Why name your estate an IRA beneficiary?

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 Lutsky. 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? How are you?

Speaker 2 (00:54):
I'm great? Thank you?

Speaker 3 (00:56):
Welcome September.

Speaker 2 (00:57):
Hmm, can you screaming?

Speaker 3 (01:00):
I'm going to call you A couple of cases actually
pretty interesting. I think a Tennessee Appellate court case dealing
with you know, joint property in a divorce, then a
death and what happens to the joint property and the
tenets by the entirety property if the death occurs before
the divorce is final.

Speaker 2 (01:20):
That doesn't sound mighty at all.

Speaker 3 (01:22):
This sounds like it could be interesting. So we're gonna
find out about that. And again I think the key
here is what we're going to learn about joint property
and how joint property works and how it fits into
a state planning. So the lessons are sometimes better than
the story, but the story will be interesting for you.
And another one we're going to run over to Kansas,
and we've got a Supreme Court case in Kansas. So basically,

(01:44):
you know, once you accept something, then you can't get upset.
You get what you get and you don't get upset.
And that's in essence what happens here where somebody basically
ends up accepting a distribution from a trust and then decides, no, oh,
I don't like what I got? Well can you do that?
Stay tuned and you will. You will find out. So

(02:08):
a couple of things, though, folks, this is all going
to require the need for planning. And one of the
big items, one of the big assets you know, whether
it's real estate which is important to plan for, or
another problem asset in the estate planning world is iras
four oh one case or as we know them, retirement
qualified plan money. They're hard to plan for, especially in

(02:30):
the nursing home world. So this new guide we're giving away.
By the way, folks, I say it's new because this
technique's only been around since twenty twenty two when the
Secure Act changed. But you can learn how to name
your IRA beneficiary your estate. Again, you have to meet
the required beginning date, but naming it your estate as

(02:52):
the beneficiary, coupling it with a testamentary trust. The two
ideas that are in the guide will show you how
it can both be protect protected from the nursing home
which is very hard to do in advance, and sheltered
for estate taxes on the first death, all while not
incurring any adverse income taxes on the required minimum distributions

(03:14):
from these iras. Folks. That's a mouthful. It's in the guide.
It explains how to do this technique call and get
it eight six six eight four eight five six ninety
nine or Legal Exchange Show dot Com again eight six
six eight four eight five six ninety nine or Legal
Exchange Show dot Com. It's new for the month, and

(03:36):
it also talks about those testamentary trusts they're in there
as well. You got to learn how those trusts work,
which are very different than what we're talking about right
now over in Tennessee when we go to this appellate
court case. What are we doing over there? Well, Charles
Senior and Shirley married in nineteen eighty one, surely then

(03:59):
five for divorce in March of twenty twenty January of
twenty twenty three, they're still not divorced. Shirley and Charles
Senior agree that the proceeds from the sale of certain
parcels of real estate that were owned as tenants by

(04:19):
the entirety or just jointly would be deposited with the
Chancery Court. Whatever the heck that means?

Speaker 2 (04:28):
What does then?

Speaker 3 (04:29):
I don't know, We're going to keep going. That's what
they agreed to, though. Then in August of twenty twenty three,
So a few months later Senior dies and guess what
it was? Prior to a final divorce decree being entered into.
So what do you think Shirley does. Shirley says, well,
I'm going to file a motion to dismiss and request

(04:51):
distributions of the sale proceeds.

Speaker 2 (04:54):
Makes sense because she's joint with rights at that point.

Speaker 3 (04:57):
Still, well, I think, so let's see Junior son of Charles.
Now they say son of not Shirley, probably son of Charles, which, yeah,
makes me think that it's probably a second marriage. Good point, Susan,
So keep that in mind. Well, he files a complaint
alleging that the sale proceeds belonged to the estate. Well,

(05:20):
the trial court granted Shirley's motion, finding that the divorce
abated was abated by Senior's death and because they were
still married on the date of death. Here you go, Susan,
and that they owned the property joint tenants by the
entirety and jointly they that the proceeds would be held

(05:41):
the same way, and therefore they belong to Shirley. As
you might imagine, Junior didn't like that, so Junior appealed.
He argues that because they were in the middle of
a divorce, they intended to dissolve the tendancy. Yep, the
appellate court affirmed, stating that the proceeds from the sale

(06:03):
of the property held jointly or tenants by the entirety
are in fact held the same way. The proceeds would
be held the same way and surely would get them
unless the party showed an intention to create a different
form of ownership. And they said that they really didn't show.
All they did was agreed that the proceeds would be

(06:25):
deposited into a chancery court. They didn't talk about changing ownership.

Speaker 2 (06:29):
And after Yeah, so folks.

Speaker 3 (06:32):
Lots to think about obviously, when you're going through a divorce. Divorce, yeah,
I mean, please a long time if I think the
first message is if you're going through divorce, please get
your ducks in a row and get some planning, you know,
take care of make sure you know what happens if
you die before you get the cashed. And I think,

(06:52):
before I get into understanding the joint property a minute,
I just want you to know that, you know, obviously,
one of the things that you think about here is
if this is a second marriage and you're dealing with
all kinds of real estate which they have here. I mean, clearly, folks,
a trust is a much better way to go.

Speaker 2 (07:11):
Right, because then the trust he could have taken care
of his son and it would be outlined exactly what
he wanted to ultimately happen.

Speaker 3 (07:18):
Right, I mean he could have. And again, if there's
ever a remarriage or I mean, you need to make
sure that you could say, okay, well, if I'm going
to get the divorce, well then maybe this property goes
to my ex wife, or this property stays in trust
for my son or something to set up the trust
to control the real estate. So it really is is
a much better way than this joint ownership arrangement especial

(07:43):
especially with a second marriage. Forget the divorce here, just
let's say they never got divorced, right, and they stayed married. Well,
maybe I want to take care of my spouse. I
loved her and I wanted her to use a certain house,
but I didn't want her to sell it. Well, the
trust can can do that.

Speaker 2 (07:59):
Just because you love yourself and spouse doesn't mean you
want to disinherit your children.

Speaker 3 (08:02):
Exactly, and you could still provide for each side of
the marriage. But that didn't happen. But let's understand what
did happen. Right, Remember, jointly held property. Most married couples
own real estate jointly, and a primary residence they own
t bye. They call it tenants by the entirety. Now,
what the heck is that? Well, that's still joint, but

(08:23):
it does provide some creditor protection because if one spouse
is sued or has a creditor chasing them, the creditor
cannot force this property to be split. So therefore it
provides some creditor protection. So that's why with the home
its own t BYE.

Speaker 2 (08:39):
And that's only for prim couples primary residents.

Speaker 3 (08:43):
Yes, yes, that's right, Susan. So so that's one thing
and the other properties just joint. So remember though on
the estate side doesn't do anything. It avoids probate, but
it passes directly to the surviving owner. Therefore, that doesn't
shelter anything for a state tax is because all the
assets will just be taxed when the surviving spouse dives.

(09:05):
So joint ownership is not a great estate planning tool
from an estate tax standpoint. You really needed the trust
to shelter the assets on the first death to provide
the estate tax savings. And as we mentioned earlier, in
a second marriage, without the trust, you have no control
over the asset for your side of the of the mayor,

(09:27):
of your side of the family, after you know, you die.
If it just goes to your spouse and it was
joint she could do whatever she wants with it.

Speaker 2 (09:35):
And if it's not and if it's own jointly, that
means it doesn't go through probate, So it's not like
they can contest probate and say, hey, i'm a child,
I get abortion right.

Speaker 3 (09:46):
And I think that's the next pact right here. I
don't know what they had done for planning, but if
they didn't have much planning done, then you know the
jointly if it's if it's just money and there's no will,
it's going to go intestate. And if they're still married,
she going to get something at least depending on what
the laws are of that state, the intestate laws of
that state. Folks, don't leave things to chance. Do your planning.

(10:09):
Learn how especially to plan for your IRA and by
the way, for life insurance. Both are covered here eight
six six eight four eight five six nine nine or
Legal exchange show dot com.

Speaker 2 (10:22):
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. We've got
much more to come when we return to the Legal
Exchange with Todd Lutsky.

Speaker 1 (10:36):
Every dollar you've saved in retirement accounts and life insurance
tells a story, a story of hard work, smart choices
and the future you envision for your family. One way
to help that story end well is to make a
beneficiary choice that does more. This month's free guide from
Cushing and Dolan, IRA and Life Insurance Planning, Estate tax
Strategies and Nursing Home Protection explains how naming your estate

(10:58):
is the beneficiary of your IRA or life insurance can
at a layer of tax efficiency in nursing home protection
while still allowing your spouse access when it matters. It's
about keeping more of what you've built, working for your
loved ones now and in the years to come. Get
you a free copy today by calling eight six six
eight four eight five six ninety nine. That's eight six
six eight four eight five six nine nine, or you

(11:20):
can request it online from our website Legal Exchange show
dot com. The proceeding was paid for and the views
expressed are solely those of Cushing and Dolan. Cushing and
Dolan and Ormstrong Advisory may contact you offering legal or
investment services. Cushing and Dolan and Armstrong Advisory do not
endorse each other and are not affiliated.

Speaker 4 (11:36):
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(12:21):
We're on our website Armstrong Advisory dot com.

Speaker 1 (12:23):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
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You're listening to the Legal Exchange with Todd Lutsky, an
expert in elder life planning and taxation. Need help with
your estate plan? Call Todd right now and make an appointment.
Eight sixty six eight four eight five six ninety nine.

(13:50):
That's eight sixty six eight four eight five six ninety nine.

Speaker 2 (13:55):
Welcome back into the Legal Exchange with Todd Lotsky. I'm
Susan Powers of financial advice 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.
Where are we headed now, Todd.

Speaker 3 (14:10):
We are going to go to Kansas.

Speaker 2 (14:12):
We're not in Kansas anymore. So you should have done
that story first so that I could really say that
you did say, I haven't mean something.

Speaker 3 (14:20):
We're in Kansas anyway, and it's a Supreme Court decision.
And basically, you know, once you accept, can you still
get upset. So here's thelong in the short of it, right,
And there's obviously a lot more to this than just
the story. But Roxanne dies in twenty twenty and she

(14:41):
had a revocable trust. Yay for Roxanne and the daughter.
Sarah becomes the success or trustee. The trust provides for
Roxanne's five children. Okay, it doesn't say whether it's equal
or not, but let's just assume it is. But it

(15:01):
just as provides for so I don't know if that's
equal or not, but keep that in mind now. On
May twenty twenty one, son David sues Sarah to remove
her as trustee, but that suits quickly dismissed because there's
no grounds. Again, trust doing its job. October twenty twenty one,

(15:25):
Sarah sent around. She's the trustee. She's sent around a
final trust accounting what she's supposed to do, and then
a distribution proposal. Here's what's going to come out again,
She's probably following the terms of the trust. All the
beneficiaries except and sign a release except David. David pro Se,

(15:48):
meaning without a lawyer, files an objection to prevent the
winding up of the trust. Sarah files a declaratory action, saying, listen,
I want to put this thing to bed. I want
to distribut at the assets. And the court agreed, ordering
out the distribution of assets and releasing Sarah as trustee. Well,

(16:09):
David files a notice to appeal, but shortly after he
files the notice to appeal, he cashes his check that
he got from the trust. The appellate Court dismissed David's
appeal for lack of subject matter jurisdiction. Why because David
accepted the benefits and thus he's barred from appealing. Right, Well,

(16:33):
he didn't like that, so he went to the Supreme Court.

Speaker 2 (16:35):
Can just out of his share.

Speaker 3 (16:40):
So he goes to the Supreme Court and they affirmed, saying, look,
once you accept, you cannot take an inconsistent position. Later
you get what you get and you don't get upset.
That's crazy, It is crazy, but it's I think we
can learn a lot, you know, from something like this,

(17:02):
and attorney that's number one, get some advice and well
maybe that's why he kept the legal fees down. But folks,
I do love the idea. Any they didn't have any.
I do love the idea the revocable trust here, folks,
but think about this because you know, when you're doing
your planning, this new guide for the month, which is
is still a relatively new technique. It's it's basically learning

(17:24):
how to name the beneficiary of your IRA, your estate,
which sounds like malpractice because it was for a long time,
but not anymore. And again, while this trust might deal
with certain assets that we just read about, this idea
involves a testamentary trust. Right how you use an IRA

(17:46):
coupled with a testamentary trust, which, by the way, is
a will trust. It's it's a trust built into your will,
and it's good for IRA assets and it's good for
life insurance. Especially when you're coupling it with nursing home planning.
It gives you some great benefits from a tax standpoint,
a nursing home protection standpoint, and not causing adverse income

(18:07):
tax consequences while protecting the assets from the nursing home folks.
It's it's really a wonderful technique. Get the guide eight
six six eight four eight five six nine nine or
Legal Exchange show dot com How to name an estate
an IRA beneficiary and I should also say life insurance

(18:28):
eight six six eight four eight five six nine nine
or Legal Exchange show dot com. Let's talk about what
we learn here.

Speaker 2 (18:38):
Can we start with a new contest clause? Please, let's
just start with that.

Speaker 3 (18:44):
So it seems to me that that beginning, when I
said they're treating the taking care of the kids, it
didn't tell me whether it was equal or not. My
point is, I think whether it's equal or not anymore,
I think you ought to start with, you know, a
no contest clause. So, first and foremost, I want you

(19:07):
to see that this trust planning really worked, just another
example of how a trust works. You don't it does
the job. Second, even when you're treating kids equally, and
for sure, if you're not treating them equally, well, you know,
one should always put a no contest clause in there.

(19:27):
This effectively states that if a beneficiary challenges the trust,
they automatically lose whatever they were getting. There's no winning. Now,
in this case, it sounds like David was being taken
care of one way or another, even if he was

(19:48):
just getting a percentage. Let's first of all, it's an
equal percentage, or even if it's a smaller percentage, but
it's still a percentage. He would have thought twice about
bringing this.

Speaker 2 (20:00):
Action, because he would have gotten nothing.

Speaker 3 (20:02):
Right just by filing. You now give up, you can't win.
That's what basically says.

Speaker 2 (20:08):
I would think that David's personality would have shown through
his entire life, and they should have expected this reaction,
and they when they did the trust, they should have
recommended that no contest clause.

Speaker 3 (20:21):
Yeah. I would think that's something that they should have seen.

Speaker 2 (20:24):
Right, and dynamic, the family dynamic, and you know.

Speaker 3 (20:27):
And I say, yes that that's a good point, Susan.
And I think also, you know, just lawyers in general
might want to guide them and say, you know, to me,
this is really what we're here for counseling you. Why
not just throw a no contest clause in even if
the lawyer doesn't know that child what right? The lawyer
probably doesn't know that child right.

Speaker 2 (20:49):
But you do have conversations about that family dynamic when
you're meeting with clients.

Speaker 3 (20:54):
I do. I mean, it's one of my standard questions
that I ask in the meeting. I say, you know,
how many kids do you have? They tell me, and
I say, does everybody get along? Okay? You know I
always ask.

Speaker 2 (21:03):
That, right pause? Something you know, as you know.

Speaker 3 (21:06):
It's okay as siblings do I get. I always say that,
you know, siblings, you don't have their things, But in general,
you know, we're not enemies. We have each other's back
and whatnot. And if that's the case, they're fine, move on.
But even so, it can't hurt to put it in now.
So again saying the trust here really works, right. It

(21:26):
controlled who got what, how they got it, when they
got it, why they got it, and they couldn't fight it.
So I loved it. Secondly, the trustee situation, they got
five kids, having one child serve. They always ask me, oh,
why can't I put all five on? Because it doesn't matter.

Speaker 2 (21:46):
Nightmare.

Speaker 3 (21:46):
It's a nightmare and it doesn't really change anything. Right,
Look here, having one child and not all five serving
is still okay. Why because remember the trustee can only
do what the trust says to do it, you know,
do other things. So you're bound by fiduciary duties just
because you didn't become trustee. As long as you're not

(22:09):
treated differently, what do you care? Also, in this case,
it shows that it's not so easy to just remove
a trustee without cause they tried. Ah, what it's going
to throw you out, Sarah, remember David. Well, that case
was dismissed pretty quickly. Hey, if you don't have cause,
the trustee can't just be removed. It's not so easy.

Speaker 2 (22:31):
Because it was mom or dad's choice to have them
be the trustee.

Speaker 3 (22:34):
That's right. As long as they're following the fiduciary rules
of the trust doing what it says, you're fine. Also,
the trust really prevented David from like manipulating the mother
before death and certainly protected the assets after death. So again, folks,
these trusts are not just for probate and taxes in
nursing home protection. They really protect the family, you know,

(22:55):
behind the estate plan and again real estate, right, there's
real estate involved here. If you have real estate and
the trust and you have five kids, always a good
idea to put in the forced sale language unless they
all want it. Mostly they're not gonna want it, And
this way they can buy each other out and everybody's
still happy, and everybody's still going to go to Thanksgiving

(23:16):
dinner together because they're still treated. They got what they
wanted to get. Folks, it's a brand new guide for
the month. That's just one asset. Real estate iras and
life insurance are tricky assets. Get the new guide in
terms of how to treat them eight six six eight
four eight five six nine nine or Legal Exchange show

(23:37):
dot com.

Speaker 2 (23:38):
You've been listening to Todd Lutski, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We'll be
right back with more on the Legal Exchange with Todd Lutski.

Speaker 1 (23:51):
Every dollar you've saved in retirement accounts and life insurance
tells a story, a story of hard work, smart choices
and the future you and for your family. One way
to help that story end well is to make a
beneficiary choice that does more. This month's free guide from
Cushing and Dolan IRA and Life insurance Planning Estate tax
Strategies in Nursing Home Protection explains how naming your estate

(24:13):
is the beneficiary of your IRA or life insurance can
at a layer of tax efficiency in nursing home protection
while still allowing your spouse access when it matters. It's
about keeping more of what you've built, working for your
loved ones now and in the years to come. Get
your free copy today by calling eight sixty six eight
four eight five six nine nine. That's eight six six

(24:34):
eight four eight five six nine nine, or you can
request it online from our website legal exchange showed dot com.
The proceeding was paid for and the views expressed are
solely those of Cushing and Dolan. Cushing and Dolan and
Ormstrong Advisory may contact you offering legal or investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other and are not affiliated.

Speaker 5 (24:52):
Inflation, housing costs, and rising interest rates are putting pressure
on families everywhere, from higher insurance and taxes to volatile markets.
Today's economical way landscape is changing fast. This is Chuck
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seminars this fall, first at Margaritaville Resort, Cape cod on
October ninth, and next at the Showcase super Lux and
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(25:14):
three for zero zero one to reserve your spot. We'll
discuss how to manage risk, protect your retirement and create
a plan that can handle economic ups and downs, whether
it's core inflation, market volatility, or policy changes. You'll learn
about strategies that may help you plan smarter. Register today
by calling eight hundred three nine three for zero zero
one or on our website Armstrong Advisory dot com.

Speaker 1 (25:37):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal, or tax advice. Consult
your own financial, tax, and estate planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services.

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Speaker 1 (26:54):
You're listening to the Legal Exchange, and it's time for
Ask Todd, the segment where Tod will answer you your
questions about anything and everything that's included in the estate
planning process. Once again, here's Tom Lutsky and Susan Powers.

Speaker 2 (27:09):
Welcome back talk. We have a few questions from listeners
for you. First question comes from Lena and Brookline, mass
And Lena writes, my mother passed away in December without
a will or anything written down with her intentions. I
have one sibling and my father passed away years ago.
Does her lack of planning complicate the process of settling
her estate? She was worth around one point five million

(27:32):
when she died. Doesn't say what type of assets she had,
so you might have to make live here a little bit.

Speaker 3 (27:38):
Yeah, yeah, it always it always complicates things when you
don't do planning, period. I think that's just a general statement.
You have to just say. The question is more how
bad is it going to be? You might luck out here.
Let's say let's say they had, you know, an IRA,
but it had a designated beneficiary and the two kids. Yep,

(28:01):
well that's easy. Kids can just go to the IRA
store or to the financial IRIS store, to the financial
institution that houses the the IRA money and and basically
present the death certificate, present you know who they are,
and if they're listed on the on the form, then
that money will go to them, no probate, no fuss uh.

(28:24):
And because she's at one point five million, that also
lessens the complication because in Massachusetts you can shelter up
to two million without paying an estate tax, So we
don't have an estate tax filing to worry about.

Speaker 2 (28:38):
So no federal, no state.

Speaker 3 (28:40):
Oh, definitely, no federal and no state. Correct And so
again now it's just the complication level comes down. And
again depending on the assets will cause the complication level
to go up. So iras they can.

Speaker 2 (28:53):
Just takeank accounts and things like that.

Speaker 3 (28:56):
Yeah, so life insurance, so again we have a dB
is likely on there, go take it. The problem's going
to come with the investment accounts and the bank accounts. Right,
how are the and real est real estate? They have
real estate, he said.

Speaker 2 (29:11):
I think that she doesn't say what type of assets.

Speaker 3 (29:15):
So right off the bat, again, you could be dodging
a bullet. Right you go into the investment house and
you find out that that she actually did list a beneficiary.
There's a fifty chance that you'll have a designated beneficiary
on those investment accounts.

Speaker 2 (29:30):
Yeah, we always try to put them on. When there's
an individual account, we always try to make it a
transfer on death account so that you don't end up
with the situation.

Speaker 3 (29:38):
Right. By the way, when Susan says the situation, it's
just avoiding probate, it's still part of the estate. It's
just avoiding probate and allowing an ease of accessibility.

Speaker 2 (29:47):
And it makes it a lot longer.

Speaker 3 (29:49):
Oh yeah, it's so much bear.

Speaker 2 (29:50):
Money to your beneficiaries.

Speaker 3 (29:52):
I think where she's going to run into problems, and
I think where the complexity of the estate administration process
is going to be is with bank accounts. In real estate.
It's highly likely that bank accounts don't have the TOD
the transfer on death, can you yes, but for some
reason they don't.

Speaker 2 (30:12):
Do it, not if they have us for their advisors.
We always talk about that stuff, not leaving anything any
any open open things where you don't have beneficiaries.

Speaker 3 (30:22):
So even if you're not managing their money, but they
have money in a bank.

Speaker 2 (30:25):
Account, got it. We have the conversation, good for your
review the beneficiaries at all our reviews and say, okay,
what do you have outside of here? Are there bennies
on those accounts? Get them on those? So yeah, good
for you. We've seen it happen and some people walk
away from a small bank account rather than go to probate.
So nobody wants that.

Speaker 3 (30:42):
No, And that's a good point, Susan. If the amount
in that bank account happens to be under probably don't know,
twenty five hundred bucks maybe or three grand, you probably
walk away from it. Yeah, you're going to spend that
to get it, so I don't want to go to probate.
So that's a good idea. But I think the real
problem with the complexity with certainly increase would be with
the real estate. So the real estate likely would be

(31:05):
in her name alone. I mean because it was probably
joint before her her husband died. Yeah, and then when
when she passed, it was in her name alone, even
if they did nothing, even though they say, oh no,
it was still joint with my husband.

Speaker 2 (31:19):
No, not really, because you can't put a beneficiary on
real estate, not really.

Speaker 3 (31:23):
You can add a name, but that's not a good idea.
So so yeah, I think she would have the complexity
of dealing with that real estate, releasing the lean, then
going to get the going to probate to get it,
you know, ability to sell it, even transfer it, et cetera.
So I think there's going to be some complications there.
But we can avoid these complications by doing planning, like

(31:47):
putting a house in a trust or bank accounts or
investment accounts in a trust. But when we're doing that planning,
the new guide this month helps us deal with other
assets that are not so easily planned for still need trust.
But in this case, IRA's life insurance right, two very
complicated assets. We can use testamentary trust, which is a

(32:09):
different kind of trust. It's a trust built in the will.
It's described in this guide, and it's going to help you,
especially when you're doing nursing home planning, how to name
the estate your beneficiary under your IRA, and do the
same thing with life insurance because oftentimes life insurance can't
be protected in advance from a nursing home either, So

(32:32):
this technique, this guide will show you how to protect
these assets from the nursing home, reduce estate taxes because
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(32:53):
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Speaker 2 (33:01):
Our last question comes from Janet in Conquered New Hampshire,
and Janet writes, my husband and I would like to
transfer our lake home to a trust so that our children,
grandchildren and great grandchildren can continue to enjoy this property
for years to come. Can this be done to prevent
our children from selling the property? Well, let's see, do

(33:22):
you want to make sure your kids don't get along
after you die?

Speaker 3 (33:26):
This is a recipe for disaster? Right? But it is
and it isn't right. I know that you know as
parents or grandparents, as the case may be or great grandparents,
as the case may be. You know you want this
for them, you see it as a wonderful thing, but

(33:48):
they don't always right, and so it's really hard to
force people to do this. Can you put it in
a trust? Yes? Can you have language in the trust
that says it's to be held in trust for the
benefit of my kids grandkids in great cranking yes. Can

(34:09):
you actually prohibit the sale? You can? I don't love
it right, And again, you've got to watch out how
long things stay in trust. At least in Massachusetts, we
have something called the rule against perpetuities. That simply means
that it can't last longer than all the lives in

(34:31):
being on the date of death. After the last one
of the lives in being on the date of death
dies twenty years from then, it must end. So that
could be a long time.

Speaker 2 (34:45):
So if you have, you know, infant great grandchildren.

Speaker 3 (34:48):
Say you've got three kids and three grandkids, just three
kids and three grandkids. Forget the great crankins, but it
could be right, just even that, if everybody dies in order,
twenty years after the youngest grandchild dies, right is when
it must end. That's the rule against perpetuities. I like

(35:09):
to tell people it's about one hundred years. Yeah, and
so you can't keep it forever, so that prohibition on sale. Yeah,
but ultimately it's going to come out. So can you
do all that?

Speaker 7 (35:22):
Yes?

Speaker 3 (35:22):
So let's say you do that. Now you have the
problem of who's going to get it on which weekend,
and who's going to get it on which holiday, and
who's gonna pay for it, who's going to pay all
the upkeep and the maintenance and the expenses, and who
wants the liability of someone slipping and falling and having
a party and some kid getting hurt in a pool.
It's it's complicated, right. Can you do it? Yes? But

(35:44):
then you need to provide enough money in the trust
to maintain the property because if not, you're going to
be chasing all the kids to come up with payments.

Speaker 2 (35:54):
That's a lot of money for thirty years.

Speaker 3 (35:55):
To pay all the bills, right, And so probably better
just to say, you know what, sell it unless you
all want it. The ones who want it will care
for it, they'll buy out the ones who don't, and
everybody will be to.

Speaker 2 (36:10):
Get different people at different all over the country. They
could be.

Speaker 3 (36:13):
Where they're living geography where their head's at. Who knows folks?
Great idea trust planning needed? How do we deal with
life insurance and IRA money? Most important assets to deal
with in your estate? Get the guide eight six six
eight four eight five six nine to nine or Legal
Exchange Show dot com. It's new for the month.

Speaker 2 (36:37):
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 in Cushing and Dolan.

(36:57):
I'll get that right. It's only been twenty years. I'm
Susan Powers of Financial Advice with the Armstrong Advisory Group.
We'll be right back after more on the Legal Exchange
with Todd Ludski.

Speaker 1 (37:10):
Every dollar you've saved in retirement accounts and life insurance
tells a story, a story of hard work, smart choices,
and the future you envision for your family. One way
to help that story end well is to make a
beneficiary choice that does more. This month's free guide from
cushingon Dolan, IRA and Life insurance Planning Estate tax Strategies
in Nursing Home Protection explains how naming your estate is

(37:32):
the beneficiary of your IRA or life insurance can add
a layer of tax efficiency in nursing home protection while
still allowing your spouse access When it matters. It's about
keeping more of what you've built, working for your loved
ones now and in the years to come. Get your
free copy today by calling eight six six eight four
eight five six nine nine. That's eight six six eight

(37:53):
four eight five six nine nine, or you can request
it online from our website Legal exchange show dot com.
He was paid for and the views expressed are solely
those of Cushing and Dolan. Cushing and Dolan d Ormstrong
Advisory may contact you offering legal or investment services. Cushing
and Dolan and Armstrong Advisory do not endorse each other
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One of the biggest risks to retirement isn't just market volatility,
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Speaker 1 (39:59):
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. Cansult
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 (40:42):
Your tune to the Legal Exchange with Todd Lutsky. If
you are a loved one needs a nursing homestay, call
Todd right now at eight 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 (41:01):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor the Armstrong Advisory Group, and
I'm joined, of course by Todd Lutsky, a partner with
the law firm of Cushing and Dolan with a master's
in taxation. So, Todd, this guide is all about why
you should name your estate and IRA beneficiary. So I'm

(41:22):
assuming this is not one size fits all, So who
should actually consider naming their estate as their IRA?

Speaker 3 (41:31):
As you might imagine there's a lot of rules. Whenever
you talk about iras, the first thing you think about
is how many rules there are with iras, and there are.
Forget naming the estate, just in general. You could give
an eight hour seminar on IRA bit designated beneficiary rules.

Speaker 2 (41:51):
You probably have to do that at the IRA store.

Speaker 3 (41:53):
Yes, at the IRA store. So it's complicated, but it's
not overly complicated the way we break it down. So
I think your question, and I'll try to stay focused
on the question, because there's so many spinoffs. Who should
do it? First of all, it would be people that

(42:15):
are interested in protecting assets from the nursing home. I
think it's it's limited in that regard. I probably would
not need to name the estate the beneficiary if I'm
self insured, I have enough assets. I'm not worried about
the nursing home. I'm doing revocable trust planning.

Speaker 2 (42:34):
Maybe you have a big old Cadillac policy, long term
care policy, or.

Speaker 3 (42:38):
You just have enough money, right, You've got five six
million dollars generating five percent. You got nothing to pay
for yourself. Yeah, so I think that's probably okay.

Speaker 2 (42:47):
So those that are concerned.

Speaker 3 (42:49):
That would be that would be first, but I even
think within that group, you have to then learn who
in that group should be doing.

Speaker 2 (42:59):
It, dive down into that further, so you meet with
a lot of people that are concerned with the nursing home.
Is this kind of across the board when you're doing
irrevocable trust planning?

Speaker 3 (43:09):
And that's really a fair question because let me break
that down a little bit. Yes, in order to do
this kind of thing, you're doing nursing home planning. So
we're now talking about irrevocable trust. So yes, every time
I do irrevocable trust planning, there will be a testamentary

(43:31):
trust as part of that plan, regardless of the individual's age,
which is a driving factory. I would at least set
it up so they could grow into it if they
haven't attained what we call the required beginning date. Okay,
So yes, the testamentary trust will be there, but the

(43:52):
actual naming the estate as the beneficiary on the IRA
beneficiary form might not take place until the individual attains seventy.

Speaker 2 (44:06):
Three okay or whatever their age.

Speaker 3 (44:09):
No, seventy three is the required beginning date that you
must start taking distributions from an IRA.

Speaker 2 (44:16):
Yep, So there's some that are seventy five. Now you
and I are seventy five RMD age, so they changed
that not too long ago, but seventy three is the
current age that's there, so yep.

Speaker 3 (44:28):
So seventy three, yeah, I would say when you reach
age seventy three, you have to take minimum distribution. So
at that point, that's when you're allowed to name the
estate the beneficiary yep, to avoid any adverse income tax consequences.

Speaker 2 (44:45):
So you have to be RMD age in order to
update to change it to the estate of right.

Speaker 3 (44:51):
But if we're doing the planning and they're sixty two, yep,
I'm going to set it up so that when they
so that that testamentary trust is in place to receive
the IRA money when they die. But they won't actually
change the beneficiary designation until they reach seventy three, so they.

Speaker 2 (45:09):
Would probably have their spouse and then their kids. Yeah
as But then once they reach that R and D,
that's when they need to update.

Speaker 3 (45:16):
Put it on your watch so it dings when you're
seventy three.

Speaker 2 (45:20):
I wonder what that little string on my finger is
for after all these years.

Speaker 3 (45:23):
But it is. It is great. But a lot of
times people are already that age and it just it
just sure. So I just wanted you to know both
sides of it. But folks, that's just one of the
things you have to think about right when you're dealing
with IRA beneficiary designations and or life insurance beneficiary designations.
That's something we have to talk about as well. Those
are two great assets to deal with when you're dealing

(45:46):
with this kind of a planning so irrevocable trusts, planning
using testamentary trusts, naming the estate the beneficiary, and on
an IRA or life insurance policy. This guide explains the
benefits of doing that, from estate tax planning to nursing
home protection to income tax benefits Call and Get It

(46:08):
eight six six eight four eight five six ninety nine
or Legal Exchange show dot com New for this month.
Naming an IRA the estate beneficiary.

Speaker 2 (46:18):
Okay, so we know the age of folks that should
consider it. Why would they do this though? What are
the benefits? So we haven't talked to mechanics yet of
what you achieve by doing this.

Speaker 3 (46:29):
So if you do this so that that really jumps ahead.
But the big, the big asset, the big benefit here
is think about an IRA for a minute, right, clients
come in and they say, I got my house, most
of my money's in an IRA, and I got some
bank account want and a bank aout money is not huge? Well,
they really have two big items, you know, million dollar

(46:52):
home and you know eight hundred thousand dollars in an
iraw a million dollars in two iras, husband, wife, whatever? Wow, Okay, Todd.
It sounds like, and I want to protect the stuff
from the nursing home. And they come in with that
sort of gun ho attitude. I say, okay, well, yes
we can do it. But the first thing you need
to understand is you can only protect the house in

(47:14):
advance of you going into a nursing home. We can
put that in the trust. I can't move your other
big asset, the IRA, to the trust. Now why because
if I do, I pull it out of the IRA,
you now have to give the government forty percent income tax. Yeah,
big tax, and put a lot less. So if I

(47:36):
pulled a million out, I only have six hundred thousand
to put in the trust. Bad idea. So I can't
move it today. But we could do it with designating
the estate the beneficiary. So if you die and never
go to a nursing home, and that's one of the
caveats with this planning. But again, if you don't plan,

(47:57):
you lose for sure, and there's a good chance that's
what we want anyway. We want to be able to live,
not go to a nursing home pass away. If that happens,
then that money goes into the testamentary trust. That's what
we're talking about.

Speaker 2 (48:14):
Of the person who died.

Speaker 3 (48:17):
Would then pass into this testamentary trust through probate. So, yeah,
I gotta go to probate. No, it's but it's only
one item, so it's not like I've got this huge
inventory of probate assets that I have to deal with.
It's one item. So you take it through, put it
into the testamentary trust, and simply by doing that, the

(48:40):
one main benefit. There's others, but this is the first.
Main benefit is it will sit in a trust in
which the surviving spouse that's why we do this and kids,
but surviving spouse will be entitled to both the income
and the principle from that bucket. So technically the trustee

(49:02):
can give all of that money to her.

Speaker 2 (49:05):
So how is that any different than if she just
had it and put it right in her own name
as the spouse.

Speaker 3 (49:10):
You're right, it would avoid probate. It would go directly
to the spouse.

Speaker 2 (49:14):
She she could spend it.

Speaker 3 (49:16):
However, she wants the big difference, and we'll get into
more differences later, but one of the big differences is
the money that goes directly to the spouse, not sheltered
first aid taxes completely available, and remains at risk for
the nursing home when she might get sick, right, going

(49:36):
through this testamentary trust. It then gets into the testamentary
trust through probate cleansing it, meaning even though she has
access to all of it, yep, she could have a
stroke two months later. It's completely protected from the nursing
home for the kids, no look back, no five year

(49:57):
look back period. So that's really the home run peace right.
Never mind, it's also shelter.

Speaker 2 (50:03):
Your state text those iras in advance, but they have
a few automatic when when do you die? Right, that's
worth a trip to probate.

Speaker 3 (50:10):
I mean, I think that's worth a trip to probate
if you know that there's a chance that the surviving
spouse could get sick yep later and then go to
the nursing home. And lots of times when one gets sick,
they're really already the other ones older and something could
happen right away. Now it's safe, so folks, just one
of the benefits. Learn how to name the estate and

(50:32):
life insurance. Are named the beneficiary of your estate for
both life insurance and iras. Get the new guide eight six, six,
eight four, eight, five, six, nine to nine.

Speaker 2 (50:43):
You've been listening to Todd Lutsky from the law firm
of Cushing and Dolan. Todd, thank you so much.

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

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

Speaker 1 (51:00):
Every dollar you've saved in retirement accounts and life insurance
tells a story, a story of hard work, smart choices
and the future you envision for your family. One way
to help that story end well is to make a
beneficiary choice that does more. This month's free guide from
Cushing and Dolan, IRA and Life Insurance, Planning, Estate tax
Strategies in Nursing Home Protection explains how naming your estate

(51:22):
is the beneficiary of your IRA or life insurance can
add a layer of tax efficiency in nursing home protection
while still allowing your spouse access when it matters. It's
about keeping more of what you've built, working for your
loved ones now and in the years to come. Get
your free copy today by calling eight six six eight
four eight five six nine nine. That's eight six six

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

Speaker 5 (52:00):
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but Tariff's, inflation and job numbers are making headlines. Interest rates,
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Even AI is changing how markets move.

Speaker 3 (52:12):
HI.

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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 service.

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