Episode Transcript
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Speaker 1 (00:01):
This is the Legal Exchange with Todd Lutsky from the
law firm of Cushing and Dolan and Susan Powers of
the Armstrong Advisory Group. Each week, Todd and Susan will
discuss many topics, including estate planning, how to avoid probate,
and protecting your money from a nursing home. If you
need assistance in any of these areas, or have a
question about another issue that may affect your future, call
(00:21):
eight six six eight four eight five six ninety nine
to make an appointment. That's eight sixty six eight four
eight five six ninety nine. Operators are standing by. Now
Here are your hosts, Todd Lutsky and Susan Powers.
Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Lutsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Welcome Todd.
How are you today?
Speaker 3 (00:53):
I'm never better in you?
Speaker 2 (00:55):
I am great? Thank you. What do you have for
us this week?
Speaker 1 (00:57):
A couple of things.
Speaker 4 (00:59):
One, we have a Tennessee Appellate Court case basically how
will contests work and how to avoid them and understanding
all that nonsense. And folks, there's so much that goes
into these will contests, and you know, is it undue influence?
Speaker 3 (01:14):
Is it?
Speaker 4 (01:15):
Is it a lack of capacity?
Speaker 3 (01:17):
Folks.
Speaker 4 (01:18):
We're going to just explain that to you and then
give you some lots of tips on what happens, and
a couple of real life stories built in there as
well to sort of bring that point home and of
course do your planning right. And then lastly, you know,
this guide this month is and I get it, folks,
it's a little complicated, it's heavy lifting.
Speaker 3 (01:35):
It's good stuff, though it's new.
Speaker 4 (01:37):
And so I've got a real life story that's really
going to help us understand a fact pattern about this
client who wants to do both medicaid and estate tax
planning at the same time. But they each have a
seven hundred and fifty thousand dollars IRA among other assets,
making a total estate of three million dollars, and so
obviously they have all kinds of issues from the state taxes,
(01:59):
to income tax issues with iras to nursing home issues.
And we're going to walk you through how Now it
brings me to the guide how naming your estate the
IR beneficiary might be the right way to go. That's
really what the guide is all about, folks. And so
it is the end of the month. It's the last
chance to get it, so call and get it. Learn
(02:21):
how you can do both estate tax planning and nursing
home planning at the same time. But more importantly, take
and protect an IRA somewhat in advance. And remember that's
the new thing. You could never really protect an asset
in advance, an IRA in advance because of the income
tax hit on the transfer. This kind of takes care
(02:41):
of all of those things. So most people have an IRA.
Learn how it fits in your estate plan. Get the
guide eight six six eight four eight five six nine
to nine or Legal Exchange Show dot com. Again the
end of the month, folks, so call and get it
eight six six eight four eight five six nine to
nine or Legal Exchange Show dot com.
Speaker 2 (03:04):
You can't believe it's the end of another month. I
just said that, like yesterday.
Speaker 4 (03:08):
No I know, No I saw Christmas lights up so
him well in the stores. It's disgusting. It's too early,
right next to the pumpkins. Doesn't make sense.
Speaker 2 (03:17):
Respect the bird I know, I know.
Speaker 4 (03:20):
Well, let's get into this story not story fact pattern
in Tennessee. Let's head over to Tennessee. So what happens here? So,
Joe has a will admitted to probate on March third,
twenty twenty one. Dates are important here. Two years later,
on March third, twenty twenty three, David's son files a
(03:41):
complaint to contest the validity of the will, claiming that
Joe was unduly influenced by his daughter Jennifer, who, interestingly enough,
is the pr on the will. So and we'll have
to see how that plays out well in October twenty
twenty three, Jennifer.
Speaker 3 (04:02):
Remember we've got March in March.
Speaker 4 (04:04):
So in October of twenty twenty three, Mark Jennifer files
a motion to dismiss because Joe only had two years
to file the complaint. There's a statute of limitations, right,
you die, you have two years to file a complaint
in that state. It's different in other states. So I
believe in mass it's only one year to file a complaint.
(04:27):
And so he filed the complaint on March third, twenty
twenty three. Remember the probate was filed on March third,
twenty twenty one, no same day. Two years later, same day,
he filed the complaint at eleven forty five in the morning.
Turns out the probate was filed at ten o'clock in
the morning. So the probate court said, we agree, you
(04:51):
missed your filing deadline. Too bad for you. Motion to
dismiss granted. He didn't like that, so he appealed. They
reversed and they said, you know what, the exact hour
and minute doesn't necessarily be determinative when dealing with the
(05:13):
statute of limitations. Remand the case and have it.
Speaker 2 (05:17):
It does seem a little obnoxious.
Speaker 3 (05:19):
It does.
Speaker 4 (05:20):
I'm on the fence on this one with you, though, Susan.
I gotta tell you, but I.
Speaker 2 (05:23):
Would think it would be the day before, because if
you count up your days, that's two whole years. That
next day would be the start of the third year.
Speaker 4 (05:30):
I mean, I'm on the fence on this one because
to me, a deadline's a deadline. It's not a deadline.
Well maybe no, it's a deadline. And if you're gonna
have a deadline, you should have a deadline. I can
assure you if you're a dayly to the irs and
there's interest and penalties. Do they're gonna charge you?
Speaker 2 (05:54):
So wait to the last possible minute?
Speaker 3 (05:57):
Though, I get it.
Speaker 4 (05:59):
No, that's good question, and of itself, I totally agree
with you there why you had two years to do it?
But then again that goes to the whole point of
well you missed it, shame on you. Anyways, folks, that's
not really why I'm explaining this. I want to give
us some tips and lessons and understand, you know, we
don't want to.
Speaker 3 (06:17):
Be in this situation, right.
Speaker 4 (06:19):
We want to do our advanced planning and get it
done and not worry about things like this. So in
this case, they were arguing that it was undue influence
not capacity.
Speaker 3 (06:28):
But we're going to talk about.
Speaker 4 (06:29):
Both because those are the two ways that your estate
plan is generally attacked.
Speaker 3 (06:37):
So here what is undue influence?
Speaker 4 (06:40):
Well, when you're preparing your estate plan, if you notice
your one child is talking to you about it a lot,
they're you know, sort of requesting that you get the
estate plan done, maybe making some references about who should
get what, you know, and the next thing you know,
they pick out the lawyer for you, and you know,
then they actually drive you over to the lawyer's office,
(07:03):
and you know, at the end of the day, you
get a new estate planning document. I don't care if
it's a will or a trust that lo and behold
somehow benefits you, right, either greatly or even moderately. That
is the epitome of undoe influence. Right, that's bad and
(07:26):
that's what they're accusing. That's what the brother was accusing
the sister Jennifer of doing in this case. Now, let
me give you a real life story on how these
play out. So you know, if you have a client
that comes in and they do after they've been our
client for years, they come back and they say, you know,
we want to exercise the limited power of appointment to
(07:47):
change even an irrevocable trust that we might have done,
a medicaid irvocable trust, and we give them the power
to do that. And so what happens is, you know,
a child calls and starts asking about this, you know,
can you change the trust? How can it be changed?
And then they start saying, yeah, and this is what
my parents want.
Speaker 3 (08:08):
Yeah. So that's a really bad sign. Right.
Speaker 4 (08:10):
So from our standpoint, you know, that's like undue influence.
So we start saying listen, this is great, that's what
you want, but we don't really care what you want.
Speaker 3 (08:20):
We need to now get.
Speaker 2 (08:21):
That parent because the kids aren't the client.
Speaker 4 (08:23):
No, no, and we need to get that parent in
the office alone, and then we can ask a series
of questions kind of unbeknownst to the client what we're
trying to do to really determine, you know, is this
your wish?
Speaker 3 (08:40):
Why is it your wish? What's going on?
Speaker 2 (08:42):
You know, you still have mind to change it, and
so yeah, we ask a series of questions.
Speaker 3 (08:46):
Get that done. So that helps clarify all of that.
Speaker 4 (08:50):
Now, what if the client calls on their own, that's okay,
they say, you know, I want to change this, and
usually when they exercise their limited power of appointment there
they're removed somebody or cutting back somebody's interest. So you know,
we'll say that's fine, we're happy to do it. But
when you're doing it, you exercise your limited power of appointment.
(09:11):
We explain that you change your will to exercise the
power in the trust to change certain paragraphs in the trust,
getting rid of whoever it is you wanted to get
rid of. And once we get all that done, and
we explain how it works great flexibility right in these
irrevocable trusts usually limited to children, grandchildren, siblings, whatever you
(09:33):
want to limit the class to. But you can change
it if you want to. Even after we get that done,
we always tell them, you know, it's probably not a
bad idea to practice defensive law here. You know that
person's going to come back and sue when you die.
Why not go to your primary care physician. Just get
us a one sentence note saying the doctor, as far
as I know, there is no cognitive inabilities with you.
(09:55):
It just helps, especially from a defensive laws see to
the point that off dynamic. Yeah, well, if you're cutting
someone out, they're going to you want to be ready
for that. So it's going to happen. So those are
just some things to think about when you're doing your
estate plan. And another thing to think about is iras
and how to deal with them because they're complicated. Get
this guide eight six six eight four eight five six
(10:18):
ninety nine or Legal Exchange show dot com.
Speaker 2 (10:21):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
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 (10:36):
Spouses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts and
elder law and they can help you protect your assets
from probate and the nursing home. By naming your estate
as a beneficiary, you can avoid the probate process, less
than the chance of creating any income tax issues on
your rmds, and enjoy enhanced the state tax reduction. Call
(10:59):
Cushing and right now at eight six six eight four
eight five six nine nine and ask for their brand
new guide called why Name your Estate and IRA Beneficiary?
Learn about these benefits and others and provide peace of
mind for you and your family during your retirement years.
That number again is eight six six eight four eight
five six nine nine, or you can request the guide
online by visiting our website at Legal Exchange Show dot com.
(11:22):
That's 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 or Armstrong Advisory may
contact you offering legal or investment services. Cushing and Dolan
and Armstrong Advisory do not endorse each other and are
not affiliated. Follow is in full swaying, The leaves are changing,
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Speaker 5 (12:37):
To fully maximize your social Security benefits, it's important to
understand how social security may affect your taxes. Hi, this
is Mike Armstrong from the Armstrong Advisory Group, and when
deciding to collect social security benefits, it's essential to consider
how those benefits interact with your other income sources, your
tax situation, and your long term financial goals. As an example,
if you have tax free or after tax options in retirement,
(12:59):
you can structure your financial plan to manage your future
tax burden. Collecting social security too early without careful planning
could limit your ability to manage taxes later in life.
Our new free guide is called Social Security and Taxes
and it unpacks these issues and more. Get your free
copy today by calling eight hundred three nine three four
zero zero one. That's eight hundred three nine three four
(13:21):
zero zero one.
Speaker 1 (13:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial, tax, and estate 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
(13:44):
with your estate plan? Com Todd right now and make
an appointment. Eight six six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.
Speaker 2 (13:53):
Welcome back into the Legal Exchange with Toddltsky. I'm Susan Powers,
a financial advisor with the Armstrong Iory 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
we headed now, Todd.
Speaker 3 (14:09):
We're actually going to do. It's a real life story.
Speaker 4 (14:12):
It's I found that I was talking to a client last.
Speaker 2 (14:15):
Week, so it's here. We're staying at home.
Speaker 4 (14:17):
We're staying at home, We're not going anywhere. And it's
really helpful because it really deals with this exact You
know why you name your estate and IRA beneficiary. It's
the end of the month. It's the perfect time for
this story because folks, this is new stuff when it
comes to estate planning twenty twenty two. That's new in
the estate planning world, and it's pretty heavy lifting. So
(14:39):
let's see if I can walk you through it and
help you understand how it works. So you got a
husband and wife. They got a one point three million
dollar home. They each have seven hundred and fifty thousand
dollars in iras and two hundred thousand dollars in some
bank accounts kicking around on jointly. Okay, it's about a
three million dollar a state if you add up the numbers.
(14:59):
They want to do both the state planning and you know,
nursing home planning at the same time. Sure, okay, not
a tall order. What's the general situation, right, Well, that's fine.
You're usually going to name the kids as the beneficiaries
or the the IRA beneficiary would generally be the spouse
and then the kids. Keep that in mind because that
(15:20):
can't go anyway. So what's their largest asset, Well, it's
the house. So we're going to take the house and
we're going to put it fifty to fifty into their
irrevocable trust. We're going to do two irrevocable trusts for them.
That makes sense. That will avoid probate, that will be
protected from the nursing home in five years, and that
will be sheltered for a state taxes.
Speaker 3 (15:40):
I like it. What else?
Speaker 4 (15:43):
Well, you know you could place their joint account in there,
but you know that that's usually people like to keep
some money kicking around, so need some. Yeah, and of
course iras the second largest asset in this group of
assets they can't name. They can't put that in the
trust right now. Why Well, because it would be a
(16:03):
huge income tax problem. So we're going to have to
leave those where they.
Speaker 2 (16:07):
Are because they would have to withdraw them right, pay
the taxes, and have them not be retirement accounts anymore.
Speaker 4 (16:13):
That's right, Yeah, and move as you said, pay the taxes,
but let's put numbers on it. Move forty percent less
money into this trust to try and protect it.
Speaker 3 (16:22):
Not a good idea.
Speaker 4 (16:23):
In fact, it's an impossible thing to do. So we
would leave it there and they would live on it,
and they would likely be naming their spouse as the
beneficiary and the kids as the contingent because it makes sense. Okay, Well,
if you do that, let's start analyzing the estate ramifications,
the income tax ramifications of this decision, and the medicaid
(16:48):
ramifications of this decision. And that's really how we're going
to break it down. I'm going to take you through
it now. Before I do that, I'm just going to
go and let you remind you that this is the
kind of thing we're going to be talking about in
our guide. Get this guide, folks. It's the end of
the month. It will in fact, there's an example in
there similar to this that will walk you through how
(17:09):
all of those tax consequences are resolved and that you
can now figure out the best way to handle your
IRA in your estate plan. Why naming your estate and
IRA beneficiary might be the best way to go? Call
and get the guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
(17:32):
again eight six six eight four eight five six nine
nine or Legal Exchange Show dot Com. End of the month, folks,
it's going away after this, Okay. So what's the result. Well,
if we left it like this, the one point five
million dollars on the death of the first spouse would
pass under the marital abduction and not be sheltered for
(17:54):
a state taxes. What is that one point five million?
That is the seven fifty ira that they have, and
there would be well, actually, in this case, the amount
the amount of assets, the one point five million that
would pass to the spouse is not really one point
five million. There would be one six hundred and fifty
(18:17):
thousand would be included in the trust.
Speaker 3 (18:20):
That's half the house.
Speaker 4 (18:22):
Okay, So that's really the only item that's being sheltered
on the first death. What else is passing to the spouse?
One point four million, right, Well, seven hundred and fifty
thousand dollars irae that's going right to the spouse, and
one hundred thousand dollars in the joint account is going
right to the spouse. So only the six hundred and
(18:43):
fifty thousand dollars in the in the trust is going
to be sheltered from a state taxes.
Speaker 2 (18:49):
So you're leaving a lot of you're leaving a lot
in the table tax on the table.
Speaker 3 (18:53):
So let's back it out right.
Speaker 4 (18:54):
Three million was the total estate minus half the house,
which is sheltered, leaves two point three million, two million,
three fifty actually subject to be taxed when the survivor dies,
the tax is only about forty thousand dollars. But you
know what my point is, I don't want to pay
any There's no federal just a state tax here in
mass Okay, well, I don't love that. So what about
(19:19):
the income side. Well, on the income side, the surviving
spouse is the beneficiary on the IRA, so it avoids probate.
It goes one hundred percent to that spouse who can
completely use it and spend it and enjoy it. And
it's not sheltered for a state taxes as we just described.
(19:40):
And of course it remains one hundred percent at risk
for the nursing home.
Speaker 3 (19:43):
So now that his IRA and her.
Speaker 4 (19:46):
IRA, which is one point four million or one point
five million, yeap, one hundred percent at.
Speaker 2 (19:54):
Risk, and it becomes much harder to protect that asset.
Last minute, if you have a person who has one
point four million as you get older, area, as you age, Yeah,
that's right.
Speaker 4 (20:04):
It becomes much harder to protect it. That's a good point. Okay,
So I don't love that result. So what could we do? Well,
we now need to set up a testamentary trust. You
can't do this, first of all without the testamentary trust.
So I think that's an important hard stop. So when
you're doing this, put that together.
Speaker 2 (20:24):
So is this something Todd where you would create your
irrevocable trust, your basic legal documents, and a separate testamentary
trust while you're doing your planning.
Speaker 3 (20:33):
That's exactly right.
Speaker 4 (20:34):
But that's separate testamentary trust is actually built into your will.
Speaker 2 (20:38):
So it's just part of the will.
Speaker 4 (20:40):
Yeah, but it's a separate document, your will, right, you
have it, so your rights's it's a separate document. It's
built into your will, which is already a separate documents.
And your irrevocable trust is what we call it's a
living trust. You're alive and it works, whereas the testamentary
trust doesn't exist until you die. Okay, yes, that would
(21:00):
be the difference between a living trust and a non
living trust, if you want to call it that.
Speaker 2 (21:04):
So I think a really important point to make Todd
is you can't just throw the estate of his beneficiary
on your iras if you don't have this language in
your will. I agree, it's all for nought. It's just
to go to probate at that point.
Speaker 4 (21:18):
Right, Yeah, it's not a good idea, Okay, yeah, so
we want to make sure you do that. So that's
a hard stop. Make sure you do that, you know.
And also I would say make sure that you're seventy
three years of age or older because that's what we
call the RBD required beginning date. That's when you must
start taking distributions from your IRA, and that affects your
(21:42):
required minimum distributions after you die, you're RMDS. So make
sure you're seventy three because if you're under seventy three
and you die.
Speaker 3 (21:53):
R MDS, the.
Speaker 4 (21:54):
Required minimum distributions for the beneficiary will come out over
five five years. If you've named your estate the beneficiary
five years. We don't necessarily want that because that could
be a big income tax hit. Okay, so try to
get this done quickly. What's the example. Now we've got
the Testamentary Trust in place. So husband dies, he's seventy
(22:16):
four years old. Now what's sheltered? Half the house in
the trust and his seven hundred and fifty thousand dollars IRA,
which is now in the testamentary trust. Both are sheltered
from a state taxes. So how much is that? Well,
that turns out to be one point four million dollars
half the house and his seven fifty, six fifty and.
Speaker 3 (22:38):
Seven fifty.
Speaker 4 (22:39):
So we've got one point four million sheltered three million
minus one point four million sheltered. Ye wife dies, she's
worth one point six that's less than two no estate tax.
Speaker 2 (22:52):
So you've eliminated it completely.
Speaker 4 (22:55):
The required minimum distributions for the spouse will come out
over the ghost life expectancy of the decedent. Why because
he's at his RBD, so that will come out over
his lifetime, which isn't bad because usually the spouses are
close in age. Yeah, so it wouldn't make a big difference.
And I know I'm running out of time. I just
want to get you the big bang for your buck
(23:16):
is the IRA remains available in that testamentary trust for
the spouse, but it's immediately protected from the nursing home
in the events she gets sick. There's no five year
waiting period. It's not lingering out there. Call and get
the guide, folks, learn how to do this eight six
six eight four eight five six ninety nine or Legal
(23:36):
Exchange show dot com.
Speaker 2 (23:38):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dowan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your questions when we return to the Legal
Exchange with Todd Lunsky.
Speaker 1 (23:53):
Spouses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts elder
log and they can help you protect your assets from
probate and the nursing home. By naming your estate as
a beneficiary, you can avoid the probate process, less than
the chance of creating any income tax issues on your rmds,
(24:14):
and enjoy enhanced a state tax reduction. Call Cushing and
Dolan right now at eight six six eight four eight
five six ninety nine and ask for their brand new
guide called why Name your Estate and IRA Beneficiary? Learn
about these benefits and others, and provide peace of mind
for you and your family during your retirement years. That
number again is eight six six eight four eight five
six nine nine, or you can request the guide online
(24:36):
by visiting our website at Legal Exchange Show dot com.
That's 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 or Armstrong 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 6 (24:54):
Last year, we introduced you to Mark Vodder, CEO of
Veterans Development Corporation. Mark is a career military and we're
proud to have him back as the presenting sponsor of
the twenty twenty four DAV five K Boston.
Speaker 7 (25:06):
I'm a proud member of a military family, including my father,
Victor and my brother Timmy serving my country was one
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I choose to give back to this special community. My
father build Veterans Development Corporation, and I am honored to
continue his legacy of working to help many disabled veterans
in their families. It also gives me great pleasure to
(25:28):
once again be the presenting sponsor of this year's DAV
five K Boston. I hope that by sharing my story,
many other disabled veterans will be able to reach their
goals once they conclude their service.
Speaker 6 (25:40):
Veterans Development Corporation is proud to be the presenting sponsor
of this year's DAV five k, taking place on Saturday,
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Speaker 8 (25:53):
According to a survey conducted by the Nationwide Retirement Institute,
more than two thirds of Americans say that the candidates
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in next month's election. Hi, this is Chucksauta from the
Armstrong Advisory Group. If you're concerned about social security, call
us today at eight hundred three nine three for zero
zero one and ask for our new free guide called
(26:15):
Social Security and Taxes. Your benefits are an important piece
of your retirement income, so it's crucial to understand how
to maximize them. In this month's guide, we'll walk you
through everything that you should know about your social security benefits,
including how they may affect your taxes. Get your free
copy of this guide today by calling eight hundred three
nine three for zero zero one. That's eight hundred thirty
(26:37):
nine three four zero zero one.
Speaker 1 (26:39):
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 a state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services. You're listening to the Legal Exchange, and
it's time for Ask Todd, the segment where Todd will
(27:00):
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 (27:09):
Welcome back, Todd. I have a few questions from listeners
for you. First question comes from Gary and Drake it
Mass and Gary writes, my mom is ninety six years
old and she has a revocable trust in place since
the eighties. The only asset I can see that is
not in the trust are three savings accounts totaling five
hundred thousand. Each of her three children are listed as
(27:32):
joint owners on the savings account. Should that be changed
to the name of the trust?
Speaker 4 (27:39):
Well, so let's let's there's a lot packed in here,
so let's try to try to unpack this a little bit.
So you got someone ninety six, So that's that's a
big issue. Right, I don't know what her health is,
but she's ninety six. The revocable trust is fine, it's
still working. The fact that it was done in the eighties.
I want people to know right up front that you know,
just because it's old doesn't mean it's no good.
Speaker 3 (28:00):
Right, doesn't mean you.
Speaker 4 (28:00):
Shouldn't update your documents over time, look at them once
in a while, make sure your life events haven't changed.
But barring that that, the trust itself doesn't expire. Okay, now,
says the only asset that you can see that's that's
not in the trust are these three accounts. But if
all three children are actually listed as joint owners.
Speaker 2 (28:23):
Each one is listed on one of the three accounts.
Three kids, three accounts, joint owners ones.
Speaker 4 (28:30):
Of course, the question that then is being begged is
what are the size of the accounts? You know, what
if you've got four hundred thousand in one account and
fifty thousand in the other two accounts, Oh, that's a problem.
Speaker 2 (28:41):
Well what's the downside of that? Because I mean, other
than obviously unfair, but what it wouldn't they be required
to share that fund with their.
Speaker 3 (28:51):
Well, isn't unfair? Downside?
Speaker 4 (28:54):
I think it is it's other than unfair, Like, I'm
pretty sure that's a downside.
Speaker 2 (28:59):
Unequal, not unfair. Excuse mebe well.
Speaker 4 (29:01):
Unequal and unfair I think go together. So I agree
with you that. I think what you were trying to say,
Susan is that you're right. It would avoid probate. So
you're right. What's the problem there, meaning that the surviving
joint owner will get those assets. They will just flow
to the surviving joint owner outside of probate, no fuss, no.
Speaker 2 (29:24):
Musk, and they won't be required to equal things out.
Speaker 4 (29:28):
Correct, Not only are they not required once they get it,
if they chose to do that out of the goodness
of their heart, saying I wanted to honor my mom's
wishes and treat all my siblings equally. The one who
got the four hundred thousand in my example, again not required.
But even if I did it, the amount that I'm giving,
(29:53):
because this is now a gift, would be greater than
eighteen thousand dollars, which is the present interest exclusion amount,
which is a freebie. So there would actually be a
gift taxable event if they make.
Speaker 2 (30:07):
The gift, so they'd have to file gift tax returns.
But not necessarily pay taxes correctly.
Speaker 4 (30:13):
Right, But it will impact your estate tax exemption. So
they reduce your federal exemption, which if may or may
not be a big deal. Although I don't know how
the election is going to turn out, they probably want
to lower the exemption. I mean, if the Democrats win,
I think they're going to want to lower the exemption
more than what it's going to be lowered to in
twenty twenty six. So that could be an issue. And
(30:35):
for your state, it could be an issue depending on
what state you live. And you also, at least here
in mass I know you have to reduce your exemption,
which is a filing threshold.
Speaker 3 (30:47):
I get it.
Speaker 4 (30:47):
You'll still save taxes, but your filing threshold will come
down by the taxable gifts.
Speaker 2 (30:53):
So there's definitely could be an impact.
Speaker 3 (30:54):
Could be an impact.
Speaker 4 (30:55):
There may be no monetary impact out of pocket at
the moment, that certainly is an issue. The way to
fix it would be simply changed to they can be
joint owners, or maybe take them off as joint owners
and list a designated beneficiary the trust and then all
the money will flow into the trust. And then if
(31:17):
her wishes in the trust are equally to the kids.
You will satisfy that wish with none of these adverse
gift tax consequences and still avoiding probate. That's the answer, folks.
That's what I would do if I was you Gary.
See if you can work that out, folks. Sometimes answers
are easy, sometimes they're not. Assets such as iras are
(31:38):
not easy to deal with. But this guide is going
to help you learn something about how to do estate
tax planning without causing an income tax negative effect and
protecting an IRA from the cost of nursing home care
even in advance of going into the nursing home, which
could never have been done before because of the type
(31:59):
of apps. That is last chance, folks, It's the end
of the month. Get the guide. Why name your estate
and IRA beneficiary 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 nine nine
or Legal Exchange Show dot com.
Speaker 2 (32:20):
Our last question comes from Phyllis in Pompino Beach, Florida,
and Phyllis writes, should a checking account be in a trust?
I'm the only trustee, but if something happens, even for
a short time and I'm not able to pay my bills.
There isn't another trustee, any advice here.
Speaker 4 (32:38):
Well, you know, not everybody puts all of their assets
in trusts, and that goes for people that are doing
revocable trusts or irrevocable.
Speaker 3 (32:48):
Trusts, right.
Speaker 4 (32:49):
I mean I meet clients and they have a revocable trust,
and I say, let's put everything in and we want
to help them do that, and we help them fund
and we're funding, and then they come, oh, you know,
I got my operating checking account, and you know, I
just don't want to get new checks.
Speaker 2 (33:04):
New account numbers, and yeah.
Speaker 4 (33:06):
Okay, you don't have to just you know, I wouldn't
suggest leaving hundreds of thousands of dollars in your checking
account for obvious reasons.
Speaker 3 (33:14):
But I wouldn't.
Speaker 4 (33:16):
I wouldn't want you to do that because that's not
good for a state planning either. But yeah, you want
to keep operating account open, ten fifteen, twenty thousand bucks
in it, you know, to run your day to day
activities and collect your Social Security and your pension. You
don't want to change any of that, perfectly okay with it,
But you know what everything else I would put in
(33:38):
so small checking account, keep it small, but everything else
I would put in and even that. Again, I don't
know phillis a single, but if she is, sounds like
she is. Again, we just talked about it with Gary, Right,
what do we do? Are we going to add a
kid as a joint owner to avoid probate when she dies,
(33:59):
because again it's in her own name, it's subject to probate.
It's not going in the trust. We either a at
a joint owner. If you don't care that this all
goes to this one child, YEP or B. Put a
designated beneficiary on it. They're probably called at a bank,
something like a tod a transfer on death account. Put
(34:21):
that on it and have it then passed to the
trust at your death, and that way your wishes in
the trust will be honored.
Speaker 2 (34:29):
So for Phyllis, she's already moved her checking account into
her trust. So I'm not sure if it's revocable or irrevocable,
but for her, would she she wouldn't have the option
of listing a co owner if it's her trust.
Speaker 4 (34:45):
Oh I'm sorry, I thought that was the one account
we were leaving outside. So yeah, if it's in the trust,
you don't have to do anything.
Speaker 2 (34:50):
No, No, but if she's if she becomes incapacitated and
she is the only trustee, she can't add a co owner. No,
she can't because it's only a trus see. They could
do that, right.
Speaker 3 (35:01):
Yeah.
Speaker 4 (35:01):
So the issue here that I might have I might
have not picked up on is if it's in the trust, folks,
And this is great. This is for all assets, not
just a checking account, anything that you put in a trust.
Speaker 3 (35:12):
Right.
Speaker 4 (35:13):
So in this case, there needs to be a not
a co trustee, there needs to be a success or trustee.
I can assure you that we never create a trust
without a success or trustee listed.
Speaker 3 (35:24):
You just can't.
Speaker 4 (35:25):
So at least one. You don't have to list ten,
but at least one. So that way your question is
set up where you're right, we can't add a co
owner to the trust, nor would we have to. Why
because upon the death, disability, or resignation, So even disability
of Phyllis, because if it's a revocable trust, Phyllis would
(35:47):
have been the trustee. So upon Phyllis's death or disability,
then the successor trustee serves automatic. Yep, you might have
to file an acceptance to say I accept my position,
but sure you're in. Yeah, and so now that successor
trustee can actively manage a control work if you will
(36:12):
every single account right checks you name.
Speaker 2 (36:14):
It, and then your other basic bank accounts like if
you have CDs and things like that, and you don't
have co owners, I mean you want to avoid probate,
right you do, God, put beneficiaries on them.
Speaker 4 (36:26):
So on those again if they're not in the trust,
put a designated beneficiary the trust for sure, and then
we'll go from there.
Speaker 3 (36:32):
So folks get the guide.
Speaker 4 (36:33):
It's the end of the month eight six six, eight four,
eight five six nine nine or Legal Exchange Show dot com.
Speaker 2 (36:40):
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 Pushing It Do. I'm Susan Powers,
(37:02):
a financial advisor with the Armstrong Advisory Group. We'll be
right back with more on the Legal Exchange with Todd Lutsky.
Speaker 1 (37:09):
Spouses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts elder
log and they can help you protect your assets from
probate and the nursing home. By naming your estate as
a beneficiary, you can avoid the probate process, less than
the chance of creating any income tax issues on your rmds,
(37:30):
and enjoy enhanced a state tax reduction. Call Cushing and
Dolan right now at eight six six eight four eight
five six ninety nine and ask for their brand new
guide called why Name your Estate and IRA Beneficiary? Learn
about these benefits and others and provide peace of mind
for you and your family during your retirement years. That
number again is eight six six eight four eight five
six nine nine, or you can request the guide online
(37:52):
by visiting our website at Legal Exchange Show dot com.
That's the Legal Exchange Show dot com. The proceeding was
paid for in the music expressed are solely those of
Cushing and Dolan. Cushing and Dolan and or Armstrong Advisory
may contact you offering legal or investment services Cushing and
Dolan and Armstrong Advisory do not endorse each other and
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Speaker 5 (39:10):
To fully maximize your social security benefits, it's important to
understand how social security may affect your taxes.
Speaker 3 (39:17):
Hi.
Speaker 5 (39:17):
This is Mike Armstrong from the Armstrong Advisory Group, and
when deciding to collect social security benefits, it's essential to
consider how those benefits interact with your other income sources,
your tax situation, and your long term financial goals. As
an example, if you have tax free or after tax
options in retirement, you can structure your financial plan to
manage your future tax burden. Collecting social security too early
(39:38):
without careful planning could limit your ability to manage taxes
later in life. Our new free guide is called Social
Security and Taxes and it unpacks these issues and more.
Get your free copy today by calling eight hundred three
nine three four zero zero one. That's eight hundred three
nine three four zero zero one.
Speaker 1 (39:56):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advice. 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 make contact you to offer investment
advisory services.
Speaker 9 (40:11):
The Financial Exchange and Veterans Development Corporation are proud partners
of the Disabled American Veterans Department of Massachusetts. The DAV
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Please visit DAVMA dot org. That's DAVMA dot org.
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 sixty six eight four eight
five six ninet 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 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. So, Todd, I have a few kind
of follow up questions to some things we've already talked
to about today, and specifically about naming your estate the beneficiary.
Speaker 3 (41:24):
So it's complicated.
Speaker 2 (41:26):
It is complicated, and we have a lot of mutual clients,
and I know that from my clients that have really
large irays when they've come in to chat with you.
Prior to this being an option, you may have leaned
towards saying, look, you can't protect this, you know, two
million dollars worth of I rays. Oh sure, why are
(41:48):
you going to do an irrevocable trust just for the
house at this point? So would that kind of change
your recommendation now that there's something that can be done
to potentially protect those iras last minute?
Speaker 3 (42:01):
Yeah, this is a really good question because when.
Speaker 4 (42:06):
We talk about these issues, every single case will be different.
Speaker 3 (42:12):
This is a case by case by.
Speaker 4 (42:14):
Case by case analysis, right, because of all these issues.
So if somebody comes in, you know, and they have
two million dollars in one IRA. Yep, that that might
be a stop. Why am I doing medicaid planning?
Speaker 3 (42:32):
Right?
Speaker 4 (42:32):
It might be simply because that's a big number. And
if one spouse gets sick and and goes to the
if the one with the IRA gets sick and goes
to the nursing home, no matter what we're doing, If
the first spouse that has the IRA gets sick and
goes to the nursing home, the surviving, the healthy spouse
(42:56):
is going to have to decide do I want to
go on Medicaid for my husband or not. Let's say
the husband got sick. In order to do that, we
would have to pull two million dollars out of the
IRA then give it to her, but lose forty percent.
Speaker 2 (43:11):
I mean, so you're talking about eight hundred grand coming.
Speaker 4 (43:14):
Would never do that, right, You just would never do
that because you're probably better off paying privately, because if
someone dies a year after you pull it out, you
could have spent one hundred thousand instead of eight hundred
thousand in taxes.
Speaker 2 (43:28):
By the time it comes out of your IRA. If
you do, it's not coming out tax for you, but
it's pretty darn close because you've got that offsetting medical deduction.
Speaker 3 (43:36):
If you're private, that's right, that's that's staring, right.
Speaker 2 (43:38):
So it has to make sense financially.
Speaker 4 (43:40):
Has to make sense financially to do it, and a
large IRA might not. Now let's again, so that's a big, one,
big factor we have to think about. Remember the example
I did in our show today was you know they
only had I don't say only, but seven fifty in
an iras a lot different than two million. Absolutely right,
you still have that question if one gets sick, no
matter what, it's always there. Remember this is designed to
(44:02):
shelter things on the first death someone dies and doesn't
go to the nursing home, or someone dies with a
large IRA, pays privately and doesn't went to the nursing
home but paid privately, never went on medicaid. That could work.
So now let's play out the string. Say you've got
someone with a two million dollar IRA, but a two
(44:24):
million dollar home and that's pretty much their estate. They
might have a small checking savings, maybe one hundred thousand
dollars in a brokerage account.
Speaker 3 (44:32):
Right, that's their home.
Speaker 4 (44:34):
That well, that's fifty percent of the estate. Well, I
can protect fifty percent of the house. Some might say,
why bother because I got two million dollars.
Speaker 3 (44:43):
I get it.
Speaker 4 (44:44):
You got to work those numbers. But remember if it's
if that first spouse who has the two million dollar
IRA dies and you did the testamentary trust, it will
ultimately shelter it for the surviving spouse.
Speaker 2 (44:58):
Now you've got three million dollars protected. Well, well, which
is great.
Speaker 3 (45:03):
It be two and two.
Speaker 4 (45:04):
You have four million dollars protected, two for the house
because the two if it's a two million dollar I right.
But if you're right, if it's split between two spousals,
would be a million dollar iras, so.
Speaker 2 (45:12):
It's still huge protection.
Speaker 3 (45:14):
Yeah, you really have.
Speaker 4 (45:15):
To run the numbers here when you do this. That's
that's the that's what you need to explain to the client.
What are the upsides? What are the downsides of doing this?
Generally you're gonna find more upsides than downsides. But folks,
the point of this discussion is I don't know how
to handle my IRA. It's part of my estate and
(45:35):
I don't know what the best way is to handle it.
This guide will help you with that. And most people
have an IRA, and most people have the IRA as
one of their larger assets in their estate.
Speaker 3 (45:49):
Call and get the guide.
Speaker 4 (45:50):
Why name your estate and IRA beneficiary eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com. It's the end of the month, folks,
last chance to get it eight sixty six eight four
eight five six nine nine or Legal Exchange show dot com.
Speaker 2 (46:08):
What do you do with roth iras Todd? Would you
also do this testamentary language and name the estate the
beneficiary of the row?
Speaker 3 (46:15):
You could?
Speaker 2 (46:17):
I mean, if you have a large wroth ira which
you can't protect in advance. Now there's no tax implications
if you pulled it out, but you like that tax
free growth too.
Speaker 4 (46:27):
That's exactly the thing to think about with an ira.
So if you if you want to leave the first
of all, if you have a roth ira, can you
when you're doing your estate plan, your irrevocable trust planning decide, Well,
you know, I've got this five hundred thousand dollars wroth
They're usually smaller than the big iris.
Speaker 3 (46:46):
Yeah, I've had.
Speaker 4 (46:48):
It for ten years. I've enjoyed tax free growth for
ten years. I'm older now and I want to protect
it from the nursing home. Okay, you can pull it out, yep,
no tax put it in your trust, it's no longer
an ira a wroth ira, and then invest it accordingly.
(47:13):
You want to buy tax free bonds or something. You
kind of have your own wroth all over again inside
the trust and in five years it'll be protected. So
that's an option for some people.
Speaker 2 (47:25):
I think it's a matter of like kind of reassessing
what your priorities are at that point in life, to say,
is it more important to me to protect from nursing
home expenses or to have this tax ree growth, And
a lot of them at that age will say I
really want to protect it more than the benefit of
the tax free growth.
Speaker 4 (47:43):
And I think the reason that might be is because, look,
if I have kids that I want to leave it
to as well, Yeah I've gotten.
Speaker 3 (47:50):
Tax free growth, that's great.
Speaker 4 (47:52):
But if I get sick and the nursing home takes
it all, that tax free growth that I've enjoyed is
really for not. So rather than be greedy I'm happy
with what I have, I'm going to take my winnings
off the table. You've heard this in the investment world,
and I'm going to put it in the trust and
then let it grow there. At least I know I'll
(48:13):
have it either for the spouse who's alive or the
kids when I die, because it's protected from the nursing home.
Speaker 3 (48:21):
So I don't know that I would.
Speaker 4 (48:24):
Necessarily name the estate as the designated beneficiary on that
although if I'm not going to put it in the
trust while I'm doing my lifetime planning, but I want
to protect I might. I mean, it can't hurt. There's
certainly no adverse income tax consequence in naming the estate
the beneficiary. It still has to come out, but when
(48:47):
it comes out, it's tax free. So even if I
was under the required beginning date, I don't care. It
can come out over five years. It's tax free, and
it's protected from the nursing home.
Speaker 3 (48:59):
So I kind of this.
Speaker 4 (49:00):
Roth Iri explore that a little bit.
Speaker 2 (49:03):
How about once the first spouse passes away and their
IRA is now owned by this testamentary trust, what happens
if the surviving spouse goes into the nursing home. They
had full access to that money that was coming out
of the IRA. What happens to that now is that
suddenly risk if they actually go into the nursing home.
Speaker 3 (49:25):
No, so that's what's really good about it.
Speaker 4 (49:27):
So if you mean if they were the beneficiary, it
would have went right to the surviving spouse and they
could do whatever they want with it, right, is that
what you're saying.
Speaker 2 (49:34):
No, No, you go through this testamentary process.
Speaker 3 (49:36):
Now it's in the trust.
Speaker 2 (49:37):
Now it's owned by the testimonary trust, the ira surviving spouse.
You have a surviving spouse who has access to all
that money that's in that testamentary.
Speaker 3 (49:45):
Yes, she does.
Speaker 4 (49:45):
She can get income and wen she goes to the
nursing home. So that's a great question. The fact that
she has access to it does not mean it's at
risk for the nursing home. Because it went through a
will into a trust. There's reg elations that say the
trust and transfer rules don't apply. The Medicaid trust and
transfer rules don't apply. So that inability to get if
(50:09):
you have discretionary distributions of principle and income like it
would be at risk in a regular situation at Medicaid trust,
it's not at risk in here and no five year weight.
And that's how it works, folks, lots of heavy lifting here.
Get the guide. Don't try and learn it all on
the radio. It's too much. Why name your Estate and
(50:30):
IRA Beneficiary eight six six eight four eight five six
ninety nine or Legal Exchange show dot com. It's the
end of the month, folks. Eight six six eight four
eight five six nine nine.
Speaker 2 (50:44):
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 (50:49):
I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
We thank you for joining us today and we'll be
back again next week on the Legal Exchange with Todd Lutsky.
Speaker 1 (51:00):
Houses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts elder
log and they can help you protect your assets from
probate and the nursing home. By naming your estate as
a beneficiary, you can avoid the probate process, lessen the
chance of creating any income tax issues on your rmds,
(51:20):
and enjoy enhanced a state tax reduction. Call Cushing and
Dolan right now at eight six six eight four eight
five six nine nine and ask for their brand new
guide called why Name your Estate and IRA Beneficiary? Learn
about these benefits and others and provide peace of mind
for you and your family during your retirement years. That
number again is eight six six eight four eight five
six nine nine. Or you can request the guide online
(51:42):
by visiting our website at Legal exchainshow dot com. That's
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 or Armstrong 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 8 (52:00):
According to a survey conducted by the Nationwide Retirement Institute,
more than two thirds of Americans say that the candidate's
positions on social security reform will influence how they vote
in next month's election. Hi, this is Chuck Zauta from
the Armstrong Advisory Group. If you're concerned about social security,
call us today at eight hundred three nine three for
zero zero one and ask for our new free guide
(52:21):
called Social Security and Taxes. Your benefits are an important
piece of your retirement income, so it's crucial to understand
how to maximize them. In this month's guide We'll walk
you through everything that you should know about your Social
Security benefits, including how they may affect your taxes. Get
your free copy of this guide today by calling eight
hundred three nine three four zero zero one. That's eight
(52:42):
hundred thirty nine three four zero zero one.
Speaker 1 (52:45):
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 a state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services. Fall is in full swing, the leaves
are changing, the days are getting shorter, and the cold
is anshen closer. Don't let the prospect of darkness at
(53:08):
four pm get you down, because your next incredible vacation
is just a click away. The US Virgin Islands are
Saint Croix, Saint Thomas, and Saint John. Enjoy one or
all three and experience rich history, world class cuisine, a
wide variety of watersports, and the most pristine beaches anywhere
in the world. Go to visit USVII dot com and
(53:28):
check out the Americancribbean, where you'll find all the information
you need to book a trip you'll never forget. Upon arrival,
you'll fall naturally in rhythm with the heartbeat of the islands.
Travel to and from New England is simple, and your
stay will be hassle free. Because this is the American Caribbean,
there's no passport required and no money to exchange. Whether
it's a romantic getaway or a family vacation, make your
(53:49):
plans now to get out of the cold and head
to America's Caribbean paradise. Go to visit USVII dot com
and book your trip of a lifetime today. That's visit
USVII dot com.
This is the Legal Exchange with Todd Lutsky from the
law firm of Cushing and Dolan and Susan Powers of
the Armstrong Advisory Group. Each week, Todd and Susan will
discuss many topics, including estate planning, how to avoid probate,
and protecting your money from a nursing home. If you
need assistance in any of these areas, or have a
question about another issue that may affect your future, call
(00:21):
eight six six eight four eight five six ninety nine
to make an appointment. That's eight sixty six eight four
eight five six ninety nine. Operators are standing by. Now
Here are your hosts, Todd Lutsky and Susan Powers.
Speaker 2 (00:37):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group, and I'm
joined by Todd Lutsky, a partner with the law firm
of Cushing and Dolan with a master's in taxation. Welcome Todd.
How are you today?
Speaker 3 (00:53):
I'm never better in you?
Speaker 2 (00:55):
I am great? Thank you. What do you have for
us this week?
Speaker 1 (00:57):
A couple of things.
Speaker 4 (00:59):
One, we have a Tennessee Appellate Court case basically how
will contests work and how to avoid them and understanding
all that nonsense. And folks, there's so much that goes
into these will contests, and you know, is it undue influence?
Speaker 3 (01:14):
Is it?
Speaker 4 (01:15):
Is it a lack of capacity?
Speaker 3 (01:17):
Folks.
Speaker 4 (01:18):
We're going to just explain that to you and then
give you some lots of tips on what happens, and
a couple of real life stories built in there as
well to sort of bring that point home and of
course do your planning right. And then lastly, you know,
this guide this month is and I get it, folks,
it's a little complicated, it's heavy lifting.
Speaker 3 (01:35):
It's good stuff, though it's new.
Speaker 4 (01:37):
And so I've got a real life story that's really
going to help us understand a fact pattern about this
client who wants to do both medicaid and estate tax
planning at the same time. But they each have a
seven hundred and fifty thousand dollars IRA among other assets,
making a total estate of three million dollars, and so
obviously they have all kinds of issues from the state taxes,
(01:59):
to income tax issues with iras to nursing home issues.
And we're going to walk you through how Now it
brings me to the guide how naming your estate the
IR beneficiary might be the right way to go. That's
really what the guide is all about, folks. And so
it is the end of the month. It's the last
chance to get it, so call and get it. Learn
(02:21):
how you can do both estate tax planning and nursing
home planning at the same time. But more importantly, take
and protect an IRA somewhat in advance. And remember that's
the new thing. You could never really protect an asset
in advance, an IRA in advance because of the income
tax hit on the transfer. This kind of takes care
(02:41):
of all of those things. So most people have an IRA.
Learn how it fits in your estate plan. Get the
guide eight six six eight four eight five six nine
to nine or Legal Exchange Show dot com. Again the
end of the month, folks, so call and get it
eight six six eight four eight five six nine to
nine or Legal Exchange Show dot com.
Speaker 2 (03:04):
You can't believe it's the end of another month. I
just said that, like yesterday.
Speaker 4 (03:08):
No I know, No I saw Christmas lights up so
him well in the stores. It's disgusting. It's too early,
right next to the pumpkins. Doesn't make sense.
Speaker 2 (03:17):
Respect the bird I know, I know.
Speaker 4 (03:20):
Well, let's get into this story not story fact pattern
in Tennessee. Let's head over to Tennessee. So what happens here? So,
Joe has a will admitted to probate on March third,
twenty twenty one. Dates are important here. Two years later,
on March third, twenty twenty three, David's son files a
(03:41):
complaint to contest the validity of the will, claiming that
Joe was unduly influenced by his daughter Jennifer, who, interestingly enough,
is the pr on the will. So and we'll have
to see how that plays out well in October twenty
twenty three, Jennifer.
Speaker 3 (04:02):
Remember we've got March in March.
Speaker 4 (04:04):
So in October of twenty twenty three, Mark Jennifer files
a motion to dismiss because Joe only had two years
to file the complaint. There's a statute of limitations, right,
you die, you have two years to file a complaint
in that state. It's different in other states. So I
believe in mass it's only one year to file a complaint.
(04:27):
And so he filed the complaint on March third, twenty
twenty three. Remember the probate was filed on March third,
twenty twenty one, no same day. Two years later, same day,
he filed the complaint at eleven forty five in the morning.
Turns out the probate was filed at ten o'clock in
the morning. So the probate court said, we agree, you
(04:51):
missed your filing deadline. Too bad for you. Motion to
dismiss granted. He didn't like that, so he appealed. They
reversed and they said, you know what, the exact hour
and minute doesn't necessarily be determinative when dealing with the
(05:13):
statute of limitations. Remand the case and have it.
Speaker 2 (05:17):
It does seem a little obnoxious.
Speaker 3 (05:19):
It does.
Speaker 4 (05:20):
I'm on the fence on this one with you, though, Susan.
I gotta tell you, but I.
Speaker 2 (05:23):
Would think it would be the day before, because if
you count up your days, that's two whole years. That
next day would be the start of the third year.
Speaker 4 (05:30):
I mean, I'm on the fence on this one because
to me, a deadline's a deadline. It's not a deadline.
Well maybe no, it's a deadline. And if you're gonna
have a deadline, you should have a deadline. I can
assure you if you're a dayly to the irs and
there's interest and penalties. Do they're gonna charge you?
Speaker 2 (05:54):
So wait to the last possible minute?
Speaker 3 (05:57):
Though, I get it.
Speaker 4 (05:59):
No, that's good question, and of itself, I totally agree
with you there why you had two years to do it?
But then again that goes to the whole point of
well you missed it, shame on you. Anyways, folks, that's
not really why I'm explaining this. I want to give
us some tips and lessons and understand, you know, we
don't want to.
Speaker 3 (06:17):
Be in this situation, right.
Speaker 4 (06:19):
We want to do our advanced planning and get it
done and not worry about things like this. So in
this case, they were arguing that it was undue influence
not capacity.
Speaker 3 (06:28):
But we're going to talk about.
Speaker 4 (06:29):
Both because those are the two ways that your estate
plan is generally attacked.
Speaker 3 (06:37):
So here what is undue influence?
Speaker 4 (06:40):
Well, when you're preparing your estate plan, if you notice
your one child is talking to you about it a lot,
they're you know, sort of requesting that you get the
estate plan done, maybe making some references about who should
get what, you know, and the next thing you know,
they pick out the lawyer for you, and you know,
then they actually drive you over to the lawyer's office,
(07:03):
and you know, at the end of the day, you
get a new estate planning document. I don't care if
it's a will or a trust that lo and behold
somehow benefits you, right, either greatly or even moderately. That
is the epitome of undoe influence. Right, that's bad and
(07:26):
that's what they're accusing. That's what the brother was accusing
the sister Jennifer of doing in this case. Now, let
me give you a real life story on how these
play out. So you know, if you have a client
that comes in and they do after they've been our
client for years, they come back and they say, you know,
we want to exercise the limited power of appointment to
(07:47):
change even an irrevocable trust that we might have done,
a medicaid irvocable trust, and we give them the power
to do that. And so what happens is, you know,
a child calls and starts asking about this, you know,
can you change the trust? How can it be changed?
And then they start saying, yeah, and this is what
my parents want.
Speaker 3 (08:08):
Yeah. So that's a really bad sign. Right.
Speaker 4 (08:10):
So from our standpoint, you know, that's like undue influence.
So we start saying listen, this is great, that's what
you want, but we don't really care what you want.
Speaker 3 (08:20):
We need to now get.
Speaker 2 (08:21):
That parent because the kids aren't the client.
Speaker 4 (08:23):
No, no, and we need to get that parent in
the office alone, and then we can ask a series
of questions kind of unbeknownst to the client what we're
trying to do to really determine, you know, is this
your wish?
Speaker 3 (08:40):
Why is it your wish? What's going on?
Speaker 2 (08:42):
You know, you still have mind to change it, and
so yeah, we ask a series of questions.
Speaker 3 (08:46):
Get that done. So that helps clarify all of that.
Speaker 4 (08:50):
Now, what if the client calls on their own, that's okay,
they say, you know, I want to change this, and
usually when they exercise their limited power of appointment there
they're removed somebody or cutting back somebody's interest. So you know,
we'll say that's fine, we're happy to do it. But
when you're doing it, you exercise your limited power of appointment.
(09:11):
We explain that you change your will to exercise the
power in the trust to change certain paragraphs in the trust,
getting rid of whoever it is you wanted to get
rid of. And once we get all that done, and
we explain how it works great flexibility right in these
irrevocable trusts usually limited to children, grandchildren, siblings, whatever you
(09:33):
want to limit the class to. But you can change
it if you want to. Even after we get that done,
we always tell them, you know, it's probably not a
bad idea to practice defensive law here. You know that
person's going to come back and sue when you die.
Why not go to your primary care physician. Just get
us a one sentence note saying the doctor, as far
as I know, there is no cognitive inabilities with you.
(09:55):
It just helps, especially from a defensive laws see to
the point that off dynamic. Yeah, well, if you're cutting
someone out, they're going to you want to be ready
for that. So it's going to happen. So those are
just some things to think about when you're doing your
estate plan. And another thing to think about is iras
and how to deal with them because they're complicated. Get
this guide eight six six eight four eight five six
(10:18):
ninety nine or Legal Exchange show dot com.
Speaker 2 (10:21):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
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 (10:36):
Spouses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts and
elder law and they can help you protect your assets
from probate and the nursing home. By naming your estate
as a beneficiary, you can avoid the probate process, less
than the chance of creating any income tax issues on
your rmds, and enjoy enhanced the state tax reduction. Call
(10:59):
Cushing and right now at eight six six eight four
eight five six nine nine and ask for their brand
new guide called why Name your Estate and IRA Beneficiary?
Learn about these benefits and others and provide peace of
mind for you and your family during your retirement years.
That number again is eight six six eight four eight
five six nine nine, or you can request the guide
online by visiting our website at Legal Exchange Show dot com.
(11:22):
That's 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 or Armstrong Advisory may
contact you offering legal or investment services. Cushing and Dolan
and Armstrong Advisory do not endorse each other and are
not affiliated. Follow is in full swaying, The leaves are changing,
the days are getting shorter, and the cold is anshin closer.
(11:43):
Don't let the prospect of darkness at four pm get
you down, because your next incredible vacation is just a
click away. The US Virgin Islands are Saint Croix, Saint Thomas,
and Saint John. Enjoy one or all three and experience
rich history, world class cuisine, a wide variety of watersports,
and the most pristine beaches anywhere in the world. Go
(12:03):
to visit USVII dot com and check out the Americancribbean,
where you'll find all the information you need to book
a trip you'll never forget. Upon arrival, you'll fall naturally
in rhythm with the heartbeat of the islands. Travel to
and from New England is simple, and your state will
be hassle free. Because this is the American Caribbean. There's
no passport required and no money to exchange. Whether it's
(12:23):
a romantic getaway or a family vacation, make your plans
now to get out of the gold and head to
America's Caribbean paradise. Go to visit USVII dot com and
book your trip of a lifetime today. That's visit USVII
dot com.
Speaker 5 (12:37):
To fully maximize your social Security benefits, it's important to
understand how social security may affect your taxes. Hi, this
is Mike Armstrong from the Armstrong Advisory Group, and when
deciding to collect social security benefits, it's essential to consider
how those benefits interact with your other income sources, your
tax situation, and your long term financial goals. As an example,
if you have tax free or after tax options in retirement,
(12:59):
you can structure your financial plan to manage your future
tax burden. Collecting social security too early without careful planning
could limit your ability to manage taxes later in life.
Our new free guide is called Social Security and Taxes
and it unpacks these issues and more. Get your free
copy today by calling eight hundred three nine three four
zero zero one. That's eight hundred three nine three four
(13:21):
zero zero one.
Speaker 1 (13:22):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial, tax, and estate 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
(13:44):
with your estate plan? Com Todd right now and make
an appointment. Eight six six eight four eight five six
ninety nine. That's eight sixty six eight four eight five
six ninety nine.
Speaker 2 (13:53):
Welcome back into the Legal Exchange with Toddltsky. I'm Susan Powers,
a financial advisor with the Armstrong Iory 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
we headed now, Todd.
Speaker 3 (14:09):
We're actually going to do. It's a real life story.
Speaker 4 (14:12):
It's I found that I was talking to a client last.
Speaker 2 (14:15):
Week, so it's here. We're staying at home.
Speaker 4 (14:17):
We're staying at home, We're not going anywhere. And it's
really helpful because it really deals with this exact You
know why you name your estate and IRA beneficiary. It's
the end of the month. It's the perfect time for
this story because folks, this is new stuff when it
comes to estate planning twenty twenty two. That's new in
the estate planning world, and it's pretty heavy lifting. So
(14:39):
let's see if I can walk you through it and
help you understand how it works. So you got a
husband and wife. They got a one point three million
dollar home. They each have seven hundred and fifty thousand
dollars in iras and two hundred thousand dollars in some
bank accounts kicking around on jointly. Okay, it's about a
three million dollar a state if you add up the numbers.
(14:59):
They want to do both the state planning and you know,
nursing home planning at the same time. Sure, okay, not
a tall order. What's the general situation, right, Well, that's fine.
You're usually going to name the kids as the beneficiaries
or the the IRA beneficiary would generally be the spouse
and then the kids. Keep that in mind because that
(15:20):
can't go anyway. So what's their largest asset, Well, it's
the house. So we're going to take the house and
we're going to put it fifty to fifty into their
irrevocable trust. We're going to do two irrevocable trusts for them.
That makes sense. That will avoid probate, that will be
protected from the nursing home in five years, and that
will be sheltered for a state taxes.
Speaker 3 (15:40):
I like it. What else?
Speaker 4 (15:43):
Well, you know you could place their joint account in there,
but you know that that's usually people like to keep
some money kicking around, so need some. Yeah, and of
course iras the second largest asset in this group of
assets they can't name. They can't put that in the
trust right now. Why Well, because it would be a
(16:03):
huge income tax problem. So we're going to have to
leave those where they.
Speaker 2 (16:07):
Are because they would have to withdraw them right, pay
the taxes, and have them not be retirement accounts anymore.
Speaker 4 (16:13):
That's right, Yeah, and move as you said, pay the taxes,
but let's put numbers on it. Move forty percent less
money into this trust to try and protect it.
Speaker 3 (16:22):
Not a good idea.
Speaker 4 (16:23):
In fact, it's an impossible thing to do. So we
would leave it there and they would live on it,
and they would likely be naming their spouse as the
beneficiary and the kids as the contingent because it makes sense. Okay, Well,
if you do that, let's start analyzing the estate ramifications,
the income tax ramifications of this decision, and the medicaid
(16:48):
ramifications of this decision. And that's really how we're going
to break it down. I'm going to take you through
it now. Before I do that, I'm just going to
go and let you remind you that this is the
kind of thing we're going to be talking about in
our guide. Get this guide, folks. It's the end of
the month. It will in fact, there's an example in
there similar to this that will walk you through how
(17:09):
all of those tax consequences are resolved and that you
can now figure out the best way to handle your
IRA in your estate plan. Why naming your estate and
IRA beneficiary might be the best way to go? Call
and get the guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
(17:32):
again eight six six eight four eight five six nine
nine or Legal Exchange Show dot Com. End of the month, folks,
it's going away after this, Okay. So what's the result. Well,
if we left it like this, the one point five
million dollars on the death of the first spouse would
pass under the marital abduction and not be sheltered for
(17:54):
a state taxes. What is that one point five million?
That is the seven fifty ira that they have, and
there would be well, actually, in this case, the amount
the amount of assets, the one point five million that
would pass to the spouse is not really one point
five million. There would be one six hundred and fifty
(18:17):
thousand would be included in the trust.
Speaker 3 (18:20):
That's half the house.
Speaker 4 (18:22):
Okay, So that's really the only item that's being sheltered
on the first death. What else is passing to the spouse?
One point four million, right, Well, seven hundred and fifty
thousand dollars irae that's going right to the spouse, and
one hundred thousand dollars in the joint account is going
right to the spouse. So only the six hundred and
(18:43):
fifty thousand dollars in the in the trust is going
to be sheltered from a state taxes.
Speaker 2 (18:49):
So you're leaving a lot of you're leaving a lot
in the table tax on the table.
Speaker 3 (18:53):
So let's back it out right.
Speaker 4 (18:54):
Three million was the total estate minus half the house,
which is sheltered, leaves two point three million, two million,
three fifty actually subject to be taxed when the survivor dies,
the tax is only about forty thousand dollars. But you
know what my point is, I don't want to pay
any There's no federal just a state tax here in
mass Okay, well, I don't love that. So what about
(19:19):
the income side. Well, on the income side, the surviving
spouse is the beneficiary on the IRA, so it avoids probate.
It goes one hundred percent to that spouse who can
completely use it and spend it and enjoy it. And
it's not sheltered for a state taxes as we just described.
(19:40):
And of course it remains one hundred percent at risk
for the nursing home.
Speaker 3 (19:43):
So now that his IRA and her.
Speaker 4 (19:46):
IRA, which is one point four million or one point
five million, yeap, one hundred percent at.
Speaker 2 (19:54):
Risk, and it becomes much harder to protect that asset.
Last minute, if you have a person who has one
point four million as you get older, area, as you age, Yeah,
that's right.
Speaker 4 (20:04):
It becomes much harder to protect it. That's a good point. Okay,
So I don't love that result. So what could we do? Well,
we now need to set up a testamentary trust. You
can't do this, first of all without the testamentary trust.
So I think that's an important hard stop. So when
you're doing this, put that together.
Speaker 2 (20:24):
So is this something Todd where you would create your
irrevocable trust, your basic legal documents, and a separate testamentary
trust while you're doing your planning.
Speaker 3 (20:33):
That's exactly right.
Speaker 4 (20:34):
But that's separate testamentary trust is actually built into your will.
Speaker 2 (20:38):
So it's just part of the will.
Speaker 4 (20:40):
Yeah, but it's a separate document, your will, right, you
have it, so your rights's it's a separate document. It's
built into your will, which is already a separate documents.
And your irrevocable trust is what we call it's a
living trust. You're alive and it works, whereas the testamentary
trust doesn't exist until you die. Okay, yes, that would
(21:00):
be the difference between a living trust and a non
living trust, if you want to call it that.
Speaker 2 (21:04):
So I think a really important point to make Todd
is you can't just throw the estate of his beneficiary
on your iras if you don't have this language in
your will. I agree, it's all for nought. It's just
to go to probate at that point.
Speaker 4 (21:18):
Right, Yeah, it's not a good idea, Okay, yeah, so
we want to make sure you do that. So that's
a hard stop. Make sure you do that, you know.
And also I would say make sure that you're seventy
three years of age or older because that's what we
call the RBD required beginning date. That's when you must
start taking distributions from your IRA, and that affects your
(21:42):
required minimum distributions after you die, you're RMDS. So make
sure you're seventy three because if you're under seventy three
and you die.
Speaker 3 (21:53):
R MDS, the.
Speaker 4 (21:54):
Required minimum distributions for the beneficiary will come out over
five five years. If you've named your estate the beneficiary
five years. We don't necessarily want that because that could
be a big income tax hit. Okay, so try to
get this done quickly. What's the example. Now we've got
the Testamentary Trust in place. So husband dies, he's seventy
(22:16):
four years old. Now what's sheltered? Half the house in
the trust and his seven hundred and fifty thousand dollars IRA,
which is now in the testamentary trust. Both are sheltered
from a state taxes. So how much is that? Well,
that turns out to be one point four million dollars
half the house and his seven fifty, six fifty and.
Speaker 3 (22:38):
Seven fifty.
Speaker 4 (22:39):
So we've got one point four million sheltered three million
minus one point four million sheltered. Ye wife dies, she's
worth one point six that's less than two no estate tax.
Speaker 2 (22:52):
So you've eliminated it completely.
Speaker 4 (22:55):
The required minimum distributions for the spouse will come out
over the ghost life expectancy of the decedent. Why because
he's at his RBD, so that will come out over
his lifetime, which isn't bad because usually the spouses are
close in age. Yeah, so it wouldn't make a big difference.
And I know I'm running out of time. I just
want to get you the big bang for your buck
(23:16):
is the IRA remains available in that testamentary trust for
the spouse, but it's immediately protected from the nursing home
in the events she gets sick. There's no five year
waiting period. It's not lingering out there. Call and get
the guide, folks, learn how to do this eight six
six eight four eight five six ninety nine or Legal
(23:36):
Exchange show dot com.
Speaker 2 (23:38):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dowan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your questions when we return to the Legal
Exchange with Todd Lunsky.
Speaker 1 (23:53):
Spouses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts elder
log and they can help you protect your assets from
probate and the nursing home. By naming your estate as
a beneficiary, you can avoid the probate process, less than
the chance of creating any income tax issues on your rmds,
(24:14):
and enjoy enhanced a state tax reduction. Call Cushing and
Dolan right now at eight six six eight four eight
five six ninety nine and ask for their brand new
guide called why Name your Estate and IRA Beneficiary? Learn
about these benefits and others, and provide peace of mind
for you and your family during your retirement years. That
number again is eight six six eight four eight five
six nine nine, or you can request the guide online
(24:36):
by visiting our website at Legal Exchange Show dot com.
That's 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 or Armstrong 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 6 (24:54):
Last year, we introduced you to Mark Vodder, CEO of
Veterans Development Corporation. Mark is a career military and we're
proud to have him back as the presenting sponsor of
the twenty twenty four DAV five K Boston.
Speaker 7 (25:06):
I'm a proud member of a military family, including my father,
Victor and my brother Timmy serving my country was one
of the greatest achievements of my life, and it's why
I choose to give back to this special community. My
father build Veterans Development Corporation, and I am honored to
continue his legacy of working to help many disabled veterans
in their families. It also gives me great pleasure to
(25:28):
once again be the presenting sponsor of this year's DAV
five K Boston. I hope that by sharing my story,
many other disabled veterans will be able to reach their
goals once they conclude their service.
Speaker 6 (25:40):
Veterans Development Corporation is proud to be the presenting sponsor
of this year's DAV five k, taking place on Saturday,
November ninth at Fort Independence in South Boston. To register
for this year's race, visit DAV five k dot Boston.
Speaker 8 (25:53):
According to a survey conducted by the Nationwide Retirement Institute,
more than two thirds of Americans say that the candidates
positions on social security reform will influence how they vote
in next month's election. Hi, this is Chucksauta from the
Armstrong Advisory Group. If you're concerned about social security, call
us today at eight hundred three nine three for zero
zero one and ask for our new free guide called
(26:15):
Social Security and Taxes. Your benefits are an important piece
of your retirement income, so it's crucial to understand how
to maximize them. In this month's guide, we'll walk you
through everything that you should know about your social security benefits,
including how they may affect your taxes. Get your free
copy of this guide today by calling eight hundred three
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(26:37):
nine three four zero zero one.
Speaker 1 (26:39):
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 a state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services. You're listening to the Legal Exchange, and
it's time for Ask Todd, the segment where Todd will
(27:00):
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 (27:09):
Welcome back, Todd. I have a few questions from listeners
for you. First question comes from Gary and Drake it
Mass and Gary writes, my mom is ninety six years
old and she has a revocable trust in place since
the eighties. The only asset I can see that is
not in the trust are three savings accounts totaling five
hundred thousand. Each of her three children are listed as
(27:32):
joint owners on the savings account. Should that be changed
to the name of the trust?
Speaker 4 (27:39):
Well, so let's let's there's a lot packed in here,
so let's try to try to unpack this a little bit.
So you got someone ninety six, So that's that's a
big issue. Right, I don't know what her health is,
but she's ninety six. The revocable trust is fine, it's
still working. The fact that it was done in the eighties.
I want people to know right up front that you know,
just because it's old doesn't mean it's no good.
Speaker 3 (28:00):
Right, doesn't mean you.
Speaker 4 (28:00):
Shouldn't update your documents over time, look at them once
in a while, make sure your life events haven't changed.
But barring that that, the trust itself doesn't expire. Okay, now,
says the only asset that you can see that's that's
not in the trust are these three accounts. But if
all three children are actually listed as joint owners.
Speaker 2 (28:23):
Each one is listed on one of the three accounts.
Three kids, three accounts, joint owners ones.
Speaker 4 (28:30):
Of course, the question that then is being begged is
what are the size of the accounts? You know, what
if you've got four hundred thousand in one account and
fifty thousand in the other two accounts, Oh, that's a problem.
Speaker 2 (28:41):
Well what's the downside of that? Because I mean, other
than obviously unfair, but what it wouldn't they be required
to share that fund with their.
Speaker 3 (28:51):
Well, isn't unfair? Downside?
Speaker 4 (28:54):
I think it is it's other than unfair, Like, I'm
pretty sure that's a downside.
Speaker 2 (28:59):
Unequal, not unfair. Excuse mebe well.
Speaker 4 (29:01):
Unequal and unfair I think go together. So I agree
with you that. I think what you were trying to say,
Susan is that you're right. It would avoid probate. So
you're right. What's the problem there, meaning that the surviving
joint owner will get those assets. They will just flow
to the surviving joint owner outside of probate, no fuss, no.
Speaker 2 (29:24):
Musk, and they won't be required to equal things out.
Speaker 4 (29:28):
Correct, Not only are they not required once they get it,
if they chose to do that out of the goodness
of their heart, saying I wanted to honor my mom's
wishes and treat all my siblings equally. The one who
got the four hundred thousand in my example, again not required.
But even if I did it, the amount that I'm giving,
(29:53):
because this is now a gift, would be greater than
eighteen thousand dollars, which is the present interest exclusion amount,
which is a freebie. So there would actually be a
gift taxable event if they make.
Speaker 2 (30:07):
The gift, so they'd have to file gift tax returns.
But not necessarily pay taxes correctly.
Speaker 4 (30:13):
Right, But it will impact your estate tax exemption. So
they reduce your federal exemption, which if may or may
not be a big deal. Although I don't know how
the election is going to turn out, they probably want
to lower the exemption. I mean, if the Democrats win,
I think they're going to want to lower the exemption
more than what it's going to be lowered to in
twenty twenty six. So that could be an issue. And
(30:35):
for your state, it could be an issue depending on
what state you live. And you also, at least here
in mass I know you have to reduce your exemption,
which is a filing threshold.
Speaker 3 (30:47):
I get it.
Speaker 4 (30:47):
You'll still save taxes, but your filing threshold will come
down by the taxable gifts.
Speaker 2 (30:53):
So there's definitely could be an impact.
Speaker 3 (30:54):
Could be an impact.
Speaker 4 (30:55):
There may be no monetary impact out of pocket at
the moment, that certainly is an issue. The way to
fix it would be simply changed to they can be
joint owners, or maybe take them off as joint owners
and list a designated beneficiary the trust and then all
the money will flow into the trust. And then if
(31:17):
her wishes in the trust are equally to the kids.
You will satisfy that wish with none of these adverse
gift tax consequences and still avoiding probate. That's the answer, folks.
That's what I would do if I was you Gary.
See if you can work that out, folks. Sometimes answers
are easy, sometimes they're not. Assets such as iras are
(31:38):
not easy to deal with. But this guide is going
to help you learn something about how to do estate
tax planning without causing an income tax negative effect and
protecting an IRA from the cost of nursing home care
even in advance of going into the nursing home, which
could never have been done before because of the type
(31:59):
of apps. That is last chance, folks, It's the end
of the month. Get the guide. Why name your estate
and IRA beneficiary 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 nine nine
or Legal Exchange Show dot com.
Speaker 2 (32:20):
Our last question comes from Phyllis in Pompino Beach, Florida,
and Phyllis writes, should a checking account be in a trust?
I'm the only trustee, but if something happens, even for
a short time and I'm not able to pay my bills.
There isn't another trustee, any advice here.
Speaker 4 (32:38):
Well, you know, not everybody puts all of their assets
in trusts, and that goes for people that are doing
revocable trusts or irrevocable.
Speaker 3 (32:48):
Trusts, right.
Speaker 4 (32:49):
I mean I meet clients and they have a revocable trust,
and I say, let's put everything in and we want
to help them do that, and we help them fund
and we're funding, and then they come, oh, you know,
I got my operating checking account, and you know, I
just don't want to get new checks.
Speaker 2 (33:04):
New account numbers, and yeah.
Speaker 4 (33:06):
Okay, you don't have to just you know, I wouldn't
suggest leaving hundreds of thousands of dollars in your checking
account for obvious reasons.
Speaker 3 (33:14):
But I wouldn't.
Speaker 4 (33:16):
I wouldn't want you to do that because that's not
good for a state planning either. But yeah, you want
to keep operating account open, ten fifteen, twenty thousand bucks
in it, you know, to run your day to day
activities and collect your Social Security and your pension. You
don't want to change any of that, perfectly okay with it,
But you know what everything else I would put in
(33:38):
so small checking account, keep it small, but everything else
I would put in and even that. Again, I don't
know phillis a single, but if she is, sounds like
she is. Again, we just talked about it with Gary, Right,
what do we do? Are we going to add a
kid as a joint owner to avoid probate when she dies,
(33:59):
because again it's in her own name, it's subject to probate.
It's not going in the trust. We either a at
a joint owner. If you don't care that this all
goes to this one child, YEP or B. Put a
designated beneficiary on it. They're probably called at a bank,
something like a tod a transfer on death account. Put
(34:21):
that on it and have it then passed to the
trust at your death, and that way your wishes in
the trust will be honored.
Speaker 2 (34:29):
So for Phyllis, she's already moved her checking account into
her trust. So I'm not sure if it's revocable or irrevocable,
but for her, would she she wouldn't have the option
of listing a co owner if it's her trust.
Speaker 4 (34:45):
Oh I'm sorry, I thought that was the one account
we were leaving outside. So yeah, if it's in the trust,
you don't have to do anything.
Speaker 2 (34:50):
No, No, but if she's if she becomes incapacitated and
she is the only trustee, she can't add a co owner. No,
she can't because it's only a trus see. They could
do that, right.
Speaker 3 (35:01):
Yeah.
Speaker 4 (35:01):
So the issue here that I might have I might
have not picked up on is if it's in the trust, folks,
And this is great. This is for all assets, not
just a checking account, anything that you put in a trust.
Speaker 3 (35:12):
Right.
Speaker 4 (35:13):
So in this case, there needs to be a not
a co trustee, there needs to be a success or trustee.
I can assure you that we never create a trust
without a success or trustee listed.
Speaker 3 (35:24):
You just can't.
Speaker 4 (35:25):
So at least one. You don't have to list ten,
but at least one. So that way your question is
set up where you're right, we can't add a co
owner to the trust, nor would we have to. Why
because upon the death, disability, or resignation, So even disability
of Phyllis, because if it's a revocable trust, Phyllis would
(35:47):
have been the trustee. So upon Phyllis's death or disability,
then the successor trustee serves automatic. Yep, you might have
to file an acceptance to say I accept my position,
but sure you're in. Yeah, and so now that successor
trustee can actively manage a control work if you will
(36:12):
every single account right checks you name.
Speaker 2 (36:14):
It, and then your other basic bank accounts like if
you have CDs and things like that, and you don't
have co owners, I mean you want to avoid probate,
right you do, God, put beneficiaries on them.
Speaker 4 (36:26):
So on those again if they're not in the trust,
put a designated beneficiary the trust for sure, and then
we'll go from there.
Speaker 3 (36:32):
So folks get the guide.
Speaker 4 (36:33):
It's the end of the month eight six six, eight four,
eight five six nine nine or Legal Exchange Show dot com.
Speaker 2 (36:40):
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 Pushing It Do. I'm Susan Powers,
(37:02):
a financial advisor with the Armstrong Advisory Group. We'll be
right back with more on the Legal Exchange with Todd Lutsky.
Speaker 1 (37:09):
Spouses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts elder
log and they can help you protect your assets from
probate and the nursing home. By naming your estate as
a beneficiary, you can avoid the probate process, less than
the chance of creating any income tax issues on your rmds,
(37:30):
and enjoy enhanced a state tax reduction. Call Cushing and
Dolan right now at eight six six eight four eight
five six ninety nine and ask for their brand new
guide called why Name your Estate and IRA Beneficiary? Learn
about these benefits and others and provide peace of mind
for you and your family during your retirement years. That
number again is eight six six eight four eight five
six nine nine, or you can request the guide online
(37:52):
by visiting our website at Legal Exchange Show dot com.
That's the Legal Exchange Show dot com. The proceeding was
paid for in the music expressed are solely those of
Cushing and Dolan. Cushing and Dolan and or Armstrong Advisory
may contact you offering legal or investment services Cushing and
Dolan and Armstrong Advisory do not endorse each other and
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Speaker 5 (39:10):
To fully maximize your social security benefits, it's important to
understand how social security may affect your taxes.
Speaker 3 (39:17):
Hi.
Speaker 5 (39:17):
This is Mike Armstrong from the Armstrong Advisory Group, and
when deciding to collect social security benefits, it's essential to
consider how those benefits interact with your other income sources,
your tax situation, and your long term financial goals. As
an example, if you have tax free or after tax
options in retirement, you can structure your financial plan to
manage your future tax burden. Collecting social security too early
(39:38):
without careful planning could limit your ability to manage taxes
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Security and Taxes and it unpacks these issues and more.
Get your free copy today by calling eight hundred three
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Speaker 1 (39:56):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advice. 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 make contact you to offer investment
advisory services.
Speaker 9 (40:11):
The Financial Exchange and Veterans Development Corporation are proud partners
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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 sixty six eight four eight
five six ninet 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 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. So, Todd, I have a few kind
of follow up questions to some things we've already talked
to about today, and specifically about naming your estate the beneficiary.
Speaker 3 (41:24):
So it's complicated.
Speaker 2 (41:26):
It is complicated, and we have a lot of mutual clients,
and I know that from my clients that have really
large irays when they've come in to chat with you.
Prior to this being an option, you may have leaned
towards saying, look, you can't protect this, you know, two
million dollars worth of I rays. Oh sure, why are
(41:48):
you going to do an irrevocable trust just for the
house at this point? So would that kind of change
your recommendation now that there's something that can be done
to potentially protect those iras last minute?
Speaker 3 (42:01):
Yeah, this is a really good question because when.
Speaker 4 (42:06):
We talk about these issues, every single case will be different.
Speaker 3 (42:12):
This is a case by case by.
Speaker 4 (42:14):
Case by case analysis, right, because of all these issues.
So if somebody comes in, you know, and they have
two million dollars in one IRA. Yep, that that might
be a stop. Why am I doing medicaid planning?
Speaker 3 (42:32):
Right?
Speaker 4 (42:32):
It might be simply because that's a big number. And
if one spouse gets sick and and goes to the
if the one with the IRA gets sick and goes
to the nursing home, no matter what we're doing, If
the first spouse that has the IRA gets sick and
goes to the nursing home, the surviving, the healthy spouse
(42:56):
is going to have to decide do I want to
go on Medicaid for my husband or not. Let's say
the husband got sick. In order to do that, we
would have to pull two million dollars out of the
IRA then give it to her, but lose forty percent.
Speaker 2 (43:11):
I mean, so you're talking about eight hundred grand coming.
Speaker 4 (43:14):
Would never do that, right, You just would never do
that because you're probably better off paying privately, because if
someone dies a year after you pull it out, you
could have spent one hundred thousand instead of eight hundred
thousand in taxes.
Speaker 2 (43:28):
By the time it comes out of your IRA. If
you do, it's not coming out tax for you, but
it's pretty darn close because you've got that offsetting medical deduction.
Speaker 3 (43:36):
If you're private, that's right, that's that's staring, right.
Speaker 2 (43:38):
So it has to make sense financially.
Speaker 4 (43:40):
Has to make sense financially to do it, and a
large IRA might not. Now let's again, so that's a big, one,
big factor we have to think about. Remember the example
I did in our show today was you know they
only had I don't say only, but seven fifty in
an iras a lot different than two million. Absolutely right,
you still have that question if one gets sick, no
matter what, it's always there. Remember this is designed to
(44:02):
shelter things on the first death someone dies and doesn't
go to the nursing home, or someone dies with a
large IRA, pays privately and doesn't went to the nursing
home but paid privately, never went on medicaid. That could work.
So now let's play out the string. Say you've got
someone with a two million dollar IRA, but a two
(44:24):
million dollar home and that's pretty much their estate. They
might have a small checking savings, maybe one hundred thousand
dollars in a brokerage account.
Speaker 3 (44:32):
Right, that's their home.
Speaker 4 (44:34):
That well, that's fifty percent of the estate. Well, I
can protect fifty percent of the house. Some might say,
why bother because I got two million dollars.
Speaker 3 (44:43):
I get it.
Speaker 4 (44:44):
You got to work those numbers. But remember if it's
if that first spouse who has the two million dollar
IRA dies and you did the testamentary trust, it will
ultimately shelter it for the surviving spouse.
Speaker 2 (44:58):
Now you've got three million dollars protected. Well, well, which
is great.
Speaker 3 (45:03):
It be two and two.
Speaker 4 (45:04):
You have four million dollars protected, two for the house
because the two if it's a two million dollar I right.
But if you're right, if it's split between two spousals,
would be a million dollar iras, so.
Speaker 2 (45:12):
It's still huge protection.
Speaker 3 (45:14):
Yeah, you really have.
Speaker 4 (45:15):
To run the numbers here when you do this. That's
that's the that's what you need to explain to the client.
What are the upsides? What are the downsides of doing this?
Generally you're gonna find more upsides than downsides. But folks,
the point of this discussion is I don't know how
to handle my IRA. It's part of my estate and
(45:35):
I don't know what the best way is to handle it.
This guide will help you with that. And most people
have an IRA, and most people have the IRA as
one of their larger assets in their estate.
Speaker 3 (45:49):
Call and get the guide.
Speaker 4 (45:50):
Why name your estate and IRA beneficiary eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com. It's the end of the month, folks,
last chance to get it eight sixty six eight four
eight five six nine nine or Legal Exchange show dot com.
Speaker 2 (46:08):
What do you do with roth iras Todd? Would you
also do this testamentary language and name the estate the
beneficiary of the row?
Speaker 3 (46:15):
You could?
Speaker 2 (46:17):
I mean, if you have a large wroth ira which
you can't protect in advance. Now there's no tax implications
if you pulled it out, but you like that tax
free growth too.
Speaker 4 (46:27):
That's exactly the thing to think about with an ira.
So if you if you want to leave the first
of all, if you have a roth ira, can you
when you're doing your estate plan, your irrevocable trust planning decide, Well,
you know, I've got this five hundred thousand dollars wroth
They're usually smaller than the big iris.
Speaker 3 (46:46):
Yeah, I've had.
Speaker 4 (46:48):
It for ten years. I've enjoyed tax free growth for
ten years. I'm older now and I want to protect
it from the nursing home. Okay, you can pull it out, yep,
no tax put it in your trust, it's no longer
an ira a wroth ira, and then invest it accordingly.
(47:13):
You want to buy tax free bonds or something. You
kind of have your own wroth all over again inside
the trust and in five years it'll be protected. So
that's an option for some people.
Speaker 2 (47:25):
I think it's a matter of like kind of reassessing
what your priorities are at that point in life, to say,
is it more important to me to protect from nursing
home expenses or to have this tax ree growth, And
a lot of them at that age will say I
really want to protect it more than the benefit of
the tax free growth.
Speaker 4 (47:43):
And I think the reason that might be is because, look,
if I have kids that I want to leave it
to as well, Yeah I've gotten.
Speaker 3 (47:50):
Tax free growth, that's great.
Speaker 4 (47:52):
But if I get sick and the nursing home takes
it all, that tax free growth that I've enjoyed is
really for not. So rather than be greedy I'm happy
with what I have, I'm going to take my winnings
off the table. You've heard this in the investment world,
and I'm going to put it in the trust and
then let it grow there. At least I know I'll
(48:13):
have it either for the spouse who's alive or the
kids when I die, because it's protected from the nursing home.
Speaker 3 (48:21):
So I don't know that I would.
Speaker 4 (48:24):
Necessarily name the estate as the designated beneficiary on that
although if I'm not going to put it in the
trust while I'm doing my lifetime planning, but I want
to protect I might. I mean, it can't hurt. There's
certainly no adverse income tax consequence in naming the estate
the beneficiary. It still has to come out, but when
(48:47):
it comes out, it's tax free. So even if I
was under the required beginning date, I don't care. It
can come out over five years. It's tax free, and
it's protected from the nursing home.
Speaker 3 (48:59):
So I kind of this.
Speaker 4 (49:00):
Roth Iri explore that a little bit.
Speaker 2 (49:03):
How about once the first spouse passes away and their
IRA is now owned by this testamentary trust, what happens
if the surviving spouse goes into the nursing home. They
had full access to that money that was coming out
of the IRA. What happens to that now is that
suddenly risk if they actually go into the nursing home.
Speaker 3 (49:25):
No, so that's what's really good about it.
Speaker 4 (49:27):
So if you mean if they were the beneficiary, it
would have went right to the surviving spouse and they
could do whatever they want with it, right, is that
what you're saying.
Speaker 2 (49:34):
No, No, you go through this testamentary process.
Speaker 3 (49:36):
Now it's in the trust.
Speaker 2 (49:37):
Now it's owned by the testimonary trust, the ira surviving spouse.
You have a surviving spouse who has access to all
that money that's in that testamentary.
Speaker 3 (49:45):
Yes, she does.
Speaker 4 (49:45):
She can get income and wen she goes to the
nursing home. So that's a great question. The fact that
she has access to it does not mean it's at
risk for the nursing home. Because it went through a
will into a trust. There's reg elations that say the
trust and transfer rules don't apply. The Medicaid trust and
transfer rules don't apply. So that inability to get if
(50:09):
you have discretionary distributions of principle and income like it
would be at risk in a regular situation at Medicaid trust,
it's not at risk in here and no five year weight.
And that's how it works, folks, lots of heavy lifting here.
Get the guide. Don't try and learn it all on
the radio. It's too much. Why name your Estate and
(50:30):
IRA Beneficiary eight six six eight four eight five six
ninety nine or Legal Exchange show dot com. It's the
end of the month, folks. Eight six six eight four
eight five six nine nine.
Speaker 2 (50:44):
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 (50:49):
I'm Susan Powers, a financial advisor with the Armstrong Advisory Group.
We thank you for joining us today and we'll be
back again next week on the Legal Exchange with Todd Lutsky.
Speaker 1 (51:00):
Houses generally serve as the beneficiary to your IRA or
life insurance policy, but naming your estate the beneficiary has
quite a few benefits. Cushing and Dolan are experts elder
log and they can help you protect your assets from
probate and the nursing home. By naming your estate as
a beneficiary, you can avoid the probate process, lessen the
chance of creating any income tax issues on your rmds,
(51:20):
and enjoy enhanced a state tax reduction. Call Cushing and
Dolan right now at eight six six eight four eight
five six nine nine and ask for their brand new
guide called why Name your Estate and IRA Beneficiary? Learn
about these benefits and others and provide peace of mind
for you and your family during your retirement years. That
number again is eight six six eight four eight five
six nine nine. Or you can request the guide online
(51:42):
by visiting our website at Legal exchainshow dot com. That's
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 or Armstrong 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 8 (52:00):
According to a survey conducted by the Nationwide Retirement Institute,
more than two thirds of Americans say that the candidate's
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in next month's election. Hi, this is Chuck Zauta from
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(52:21):
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hundred three nine three four zero zero one. That's eight
(52:42):
hundred thirty nine three four zero zero one.
Speaker 1 (52:45):
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 a state planning advisors before
making any investment decisions. Armstrong may contact you to offer
investment advisory services. Fall is in full swing, the leaves
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(53:08):
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