Who to choose as your power of attorney

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

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

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

Speaker 4 (00:54):
I'm great? Thank you What he have for us this week?

Speaker 3 (00:56):
A couple of things I've got and we're going to
go back to my old stock grounds. Again we've been
there a few times. Oh Ohio, uh, And we're going
to figure out And this case is more about which
you know, which standard of proof applies, and say, that
isn't really what I what I care about in this case,
it's all about naming a daughter a power of attorney
and co trustee on a trust that was a revocable trust,

(01:19):
and then watching the daughter transfer money out of the accounts.
And I mean, you've got to be careful, right, So
we're going to talk about how to set up trusts
revocable in this case, how to protect against this, how
powers of attorney work, what assets they cover, what assets
they don't cover. Yeah. I think a lot of stuff

(01:39):
we can learn from this case. And that's why I
did it, not so much about what burden of proof
is needed to prove breach of fiduciary duty, but of
course that's going to come up in this case. So
still it's going to help us understand the planning aspects
of it. Then we head over to an appellate court
case in Connecticut, And in Connecticut, in this case, it's

(02:03):
a situation where when can an ira be brought into
the probated state to satisfy specific bequests that are made
in a willow or can they be brought in? And folks,
I think it's really important. We're going to learn a
lot of lessons about how to deal with an IRA

(02:24):
in your estate as part of your estate plan. It's
not the easiest asset to deal with. Let's face it.
Remember iras have both income tax components and estate tax components.
So many people think, oh, it's an IRA, it's in
your estate, it's taxed twice, So we've got to be
careful about how to deal with it. And you know what, folks,

(02:46):
that leads me really right to the new guide that
we're giving away this month. First time ever on this guide,
this simplicity of joint revocable trusts, and one of the
reasons they're so important to use is the exemption is
now going to be fifteen million in January one, so
we don't have to give away stuff as much. We

(03:08):
can win on the estate tax front by keeping items
and then getting a full step up in basis on items,
so we can then win on the capital gains tax front.
So imagine saving forty percent at the federal level for
a state taxes and twenty eight point eight percent at
the capital gains tax levels. Huge win. Even if I
got to give Massachusetts ten percent, I'm fine. And folks,

(03:32):
when do we use them? Also, you'll learn how they
work in this guide. When do you use them? Like
in this case here large iras? How do you deal
with them? This trust is the way to go when
you have large iras as part of the estate. Folks,
too much to explain, now, call and get the guide.
You'll learn about it, how these joint revocable trusts work
and how easy they are to use eight six six

(03:55):
eight four eight five six ninety nine or Legal Exchange
Show again eight six six eight four eight five six
nine nine or Legal Exchange show dot com and learn
how simple they are to use and not affect your
life at all once it's set up. All right, enoughing
about this, back to where we go in Ohio. So

(04:19):
let's let's take a look at the facts of this case. So,
after Kathleen dies her husband, I'm sorry. After Kathleen's husband
dies in twenty twelve, Kathleen's alive, she signs documents naming
her daughter Mary Beth as power of attorney. Doesn't shock
me yet, and as co trustee on her trust. Now

(04:42):
that makes me think twice, I'm like, what kind of
trust is this and why do you need her to
be co trustee with you? Well, you're alive. Not sure
that's a huge issue, but she did it, okay. She
then moves in with Mom and starts to care for
her until her death in twenty eighteen. So the daughter

(05:02):
Mary Beth then moves in with Mom again nice gesture,
seems like the right thing to do. And then before
Mom dies it's not clear, so it's until her death
in twenty eighteen. She also managed to transfer Yeah, before
her death, she managed to transfer money and real estate
both and even mineral rights to herself before the death

(05:27):
of Mom. How much about eight hundred and fifty thousand
in cash? Wow? And real estate on top of that?

Speaker 4 (05:36):
Is she the only beneficiary?

Speaker 3 (05:37):
Thinking not, because in twenty eighteen when she died, the
other kids file a lawsuit for what for breach of
fiduciary duty, conversion fraud, classic undo influence? Like it right,
mom moves in or Mary Beth moves in with Mom?

(05:59):
Mary Beth Pross needs to take all the assets? Yeah,
I mean it seems to me to be a classic
undue influence situation. And the court said, yeah, we agree.
We're going to set aside five of the seven gifts
that were involved and to order payment of eight hundred

(06:21):
and sixty seven thousand dollars, including one hundred and twenty
eight thousand dollars of interest because you might say, well,
there's only eight hundred and fifty of cash. How come
because there's interest, And however, we're going to allow one
hundred and eleven thousand dollars of the gifts to stand.
We'll have to figure out why they did that. Well,

(06:41):
the kids weren't satisfied with that, so they appealed, but
the appellate court affirmed and didn't change the burden of
proof and didn't change the amount of gifts that were
allowed and the huge amount that were not allowed. So
what do we learn from this? Well, I think the
first thing we need to learn is that when you're

(07:02):
naming a power of attorney, obviously consider who you're naming.
And maybe she didn't see anything wrong with this daughter,
and you can't always know that.

Speaker 4 (07:12):
So I get it, temptation some people can't resist.

Speaker 3 (07:16):
However, when you're drafting your power of attorney, you should
always check to see if it allows for self dealing.
So it might say, yeah, the trust that there's a
whole laundry list of asked the things that you can
do right in the power of attorney. And remember they've
got to be specified. So they've got this laundry list
of things that you can do, and you know one
of them is to make gifts. Sometimes it says to

(07:38):
make gifts, but limited to the present interest exclusion, so
you can only gift up to today, I.

Speaker 4 (07:43):
Think nineteen thousand or so.

Speaker 3 (07:44):
Yep, correct Susan, it's it's a nineteen thousand dollars amount,
and so sometimes they limited to that. Sometimes they say,
you know, my agent, Mary Beth in this case can
make gifts to other people but not herself. Oh well,
then that might have prevented some of this cash sure
from coming out, So be careful and think about that. Now,

(08:10):
what about this trust that she had. That's the next item.
So the revocable trust, Kathleen, if it's her trust, she
could probably take stuff and gift it directly to her daughter.
If it's revocable, likely she could do whatever she wants
to do. So if it was revocable, I'm not sure

(08:31):
why we needed to add the co trustee on.

Speaker 2 (08:35):
Well, she moved in not long after that, so maybe
she was starting to have signs of failing health or
something at the time.

Speaker 3 (08:41):
Could be I mean, the trust probably could have been
could have been a joint trust, just like our guide.
If it was a joint trust, well then the trust
would have became irrevocable. But Kathleen would have likely been
the trustee as a surviving spouse. And you'll learn that
in the guide, folks, how that works. And so again,
she wouldn't need to name her as co trustee unless

(09:01):
there was a capacity problem, right, But then if there's
a capacity problem, there should be language and the trust
that says upon disability or capacity issues, so and so
will serve sure as co trustee. Now, so I think
maybe that's where some of the gifts that were allowed
might have come from. Now, with a near revocable trust,
if you had named two kids on as trustee, you

(09:23):
might have had a better check and balance over the
money and the real estate. It would have been much
harder to transfer real estate out when you have two
kids sort of monitoring the transfers. So think about that also, folks.
It's not uncommon for caregivers to be given something like
you could take a house, put it in trust and
allow the caregiver to live there and provide for that

(09:44):
caregiver because you want to. So a trust could have
done that if you kept the house in trust and
just say, you know, the child needs to pay the bills,
et cetera. So there's lots that you can do in
this case. But clearly breach of fiduciary duty did happen.
But do your planning, folks, get your stuff. You're ducks
in a row. Get this new guide. It's the Simplicity

(10:06):
of joint revocable trusts. Brend who never been given away.
It'll help you get started with your planning eight six
six eight four eight five six nine nine or Legal
Exchange show dot com. You can download it there.

Speaker 2 (10:20):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers of
financial Advice with the Armstrong Advisory Group. We've got much
more to come when we return to the Legal Exchange
with Todd Lutsky.

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

(10:56):
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

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

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Speaker 7 (12:37):
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(13:20):
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Speaker 1 (13:25):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory Services. You're listening to the Legal Exchange with Todd Lunsky,
an expert in elder life planning and taxation. Need help
with your estate plan? Comp Todd right now and make

(13:46):
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Speaker 2 (13:54):
Welcome back into the Legal Exchange with Todd Lotsky. I'm
Susan Powers of financial advisor with the Armstrong Advice Group,
and I'm joined by Todd Letsky, a partner with the
law firm of Cushing A. Dolan with a master's in taxation.
Where are we headed now, Todd, we.

Speaker 3 (14:09):
Are going to go to Connecticut where we're going to
learn about iras and when they can be brought into
a probated state to satisfy specific bequests. I know you
should be making that face, because it made me make
that face when I read this. Let's let's take a
look at the facts. Ruben is a residual beneficiary of

(14:33):
an estate, so basically what's left over goes to Ruben.
Of who's the state? Marcia Chambers is a state. Now,
Marcia had made specific bequests set out in her will
specific dollar bequests set out in her will, and we're
going to talk a lot about dollar bequests versus percentage bequests,

(14:55):
makes a big difference. So these specific bequests were set
out in the will, but it turns out that there's
not enough assets to cover them in the will. So
therefore the residuary beneficiaries are simply out of luck. Why
because you have to cover the specific bequest first. Okay, Well, Rubin,

(15:19):
that poor residuary beneficiary, he's not happy with this, I'm sure.
So he sues and says, I'm sure that Rubin claimed
that Marcia intended or believed that her two million dollar

(15:39):
IRA would be distributed through the will because she knew
she didn't have enough money to cover the bequests, and
therefore this money must be used to make up the difference. Wow,
that's a great argument. Never heard that before. Remember, there's
a designated beneficiary on the IRA, and the IRA's designated

(16:05):
beneficiary avoids probate and it goes directly to the beneficiaries.
You're aware of that, Susan. You've probably done that many times.
So the trial court says the will is not ambiguous
at all. It has specific bequests. There's no need to
even bring in extrinsic evidence here. The IRA goes directly

(16:29):
to the beneficiary and we're not going to alter the
distributions period, which I think is the right answer. Yeah.
But Ruben at residual beneficiary, who's out, it's not happy
about this, so definitely not so he appeals. Yeah, and
the appellate court rightly so affirms the trial court and

(16:53):
says basically the same thing. Look, when you have a
designated beneficiary on an account like an IRA, it's pretty
clear that's who they wanted to go to. It avoids probate,
it passes directly to that person. Go away, Ruben m hm.
And that's pretty much what happened here. Now. I think

(17:14):
it's really important to understand that because iras this case
two million dollars, it could be bigger, could be even larger.
It could make up a big portion of the entire estate.
And when you're planning as a married couple, I think
it's important to understand how to handle the IRA, which
kind of brings me to the guide folks, the simplicity
of joint revocable trusts, and it's I call it, it's

(17:36):
all about the basis, meaning when you've got a large IRA.
Let's say again you have you have like a five
million dollar estate, and let's say you had a three
million dollar IRA, or in this case two, but even
three if you then that means only two million dollars
is available to be sheltered on the first death. And

(17:57):
if I have to trusts a husband trust and a
wife trust, and I put a million in each, how
much am I sheltering on the first death?

Speaker 4 (18:03):
Only a million?

Speaker 1 (18:04):
Right?

Speaker 3 (18:04):
But Massachusetts, we have a two million dollar exemption. Wouldn't
it be great if I could shelter two million on
the first death?

Speaker 4 (18:10):
Sure it would be sure could if you have.

Speaker 3 (18:11):
A joint revocable trust. So for these smaller and moderate estates, folks,
you have a joint revocable trust. The three million in
the IRA passes to the spouse, and the two million
in the joint trust are all included on the first death,
getting a full step up in basis, and more importantly,
sheltering as much as we can, in this case, capturing

(18:32):
the entire estate for Massachusetts of state tax purposes. There's
so many more benefits to a joint revocable trust, even
from the simplicity of funding it. Folks, call and get
the guide 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

(18:54):
nine or legal Exchange show dot com and download it there.
All right, what are we gonna learn.

Speaker 4 (19:02):
Not to do? Sounds like you shouldn't be using dollar amounts.

Speaker 3 (19:06):
Well, let's go. That's the first thing I've got is
tips and lessons, right, drafting tips and lessons. Whenever you're
leaving specific amounts to specific people and you're allowed to
do that, please don't leave specific amounts. Use a percentage

(19:26):
of the assets rather than dollar amounts.

Speaker 4 (19:29):
And then everyone would get something right.

Speaker 3 (19:31):
Right, because dollar amounts are always satisfied first to the
exclusion of anyone else, which you could end up disinheriting
somebody when you don't mean to. Now, let's take an example. Obviously,
if you're saying equally to my kids, who cares, that's fine.
But if you're leaving specific dollar amounts, they say, well,
how much do I want to leave? They usually tell you, oh,

(19:53):
I want, you know, Billy to get you know, one
hundred thousand dollars. Okay, Well, then you say, all right, well,
how much is in the tw trust? Right? How much
are we putting in the trust right now the day
you're creating it? Okay? And you use a percentage. Then
you say, all right, well there's five million dollars and
there are four million dollars in the trust. You know,
one hundred thousand. Divide by four million. It gives you

(20:15):
a percent. That's the percent.

Speaker 4 (20:18):
Thank goodness, you weren't going to ask me to do
that math.

Speaker 3 (20:20):
Right, but that's how you do it. So whatever, whatever
it is, whatever the amount is that you want to specify,
you you calculate right then and there, and you say, well,
well that's that's not right. Well, sure it is, because
if you then say, well that turns out to be
let's let's call it one percent. If I want to
that number equals one percent today. Fine, If you live

(20:44):
a long time and these assets grow in value, well
then that person gets one percent of a larger number.
Doesn't hurt anyone else. But if assets decline in value,
that person gets one percent of all all are number.
But the point is in leaves charity, yeah, it leaves

(21:05):
the assets available for everybody else without disinheriting and that's
really what happened here. So it's an easy fix, and
I don't think the IRA was the answer, and these.

Speaker 2 (21:15):
Were for people, and a lot of times when you
see those specific amounts, a lot of times it's charity.
So you could leave money to charity and completely disinherit
your own kids.

Speaker 4 (21:23):
If you do that.

Speaker 3 (21:24):
Yeah, exactly right. In fact, I have a real life
story here that we when clients come to me and
say they want to leave assets to charity, I always
tell them, let's use the IRA, because if you make
the I remember the iras not in the trust, but
if you designate the beneficiary an IRA to charity, now

(21:44):
you get in a state tax deduction and an income
tax deduction. So it's it's a better asset to leave
to charity and maybe make that specific bequest. So that's
kind of the example that I had there. But also
just remember in general they're trying to use the will here.
Probated assets are only assets that are probated is if

(22:07):
you die owning it in your own name with no beneficiary,
so jointly held IRA tendancy transfer on death designated beneficiaries
they all avoid probate and go directly to that person,
so they should never be pulled in here. Also, think
about it from an estate tax standpoint, Why would anybody
intend to have it go to the estate. If this

(22:29):
person was under seventy three, which is the required beginning
date for distributions, and you name the estate the beneficiary,
it's going to come out over five years. Well, why
would I want to do that just to satisfy a
bequest in my will and cause the hugest income tax problem. Now,
if it's seventy three or older, it's going to come

(22:50):
out over the ghost life expectancy of that person. So
maybe it's not a huge income tax problem, but you
have to think about the income tax ramifications when you
make these arguments. Yeah. Now, sometimes it's possible under the
new Medicaid with the new Secure Act, that you can
name the estate the beneficiary and get some both estate
tax planning and nursing home protection benefits. We talked about

(23:12):
that in some of our shows in the past. But
just be mindful. I don't think that she really intended
to have it go through the estate. Folks. Iras, as
you're learning, are complicated assets to deal with in your
estate planning. But boy, if you're going to if you're
going to do estate planning, get the Simplicity of the
Joint Revocable Trust Guide because it works great with large iras,

(23:33):
among other things. Eight six, six, eight four, eight five, six,
nine to nine.

Speaker 2 (23:39):
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 legally exchange with Todd Lutsky.

Speaker 1 (23:54):
Estate planning isn't just about taxes. It's about peace of
mind that Cushing and Dolan. We believe you are 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,

(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 sixty six
eight four eight five six nine to nine right now
and ask for your free copy of the Simplicity of
Joint Revocable Trusts that's eight six six eight four eight

(24:38):
five six ninety nine, or requested online from our website
Legal exchange show dot com. The proceeding was paid for
in The views expressed are solely those of Cushing and Dolan.
Cushing and Dolan and or Armstrong Advisory may contact you
offering legal or investment services. Cushing and Dolan in Armstrong
Advisory do not endorse each other. In are not affiliated HI.
This is Chuck Zada from the Armstrong Advisory Group. Your

(24:58):
home is about more than where you 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 for you should you stay, put downsize, or relocate

(25:19):
to an area with lower costs. We cover those issues
as well as how factors like property taxes, insurance premiums,
and 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 three nine three for zero zero one. A request

(25:40):
the guide at Armstrong Advisory dot com. 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.

Speaker 6 (25:56):
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You're listening to the Legal Exchange, and it's time for

(27:31):
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 (27:43):
Welcome back, Todd. We have a few questions from listeners.
First question comes from Susan and Rent the Mass and
Susan writes, I am married with two minor children. My
husband and I own a home, have around three hundred
thousand in our four to one K plans, in around
one million total interm life life policies. We've done a will,
but someone mentioned that we need more than that. What

(28:04):
would you recommend for our situation.

Speaker 3 (28:08):
Let's take a gander at this again. So we've got
the qualified plan money of three hundred right, yep, that's
qualified plan money and our home. How much is the homework?
Do we know? It doesn't say let's give it a number,
it'll help us with the six No, it's worth more
than that. It's worth a million. This is fans, it's
in rent them, come on, and a million in life insurance.

(28:32):
Is that about right?

Speaker 4 (28:32):
Yep?

Speaker 3 (28:33):
But no real investments. So we're looking at two point
three million. Yea, there's probably some investments.

Speaker 4 (28:39):
The bank accounts or whatever.

Speaker 3 (28:41):
Yeah, let's assume another half a million, okay, So we've
got two point eight million in total.

Speaker 4 (28:48):
Assets, okay, and minor kids.

Speaker 3 (28:50):
And minor children. So in this case that's actually the key, Susan,
And that's important for everybody that's listening, right, because they say,
you know, when do I do planning? Everyone asks when
do I it? What kind of planning? Well, young people
need to do planning, right, young people. Maybe not because
it's a large estate. In this case, the insurance is
driving the estate, which I get. But maybe not because

(29:14):
it's a large estate, but because your minor children can't
own anything. Right.

Speaker 4 (29:20):
So if you both were to die.

Speaker 3 (29:22):
Right, you could name a guardian in your will, which
I'm likely you will do or have done, because you
said you did a will, so I'm sure you've got
your guardian listed in the will, which, by the way,
wills are usually poor over wills that put things in trust.
Wills don't do much of anything but for a little
But for people with minor children, the will is hugely important.
Why because it names the guardian, so very important to

(29:45):
do that. Okay, So now I say, for the reason
you want to hear is yes, probate, Yes, the state tax.
I'm going to come back to that in a minute.
But most importantly, if you die, I don't want it
going to my guard gardian. I don't want my guardian
owning my house and owning my money. I want the

(30:06):
guardian taking care of the kids.

Speaker 4 (30:08):
Yep.

Speaker 3 (30:08):
But I want the money owned in trust. I want
the house owned in trust. I want language and the
trust controlling and dictating how these assets go, where they go,
when they get there, how they get there. Yeah, maybe
a different trustee managing the money, sure, making distributions to
the guardian to take care of the kids, all stuff.

(30:30):
That's that's stuff i'd probably want. So I think that's
probably the first priority here. So a trust a trust.
And because of the size of the estate two point
eight million slightly over the Massachusetts exemption amount in our
example anyway, but even if it wasn't, I would still
do the trust because of the minor young minor kikes.

(30:51):
So that's number one. Number two probate an estate taxes. Yeah,
I've got a state tax problem because your insurance is
driving the estate. So this way, if you look at it,
I have a million, five hundred thousand dollars of I've
got a house worth a million and a million insurance.
So there's two million, right and five hundred. I can
play with the three hundred. I can't because that's an IRA.

(31:13):
So I got two point five million. And the joint
trust is beautiful here because if I divided that between
a husband and wife trust, right, I would only have
one point five one point seven. I don't want. I
want to be able to shelter the full two million
on the first death. And it depends on who dies
first because I got the insurance. But either way, folks,

(31:34):
the joint trust would have been the way to go
for them. So I'm recommending for this folks a basic
estate plan which would include a joint revocable trust for
them and folks, that's what the guide is all about
this month. It's the simplicity of a joint revocable trust.
It explains to you how easy it is to fund
the trust. It gives you an example as to how

(31:56):
the estate taxes are calculated and saved. It even gives
you an example as to why gifting is not always
better than dying owning. It talks about step up in
basis and explains how this trust can get you a
double step up in basis and still provide for the
family and overall just make it so much easier for you.
Fund it, easily, set it, forget it, live your life,

(32:19):
and take care of all of these estate planning issues
that you have. Call and get it it's brand new
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 and download it there.

Speaker 2 (32:40):
Our last question comes from Fred and mend and Mass
and Fred writes, I would like to lend one of
my children some money to purchase a home. Can I
lend him money from my living trust, which I'm assuming
is a revocable trust?

Speaker 3 (32:52):
Now I hate when they say living trust. I know
what that means.

Speaker 2 (32:55):
Can I automatically forgive this loan if I die before
he finished is repaying it? I have two kids and
want to make sure things are split evenly. So I
guess in this case, would it matter if it's revocable
or irrevocable.

Speaker 3 (33:12):
No, I don't think it would matter whether it's to
a kid. Yeah, I think if it was revocable or irrevocable,
he could he could still make a loan, you know,
to a child. Got it. So I don't think that's
that's an issue. But you know, the bigger issue is
he's seemingly talking out of sort of both sides of
his of his mouth. Here he's saying, I want to

(33:33):
forgive the loan, but I want to treat my kids
equally well.

Speaker 4 (33:37):
Which I think a lot of people feel that way.

Speaker 3 (33:39):
Yeah, but if you forgive the loan, if he dies, right,
so that's when you're dividing your assets, right, So at death,
you're dividing your assets equally to the kids. But but
if you're if you're going to say, okay, there's an
outstanding five hundred thousand dollars balance on this loan that
goes away magically, Yeah, everything else gets divided equally. Didn't

(34:00):
kid get a five hundred thousand dollars benefit?

Speaker 2 (34:02):
See, I don't read his question is that. I read
it as how do I still keep it? Evenly if
I want to forgive this loan.

Speaker 3 (34:09):
Oh okay, so I read it differently.

Speaker 4 (34:12):
You came from a cynical lawyer's perspective.

Speaker 3 (34:14):
Audience, exactly the way I always look at things. I'm
the worst case scenario guys.

Speaker 2 (34:18):
Then let me look at it from the kinder gentler
financial advisors perspective.

Speaker 6 (34:23):
So if we.

Speaker 4 (34:24):
Want to ultimately treat the kids equally.

Speaker 2 (34:28):
How do we clear the deck of that loan and
still be fair in total?

Speaker 1 (34:33):
Oh?

Speaker 3 (34:33):
I see, okay, so it's good. Well, I'm glad we
both looked at it. See that's what's important about drafting.
When you draft, you have to be very clear about
what you mean. So likely in our intake meeting, my
first meeting with the client, when I'm getting to the
point where I say, how do you want to leave
your assets, and he would have already explained to me
that he has this loan, I would have said what

(34:54):
do you want to do with the loan? And it
would have came out. Then sure he would have said, well,
I want to forgive the loan because he might not
be able to pay it back, but I still want
to treat my kids equally with what you're saying yes,
can I do that? See, as long as they tell
us that in advance, then in our document we have
language that's called there's there's a there's a paragraph in

(35:16):
every one of our trusts called a titled rather advancement. Okay,
if I'm not told about it, the advancement paragraph is ignored,
doesn't apply, but it's there in case we need it.
So in this case, he would say, well, Todd, when
I die, I don't know what the outstanding balance on

(35:37):
the note will be because he's paying for it. Now, well,
that's okay. We simply just put language in there that says,
on the date of death, the value of the outstanding
balance on the promissory note to so and so child,
so grand, whatever the balance is on that at that

(35:59):
moment that's called one hundred grand is forgiven, but treated
as an advancement. What does that mean? On their inheritance?
On their inheritance? So what that means is and then
our advancement language kicks in and I'll just sort of
say in English, but that the way it works is, Okay,
we've got a million dollars in the trust equally to

(36:22):
the kids. Let's say we have three oh, but I've
got this hundred thousand dollars advancement language that I just read.
That means we have to reach into the one hundred
thousand dollars bucket, pull out one hundred thousand for the
other two kids.

Speaker 4 (36:36):
First, got it.

Speaker 3 (36:38):
Now everybody is equal, but there's only eight hundred thousand
left to go around. Well, that can be split equally, okay,
so you kind of raise up the other people to
equal the amount of the advancement to take care of it.
So it absolutely can be done. But again through a trust.
You've got to make sure you plan for this and

(36:58):
you tell somebody. Folks can get the new guide Joint
Revocable Trusts eight six six eight four eight five six
nine nine or Legal Exchange Show dot com and you
can download it right there.

Speaker 2 (37:11):
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,

(37:33):
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 (37:42):
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's private,
and your family stays in control. Our new guide, The

(38:03):
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.

(38:24):
That's eight six six eight four eight five six ninety nine,
or request it 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 affiliated HI. This
is Chuck Zada from the Armstrong Advisory Group. Your home

(38:45):
is more than just a place to live. It's part
of your story in retirement. Real estate can play a
powerful role in how you manage your wealth and plan
for the next generation. Passing property to family members isn't
always easy. One child might want to keep the home
while another prefers to sell its. Costs, taxes, and distance
to healthcare services are all important factors that need to
be considered, which is why having a clear plan can

(39:06):
help prevent family stress while keeping your wishes front and center.
Our new guide Owning Real Estate and Retirement is designed
to help you fit your property into a long term
strategy that supports your life today and preserves what matters
most for your future. Get your free copy right now
by calling eight hundred three nine three for zero zero one.
That's eight hundred three nine three four zero zero one.

(39:27):
A request the guide at Armstrong Advisory dot Com. The
proceeding was paid for by Armstrong Advisory Group, a registered
investment advisor. Nothing in the ad or in any Armstrong
guide is specific financial, legal or tax advice. Consult your
own financial, tax into state planning advisors before making any
investment decisions. Armstrong may contact you to offer investment advisory services.
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Your tune to the Legal Exchange with Todd Lutsky. If
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Todd right now at eight six six eight four eight
five six ninet nine and let him make sure your

(40:54):
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 (41:04):
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 the law firm of Cushing and Dolan with a
master's in taxation. Todd, I want to keep exploring further
the joint revocable trust that's in your new guide for

(41:25):
the month. Okay, So you go down the path you've
decided this is the type of trust for you. What
kind of assets should you actually move into your joint
revocable trust.

Speaker 3 (41:39):
Again, back to the funding idea and the simplicity of
the funding idea. Ready, everything except IRAS four oh one
KSE four O three b's qualified retirement money in general
doesn't go in. Now I say it doesn't go in
because the primary benefit can be a spouse, but the

(42:02):
contingent beneficiary might be the trust.

Speaker 2 (42:06):
Okay, well we'll explore that after. So my home, if
I have vacation home, what if I have rental properties?

Speaker 3 (42:13):
Yeah, so, well let's pause there. So the answer, the
quick answer is, yes, your home goes directly into the
into the trust. And yes, vacation can go into the
trust directly, just like a home. But I'm sorry, rental
can go directly into the home. But if it's a
rental I might say, do you want to have creditor
protection from lawsuits tenants? If you do, then what I

(42:36):
would do is I would suggest you put the you
deed the property into an LLC so that the LLC
provides you with the creditor protection. Okay, but the owner
of the LLC shares yep. Trust is the trust and
just as a caveat, because it's a joint trust, the

(43:01):
shares are owned one hundred percent by the joint trust,
which makes it a single member LLC yeap. Why that's
important is because so many people, again not knowing perhaps
think that having an LLC is an administrative headache.

Speaker 2 (43:23):
Well, because yeah, you have to do a separate tax
return for that, and you have to go through different
hoops to do like what you normally would do just on.

Speaker 3 (43:32):
Your own right. Everybody thinks this right, But if it's
a single member LLC owned one hundred percent in this
case by the joint revocable trust, which is another beauty
of having this trust, you now have no income tax
return to file because they are disregarded entities for income

(43:54):
tax purposes. Does it mean you don't pay income tax?
Don't get too excited.

Speaker 4 (43:59):
That's it's the magic wand we're all looking for here.

Speaker 3 (44:02):
Let's get it. Means we don't have to file that return.
What we do is we continue to file our personal
income tax return like we always do, and right on
schedule E you put your rental property.

Speaker 2 (44:18):
So hold on a minute, because if I have my
assets in my revocable trust. Don't I need to file
a separate tax return for my revocable trust. Again, perhaps
a misunderstanding by a lot of folks. Absolutely not, because
the revocable trust everything you put in it, like a
brokerage account if we get to that, or a bank account.

(44:39):
Everything we put in it is titled not only to
the name of the trust. So let's call it the
Lutski Family Trust, which is what I would call it.
It'll be in my social Security number or my wife's
social Security number, so the ten ninety nine's will come
out in the name of the Lutsky Family Trust.

Speaker 3 (44:58):
But my social YEP. So I don't file a tax
return for the revocable trust. I put it right on
my ten forty, and I'm not filing for the ten
sixty five, for the partnership or for the LLC return.
It also just gets reported on my schedule E ten
forty administratively simple, and no annual reports are needed or

(45:21):
annual meetings are needed for an LLC. Of course, there
is the one little issue of writing a check every
I think June to the state for about five hundred
dollars for the privilege of having an LLC. So you
take getting the business insetts you're doing business in mass
You got to pay them five hundred bucks, but it
might be an issue you got to write to check

(45:43):
it is tax deductible against the rent dollar for dollar, folks.
That is really a great way of sort of looking
at the simplicity of this joint trust. It helps you
with LLCs, It helps from funding. You just take stuff
and need it to directly in. You don't have to
split assets. It no tax return due, and you get

(46:06):
all the probate avoidance, all the estate tax savings that
you would get, in fact, perhaps more state tax savings
than dividing assets between two trusts, because you can shelter
more on the first death than you can on the other.
And you get a step up in basis. And I
can't even tell you all the all the benefits, folks.
Just learn about this new guide, the Simplicity of Joint

(46:28):
Revocable Trusts. Call and get it 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 and
you can download it right there.

Speaker 2 (46:45):
So Todd, you said that I can put my primary
residence in there. What if I have a mortgage on my.

Speaker 3 (46:51):
Home, Yes, you absolutely can, but it's this is really
where you were those questions. When we do the differences
between revocable and irrevocable trusts, that kind of have to
ask this question. So the nice part again, the simplicity
of these joint revocable trusts is yeah, take your house,
put it in, take your vacation home, put in. Don't
even care if it's encumbered. If it's encumbered, we don't

(47:13):
need to even tell the bank, okay, because it does
not you have not really transferred anything away. We have
the garn Saint Germain Act that says putting assets in
a revocable trust does not trigger the du on sale clause.
And that's why you're asking the question. People want to
know about what difference does it make? It matters because
it could trigger the duan sale clause. Right, So, in

(47:35):
an irrevocable trust, when we transfer it into our medicaid trust,
if you have a mortgage, I reserve a life estate
and the deed, so that little nugget of ownership that
you keep prevents the bank from calling the note on
the du on sale or du.

Speaker 4 (47:52):
On transfer's not required the revocable.

Speaker 3 (47:54):
Yeah, revocable, it's not even required.

Speaker 2 (47:56):
Okay, So if I have a mortgage currently, and let's
say someone's younger.

Speaker 4 (48:01):
That's that's using this revocable trust.

Speaker 2 (48:03):
What if I want to I mean, what if I
have high interest rates because I financed at a high
interest rate time, and I want.

Speaker 4 (48:10):
To refinance and you're in the revocable truth, I'm in
the revocable trust.

Speaker 3 (48:13):
What do I have?

Speaker 4 (48:14):
Can I refinance while it's in the trust?

Speaker 3 (48:16):
You absolutely can? You have zero problems. Well, every bank's
a little different. The worst case scenario you're going to
run into is the bank might say, okay, well, can
you deed the property back out of the trust to
your name personally, let us get the loan on it. Yeah,
and then we can transfer it. They'll even do it

(48:36):
for you. Then they'll transfer it back into the revocable trust.
So after the loan is on.

Speaker 4 (48:42):
Take it out or do the refinance and then just
slide it back in.

Speaker 3 (48:45):
Right. That would be the worst case, right, right, But
a lot of times banks are like, depending on the bank,
they'll be like, yeah, okay, it doesn't matter.

Speaker 4 (48:52):
Because your trust is your social security.

Speaker 3 (48:54):
Now still you. You're still on the hook. You're still it's
still all you. So it really isn't isn't a problem? Okay,
zero issue. Good?

Speaker 2 (49:02):
And I want to just jump back to one thing
that you said before. You would recommend it, if it's
a rental property, have it in the LLC for credit
or protection. Does that mean you can't get any creditor
protection with your revocable trust? Like if I want to
protect my kids inheritance when I die, well I need
to do something different for creditor protection for them for

(49:24):
their inheritance.

Speaker 3 (49:25):
Well, I was listening to you, and I'm going to
say I thought you were going to ask another question.
So there's kind of two questions built into your question, Susan.
One is, well, if I put my house in the trust,
since I had to do an LLC to get credit
or protection, well you're alive. No, a revocable trust does
not offer you credit or protection. Well you're alive. Right,

(49:47):
you get sued, You get sued. Your assets in the
trust are yours? Yeah, that's the beauty of a revocable trust,
no interference. It's not a credit or protection item. The
second question is for my kids. Oh, that's a different story,
whether it's a revocable or an irrevocable trust. When you die,
the trust becomes irrevocable. And yes, you are allowed to

(50:09):
get credit or protection for the children, so you can
still set the language up in there to have it
be a dynasty trust, move on and so forth and
protect from future divorces folks. The simplicity of joint revocable trust.
It is a brand new guide. We've never given it away.
The BBBA passage really helps us understand why they're so important.

(50:33):
Call and learn how they work eight six six eight
four eight five six nine to nine or Legal Exchange
show dot com and you can download it right there.

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

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

Speaker 2 (50:48):
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):
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, The Simplicity of Joint

(51:21):
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

(51:42):
six six eight four eight five six ninety nine, or
requested online from our website Legal exchange show dot com.
The proceeding was paid for in The views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan in Armstrong Advisory do not endorse each other.
In are not affiliated.

Speaker 6 (52:00):
HI.

Speaker 7 (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
an area with lower costs. We cover those issues as
well as how factors like property taxes, insurance premiums, and
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 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.

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