would put real estate into these doc into these
nominee realty trusts, and the real estate then the beneficiary
would be your family revocable trust let's say, or whatever,
or irrevocable medicaid trust.

Speaker 3 (45:21):
Right, And so now the owner.

Speaker 4 (45:24):
Is the correct trust that you want to be the owner,
and what you put on record is the nominee realty trust,
not the schedule of beneficiaries, and not the big family
trust that you now owns the property. So it was
a privacy benefit, right, and it was also an ease

(45:45):
of transferability benefit where you could just change beneficiaries and
not change deeds.

Speaker 2 (45:51):
Got it.

Speaker 3 (45:51):
So there were some reasons to do it. Boy way
more problems than benefits. So folks, that.

Speaker 4 (46:00):
Is actually the first, not that I put it there
by design, but it's the first trust in this new
guide for the month Top seven estate planning trust demystifying them.
It's the first one listed. There are many other kinds,
seven other kind in fact, from pool trust to special
needs trust to many types of irrevocable trusts, gifting trusts.

(46:24):
Of course, revocable trusts are important, but more importantly it
goes into describing who would use it, when you would
use it, and how it works when you're alive, so
you can say, oh, am I going to be burdened
by this trust? And what are the income and gift
tax associated with these trusts? And of course how do
you save estate planning? So lots to learn about if

(46:46):
you need to get your estate plan and going or
in order either one something is in here for everybody
eight six six eight four eight five six nine to
nine or Legal exchange show dot com to get the
new guide for the month month eight six six eight
four eight five six nine to nine or Legal exchange
show dot com.

Speaker 2 (47:07):
So let's go back to the scenario where you've got
mom and dad and they put their kids down as
the beneficiaries. Okay, would you say the kids already own it?

Speaker 3 (47:19):
Yeah, I would say that's that's what happened. Right.

Speaker 2 (47:22):
So what if mom and dad want to sell their house.

Speaker 4 (47:25):
Yeah, what happens so the trustee cannot act unless directed
by the beneficiary.

Speaker 3 (47:31):
See how this comes into PA.

Speaker 2 (47:32):
I do not enjoy that whatsoever.

Speaker 4 (47:35):
So if they want to sell the house, they're going
to have to say, kids, can you please when we
do this? Right, you prepare an Authorization and Direction of
Beneficiary form signed by the beneficiary saying trustee, please sell
or transfer the property located at our permission you And
then there's a trustee certificate that signs saying the trustees

(47:58):
of the trust say, we work told by the beneficiaries
to go ahead and sell the property, and we acknowledge.
I mean, there's paperwork that you have to do and
then we go ahead and sell it. It's like Robert's
Rules of Order, right.

Speaker 2 (48:10):
Yeah, okay, so no fun if someone's out there listening
and they go row, Yeah, my kids are listed. Is
the beneficiaries on my nominee? Reality trust? How do we
undo this?

Speaker 4 (48:22):
Is it?

Speaker 2 (48:23):
Can you undo that?

Speaker 3 (48:24):
Yeah?

Speaker 4 (48:24):
So let me ask you a follow up question. In
your little hypothetical, Susan, do these kids get along with
their parents?

Speaker 2 (48:31):
Let's start with no, No.

Speaker 4 (48:34):
That's a problem, I would think, because you know they
those kids control that trust, they control who you know
you can you change the beneficiaries of that trust, Yes,
but it has to be signed by the beneficiaries authorizing
the change. Well, they're not going to sign that. So
so you you really, in a lot of ways, you've

(48:55):
tied your hands.

Speaker 2 (48:57):
And if they do get along, get along that.

Speaker 4 (49:00):
Way, you just prepare an authorization and direction of beneficiaries
to issue a change of schedule of beneficiaries form. Change
the form back to mom and dad as a beneficiaries. Yep,
sign that off. Now mom and dad are the trustees.
Mom and dad are the beneficiaries, and on we go. Okay,
so out would come the property. Please let's get rid

(49:20):
of this and then let's just take the property that
they now own mom and dads of the world and
put it directly into their new family Planning trust.

Speaker 2 (49:30):
So you've mentioned this that you used these in the past.

Speaker 3 (49:34):
Oh yeah, you had to, but your.

Speaker 2 (49:36):
Schedule of beneficiaries would have been their trust.

Speaker 4 (49:39):
Oh yeah, yeah, we would never make the schedule of
beneficiaries the kids have you say you're making a gift,
why bother, why even bother?

Speaker 3 (49:45):
Just give it to the kids.

Speaker 2 (49:46):
So I recall years ago you and I met with
some folks and they were listed as their own beneficiaries.
So what did they accomplished by doing that? Like mom
and dad the trustee and mom and Dad's the beneficiaries,
great quot question.

Speaker 4 (50:00):
They accomplished nothing. I mean the property went from their
name through a trust back into their name. I'm not
even sure they're avoiding probate, never mind not accomplishing any
estate tax planning. And where does it go when the
survivor dies?

Speaker 3 (50:14):
Right?

Speaker 4 (50:15):
I mean you got to tie the estate plan together, folks,
and in your case, to get going with your estate plan,
get this guide Demystifying the top seven estate planning trusts
so you don't make this mistake. You pick the right
trust that works for you and your family situation eight
six six eight four eight five six ninety nine or

(50:38):
Legal exchange show dot com and you can download it
right there.

Speaker 2 (50:42):
Todd Letsky from the law firm of Cushing and Do
and thank you so much.

Speaker 3 (50:46):
Thank you, Susan, always a pleasure.

Speaker 2 (50:47):
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 Letske.

Speaker 1 (50:59):
A trust isn't just document. It's a powerful tool that
can help protect your assets from the nursing home and
even reduce or eliminate a state taxes. Cushing and Dolan
are leaders in elder law, estate planning and asset protection.
This month, they're offering a free guide called Dmistifying the
Top seven estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(51:19):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules, benefits,
and tax treatment, and choosing the wrong one could cost you.
Learning the differences now can help you make smarter decisions
for your future and your loved ones. Trusts are a
critical part of any well designed estate plan, but they
can be complex. Don't guess your way through it. Get

(51:40):
the facts first. Call Cushing and Dolan now at eight
sixty six eight four eight five six ninety nine to
request your free copy, or visit Legal Exchange show dot com.
The proceeding who's paid for in the views express or
sole leaders of Cushing and Dolin, Cushing and Dolan ind
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 3 (51:59):
HI.

Speaker 6 (51:59):
This is Mike Armstrong from the Armstrong Advisory Group. When
it comes to legacy planning, having a will is important,
but it may not be enough. A will only covers
probate assets, and the probate process can be slow, public,
and expensive. That's where trusts come in. Trust can help
you avoid probate, keep your wishes private, and control how
and when your assets are distributed. Whether you're looking to
support family, minimize taxes, or prepare for the unexpected, a

(52:23):
well designed plan can make a meaningful difference. Our new
free guide Leaving a Lasting Legacy covers wills, trusts, and
other strategies to help you build a strong retirement plan.
Take the first step towards clarity by calling eight hundred
three nine three for zero zero one right now and
asking for your free guide today. That number again is
eight hundred three nine three four zero zero one, or

(52:44):
requested online at Armstrong Advisory dot Com.

Speaker 1 (52:47):
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. The holidays are just around the corner, so
now is the time to plan your winter escape. Trade
in the cold for sunshine, sea breezes and island vibes

(53:09):
in the US Virgin Islands, America's Caribbean paradise. Whether it's
a romantic retreat, a family celebration, or a solo recharge
before the new year. Saint Croix, Saint Thomas, and Saint
John offer the ultimate warm weather getaway. Lounge on sun
drenched beaches, explore vibrant culture and celebrate the holiday's island style.

(53:31):
No passport, no hassle, just warm weather, clear blue water
and unforgettable memories. This is where the stress melts away
and you find yourself naturally in rhythm with the heartbeat
of the islands. Go to visit USVII dot com and
book your trip today. That's visit USVII dot com the
US Virgin Islands, America's Caribbean paradise. Your holiday escape starts

(53:56):
here at visit USVII dot com