What happens when you die without a will

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, Tod Lutsky and Susan Powers.

Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lotsky. I'm Susan Powers,
of 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? And Welcome to November.

Speaker 2 (00:56):
Had to bring the party down, didn't she.

Speaker 3 (00:58):
That's right, I do. We're going to bring it up
because we've got a couple of interesting cases. One basically
is a Mississippi appelle tax court case, and the best
way to describe it is to say, when are you
an air and when are you not an air? Right?
So this is a situation where someone died intest state

(01:20):
and husband and the husband and the sons all predeceased,
so there was only two illegitimate grandchildren that were kicking around,
and so are they in or are they out? So
stay tuned, folks, because planning, of course, is key to

(01:41):
not making these mistakes. And where the heck was your
head when the red flag went off where you lost
your whole family? It might be time to do some planning,
I would, I would think. Anyways, we then head over
to my old stomping grounds, Ohio, and we have an
appellate court case there that basically says, how do we
handle business assets? Do we want to get this business

(02:05):
succession to either family members kids? Do we need a
buy sell agreement? So important to deal with family? Do
we sell it? Do we do a promisory note? How
do we plan when we're dealing with business assets? We
talk a lot about real estate. This is an important
asset too well. Part of planning this month is really

(02:28):
going to be great because it is actually another it's
a brand new guide. In it's true brand brand new guide.
We've decided to put together really underutilized trust called the
Simplicity of joint revocable trusts. Never mind the two trust approach.

(02:49):
Never mind dividing assets between husband and wife's trust and
trying to fund them complicated and balance the assets between
both sides. No one simple trust for moderate estates. By
the way, moderate estates are somewhere around fifteen million nowadays
with the exemption so high, So that's big. You put
it in this trust. It is and you can now.

(03:10):
And the other benefit is not only simplicity of funding
an operation, but it allows you to cram down twice
as many assets on the first death as you could
if you split them between two trusts. Allows you to
get a full step up in basis on the first
death and maybe a second double step up in basis
on the second death. Folks, please get the guide Understand

(03:35):
how to use revocable joint trusts Brand New Guide for
the month eight six six eight four eight five six
nine nine or Legal Exchange Show dot Com again eight
six six eight four eight five six nine nine or
Legal Exchange show dot com. Now let's head over to

(03:57):
uh Mississippi. What do we got going on here? When
are you an heir? Well, let's see, Francis died intestate
without a will yeap February twenty twenty two, husband and
two sons had already predeceased her. Then, however, her son

(04:20):
Laddell had died right but had two illegitimate kids, Angela
and Dexter.

Speaker 2 (04:27):
So meaning he wasn't married to the mom, correct? Is
that your legal definition of that?

Speaker 3 (04:31):
Correct? And therefore their grandkids. Well, Angela had been assisting
with Francis's with her medical care, her financial affairs. Angela
was even named as a beneficiary on the life insurance
policy and listed as a granddaughter.

Speaker 2 (04:49):
Okay, so she had a relationship with.

Speaker 3 (04:51):
Her seems good. February twenty twenty three, Jim Francis's nephew
appointed as administrator of the estate. Angela then files a
motion to intervene, claiming to be the granddaughter, while other
nieces and nephews also file emotion to determine airship. Makes sense.

(05:13):
While the court determined that Angela and Dexter were in
fact heirs and substituted them as administrator of the estate. Well,
as you might imagine, the nieces and nephews weren't thrilled
about this. So they filed a motion to amend and
alter this because they believed that there was an error

(05:33):
of law made. Why because the statute of limitations to
determine paternity has passed. So they denied. They got so
they got denied. Right, So because now the nieces and
nephews the court still said, no, they're heirs, and you're
denied this. Nieces and nephews, you waived that affirmative defense

(06:00):
long ago. Well, they didn't like that, so they appealed.
The appellate court reversed and as much as you don't
like it, remanded the case back to the to the appellates,
to the court, back to the district court. Why well,
the state laws of Mississippi allow illegitimate kids to inherit

(06:27):
under the intestacy laws from and through their natural father.
So these kids were the natural father of Laddell. Such
paternity actions does need to be filed within one year
of the death of the father. Here, she waited seventeen

(06:49):
years to file. Only after Francis died did she file.
Because Francis was the grandfather or grand right, So they
remanded the case. But sounds like they're probably going to lose,
but not entirely sure how that's going to play out.
But folks, that's not why I tell.

Speaker 2 (07:10):
You Francis had done her planning.

Speaker 3 (07:13):
That's really where we're at, right, Not only Francis has
done their planning. But you're right, how would these these
grandchildren you know, want to be filing an action when
Grandma is still alive. It wouldn't have made sense, right,
But but they had to because their father had died already.
Remember Ladell was there father?

Speaker 2 (07:32):
What would ever inspire you to do that kind of
paternity testing and file that I know seventeen years ago
when he's dead now?

Speaker 3 (07:41):
Unfortunately not knowing is not an excuse, right, So how
does this work? What's the lesson here? The lesson here,
as you said, Susan, is obviously take matters into your
own hands, right, do some planning for goodness sake? So
the intestacy statute here says if you die without a will,
then you look at the state statute to see who's

(08:03):
next in line? And why is that important in this case? Right?
So generally, when you die you look to see a
spouse and kids are usually next in line. Mm hm,
well here the spouse and the kids predeceased Francis Okay,
so next you would look to grandkids. Ah, therefore Angela

(08:26):
and Dexter would be in right because they would take
before we get to nieces and nephews. See how this
plinko ball works. So after that, if there's no grandkids,
they look to siblings. If there's no siblings, then probably
down and again I'm sorry guessing. Finally, and so again

(08:48):
I'm kind of guessing on the exact statute of Mississippi.
Understand it's subject to state by state law, but but
I kind of give you an idea of how it works.
I have a funny feeling that I'm that a grandchild
would be way before a niece or nephew. Yes, in
almost any state, and.

Speaker 2 (09:02):
She may have just assumed that they'd be good.

Speaker 3 (09:05):
Yeah. Oh, so now we understand why the litigation was
going on, because in this case, if it does go
back and they in fact missed their deadline to file
and determine airship, well then the nieces and nephews are
going to luck out here and they're going to take
over the grandkids. So that's an issue. But planning, as
you said, Susan, is the way to go. And remember

(09:26):
when you're planning, if you have kids and spouses, you
should always have it set up where you define You know,
if you have kids from second marriages, that you define
them right. If they're illegitimate kids or step kids, you
need to define them as issue. Simply say that these
people who might be step kids might be illegitimate. I
want them specifically included as children issue descendants. All you

(09:51):
have to do is define them in your document and
then they'll be included. So again it comes down to
drafting and planning, and then you don't have a problem
like this. Planning. Now, I'm hoping you're all going to
learn to get this joint revocable trust the simplicity of
joint revocable trusts, a brand new guide, never before given

(10:12):
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Speaker 2 (10:19):
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. We've got much
more to come when we return to the Legal Exchange
with Todd Lutsky.

Speaker 1 (10:33):
The state planning isn't just about taxes, It's about peace
of mind. At Cushing and Dolan, we believe your plan
should protect your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your state stays
private and your family stays in control. Our new guide,

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

(11:17):
six ninety nine, or requested online from our website Legal
Exchange Show dot com. The proceeding was paid for in
The music expressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other and are not affiliated.
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Speaker 1 (13:22):
The proceeding was paid for by Armstrong Advisory Group a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial, tax, into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. You're listening to the Legal Exchange with Todd Lutsky,
an expert in elder life planning and taxation. Need help
with your estate plan? Comp Todd right now and make

(13:44):
an appointment eight six six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.

Speaker 2 (13:51):
Welcome back into the Legal Exchange with Todd Latsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined by Todd Lotski, a part with the
law firm of Cushing and Dolan with a master's in taxation.
Where we headed now, Todd, how about Ohio? Okay, a
huge stopping grounds.

Speaker 3 (14:08):
Head over to Ohio and we're going to take a
look at how you handle business assets. Not an easy
thing to do so. In July of twenty seventeen, Ned
transferred ownership of several businesses to his daughter Heather and
her husband Tom. They executed a promisory note. It wasn't

(14:30):
a gift for seven million dollars two percent interest, monthly
payments twenty nine thousand dollars over twenty five years. Okay, well,
unfortunately a year later Ned married Verda. That never works out,
well sod. Ned married Verda a year later and a

(14:51):
new will was drawn up that left almost everything to Verda.
Not surprised, I mean, you're married, but again, probably a
trust planning might be better. But let's keep going. We
can't add to the fact state Ned's will identified specifically
identified the promissory note as a primary asset of the estate.

Speaker 2 (15:15):
Okay, okay, well.

Speaker 3 (15:16):
January twenty twenty two, Ned died. Verda files the will,
and of course Tom challenges its validity. The estate files
a complaint that Tom and Heather stopped making payments on
the promissory note. Shocker. Heather and Tom said, well, it
was always intended for the promissory note to stop at

(15:39):
his death. By the way, you can draft him that way,
it's not illegal. And they sued for unjustin Richmond to
verta Then there was a lot of jurisdictional arguments and
the case got remanded to correct jurisdiction, to figure out
this whole thing out.

Speaker 2 (15:56):
So we don't have an answer, Ah, Lutsky, have you
learned nothing? Well, I feel like you can't do two
stories at once.

Speaker 3 (16:06):
This case is just too important to leave alone. So
how it ultimately plays out, I'm going to give you
some lessons on how to You're going to.

Speaker 2 (16:13):
Learn some lessons if you give us no answer. Again.

Speaker 3 (16:17):
So they didn't actually determine this, although in my head
it seems like they went out of their way to
determine that it was a promisory note, was part of
the estate, and if the note didn't specifically say it
terminates at death, I have a funny feeling it's going
to be a liability or an asset of the estate.

Speaker 2 (16:31):
Because if that's your intention, it would be in the note, right,
wouldn't it be in the legal document.

Speaker 3 (16:37):
They're called self canceling installment notes. They're called skins in
the estate planning world, okay, and they can be drafted
that way. In order to do a skin, you usually
charge a higher interest rate for the benefit of it
expiring at your death. I'm looking at this two percent
thing and thinking that that's probably not a higher interest rate.

(16:59):
I mean, you really got to pay a higher interest
rate in order for the benefit of the skin to
forgiveness at death. So so you know, I know I'm
not giving you an answer. I know I'm only speculating,
but it seems to me like this is probably going
to have to continue to be paid, you know, over time.
I don't think it'll be due and full er any which.

Speaker 2 (17:17):
It sounds like it's what should happen.

Speaker 3 (17:19):
Yeah, probably probably, And folks, you know, things happen the
way they're supposed to when you plan. And that's what
this is all about. This month, it's a brand new
guide called the Simplicity of Joint revocable Trusts. So many
people just don't use them. I'm giving a seminar later
on this week coming week about these trusts. It's just

(17:42):
so underutilized that I want everybody to know about them.
Why are they simple? I don't have to divide assets
between two trusts. I don't have to balance things between
husband and wife. I can just throw all our joint
assets together right into one trust. Easy operation operates during life,
easily to step up in basis on death. On everything

(18:02):
in the trust, not half. You can cram down more
than half of the assets. By splitting them you only
get half cram down the full amount on the first death.
And if it's done right, you can actually get a
step up in basis a second step up in basis
on the surviving spouse's estate. So lots of things that

(18:23):
can be done with these joint trusts, and of course
provide for your family and divorce proof and everything else.
So folks, really, if you never done planning, get the
guide The Simplicity of Joint Revocable Trust Brand New eight
six six eight four eight five six nine nine or
Legal Exchange Show dot com again eight six six eight

(18:45):
four eight five six nine nine or Legal Exchange Show
dot Com. Well what can we learn here? While there's
many ways to leave a business to family members and
many things to think about, I'm gonna try to touch
on a one. Sometimes one child has actually been working
in the business right, put all their sweat equity into

(19:08):
the business. And a lot of families might say, you
know what, this this child has really earned it. So
if they've earned it, just when you die, leave those
at leave the shares of the stock in that business
to that to that child. You say, well, won't that
make it unequal treatment for the other kids, it might,

(19:32):
but if this child actually earned it, worked their whole
career there worked that this was made part of it,
they built it, well, then they earned it, So you
can't really say that that that was a gift at
death to them because they should have probably got it anywhere.

Speaker 2 (19:49):
So if that's your primary asset, and you want to
treat your kids equally, but couldn't you like leave the
business to all of them, but like give that child
that was in one extra share, like fifty or something
like that, we're going to go.

Speaker 3 (20:05):
It's kind of leading me down the path of the
next idea. So number two would be, well, maybe we
gift non voting shares to one child over time, but
keep control. Remember I'm still all about my client keeping
control of the business. So we'll get to your idea.
But this is on that idea, Susan, where Okay, I

(20:25):
might start giving away some shares to that child who's
in the business right now, makes the child feel like
they can't control it, they can't decide to sell it,
they can't run it. But if the parent who's my client,
who I want to stay in charge of the business,
keeps voting shares well, and it gets sold, at least
the kid who has the non voting shares will get

(20:47):
a piece of the proceeds. Maybe I gifted fifty percent
of the non voting shares, fine, their partner. My voting
shares might only be ten percent of the entire company,
and that's fine. You could do a nine to one
non voting start dividend. I keep ten percent of the
voting and I slowly give away ninety percent of the
non voting. Again, there's tax ramifications with that, there's carryover

(21:08):
basis issues, but you know what it does provide a
way of getting the business to the next generation. Well,
you could have the voting shares, so this is more
your point. When you die, you can have the voting
shares actually go to the child who runs the business,
and all the ninety percent of the non voting shares

(21:29):
be treated equally to all the kids. That way, the
kid who's running the business can still run the business.
But if you sell the business, some of the money
will go to the other kid.

Speaker 2 (21:39):
Take orders from your siblings if he'd been renting the show.

Speaker 3 (21:42):
You might even want to put assets in there to
try to equalize things. To say, Okay, I'm going to
let the non voting shares go to my kids equally,
but I'm going to give my one child who's getting
the voting shares the right to buy out the interest
of the ones who don't. And now I can do
it at date of death value. I don't have to
buy out my non voting shares I got those, but

(22:03):
I'll buy out theirs and then I could run the
business and generate a much higher value for the business
on my own sweat equity. So that's okay, so many
different ways, folks. And then of course, if you got
it between two owners, owner one and owner two that
are maybe brothers, are not related, Yeah, what a nightmare.

Speaker 2 (22:22):
If you don't do any planning with that situation.

Speaker 3 (22:24):
Yeah, then you think about buy sell agreements, right, that
can trigger when you die, if you retire, if you
become disabled, you got to buy out the other one.
And it's easy that way, at least if you have
life insurance on one one gets the money. So owner
one dies, Owner two gets the money from the life
insurance tax free because it's life insurance. And then the

(22:44):
buy sell agreement says you've got to buy out owner
one who died, Owner two buys out. Owner one gets
the stock, the family gets the money, so the family's
taken care of Owner two can continue to run the
business and there's no capital gain because there was a
step up and basis on the stock when the owner
one died. Right, So these buysell agreements should certainly be

(23:06):
explored for all of you who are doing this without
family members. Just two independent partners look into the buy
sell agreements. Very important to have those ducks in a
row with a business. Folks, planning in general is important.
This brand new guide dealing with the simplicity of joint
revocable trusts can be so much more powerful and easier

(23:31):
than splitting assets between two trusts eight six six eight
four eight five six ninety nine.

Speaker 2 (23:37):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. Tod will be
answering your listener questions next when we return to the
legal exchange with Todd Lutsky.

Speaker 1 (23:53):
The state planning isn't just about taxes, It's about peace
of mind that Cushing and Dolan we believe your plan
should protend your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your estate stays
private and your family stays in control. Our new guide,

(24:15):
The Simplicity of Joint Revocable Trusts also explains how a
trust can protect your children's inheritance from creditors, divorce, or
bad financial decisions down the road. This guide makes it
easy to understand why a joint trust may be the
smart move for your family's future. Call eight six six
eight four eight five six ninety nine right now and
ask for your free copy of the Simplicity of Joint
Revocable Trusts. That's eight six six eight four eight five

(24:37):
six ninety nine, or requested online from our website Legal
exchange show dot com. The proceeding was paid for in
The views expressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other. In are not.

Speaker 4 (24:53):
Affiliated hi This is Chuck Zada from the Armstrong Advisory Group.
Your home is about more than where you live. It's
a big part of your financial life, and as you
head into retirement, certain questions may come up. Does the
space feel too large or too expensive to maintain? Does
it still fit your needs? But the taxes, insurance and
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(25:36):
hundred three nine three for zero zero one A request
the guide at Armstrong Advisory dot com.

Speaker 1 (25:41):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or 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.

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Speaker 1 (26:55):
You're listening to the legal exchange, and it's time for
Ask Tom, 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 (27:10):
Welcome back, Todd. We have a few questions from listeners.
First question comes from Maureen and Attleborough Mass and Maureen writes,
my husband and I have separate revocable trusts, and we
kept meaning to revise how we're leaving our assets to
include our grandchildren and give a bit more to my
daughter who's been helping with our care. He recently passed away.

(27:32):
Is there anything that I can do now to change
how his assets are left? This is a mutual.

Speaker 3 (27:37):
Client, by the way, so he being the husband.

Speaker 2 (27:40):
Husband died, Maureene is the surviving spouse. They never revised anything.
This is the first marriage. Okay, so this is a
mutual client, so I know a little bit about their situation. Okay,
this is your trust, your trust trust plural. Yeah, they
were older, right, you know, so many years.

Speaker 1 (27:57):
Ago, right right, right?

Speaker 3 (27:58):
And to trust are not inappropriate there, They're certainly appropriated.
It's just that I just love this idea of the
joint revocable trust.

Speaker 2 (28:05):
Yeah, before we were able to do that.

Speaker 3 (28:08):
So you know, the unfortunate part is one one did pass,
so so I can't. I was going to I was thinking,
as you were reading this, that maybe we'll switch these
people into a joint trust or modify their their trust
to accommodate you know, their situation. But now what we
have is we have the husband trust, which is now irrevocable,

(28:30):
right because as soon as the husband died or the
donor of the trust dies, whoever that is, the donor
was the only one who could revoke that trust, okay,
and so since that donor has died, that trust becomes irrevocable. However,

(28:50):
I always tell the spouse, who as soon as I
say that, you see the shock right appear in their face.
I tell them, doesn't mean that it's not flexible, and
the these kinds of irrevocable trust would put the surviving
spouse as trusteek. So now it's irrevocable, but surviving spouse,
you're in charge of the trust, and you're going to
see as we go through it that you're really in

(29:12):
control of all those assets, and not just control. You
can enjoy them, you can use them. Okay, But the
irrevocability creates the buckets of the marital share and the
remainder share to help us shelter assets for estate tax purposes.
They also will receive the step up in basis. So

(29:33):
we're good. So we don't want to mess up the
estate tax savings now that one died. In fact, we
want to capitalize on it. So we're going to fund
the buckets. We're going to read the trust, and I'm
going to tell her that it is irrevocable. But you're
in charge now. I know I said a lot and
I haven't answered your question. So the question now is
can she change his trust to tink with who gets

(30:01):
it when she dies? And the way she wants to
do it is to include grandchildren, Am I right? Yes? Uh,
and give them a bit more than they were doing before.

Speaker 2 (30:15):
They want to include the grandchildren who were not specifically
included before they were.

Speaker 3 (30:20):
They want it said equally to the kids before.

Speaker 2 (30:23):
Yeah, and now they want to They wanted to carve
out and do like ten or twenty percent to grandkids
and then to the kids. But she also wants to
give a little extra to one.

Speaker 3 (30:33):
Of her daughters. So let's assume for the moment that
it did say equally to the kids if living otherwise
to their.

Speaker 2 (30:39):
Kids, and that's what it says currently be sure he died,
So that's fine.

Speaker 3 (30:43):
So now the idea is, we just want to give
a little more to one to one daughter, one daughter,
and a little more to the grandchildren, and.

Speaker 2 (30:50):
To specifically carve out and say the grandkids get this.

Speaker 3 (30:54):
And then oh, so we're not going to make the grandkids.
Wait exactly, I see, give a little bit the.

Speaker 2 (31:00):
Gus a little bit better than the kids.

Speaker 3 (31:01):
Yeah, big, so hard there. Yeah, no, I totally get it.
And so well I don't yet because I don't have
any but we'll get there. So yes, the answer is, yes,
you can do it, uh in our trusts, uh, especially
on first marriages. It's it's pretty certain that it would
have something called a limited power of appointment, which is

(31:24):
the ability to change a deceased spouse's trust even though
it's irrevocable as to who gets it when they die,
but limited to children of all generations, so she can
tinker with percentages and amounts to grandkids, daughters kids.

Speaker 2 (31:42):
So she can't add her new boyfriend in.

Speaker 3 (31:44):
No, no, that wouldn't be allowed. One. Yeah, that would
be like cousin Vinnie. Nobody can't can't do it, So yeah,
great flexibility and you can still change folks. That's kind
of how two trusts work. But the guide this month
brand New is about how to give away the joint
revocable how to use a joint revocable trust for a

(32:05):
married couple, rather than two trusts. So if you've never
done your planning and you're saying I've always been too complicated,
this makes it so much easier. No dividing between assets,
no balancing, put everything into one trust easy, you both
serve as trustee. The real benefits is when one dies,
you shelter more assets than you could if you split

(32:28):
them between two, and you get a full step up
in basis on the first death. And you can actually
get a second step up in basis with some additional
steps that you take on the second death if the
estate plan allows for it. So folks, learn how to
get learn how to do your planning eight six six
eight four eight five six nine nine or Legal Exchange

(32:51):
Show dot Com again eight six six eight four eight
five six nine nine or Legal Exchange Show dot Com
Brand New Guide.

Speaker 2 (33:01):
Our last question comes from Mara and Chelsea mass and
Mora rites, Is there any way to minimize my estate taxes?
I am single and I am worth around four million.
I know that I'm under their federal amount, but I'm
concerned about Massachusetts estate taxes? Is there anything I can
do here?

Speaker 1 (33:18):
So?

Speaker 3 (33:18):
I guess we should first figure out what the tax is.
You know, what are we dealing with? Right? You know?
So four minus two it's two million. You know, the
tax on two million is going to be every bit
of two hundred thousand, two hundred. So yeah, I'm thinking
right around two hundred thousand is probably the tax liability,
give or take if she does nothing. If she does nothing,

(33:42):
So we first got to say, is that important enough
to do planning? Well, it's not short money change, Yeah,
not short money, that's for sure. Well okay, what about
uh gifting? Well, I suppose we could make gifts, but
we really would need to add this as to whether

(34:02):
or not it makes sense. I say that because from
a gifting perspective, we're going to get no benefit from
the federal estate tax side, right.

Speaker 2 (34:14):
Which is typically the bigger liability, right, right.

Speaker 3 (34:18):
So we have a thirteen point nine million dollar exemption currently.
If I make a gift of a million dollars to
bring me down to three million, I save nothing at
the federal level. In other words, there's a forty percent
tax hit at the federal level, but I'm under that,

(34:38):
so I don't need to make any gifts to save
the forty yep. If I make a gift now of
a million dollars, but there's a lot of gain built
into the assets that I'm giving away. It's not cash
cash that might be a little different story. But if
it's just a stock portfolio that has got five hundred
thousand dollars of gain built in it, well, I guess

(35:04):
I save a little bit on the mass side, maybe
ten percent, because I've saved ten percent on a million
dollars if it works exactly that way. But I've trapped
almost thirty percent capital gains tax rates on the five
hundred thousand, So that's one hundred and fifty thousand dollars

(35:27):
of tax that I'm trapping. I don't know if I
like that, don't I don't think. In other words, I'm
I'm trapping something at twenty eight point eight percent to
save ten by giving it away in mass, so I'm
not overly thrilled with that idea. And again the other

(35:49):
reason is that the ten percent that you're saving is
actually taxd date of nine months after the date of death.
You got to pay hard stop the capital gains tax
that I'm trapping. The only benefit there is I could
shelter it later with capital losses. You have to think
these things through. This is not an easy an easy
way answer cash she has cash would be okay, especially

(36:11):
with the new Massachusetts of state tax laws that now
eliminated that cliff rule. Remember the paying tax on everything
when you're over, so that cliff rull has been eliminated.
So giving away, you know, five hundred thousand in cash
might be an acceptable approach. But folks just call and
get the new guide and learn how to do your
planning right. Simplicity of joint revocable trusts eight six six

(36:36):
eight four eight five six nine nine or Legal Exchange
Show dot com.

Speaker 2 (36:41):
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,

(37:01):
a financial advisor with the Armstrong Advisory Group. We'll be
back with more after this quick break on the legal
exchange with Todd Lutsky.

Speaker 1 (37:09):
The state planning isn't just about taxes, It's about peace
of mind. At Cushing and Dolan, we believe your plan
should protect your family, not complicate your life. A joint
revocable trust can help you do both. It lets you
avoid probate, which means no court delays, no public filings,
and no stress for your loved ones. Your state stays
private and your family stays in control. Our new guide,

(37:31):
The Simplicity of Joint Revocable Trusts, also explains how a
trust can protect your children's inheritance from creditors, divorce, or
bad financial decisions down the road. This guide makes it
easy to understand why a joint trust may be the
smart move for your family's future. Call eight six six
eight four, eight five six nine nine right now and
ask for your free copy of the Simplicity of Joint
Revocable Trusts. That's eight six six eight four eight five

(37:54):
six ninety nine, or requested online from our website Legal
exchange show dot com. The proceeding was paid for. The
use expressed are solely those of Cushing and Dolan. Cushing
and Dolan in or Armstrong Advisory may contact you offering
legal or investment services. Cushing and Dolan in Armstrong Advisory
do not endorse each other. In are not affiliated HI.

Speaker 4 (38:10):
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Speaker 1 (38:57):
The proceeding was paid for by Armstrong Advisory Group, 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.
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Speaker 1 (40:41):
Your tune to the legal Exchange with Todd Lutsky. If
you were a loved one needs a nursing homestay, call
Todd right now at eight six six eight four eight
five six nine nine and let him make sure your
assets are protected. That's eight six six eight for eight
five six nine nine or visit him online at Legal
Exchange show dot com.

Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with a law firm of Cushing and Dolan with a
master's in taxation. So you have this brand new, never
before offered hot the Press's guide all about using joint

(41:22):
revocable trusts. When we talk about the irrevocable trusts, kind
of an older population that's considered that would consider that
to protect against nursing home and so forth. When we
talk about the revocable trust, do you have to be
a certain age to consider using a revocable trust? Is

(41:43):
age a factor in that at all?

Speaker 3 (41:46):
It's it's not a factor. Well, it's not a factor
in whether you would use it, other than if I'm
thinking about nursing home planning. So now, lord, you could
be really young, you could be really old, and you
can still use a joint revocable trust. The only reason
age would come into play again. Any age, Yes, for

(42:09):
the joint revocable trust, as long as you're not thinking
about nursing home planning as an option. Okay, if you are,
then certainly the older you are, you would not use
the joint revocable trust, not because it's a joint trust,
but because it's revocable, right, you would want to irrevocable. Yeah,

(42:30):
So I think that real answer to your question is
age doesn't.

Speaker 2 (42:33):
Matter, okay at all? All Right, So if I have
let's say, you know, feely just start now or marry
couple just starting out at what point from a I
guess from an asset or a net worth perspective, would
it make sense for them to start to do trust planning?

Speaker 3 (42:53):
So I think the net worth let's go with the
top side, right, you know. I think when you get
close to you know, the federal exemptions or dollar amounts
you know, which is going to be fifteen million. So
that's a pretty high number, you know, fifteen million or less,
you easily can do joint revocable trusts. Does it mean

(43:16):
you can't do it if you're worth thirty million, No,
you could still do it. I think that the difference
is when you get to a point where you might
be exceeding the federal exemption as a married couple, you
want to think about the division because you get fractional
shared discounts by owning, you know, half a property in
one trust and half a property in another trust. You
can actually say I died and my property is worth

(43:38):
a million, but since I only own fifty percent of it,
nobody wants to buy half a property, so it's only
worth and you take a discount when value it, so
you can get some benefit to discounting. But again for
smaller estates, let's go.

Speaker 2 (43:52):
Way down the estate problem at all. So let's say
you've got that younger couple they're working starting out, I mean,
when what's the trigger event that they should be thinking
about doing trust playing.

Speaker 3 (44:04):
In fact, I just met a couple the other day
and and they were like forty but they had you
know three No, they actually had four kids. They're one
of these people who tried for the boy ended up
getting twin girls. So that was interesting. They said they
way undersold the odds. Yeah and so so yeah, so

(44:24):
they're doing they're doing planning, and for them it's it's
a you know, they're nowhere near these federal exemption amounts,
and so instead we're doing a joint revocable trust for them,
again simplicity for them, they fund it very easily. It's
they're the trustees. I don't have to worry about which
account is growing higher or faster than another account. And

(44:47):
we did it not just because it's simple and because
it's a joint revocable trust, but for them. We did
it because at minor kids. Okay, right again, is it
going to help right now for estate taxes? Not overly,
and they're not you know, won't matter for federal they're
not anywhere near that. It could help for mass a
little bit, but it's more about, hey, if we both die,

(45:10):
these kids can't own it. It can't own anything, Okay,
So I don't want some guardian owning my stuff. I'm
gonna instead, you know, have a trust own it, and
that way the trust can take care of it, folks,
joint simplicity of joint revocable trust. It is a brand

(45:32):
new guide. I'm doing seminars on it right now, and
it's so many people just they don't seem to understand
the benefits of it, and they seem to be underutilized.
So I thought I'd do a whole guide on it
for you. Simple, easy to fund ability, to shelter more
assets on the first death. Operationally, it's easy. You get

(45:53):
a full step up in basis on the first death,
and maybe a double step up in basis. Learn what
all that stuff means. I'm sort of just throwing words
at you, right, but you've got to get the guide
to understand the power of what that means. There's examples
in here. I run the numbers for the estate tax
savings on how it works, how portability works, everything, the

(46:14):
simplicity of joint trust folks brand new eight sixty six
eight four eight five six nine nine or Legal Exchange
show dot com again eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.

Speaker 2 (46:30):
So a lot of people can be intimidated when you
start to talk about a state planning. It feels like
it's something that's really complicated or something that they can
wait to do. So can you explain how one of
these joint revocable trusts can actually make things simpler for
couples and keep things easy for their family when they pass.

Speaker 3 (46:51):
Yeah, So I think when we if we're trying to
compare maybe the revocable trust's husbandwife version two to one.
I think that's kind of what you're asking me here.
And and so the simplicity of it is a lot
of times clients will say, you know, Todd, how do
I fund the trust? We talk about it all the time.

Speaker 2 (47:14):
What do we put in her trust? What do we
put in his trust?

Speaker 3 (47:17):
Funding is so important. And actually I've had clients who
have come in with existing trusts and I say, you know,
we need to you know, we need to update your
documents in there so we're okay with starting over. They
go and they look at me and they say, but
am I going to have to retitle everything again? Because
I really didn't like doing right right and they know

(47:38):
about it right that I don't want to retitle. And again,
for a lot of these people that if we're if
we're doing that, just so you know, so you're not
upset if you hear this, you know, if we're going
to Oftentimes I'll tell them, if we're going to stay
with the two trust approach, let's say that's what they have, Yeah,
I would say, you know, we will amend and restate
in its entirety, keeping only the name. Every other word

(48:01):
in the document goes.

Speaker 2 (48:02):
Away, so it's the name and then the tax id
number of their socials.

Speaker 3 (48:07):
The social doesn't change and changes. So then I tell them, No,
you don't have to refund the trust at all, because
we're not going to terminate the trust. We're just going
to keep the name. Okay, brand new guts, sixty pages
of new god new guts. If they come in with
a joint trust that somehow needs to be updated, we
could keep the name, same thing, so you don't have

(48:28):
to refund. But you're asking me about simplicity, and that's
exactly what we're talking about. Oh geez, Todd, I funded
the trust with these ab I got a husband trust,
a wife trust, and I'm worried now because this trust
has got assets that are growing really fast, and the
assets and this trust aren't growing as fast. Do I
have to rebalance? No, I don't have to do any
of that. With a joint trust. Put everything in jointly

(48:53):
trans You don't have to divide the house. Remember the house.
You would have to prepare a deed half into one trust.
I have to just take one deed both contributed to
the trust. Vacation home jointly contributed to the trust investment
accounts boom, right in, don't care which account grows more
or less. Very simple, Ye, both trustees. Now there's some

(49:16):
some similarities, right, So for how we provide for the
children the divorce, proof to credit or protection, that happens
the same in both trusts. The state taxes is also similar.
But there's a little difference here because I think with
a joint trust you actually have the ability to shelter
more assets than you would if you had two trusts.

(49:40):
Let's say, for example, you had a five million dollar
estate and three million was non IRA assets and two
million was IRA assets. Well, if I have to take
a three because I can't remember, I can't do anything
with the IRA assets now, so I take the three
million dollars and divide it between a husband and wife trust.

(50:01):
On the first death, I can only shelter how much
one point five million?

Speaker 1 (50:06):
Right?

Speaker 3 (50:06):
Oh, but the Massachusetts a state tax exemption is two million. Yeah,
you wasted five hundred thousand dollars. Why because I got
a large IRA. Right with a joint trust, you don't
have that problem with a joint trust. Boom, you shelter
the whole you know, your whole two million, because you've
got three million in one trust, all included on the
first death. Folks learn how and what the benefits are

(50:29):
of this Simplicity of joint Revocable Trusts. Brand new guide
never before issued eight six six eight four eight five
six ninety nine or Legal Exchange show dot com and
download it right there.

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

Speaker 3 (50:48):
Thank you, Susan, always a pleasure.

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

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

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

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

Speaker 4 (52:00):
This is Chuck Zada from the Armstrong Advisory Group. Your
home is about more than where you live. It's a
big part of your financial life, and as you head
into retirement, certain questions may come up. Does the space
feel too large or too expensive to maintain? Does it
still fit your needs? But the taxes, insurance and upkeeper
starting to add up. Our new guide Owning real Estate
and Retirement offers insight into how to decide what's right

(52:21):
for you should you stay, put downsize, or relocate to
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local living expenses can impact your retirement budget, and why
it's important to match your housing decisions to your long
term financial plan. Call us right now at eight hundred
three nine three for zero zero one. That's eight hundred

(52:42):
three nine three for zero zero one. A request the
guide 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 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.

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