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 (00:36):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor 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 (00:51):
I am never better in you?
Speaker 2 (00:52):
I am great? Thank you? What do you have for
us this week?
Speaker 3 (00:55):
Got a couple of things. We've got a Pennsylvania Uppellate
Court basically gonna show us how how poorly drafted Medicaid
trusts that basically fail to protect the house from a
nursing home because it's so poorly drafted. And then the
family discovered it and they decided they would terminate to
trust and start over. But the court didn't like that
(01:18):
idea too much. So we're gonna have to take a
look at this and show you, obviously how to fix
it and how not to run into this problem. But
I thought a whole lesson about drafting is so darn important.
I think we'll learn that from that case. Then we
have an Alabama Supreme Court case where, you know, we
have a situation where basically a will is created in
(01:42):
twenty eleven, then another will is created in twenty twenty,
naming step step granddaughter and step granddaughter's husband as beneficiaries
instead of I guess daughter Beatrice in the beginning. Well,
she died three weeks later and that didn't go over
so well. So we're going to see what happens here.
(02:02):
This is really an undue influenced case and a lack
of capacity case, and you're going to see how a
will is really a won't but it still can do
things for you. So it's better to have it than not.
So lots to learn about here and again even this one, right,
it comes down to who do you really want your
assets to go to? And folks, that's what our guide
(02:22):
this month is about. It really does offer I don't
know countless numbers of ways to leave your assets. If
you have a special needs child, if you've got children
that are bad with money, if you're concerned about divorces,
if you're concerned about generation skipping taxes, if you want
(02:42):
to just leave your assets outright. I mean, there's so
many things to think about when someone passes that the
trust can live on and do more than just avoid
probate and reduce taxes, which are certainly important, but the
family behind the estate plan could really matter. And so
if you've never done your planning, get the guide and
learn how you might want to leave assets to children
(03:05):
or family. And if you've already done it, get it
because I think you might figure out that there's other
things you can do if your life events or family
events have changed. Eight six six eight four eight five
six ninety nine or legal exchange show dot com to
get how to leave your assets to beneficiaries eight six
six eight, four, eight, five, six, nine nine, or Legal
(03:29):
Exchange show dot com. So here we go, Pennsylvania Appellate
Cord case. So Don and Marjorie Patterson established an irrevocable
trust in twenty eleven. They were the lifetime beneficiaries and
their daughter was the trustee. So far sounds great, right,
(03:49):
and the two grandkids were contingent beneficiaries. Still okay. The
home was the only asset really transferred to the trust.
Still okay, here's the problem. The trust provided that the
trustee could pay could provide income and support for the
Petersons and the grandkids, not the daughter, but and the grandkids,
(04:15):
including for the Peterson's health care expenses.
Speaker 2 (04:19):
Oh not so good.
Speaker 3 (04:20):
Yeah, so that's a concern. Bad language, right, So the
Petersons filed a petition to terminate the trust on January sixteenth,
twenty twenty four. They did this in twenty eleven. All right,
so because it violates the state guidelines right to protect
the home. In essence, it will not protect the home,
(04:43):
and that was the primary intent when they created the trust.
The problem here is that the trust provides that distributions
can be made for the Patterson's benefit, and specifically for
health related expenses makes the asset clearly available for the
(05:03):
nursing home. So I agree with their determination that this
is not going to protect it from the nursing home.
So they want to terminate it. I get it. Now.
Most of these cases don't have termination clauses in it.
Most of these trusts don't have that, and there's reasons
for it, and we'll talk about it. Yeah, So the
(05:25):
probate court and the appellate court. The probate court first
believed that it was like a life estate for them
and then the grandkids. I don't really see that, but okay.
The appellate court agreed that the trust was clearly designed
to provide them income and support for their health care,
(05:49):
and therefore it was not an unanticipated circumstance that they
would not get Medicaid. So the way the appellate court
read it says, look, you draft it specifically to take
care of your health care. So if you drafted it
that way, then this is not an unanticipated event that
(06:10):
it would not protect it from the nursing home. So
therefore we're not going to let you terminate the trust.
That's the court said. So this is a case of
first impression by the way, for this court. So I'm like, wow, yeah,
and I listened to this, and I'm a little taken aback. Now,
let me give you an example. A CUPER to qualified
(06:30):
personal residence trust you could set up years ago to
try and get a house out of an estate. You
put it in a trust, and if you live beyond
a certain term of the trust, say five years or
say ten years, then the house is out of the estate.
Usually it's ten years or longer. Then the house is
out of the estate. Well over that ten year period,
(06:51):
if estate tax exemptions shoot up like they have in
the past, well then the need to get the house
out of the estate to save a state tax is
no longer exists. So you can petition the court to
terminate the trust because the purpose of the trust to
reduce the state taxes no longer exists. And that's not
(07:12):
an unanticipated event. You could not have known that the
tax laws would change the way they changed to benefit
the tax payer, and therefore the court would likely undo
the q PURT. In fact, we've undone q perts in
the past, and we've helped clients, you know now get
(07:33):
the house back in the estate. So when they pass
it'll get a step up in basis and not cause
a tax problem. In this case, that's not that's the problem.
They said, you didn't this was not unanticipated. You drafted
it poorly. So what do we learn, folks?
Speaker 1 (07:47):
Right?
Speaker 3 (07:48):
The simple solution is, please draft the language properly. Right,
there must always be language in the trust that absolutely
prohibits the distribution of principle to the owners, the creators
of the trust. That is the language that protects the
assets from the nursing home after five years. Note this
(08:08):
trust existed way longer than five years, longer it could
have been protected. Why they waited from twenty eleven to
twenty twenty four to discover this problem, I don't know.
But again that goes back to the court saying, probably
because you know you drafted it the way you thought
you wanted it drafted right to take care of you,
(08:29):
and that's why they didn't terminate it. Now. Also, I
can mention that there's not a lot of we don't
usually put termination clauses in the medicaid trust. There was
a Doherty case here in Massachusetts where they had a
termination clause left in a trust that said, oh, even
though there's no access to principle. The termination clause said
that the trustee can terminate the trust and distribute the
(08:51):
asset out to the beneficiaries. Well that's a problem, right
if you don't.
Speaker 2 (08:54):
Define income beneficiary.
Speaker 3 (08:56):
Right, If you were just an income beneficiary and that
and it could only go to the remainder beneficiaries, that's okay.
But if you have a paragraph that says you can
terminate it and give it to all beneficiaries, well that's
a problem, right, because then it can go back to
the person who's in the nursing home. Right, However, there
should I'm a little confused as to why there wasn't
any paragraphs in this trust. Well I'm confused with why
(09:19):
there wasn't a lot of paragraphs in this trust. But
you know, normally there's a paragraph that allows you to
make transfers out to children and grandchildren. Like what if
kids are going to college or grandkids are going to
college and you want to make a gift to them
out of the trust. You should be able to do that, right.
Speaker 2 (09:34):
Which would include a house, would.
Speaker 3 (09:36):
Include anything you want. And there's no obligation here for
a child to once you give it to them. I
get it all bets are off and that's why you
can do this. But if you did this, maybe they
could have just undone the trust and started over and
not even gone to court. Folks, at the end of
the day, this lesson is about making sure your trusts
are drafted properly. But I'm sure this trust also had
(09:57):
language going to the you know, wanted to take care
of the grand kids. This one was designed to skip
a generation. Remember it was to take care of the
grandkids after mom, after the grandparents passed. Learn how best
to leave your assets to your kids. Get the guide
eight six six eight four eight five six nine nine
or Legal Exchange show dot com.
Speaker 2 (10:17):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We've got
much more to come when we return to the Legal
Exchange with Todd Lutsky.
Speaker 1 (10:31):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to Beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(10:54):
the road. Call Cushing and Dolan right now at eight
six six eight four eight five six nine nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight six six eight four eight five
six nine nine, or you can request it online from
(11:16):
our website Legal exchange show dot com. That's legal exchange
show dot com. The proceeding was paid for in The
views expressed are solely those of Kushigan Dolan. Kushing Dolan
in or Armstrong Advisory may contact you're offering legal or
investment services. Kushingan Dolan and Armstrong Advisory do not endorse
each other and are not affiliated. Consistently voted one of
the top Caribbean destinations the United States, Virgin Islands is
(11:37):
the perfect place for your next vacation. Whether you're looking
for romantic getaway, a long weekend with friends, or a
family vacation, Saint Croix, Saint Thomas, and Saint John have
everything you need to enjoy that special time away from home.
Take advantage of a variety of incredible promotions that are
available right now. Go to visit usvii dot com slash promotions,
(11:57):
where you'll find the details about all of these amazing experiences,
including a stay at the Divvy Karina Bay all inclusive
beach resort and casino on Saint Croix. From the moment
you arrived, you'll fall naturally in rhythm with the heartbeat
of the islands. There's no money to exchange, and travel
from New England could not be easier. Don't miss your
chance to enjoy America's Caribbean paradise the United States Virgin Islands.
(12:20):
Had to visit USVII dot com slash promotions from more
information and to book your trip today. That's visit USVII
dot com slash promotions.
Speaker 4 (12:31):
One of the keys to enjoying a peaceful retirement is flexibility.
Speaker 3 (12:35):
Hi.
Speaker 4 (12:35):
This is Chuck's outa from the Armstrong Advisory Group Today.
Retirement planning involves lots of possible changes and challenges given
all of the external factors that may affect your goals,
so creating a budget for your retirement is vital to
financial stability. Retirement comes with a number of monetary considerations,
from how much money you'll need every month to managing
your existing investments through market volatility. Our new guide is
(12:56):
called how to Build a Retirement Budget, and it will
offer a variety of options for your consideration that may
lessen your risks when it comes to your planning. Call
right now at eight hundred thirty nine three for zero
zero one and ask for our new guide today. That's
eight hundred three nine three for zero zero one, or
requested online from our website Armstrong Advisory dot com. That's
(13:16):
Armstrong Advisory dot com.
Speaker 1 (13:18):
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 Lutsky,
an expert in elder life planning and taxation. Need help
(13:38):
with your estate plan? Call 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 (13:47):
Welcome back into the legal exchange with Todd Letsky. 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.
Where are we headed now, Chod, We're.
Speaker 3 (14:02):
Going to go to the Alabama Supreme Court. Listen to
this case. This is a combination of testamentary capacity and
undue influence. So Nancy did a will in twenty eleven
naming her sister the PR and devised the home and
the remaining residue of the estate to Beatrice, which is
(14:26):
her sister, so she must have I'm guessing she didn't
have any children of her own, which we'll learn here
in a minute, because in twenty twenty, Nancy executed a
new will, naming step granddaughter Meghan and as PR and
devising the home and the residue to Megan. And her husband,
(14:49):
Joe C. Because there's a Joe em coming.
Speaker 2 (14:52):
Up, so that's a little suspect.
Speaker 3 (14:54):
Yeah, And the end, they went ahead and they actually
executed a deed conveying the home out right to Megan
and Joe C. Well, facts get better. Turns out that Megan,
Joe C and their kids had been living with Nancy
for about five months and three weeks after she did
(15:19):
executing the new will and the deed, she died five months.
They're living there three weeks before death. All this happens
to me, that's a problem. Yeah, Well, Joe M who
is Beatrice's son in law, so that would be Beatrice
who's the sister's kid's spouse. Just to play out that
(15:41):
string a little bit, brings this action to admit the
two thousand will and void the twenty twenty will and
the deed due to undue influence seems spot on to me. Well,
the parties apparently the case doesn't tell you this, but
the parties just worked it out and they agreed that
(16:01):
the twenty twenty will would be would be probated. I
don't know if they couldn't prove undue influence or whatever.
And they agreed that Megan would be the pr who's
the step granddaughter. Huh. Well, Joe M. Files decides to
file to have the twenty twenty will. This is later
(16:23):
Joe M files to have the twenty twenty will indeed
invalidated due to lack of testamentary capacity. Second second try,
try at the apple, and the twenty eleven will should
be probated in its place, which of course leaves everything
to Beatrice, which somehow finds its way to Beatrice Kids
(16:43):
or something. Joe C and Meghan and the step grandkids
file a motion to dismiss Well. The court found that
the twenty twenty deed and will not to be valid,
not surprised, and that the step kids decided to appeal.
(17:04):
There was no dispute that Nancy was cognitively impaired during
the final weeks of her life, diagnosed with dementia and
failure to thrive and things like that. Yep. But there
turned out to be conflicting evidence regarding the testamentary capacity.
So it's up to the jury really to decide and
judge the credibility of the witnesses, etc. And determining this,
(17:26):
and they concluded that she in fact did lack testamentary
capacity to make the will, and the Supreme Court agreed,
because they appealed again, of course, and the Supreme Court
agreed and affirm the case. So I think it's the
right decision, and we're going to learn a little bit
about what was done here. When I say what was
done here, there was only a will done here. Sometimes
(17:48):
a will is better than nothing, folks. But I can
tell you how you decide to leave your assets to
your beneficiaries, which is the name of our guide this
month is very important because the will in this case
saved their intent and if you want your intent honored,
get the guide. If you've never done your planning, this
will help you figure out how to leave your assets,
(18:11):
and if you've done it, it might give you some
ideas on how to change if your life events have changed.
And it gives numerous examples of how to do that,
from staggered distributions to special needs children to divorce proofing
it for creditors. Whatever's right for you, it's here. Get
the Guide eight six six eight four eight five six
(18:34):
nine nine or Legal Exchange Show dot com again eight
six six eight four eight five six nine nine or
Legal Exchange Show dot Com well, what can we learn
from this again, let's start with the with the planning
that was done. It was a will, you know me,
(18:54):
a will's a won't and it's still a won't. It
won't avoid probated didn't hear. It's not going to reduce
to state taxes and again she was single, maybe there
was no way to do it with a trust anyway,
but it won't reduce the state taxes. And of course
it won't protect assets from the nursing home if that's
a concern of yours. But you know, at least the
will does direct where your assets go when you die,
(19:16):
and you're not stuck with the intestate succession stature and
if you go to the probate court and you have
to go through these headaches. At the end of the day,
as we learned here, your assets, your wishes can be
followed and your assets will go where you're really wanted
them to gop. So obviously one of the lessons from
this case is don't procrastinate, don't try to do things
(19:39):
last minute. And I don't think she did. I think
they she was deleted it for her. So in this
case also, drafting is important, right, This was step grandkids
and step kids that were involved here. So remember it's
very important when you draft a document. And maybe they
(20:02):
did this, maybe they informed you know, the attorney. But
you can't just draft documents that say I leave things
equally to children, issue descendants. Those are words that have
meaning terms of art, and they capture people like children, grandchildren,
great grandchildren, great great grandchild, adopted on and on on. Well,
(20:25):
adopted children have to be drafted to be included. But yes,
generally in a definition section, we adopted children are included
in that term of art. But you have to draft
that into your document. The term of art by itself
would not capture an adopted child, but if it's drafted in,
it would. But in this case, a lot of times
(20:45):
no step grandkids would not fit. That's the whole point here.
They would not be captured by those definitional terms, So
you need to make sure you draft it to include
them as children or specific list them as beneficiaries, which
is what they did here, right.
Speaker 2 (21:04):
I would think Todd that you have more or a
lesser chance of people contesting things if you do a
trust rather than a will. Would that be an accurate statement?
Speaker 3 (21:15):
I don't know if it's less. I mean, anybody can
contest any time, right, So I don't know if it's less,
but I think it goes to it being harder to
perhaps win when you've taken these extra steps to do
the planning.
Speaker 2 (21:29):
You could put it in a contest clause.
Speaker 3 (21:31):
Put them everywhere, both in the will, in the trust.
That is the key to what you're saying to preventing
the litigation. Now, let's just explore undoe influence a minute. Right,
In this case, it certainly seemed like we had it.
They're living there, they probably took her to the lawyer.
They probably told the lawyer what they want. I mean,
(21:53):
I mean, you think the lawyer would have seen that this.
It certainly looked like it because they did everything, and
at the end of the day, the people who helped
her get that will drafted ended up being the only beneficiaries.
That's classic under influence. So I don't know why they
didn't win that case. But again, I think it's important
to understand the difference between testamentary capacity and contractual capacity,
(22:16):
because their second bite at the apple was okay, if
we don't win under undue influence. She lacked capacity, and
even though she was diagnosed with failure to thrive and
early dementias. I think what they called it, that doesn't
mean that you can't do a will. So for all
of you listening out there, if you have people that
are in that situation and you think that they can't plan,
(22:40):
it might still be okay, okay, And so in this case,
you know, get asked questions. The lawyer needs to ask questions,
simple questions like how many children do you have? You know,
do you know where they live? How many grandchildren do
you have, how many of your daughters. If they can
rattle these things off, then they kind of oh the
nature of their bounty and that would mean okay for
(23:03):
testamentary capacity, but perhaps not contractual capacity. So, folks, this
was a prime example a will at least directed where
their assets went when they died, and it was honored.
If you want your wishes to be honored, get the
guide and learn when you're doing your estate planning how
to leave your assets to your family. There's so many
(23:23):
ways to protect it even after you're gone. Eight six
six eight four eight five six nine nine or Legal
Exchange show dot com.
Speaker 2 (23:32):
You've been listening to Todd Lutsky, a partner with a
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your listener questions when we return to the
legal exchange with Todd Lutsky.
Speaker 1 (23:48):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called How to
Leave Assets to Beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your children,
isn't it as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(24:11):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from
(24:33):
our website Legal Exchange show dot com. That's the 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're
offering legal or investment services. Cushing and Dolan and Armstrong
Advisory do not endorse each other and are not affiliated.
Speaker 5 (24:49):
The breadth of the stock market sell off in recent
days hasn't been seen since the early days of the pandemic.
And while it's easy to say don't panic if you're
concerned about your portfolio, given the impact of these TIFFs,
now's the time to have that conversation. Hi, this is
Mike Armstrong from the Armstrong Advisory Group. If the market
correction has you anxious or worse rattled, give us a
call at eight hundred three nine three four zero zero one.
(25:10):
Let's get together and talk through your financial strategy, evaluate
at strengths and weaknesses, and make decisions for the future
that are in your best interest. These are challenging times,
but we've dealt with them before and are prepared to
deal with them again. Our goal is to help you
protect the assets that you've worked so hard to attain.
You can give us a call at eight hundred three
nine three four zero zero one and request a no
obligation consultation. That number again is eight hundred three nine
(25:33):
three four zero zero one.
Speaker 1 (25:35):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. Consistently voted one of the top Caribbean destinations
the United States, Virgin Islands is the perfect place for
(25:57):
your next vacation. Whether you're looking for romance to get away,
a long weekend with friends, or a family vacation. Saint Croix,
Saint Thomas, and Saint John have everything you need to
enjoy that special time away from home. Take advantage of
a variety of incredible promotions that are available right now.
Go to visit USVII dot com slash promotions, where you'll
find the details about all of these amazing experiences, including
(26:21):
a stay at the Divvy Karina Bay, all inclusive Beach
Resort and Casino on Saint Croix. From the moment you arrive,
you'll fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Don't miss your chance to enjoy
America's Caribbean paradise the United States Virgin Islands. Head to
visit USVII dot com slash promotions for more information and
(26:43):
to book your trip today. That's visit USVII dot com
slash promotions. You're listening to the Legal Exchange, and it's
time for Ask Todd, the segment where Todd will answer
your questions about anything and everything that's suited in the
estate planning process. Once again, here's Todd Lutsky and Susan Powers,
(27:07):
welcome back talk.
Speaker 2 (27:08):
We have a few questions from listeners for you. First
question comes from Harry in Agawa, mass And Harry writes,
my wife and I have a total net worth of
about three and a half million. One million is in
our home, five hundred thousand in savings and two million
in our IRA investments. Can we qualify for an irrevocable
(27:28):
trust to shield our assets from a nursing home. I
would want to make sure we protected the two million
in IRA investments for our son and daughter. I am seventy,
my wife is sixty nine, and we are in good health.
Speaker 3 (27:42):
Wow, this is not an easy one.
Speaker 2 (27:44):
But he gave you all the details this time.
Speaker 3 (27:45):
Yeah, he did. But so folks, when we meet clients,
and this is exactly why we spend time with them
in the beginning, to learn about their assets, about their
family dynamics, to help them determine which ways the right
way to go. So when you look at three and
a half million, they have about one point five million
(28:06):
of assets between the home and money.
Speaker 2 (28:08):
Yep.
Speaker 3 (28:09):
That is what we like to call protectable from the
cost of long term care.
Speaker 2 (28:16):
So they could essentially transfer those assets into an arevable.
Speaker 3 (28:20):
Task and that's one of the things they're asking about, right.
But they went on to say that they really want
to protect the IRA. So the IRA is is an
asset that you can't you can't move into a trust
today without incurring a huge income tax hit.
Speaker 2 (28:39):
Because you'd have to first withdraw it, pay the taxes
the net.
Speaker 3 (28:44):
Yeah, into the trust. See, So that that to me,
I mean if I took two million dollars out of
an ir IRA I got to give. You know, at
least forty thirty five federal and state figure thirty five
to forty percent would go in taxes. So that's what
eight hundred thousand dollars.
Speaker 2 (29:02):
Eight hundred thousand versus you know, if they end up
getting to the point where they need to go into
a nursing home, if they have two million, now I mean,
let's say it's three by the time they have to
go into a nursing home, they could essentially self ensure.
Speaker 3 (29:17):
They could be self pay if it's grown, and if
they're you know, that's the thing. So you got to
run the numbers here, and you got to say, you
know what, though I don't think this is a negative answer,
I think for them, I would still go out of
my way to protect a one point five Why not
if I'm going to do a trust anyway, it's close
enough here that that if I'm going to do a
revocable trust that will avoid probate, reduce my death taxes
(29:41):
for the state, and provide a bloodline plan for my
family as to who gets at how and when, why
not just do the irrevocable and get all of that
and add nursing home protection for at least some of
my assets. I say that because of two reasons. One,
you're going to live off your era anyway. Two maybe
(30:02):
it'll grow, maybe it won't. I don't know, but either way,
there's things that can be done last minute to protect
assets when one gets sick and goes in a nursing home.
So we'll deal with that when the time comes. And
the other thing is, not only might it come down
if you're living off of it, but we would always
also add the testamentary trust to make the beneficiary the
(30:26):
estate once they're seventy three, they're not there yet. And
that way, if one just died and never went to
the nursing home, that person's that decedent's IRA could be
held in the testamentary trust, immediately protected from the nursing
home in the event the surviving spouse gets sick, yet
(30:47):
available to the surviving spouse if the surviving spouse doesn't
get sick right and needs it to live on. So
it's really a great It offers another opportunity to protect
something that you can can't in advance anyway. So this
is a tougher case, I think all the way around.
But I think if you walk through it combination of
(31:08):
potentially being self insured, as you said, Susan, these assets
could grow and you could generate enough income coupled with
social Security to pay. But if I've got the trust
in place, you know what, I'm happy because I've taken
some things off the table and I've provided myself with
some options to protect the rest later on with that
idea of the testamentary trust. So great case, but again
(31:32):
one that requires some attention, and folks, your overall estate
plan might require some attention. And again, to me, the
most important part here in this example was they wanted
to protect things for their family. Well, if you do,
you need to learn how best to do that. Sometimes
leaving assets outright to children is not the best bet
protecting them from future creditors, divorces, and perhaps generations. Skipping
(31:57):
taxes without causing any harm your children at all might
be a great way to do it. Or maybe you've
got a special needs kid. There's so many ways to
think about leaving assets to children. Call and get the
guide how to Leave Assets to Beneficiaries eight six six
eight four eight five six nine nine or Legal Exchange
(32:18):
Show dot Com again eight six six eight four eight,
five six nine nine or Legal Exchange show dot com.
Speaker 2 (32:26):
Our last question comes from Ruth in North Kingstown, Rhode Island.
Ruth rights, My husband and I own our rental duplex jointly.
Should we get an LLC for it? What are the benefits?
Will this make it more difficult for our daughter to
inherit when we when we pass away.
Speaker 3 (32:43):
Yeah, So this is a great question, really completely different
than the one we just talked about. I mean, this
is what makes what I think my job so fun
is that that every day is always different situation. So
when you have an LLC, I'm going to just say
a general rule. Yeah, I'd consider an LLC as a
general rule. At least start there. Yeah for a rental,
(33:06):
I'm sorry, for a rental, at least start there, right.
And so the reason you I don't know what the
rest of their assets are, but when you have a rental,
you might have a home, you might have a vacation home,
you might have other investment portfolios. So there could be
a lot of other assets here. And if you have
(33:26):
a rental and you're worried about getting sued because tenants
that's what they do. They do that and so if
you have it in your own name, then it is
going to be sued personally. They're going to sue you personally,
So that means all your other assets could be at
(33:46):
risk for that lawsuit exactly. That that vacation home, that
that investment portfolio, it's all going to be available. Whereas
if you put it in an LLC, then the tenant
can only sue the company, not you personally, and can
really only get the item in that LLC. And most
(34:07):
of the time they don't want the building, they just
want the money. So that said, even if you're going
to have an LLC, I am not suggesting that you
get rid of your umbrella or homeowner's insurance policies. In fact,
I'm stressing that you keep it because it's that insurance
company that's likely to hire the lawyer to help litigate
(34:29):
and mitigate the amount of money that the tenant wants.
And you don't care because you got to keep your
building and you weren't sued.
Speaker 2 (34:39):
And they don't want the building, they want the money.
Exact's why they're going to go out to the deep
pockets of the insurance company to keep that. For sure.
Speaker 3 (34:46):
Now I want to make a comment because that's a
general generalization. Really, you mentioned that it's a duplex here,
so I'm wondering if they live in half and rent half. Sure,
so let's comment on that either way. So if in
fact it's a general rental property, I love this whole
(35:07):
discussion we just had about LLCs. If it's a duplex
and you rent one unit and you live in the
other unit, then it's not so easy. Then then I
probably would not opt for putting it into the LLC
because I think when you put it into the LLC,
(35:29):
it becomes commercial property. And if it's commercial property, how
can it be your primary residence? And if it's if
you lose the fact that it's your primary residence and
you go to sell it, even if you were renting half,
you lose the capital gains exclusion on the other half,
(35:50):
which would be huge. Right, So if you're married and
there's a five hundred thousand dollars capital gains exclusion available
to you when you sell your primary residence, which of
course you have had to own and use as your
primary residence for two of the last five years. Yeah,
I don't know that I want to give that up. So,
if it's a rental and I'm living there. Even if
(36:14):
I sell it, half of the gain would be available
for my capital gains exclusion. The half that I'm renting
wouldn't be But you know I still want that half.
M So think about that. So lots to think about
when you're dealing with LLCs. At the end of the day, folks,
call get the guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
(36:37):
and learn how to leave your assets to your family.
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 Cushing and Dolan. I'm Susan Powers,
(37:01):
a financial advisor with the Armstrong Advisory Group. We'll be
right back with more on the legal exchange with Todd Letsky.
Speaker 1 (37:08):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to Beneficiaries and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(37:31):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight six six eight four eight five
six nine nine, or you can request it online from
(37:53):
our website Legal exchange show dot com. That's a Legal
exchange show dot com. The proceeding was paid for in
the US. Expressed are solely those of Krishmian Dolan, Krishinga,
Dolan in or Armstrong Advisory may contact you're offering legal
or investment services. Chrishiingan Dolan and Armstrong Advisory do not
endorse each other and are not affiliated consistently voted one
of the top Caribbean destinations. The United States Virgin Islands
(38:14):
is the perfect place for your next vacation. Whether you're
looking for romantic getaway, a long weekend with friends, or
a family vacation, Saint Croix, Saint Thomas, and Saint John
have everything you need to enjoy that special time away
from home. Take advantage of a variety of incredible promotions
that are available right now. Go to visit USVII dot
com slash promotions, where you'll find the details about all
(38:37):
of these amazing experiences, including a stay at the Divvy
Karina Bay all inclusive beach resort and casino on Saint Croix.
From the moment you arrive, you'll fall naturally in rhythm
with the heartbeat of the islands. There's no money to exchange,
and travel from New England could not be easier. Don't
miss your chance to enjoy America's Caribbean paradise, the United
States Virgin Islands. Head to visit USVII dot com SA
(39:00):
promotions from more information and to book your trip today.
That's visit USBI dot com slash promotions.
Speaker 6 (39:09):
This is Michael Valila, adged of the Disabled American Veterans
Department of Massachusetts. We focus on the people returning from service,
not their specific illness or injury. Our number one goal
is to make sure our veterans have the necessary services
they need, be it physical, emotional, or financial, so that
their transition can be seamless. You can help our great
(39:30):
American heroes as well by making a donation today by
visiting Dav five k dot Boston. That's dav five k
dot Boston.
Speaker 4 (39:39):
One of the keys to enjoying a peaceful retirement is
flexibility hi. This has chucks out of from the Armstrong
Advisory Group today. Retirement planning involves lots of possible changes
and challenges given all of the external factors that may
affect your goals, so creating a budget for your retirement
is vital to financial stability. Retirement comes with a number
of monetary considerations, from how much money you'll need every
(40:00):
month to managing your existing investments through market volatility. Our
new guide is called how to Build a Retirement Budget,
and it will offer a variety of options for your
consideration that may lessen your risks when it comes to
your planning. Call right now at eight hundred three nine
three for zero zero one and ask for our new
guide today. That's eight hundred three nine three for zero
zero one, or requested online from our website Armstrong Advisory
(40:23):
dot com. That's Armstrong Advisory dot com.
Speaker 1 (40:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. Your tune to the Legal Exchange with Todd Lutsky.
If you are a loved one needs a nursing homestay,
call Todd right now at eight sixty six eight four
(40:48):
eight five six nine nine and let him make sure
your assets are protected. That's eight sixty six eight for
eight five six nine nine, or visit him online at
Legal Exchange show dot com.
Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with a law firm of Cushing and Dolan with a
Master's in Taxation Todd. I was meeting with a couple
recently and we were doing some financial planning and figuring out,
(41:21):
you know, how much money they're going to have left
on the table when they both pass away, and they
were surprised by how large the amount was, and they
immediately started displaying concern for potential future divorces for one
of their children. And I'd ask the question if they
had done, you know, had the divorce proofing, if you will,
(41:44):
in with their estate plan, because they do have a
trust in place, and they didn't realize that that was
even a possibility to divorce proof their kid's future inheritance.
And I think there may be a lot of people
out there that don't realize. So how do you actually
accomplish divorce proofing?
Speaker 3 (42:02):
Soance Again, I can't stress enough the importance is what
you're saying here as well of not only doing your
trust planning, but but learning how the trust can live on.
Like I don't think they realized that the trust could
actually live on after you die. And I oftentimes explain
(42:24):
to a lot of my clients that that you know,
you're going to find that the trust does more for
you after you're gone sometimes than it does when you're living,
especially with a revocable trust. I mean, I might spend
an hour at the whiteboard with a client explaining all
the intricacies of the revocable trust and how it works,
and I'm like, guess what, Your life didn't change it all.
(42:46):
It's revocable, it's yours. Do what you want to do,
and at the end of the day you realize in
summary that, oh, this is pretty good. But most of
the explanation was what happens when one spouse dies, what
happens when the other spouse dies, and how does it
go and live on? So in this case, you would
still treat the kids equally, no problem, if that's their wish.
(43:07):
You're just divide it into equal buckets, and then you
can name a child as trustee. You know, I'm not
a fan of all kids serving as trustees, but you
could and they serve though as a general trustee, which
means what so they would be in charge. So let's
say in this case, I don't.
Speaker 2 (43:27):
Got two buckets.
Speaker 3 (43:28):
Let's say we've got two buckets and each bucket has
three million bucks in it. I don't know if they're
worth six million dollars. That would be three million in
each bucket. Whatever the number is, the concept is the same.
Speaker 2 (43:39):
Yeah.
Speaker 3 (43:40):
And so you know, even now, if there's only two kids,
you could put both kids on as trustees. What does
that mean general trustees, Well, they get to do ninety
nine percent of what they would do with those assets
as if they own them personally.
Speaker 2 (43:56):
So for example, making decisions about how to wind vass
things like that, would to buy in them.
Speaker 3 (44:01):
Yep, they could call you up and say, let's talk
about my investment portfolio. Yeah. Not only that, they could
call you and say liquidate. I'm buying a beach house
in Florida. Sure where inside the trust? Okay?
Speaker 2 (44:14):
So the trust would continue to be the owner.
Speaker 3 (44:16):
Right, And that's the key the ownership, Susan, Just like
you said it right, it's it's the trust owns these
two buckets, not the kids.
Speaker 2 (44:26):
So you could have both kids, or you would have
two trustees on each trust bucket.
Speaker 3 (44:30):
So there, Yeah, they could work together and they can't
rob Peter to pay Paul, So that's another piece that's
in there. They don't ever have to worry about one
kid reaching into the other kid's bucket and taking assets.
Speaker 2 (44:40):
So you create two separate buckets when the.
Speaker 3 (44:43):
Parents pass right inside the trust got it and so,
and they could be trustees over their own buckets if
you really wanted to draft it that way. Doesn't really matter.
But again I said, they're doing ninety nine percent of
the things right there.
Speaker 2 (44:57):
So there's one percent they're not doing.
Speaker 3 (45:00):
Yeah, they're investing, they're buying and selling properties, rental properties.
They just can't reach in and make a withdrawal from
their account and give it to themself or their kids. Okay,
but I'm going to explain how they can do that
in a minute. But folks, this idea that we're talking
(45:21):
about right here, how to leave your assets to your beneficiaries,
is exactly what's in the guide. There's an example like
this one in the guide for divorce proofing that also
leads to generations skipping tax planning. It's a tremendous way
of getting the assets to your kids controlling it without
really causing them any grief. They can still enjoy use
(45:45):
and have it protected from creditors and get to a
generation below tax free. Many other examples of how to
leave assets are in this guide to your children, Learn
what's best for you and your estate planning needs. Get
the guide eight six six eight four eight five six
ninety nine or legal Exchange show dot com again eight
(46:07):
six six eight four eight five six ninety nine or
Legal Exchange Show dot com to get how to leave
your assets to your beneficiaries so.
Speaker 2 (46:16):
They can't reach into their own buckets and pull principle out.
Then who actually decides whether a distribution is okay for them?
Speaker 3 (46:24):
Yeah, and so that's where you start to again delve
into the drafting of the document. How much ConTroll do
we want to give the kids? So let's lean on
the idea of lots of power, lots of control. And
I like that until a client reels me in and says, no,
I want to make it less. Yeah, that's up to
(46:45):
the client. So let's start with great power. Now what
is that great power? They have the ability to pick
an independent trustee.
Speaker 2 (46:56):
And who is that?
Speaker 3 (46:56):
Typically, so, an independent trustee is defined as some not
related or subordinate tokay, the family, an accountant, a lawyer.
I mean, you could do a trust company. I mean,
but I like to stay with the licensed people because
they understand the dynamics of the trust right. And so
(47:19):
let's say for fun that they picked me, you be
the independent trustee. Well, it's the great power piece that
we want to remind you of here. Not only are
the kids given the power to appoint me, they also
should be given the power to remove me any time
(47:42):
for any reason. In that way, there's what no risk
to them? When I say no risk to them? What
no risk of them not being able to get the
assets because I'm a curmudgeon trustee and never give it
to them?
Speaker 2 (47:56):
What do they do if they can't you? If you
say don't say it's.
Speaker 3 (47:59):
Okay, they remove me, Absolutely, you're out. Remember, no reason needed. Okay. So,
now now that we know what their great power is,
what are they what are they doing? Well, they're going
to say, Todd, we need an independent trustee because the
one percent, the one thing that they can't do would
(48:19):
be the one thing that I can do. And the
one thing that the independent trustee does is say yes
or no to distribution requests by the beneficiaries.
Speaker 2 (48:31):
For the future ex or the grandchildren.
Speaker 3 (48:35):
So let's play out that strength.
Speaker 2 (48:38):
Yeah.
Speaker 3 (48:38):
So now life goes on, and you know, let's say
Billy says, you know, I'd like to take some money
out because we're buying a family car and he's happily married,
or we're taking a family vacation that's fine, or the
kids going to prep school or college or whatever the
case might be. They ask, yeah, I get to say
(49:02):
yes or no. That's my job. I get one job
and so and I don't have to give a reason
to say yes or no. So I go along and
I say yes lots. And then life goes on, and
let's say ten years after you're dead, the three million
has doubled to six, even though they've been taking money
(49:24):
out and enjoying it and the grandkids have enjoying it.
And then the divorce comes, and then the other side says,
I want three million of the six because half, you know,
we get half. That's how it works. And that's when
Billy says, great idea. But ask Todd, Oh right right,
that's the problem. Right, But I think we go it's
(49:46):
even better, Susan. We go back to your point, which
was ownership. Forget the fact that I have discretion to
say yes or no, which of course is very important
in protection. The other side of the coin would be
he doesn't own it, right, If he's never owned it,
it's not a marital asset to begin with, I simply
(50:08):
tell the other lawyer it's not even subject to the divorce.
Only marital assets are subject to the divorce. Oh good folks.
This kind of arrangement is amazing not only for credit
or protection, but it also can be used for generation
skipping tax planning. Call and get the guide how to
(50:29):
Leave your Assets to your Beneficiaries For existing estate planners
and for planners that are just beginning. There's something in
here for you eight sixty six eight four eight five
six ninety nine or Legal Exchange show dot com.
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):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called How to
Leave Assets to Beneficiaries and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(51:23):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from
(51:45):
our website 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 int or Armstrong Advisory may contact your offering
legal or investment services. Cushing and Dolan and Armstrong Advisory
do not endorse each other and are not a fit.
Speaker 5 (52:00):
The breadth of the stock market sell off in recent
days hasn't been seen since the early days of the pandemic,
and while it's easy to say, don't panic if you're
concerned about your portfolio given the impact of these teriffs,
Now's the time to have that conversation. Hi, this is
Mike Armstrong from the Armstrong Advisory Group. If the market
correction has you anxious or worse rattled, give us a
call at eight hundred three nine three four zero zero one.
(52:21):
Let's get together and talk through your financial strategy, evaluate
at strengths and weaknesses, and make decisions for the future
that are in your best interest. These are challenging times,
but we've dealt with them before and are prepared to
deal with them again. Our goal is to help you
protect the assets that you've worked so hard to attain.
You can give us a call at eight hundred three
nine three four zero zero one and request a no
obligation consultation. That number again is eight hundred three nine
(52:44):
three four zero zero one.
Speaker 1 (52:46):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory soervices consistently voted one of the top Caribbean destinations.
The United States Virgin Islands is the perfect place for
(53:07):
your next vacation. Whether you're looking for romantic getaway, a
long weekend with friends, or a family vacation, Saint Croix,
Saint Thomas, and Saint John have everything you need to
enjoy that special time away from home. Take advantage of
a variety of incredible promotions that are available right now.
Go to visit usvii dot com slash promotions, where you'll
find the details about all of these amazing experiences, including
(53:30):
a stay at the Divvy Karina Bay all inclusive beach
resort and casino on Saint Croix. From the moment you arrive,
you'll fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Don't miss your chance to enjoy
America's Caribbean paradise, the United States Virgin Islands. Head to
visit USVII dot com slash promotions from more information and
(53:53):
to book your trip today. That's visit USVII dot com
slash Promotions
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 (00:36):
Welcome into the Legal Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor 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 (00:51):
I am never better in you?
Speaker 2 (00:52):
I am great? Thank you? What do you have for
us this week?
Speaker 3 (00:55):
Got a couple of things. We've got a Pennsylvania Uppellate
Court basically gonna show us how how poorly drafted Medicaid
trusts that basically fail to protect the house from a
nursing home because it's so poorly drafted. And then the
family discovered it and they decided they would terminate to
trust and start over. But the court didn't like that
(01:18):
idea too much. So we're gonna have to take a
look at this and show you, obviously how to fix
it and how not to run into this problem. But
I thought a whole lesson about drafting is so darn important.
I think we'll learn that from that case. Then we
have an Alabama Supreme Court case where, you know, we
have a situation where basically a will is created in
(01:42):
twenty eleven, then another will is created in twenty twenty,
naming step step granddaughter and step granddaughter's husband as beneficiaries
instead of I guess daughter Beatrice in the beginning. Well,
she died three weeks later and that didn't go over
so well. So we're going to see what happens here.
(02:02):
This is really an undue influenced case and a lack
of capacity case, and you're going to see how a
will is really a won't but it still can do
things for you. So it's better to have it than not.
So lots to learn about here and again even this one, right,
it comes down to who do you really want your
assets to go to? And folks, that's what our guide
(02:22):
this month is about. It really does offer I don't
know countless numbers of ways to leave your assets. If
you have a special needs child, if you've got children
that are bad with money, if you're concerned about divorces,
if you're concerned about generation skipping taxes, if you want
(02:42):
to just leave your assets outright. I mean, there's so
many things to think about when someone passes that the
trust can live on and do more than just avoid
probate and reduce taxes, which are certainly important, but the
family behind the estate plan could really matter. And so
if you've never done your planning, get the guide and
learn how you might want to leave assets to children
(03:05):
or family. And if you've already done it, get it
because I think you might figure out that there's other
things you can do if your life events or family
events have changed. Eight six six eight four eight five
six ninety nine or legal exchange show dot com to
get how to leave your assets to beneficiaries eight six
six eight, four, eight, five, six, nine nine, or Legal
(03:29):
Exchange show dot com. So here we go, Pennsylvania Appellate
Cord case. So Don and Marjorie Patterson established an irrevocable
trust in twenty eleven. They were the lifetime beneficiaries and
their daughter was the trustee. So far sounds great, right,
(03:49):
and the two grandkids were contingent beneficiaries. Still okay. The
home was the only asset really transferred to the trust.
Still okay, here's the problem. The trust provided that the
trustee could pay could provide income and support for the
Petersons and the grandkids, not the daughter, but and the grandkids,
(04:15):
including for the Peterson's health care expenses.
Speaker 2 (04:19):
Oh not so good.
Speaker 3 (04:20):
Yeah, so that's a concern. Bad language, right, So the
Petersons filed a petition to terminate the trust on January sixteenth,
twenty twenty four. They did this in twenty eleven. All right,
so because it violates the state guidelines right to protect
the home. In essence, it will not protect the home,
(04:43):
and that was the primary intent when they created the trust.
The problem here is that the trust provides that distributions
can be made for the Patterson's benefit, and specifically for
health related expenses makes the asset clearly available for the
(05:03):
nursing home. So I agree with their determination that this
is not going to protect it from the nursing home.
So they want to terminate it. I get it. Now.
Most of these cases don't have termination clauses in it.
Most of these trusts don't have that, and there's reasons
for it, and we'll talk about it. Yeah, So the
(05:25):
probate court and the appellate court. The probate court first
believed that it was like a life estate for them
and then the grandkids. I don't really see that, but okay.
The appellate court agreed that the trust was clearly designed
to provide them income and support for their health care,
(05:49):
and therefore it was not an unanticipated circumstance that they
would not get Medicaid. So the way the appellate court
read it says, look, you draft it specifically to take
care of your health care. So if you drafted it
that way, then this is not an unanticipated event that
(06:10):
it would not protect it from the nursing home. So
therefore we're not going to let you terminate the trust.
That's the court said. So this is a case of
first impression by the way, for this court. So I'm like, wow, yeah,
and I listened to this, and I'm a little taken aback. Now,
let me give you an example. A CUPER to qualified
(06:30):
personal residence trust you could set up years ago to
try and get a house out of an estate. You
put it in a trust, and if you live beyond
a certain term of the trust, say five years or
say ten years, then the house is out of the estate.
Usually it's ten years or longer. Then the house is
out of the estate. Well over that ten year period,
(06:51):
if estate tax exemptions shoot up like they have in
the past, well then the need to get the house
out of the estate to save a state tax is
no longer exists. So you can petition the court to
terminate the trust because the purpose of the trust to
reduce the state taxes no longer exists. And that's not
(07:12):
an unanticipated event. You could not have known that the
tax laws would change the way they changed to benefit
the tax payer, and therefore the court would likely undo
the q PURT. In fact, we've undone q perts in
the past, and we've helped clients, you know now get
(07:33):
the house back in the estate. So when they pass
it'll get a step up in basis and not cause
a tax problem. In this case, that's not that's the problem.
They said, you didn't this was not unanticipated. You drafted
it poorly. So what do we learn, folks?
Speaker 1 (07:47):
Right?
Speaker 3 (07:48):
The simple solution is, please draft the language properly. Right,
there must always be language in the trust that absolutely
prohibits the distribution of principle to the owners, the creators
of the trust. That is the language that protects the
assets from the nursing home after five years. Note this
(08:08):
trust existed way longer than five years, longer it could
have been protected. Why they waited from twenty eleven to
twenty twenty four to discover this problem, I don't know.
But again that goes back to the court saying, probably
because you know you drafted it the way you thought
you wanted it drafted right to take care of you,
(08:29):
and that's why they didn't terminate it. Now. Also, I
can mention that there's not a lot of we don't
usually put termination clauses in the medicaid trust. There was
a Doherty case here in Massachusetts where they had a
termination clause left in a trust that said, oh, even
though there's no access to principle. The termination clause said
that the trustee can terminate the trust and distribute the
(08:51):
asset out to the beneficiaries. Well that's a problem, right
if you don't.
Speaker 2 (08:54):
Define income beneficiary.
Speaker 3 (08:56):
Right, If you were just an income beneficiary and that
and it could only go to the remainder beneficiaries, that's okay.
But if you have a paragraph that says you can
terminate it and give it to all beneficiaries, well that's
a problem, right, because then it can go back to
the person who's in the nursing home. Right, However, there
should I'm a little confused as to why there wasn't
any paragraphs in this trust. Well I'm confused with why
(09:19):
there wasn't a lot of paragraphs in this trust. But
you know, normally there's a paragraph that allows you to
make transfers out to children and grandchildren. Like what if
kids are going to college or grandkids are going to
college and you want to make a gift to them
out of the trust. You should be able to do that, right.
Speaker 2 (09:34):
Which would include a house, would.
Speaker 3 (09:36):
Include anything you want. And there's no obligation here for
a child to once you give it to them. I
get it all bets are off and that's why you
can do this. But if you did this, maybe they
could have just undone the trust and started over and
not even gone to court. Folks, at the end of
the day, this lesson is about making sure your trusts
are drafted properly. But I'm sure this trust also had
(09:57):
language going to the you know, wanted to take care
of the grand kids. This one was designed to skip
a generation. Remember it was to take care of the
grandkids after mom, after the grandparents passed. Learn how best
to leave your assets to your kids. Get the guide
eight six six eight four eight five six nine nine
or Legal Exchange show dot com.
Speaker 2 (10:17):
You've been listening to Todd Lutsky, a partner with the
law firm of Cushing and Dolan. I'm Susan Power as
a financial advisor with the Armstrong Advisory Group. We've got
much more to come when we return to the Legal
Exchange with Todd Lutsky.
Speaker 1 (10:31):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to Beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(10:54):
the road. Call Cushing and Dolan right now at eight
six six eight four eight five six nine nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight six six eight four eight five
six nine nine, or you can request it online from
(11:16):
our website Legal exchange show dot com. That's legal exchange
show dot com. The proceeding was paid for in The
views expressed are solely those of Kushigan Dolan. Kushing Dolan
in or Armstrong Advisory may contact you're offering legal or
investment services. Kushingan Dolan and Armstrong Advisory do not endorse
each other and are not affiliated. Consistently voted one of
the top Caribbean destinations the United States, Virgin Islands is
(11:37):
the perfect place for your next vacation. Whether you're looking
for romantic getaway, a long weekend with friends, or a
family vacation, Saint Croix, Saint Thomas, and Saint John have
everything you need to enjoy that special time away from home.
Take advantage of a variety of incredible promotions that are
available right now. Go to visit usvii dot com slash promotions,
(11:57):
where you'll find the details about all of these amazing experiences,
including a stay at the Divvy Karina Bay all inclusive
beach resort and casino on Saint Croix. From the moment
you arrived, you'll fall naturally in rhythm with the heartbeat
of the islands. There's no money to exchange, and travel
from New England could not be easier. Don't miss your
chance to enjoy America's Caribbean paradise the United States Virgin Islands.
(12:20):
Had to visit USVII dot com slash promotions from more
information and to book your trip today. That's visit USVII
dot com slash promotions.
Speaker 4 (12:31):
One of the keys to enjoying a peaceful retirement is flexibility.
Speaker 3 (12:35):
Hi.
Speaker 4 (12:35):
This is Chuck's outa from the Armstrong Advisory Group Today.
Retirement planning involves lots of possible changes and challenges given
all of the external factors that may affect your goals,
so creating a budget for your retirement is vital to
financial stability. Retirement comes with a number of monetary considerations,
from how much money you'll need every month to managing
your existing investments through market volatility. Our new guide is
(12:56):
called how to Build a Retirement Budget, and it will
offer a variety of options for your consideration that may
lessen your risks when it comes to your planning. Call
right now at eight hundred thirty nine three for zero
zero one and ask for our new guide today. That's
eight hundred three nine three for zero zero one, or
requested online from our website Armstrong Advisory dot com. That's
(13:16):
Armstrong Advisory dot com.
Speaker 1 (13:18):
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 Lutsky,
an expert in elder life planning and taxation. Need help
(13:38):
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an appointment. Eight six six eight four eight five six
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Speaker 2 (13:47):
Welcome back into the legal exchange with Todd Letsky. 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.
Where are we headed now, Chod, We're.
Speaker 3 (14:02):
Going to go to the Alabama Supreme Court. Listen to
this case. This is a combination of testamentary capacity and
undue influence. So Nancy did a will in twenty eleven
naming her sister the PR and devised the home and
the remaining residue of the estate to Beatrice, which is
(14:26):
her sister, so she must have I'm guessing she didn't
have any children of her own, which we'll learn here
in a minute, because in twenty twenty, Nancy executed a
new will, naming step granddaughter Meghan and as PR and
devising the home and the residue to Megan. And her husband,
(14:49):
Joe C. Because there's a Joe em coming.
Speaker 2 (14:52):
Up, so that's a little suspect.
Speaker 3 (14:54):
Yeah, And the end, they went ahead and they actually
executed a deed conveying the home out right to Megan
and Joe C. Well, facts get better. Turns out that Megan,
Joe C and their kids had been living with Nancy
for about five months and three weeks after she did
(15:19):
executing the new will and the deed, she died five months.
They're living there three weeks before death. All this happens
to me, that's a problem. Yeah, Well, Joe M who
is Beatrice's son in law, so that would be Beatrice
who's the sister's kid's spouse. Just to play out that
(15:41):
string a little bit, brings this action to admit the
two thousand will and void the twenty twenty will and
the deed due to undue influence seems spot on to me. Well,
the parties apparently the case doesn't tell you this, but
the parties just worked it out and they agreed that
(16:01):
the twenty twenty will would be would be probated. I
don't know if they couldn't prove undue influence or whatever.
And they agreed that Megan would be the pr who's
the step granddaughter. Huh. Well, Joe M. Files decides to
file to have the twenty twenty will. This is later
(16:23):
Joe M files to have the twenty twenty will indeed
invalidated due to lack of testamentary capacity. Second second try,
try at the apple, and the twenty eleven will should
be probated in its place, which of course leaves everything
to Beatrice, which somehow finds its way to Beatrice Kids
(16:43):
or something. Joe C and Meghan and the step grandkids
file a motion to dismiss Well. The court found that
the twenty twenty deed and will not to be valid,
not surprised, and that the step kids decided to appeal.
(17:04):
There was no dispute that Nancy was cognitively impaired during
the final weeks of her life, diagnosed with dementia and
failure to thrive and things like that. Yep. But there
turned out to be conflicting evidence regarding the testamentary capacity.
So it's up to the jury really to decide and
judge the credibility of the witnesses, etc. And determining this,
(17:26):
and they concluded that she in fact did lack testamentary
capacity to make the will, and the Supreme Court agreed,
because they appealed again, of course, and the Supreme Court
agreed and affirm the case. So I think it's the
right decision, and we're going to learn a little bit
about what was done here. When I say what was
done here, there was only a will done here. Sometimes
(17:48):
a will is better than nothing, folks. But I can
tell you how you decide to leave your assets to
your beneficiaries, which is the name of our guide this
month is very important because the will in this case
saved their intent and if you want your intent honored,
get the guide. If you've never done your planning, this
will help you figure out how to leave your assets,
(18:11):
and if you've done it, it might give you some
ideas on how to change if your life events have changed.
And it gives numerous examples of how to do that,
from staggered distributions to special needs children to divorce proofing
it for creditors. Whatever's right for you, it's here. Get
the Guide eight six six eight four eight five six
(18:34):
nine nine or Legal Exchange Show dot com again eight
six six eight four eight five six nine nine or
Legal Exchange Show dot Com well, what can we learn
from this again, let's start with the with the planning
that was done. It was a will, you know me,
(18:54):
a will's a won't and it's still a won't. It
won't avoid probated didn't hear. It's not going to reduce
to state taxes and again she was single, maybe there
was no way to do it with a trust anyway,
but it won't reduce the state taxes. And of course
it won't protect assets from the nursing home if that's
a concern of yours. But you know, at least the
will does direct where your assets go when you die,
(19:16):
and you're not stuck with the intestate succession stature and
if you go to the probate court and you have
to go through these headaches. At the end of the day,
as we learned here, your assets, your wishes can be
followed and your assets will go where you're really wanted
them to gop. So obviously one of the lessons from
this case is don't procrastinate, don't try to do things
(19:39):
last minute. And I don't think she did. I think
they she was deleted it for her. So in this
case also, drafting is important, right, This was step grandkids
and step kids that were involved here. So remember it's
very important when you draft a document. And maybe they
(20:02):
did this, maybe they informed you know, the attorney. But
you can't just draft documents that say I leave things
equally to children, issue descendants. Those are words that have
meaning terms of art, and they capture people like children, grandchildren,
great grandchildren, great great grandchild, adopted on and on on. Well,
(20:25):
adopted children have to be drafted to be included. But yes,
generally in a definition section, we adopted children are included
in that term of art. But you have to draft
that into your document. The term of art by itself
would not capture an adopted child, but if it's drafted in,
it would. But in this case, a lot of times
(20:45):
no step grandkids would not fit. That's the whole point here.
They would not be captured by those definitional terms, So
you need to make sure you draft it to include
them as children or specific list them as beneficiaries, which
is what they did here, right.
Speaker 2 (21:04):
I would think Todd that you have more or a
lesser chance of people contesting things if you do a
trust rather than a will. Would that be an accurate statement?
Speaker 3 (21:15):
I don't know if it's less. I mean, anybody can
contest any time, right, So I don't know if it's less,
but I think it goes to it being harder to
perhaps win when you've taken these extra steps to do
the planning.
Speaker 2 (21:29):
You could put it in a contest clause.
Speaker 3 (21:31):
Put them everywhere, both in the will, in the trust.
That is the key to what you're saying to preventing
the litigation. Now, let's just explore undoe influence a minute. Right,
In this case, it certainly seemed like we had it.
They're living there, they probably took her to the lawyer.
They probably told the lawyer what they want. I mean,
(21:53):
I mean, you think the lawyer would have seen that this.
It certainly looked like it because they did everything, and
at the end of the day, the people who helped
her get that will drafted ended up being the only beneficiaries.
That's classic under influence. So I don't know why they
didn't win that case. But again, I think it's important
to understand the difference between testamentary capacity and contractual capacity,
(22:16):
because their second bite at the apple was okay, if
we don't win under undue influence. She lacked capacity, and
even though she was diagnosed with failure to thrive and
early dementias. I think what they called it, that doesn't
mean that you can't do a will. So for all
of you listening out there, if you have people that
are in that situation and you think that they can't plan,
(22:40):
it might still be okay, okay, And so in this case,
you know, get asked questions. The lawyer needs to ask questions,
simple questions like how many children do you have? You know,
do you know where they live? How many grandchildren do
you have, how many of your daughters. If they can
rattle these things off, then they kind of oh the
nature of their bounty and that would mean okay for
(23:03):
testamentary capacity, but perhaps not contractual capacity. So, folks, this
was a prime example a will at least directed where
their assets went when they died, and it was honored.
If you want your wishes to be honored, get the
guide and learn when you're doing your estate planning how
to leave your assets to your family. There's so many
(23:23):
ways to protect it even after you're gone. Eight six
six eight four eight five six nine nine or Legal
Exchange show dot com.
Speaker 2 (23:32):
You've been listening to Todd Lutsky, a partner with a
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group, and Todd will
be answering your listener questions when we return to the
legal exchange with Todd Lutsky.
Speaker 1 (23:48):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called How to
Leave Assets to Beneficiaries, and it can help make your
planning process smooth and easy. Leaving your assets to your children,
isn't it as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(24:11):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from
(24:33):
our website Legal Exchange show dot com. That's the 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're
offering legal or investment services. Cushing and Dolan and Armstrong
Advisory do not endorse each other and are not affiliated.
Speaker 5 (24:49):
The breadth of the stock market sell off in recent
days hasn't been seen since the early days of the pandemic.
And while it's easy to say don't panic if you're
concerned about your portfolio, given the impact of these TIFFs,
now's the time to have that conversation. Hi, this is
Mike Armstrong from the Armstrong Advisory Group. If the market
correction has you anxious or worse rattled, give us a
call at eight hundred three nine three four zero zero one.
(25:10):
Let's get together and talk through your financial strategy, evaluate
at strengths and weaknesses, and make decisions for the future
that are in your best interest. These are challenging times,
but we've dealt with them before and are prepared to
deal with them again. Our goal is to help you
protect the assets that you've worked so hard to attain.
You can give us a call at eight hundred three
nine three four zero zero one and request a no
obligation consultation. That number again is eight hundred three nine
(25:33):
three four zero zero one.
Speaker 1 (25:35):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory services. Consistently voted one of the top Caribbean destinations
the United States, Virgin Islands is the perfect place for
(25:57):
your next vacation. Whether you're looking for romance to get away,
a long weekend with friends, or a family vacation. Saint Croix,
Saint Thomas, and Saint John have everything you need to
enjoy that special time away from home. Take advantage of
a variety of incredible promotions that are available right now.
Go to visit USVII dot com slash promotions, where you'll
find the details about all of these amazing experiences, including
(26:21):
a stay at the Divvy Karina Bay, all inclusive Beach
Resort and Casino on Saint Croix. From the moment you arrive,
you'll fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Don't miss your chance to enjoy
America's Caribbean paradise the United States Virgin Islands. Head to
visit USVII dot com slash promotions for more information and
(26:43):
to book your trip today. That's visit USVII dot com
slash promotions. You're listening to the Legal Exchange, and it's
time for Ask Todd, the segment where Todd will answer
your questions about anything and everything that's suited in the
estate planning process. Once again, here's Todd Lutsky and Susan Powers,
(27:07):
welcome back talk.
Speaker 2 (27:08):
We have a few questions from listeners for you. First
question comes from Harry in Agawa, mass And Harry writes,
my wife and I have a total net worth of
about three and a half million. One million is in
our home, five hundred thousand in savings and two million
in our IRA investments. Can we qualify for an irrevocable
(27:28):
trust to shield our assets from a nursing home. I
would want to make sure we protected the two million
in IRA investments for our son and daughter. I am seventy,
my wife is sixty nine, and we are in good health.
Speaker 3 (27:42):
Wow, this is not an easy one.
Speaker 2 (27:44):
But he gave you all the details this time.
Speaker 3 (27:45):
Yeah, he did. But so folks, when we meet clients,
and this is exactly why we spend time with them
in the beginning, to learn about their assets, about their
family dynamics, to help them determine which ways the right
way to go. So when you look at three and
a half million, they have about one point five million
(28:06):
of assets between the home and money.
Speaker 2 (28:08):
Yep.
Speaker 3 (28:09):
That is what we like to call protectable from the
cost of long term care.
Speaker 2 (28:16):
So they could essentially transfer those assets into an arevable.
Speaker 3 (28:20):
Task and that's one of the things they're asking about, right.
But they went on to say that they really want
to protect the IRA. So the IRA is is an
asset that you can't you can't move into a trust
today without incurring a huge income tax hit.
Speaker 2 (28:39):
Because you'd have to first withdraw it, pay the taxes
the net.
Speaker 3 (28:44):
Yeah, into the trust. See, So that that to me,
I mean if I took two million dollars out of
an ir IRA I got to give. You know, at
least forty thirty five federal and state figure thirty five
to forty percent would go in taxes. So that's what
eight hundred thousand dollars.
Speaker 2 (29:02):
Eight hundred thousand versus you know, if they end up
getting to the point where they need to go into
a nursing home, if they have two million, now I mean,
let's say it's three by the time they have to
go into a nursing home, they could essentially self ensure.
Speaker 3 (29:17):
They could be self pay if it's grown, and if
they're you know, that's the thing. So you got to
run the numbers here, and you got to say, you
know what, though I don't think this is a negative answer,
I think for them, I would still go out of
my way to protect a one point five Why not
if I'm going to do a trust anyway, it's close
enough here that that if I'm going to do a
revocable trust that will avoid probate, reduce my death taxes
(29:41):
for the state, and provide a bloodline plan for my
family as to who gets at how and when, why
not just do the irrevocable and get all of that
and add nursing home protection for at least some of
my assets. I say that because of two reasons. One,
you're going to live off your era anyway. Two maybe
(30:02):
it'll grow, maybe it won't. I don't know, but either way,
there's things that can be done last minute to protect
assets when one gets sick and goes in a nursing home.
So we'll deal with that when the time comes. And
the other thing is, not only might it come down
if you're living off of it, but we would always
also add the testamentary trust to make the beneficiary the
(30:26):
estate once they're seventy three, they're not there yet. And
that way, if one just died and never went to
the nursing home, that person's that decedent's IRA could be
held in the testamentary trust, immediately protected from the nursing
home in the event the surviving spouse gets sick, yet
(30:47):
available to the surviving spouse if the surviving spouse doesn't
get sick right and needs it to live on. So
it's really a great It offers another opportunity to protect
something that you can can't in advance anyway. So this
is a tougher case, I think all the way around.
But I think if you walk through it combination of
(31:08):
potentially being self insured, as you said, Susan, these assets
could grow and you could generate enough income coupled with
social Security to pay. But if I've got the trust
in place, you know what, I'm happy because I've taken
some things off the table and I've provided myself with
some options to protect the rest later on with that
idea of the testamentary trust. So great case, but again
(31:32):
one that requires some attention, and folks, your overall estate
plan might require some attention. And again, to me, the
most important part here in this example was they wanted
to protect things for their family. Well, if you do,
you need to learn how best to do that. Sometimes
leaving assets outright to children is not the best bet
protecting them from future creditors, divorces, and perhaps generations. Skipping
(31:57):
taxes without causing any harm your children at all might
be a great way to do it. Or maybe you've
got a special needs kid. There's so many ways to
think about leaving assets to children. Call and get the
guide how to Leave Assets to Beneficiaries eight six six
eight four eight five six nine nine or Legal Exchange
(32:18):
Show dot Com again eight six six eight four eight,
five six nine nine or Legal Exchange show dot com.
Speaker 2 (32:26):
Our last question comes from Ruth in North Kingstown, Rhode Island.
Ruth rights, My husband and I own our rental duplex jointly.
Should we get an LLC for it? What are the benefits?
Will this make it more difficult for our daughter to
inherit when we when we pass away.
Speaker 3 (32:43):
Yeah, So this is a great question, really completely different
than the one we just talked about. I mean, this
is what makes what I think my job so fun
is that that every day is always different situation. So
when you have an LLC, I'm going to just say
a general rule. Yeah, I'd consider an LLC as a
general rule. At least start there. Yeah for a rental,
(33:06):
I'm sorry, for a rental, at least start there, right.
And so the reason you I don't know what the
rest of their assets are, but when you have a rental,
you might have a home, you might have a vacation home,
you might have other investment portfolios. So there could be
a lot of other assets here. And if you have
(33:26):
a rental and you're worried about getting sued because tenants
that's what they do. They do that and so if
you have it in your own name, then it is
going to be sued personally. They're going to sue you personally,
So that means all your other assets could be at
(33:46):
risk for that lawsuit exactly. That that vacation home, that
that investment portfolio, it's all going to be available. Whereas
if you put it in an LLC, then the tenant
can only sue the company, not you personally, and can
really only get the item in that LLC. And most
(34:07):
of the time they don't want the building, they just
want the money. So that said, even if you're going
to have an LLC, I am not suggesting that you
get rid of your umbrella or homeowner's insurance policies. In fact,
I'm stressing that you keep it because it's that insurance
company that's likely to hire the lawyer to help litigate
(34:29):
and mitigate the amount of money that the tenant wants.
And you don't care because you got to keep your
building and you weren't sued.
Speaker 2 (34:39):
And they don't want the building, they want the money.
Exact's why they're going to go out to the deep
pockets of the insurance company to keep that. For sure.
Speaker 3 (34:46):
Now I want to make a comment because that's a
general generalization. Really, you mentioned that it's a duplex here,
so I'm wondering if they live in half and rent half. Sure,
so let's comment on that either way. So if in
fact it's a general rental property, I love this whole
(35:07):
discussion we just had about LLCs. If it's a duplex
and you rent one unit and you live in the
other unit, then it's not so easy. Then then I
probably would not opt for putting it into the LLC
because I think when you put it into the LLC,
(35:29):
it becomes commercial property. And if it's commercial property, how
can it be your primary residence? And if it's if
you lose the fact that it's your primary residence and
you go to sell it, even if you were renting half,
you lose the capital gains exclusion on the other half,
(35:50):
which would be huge. Right, So if you're married and
there's a five hundred thousand dollars capital gains exclusion available
to you when you sell your primary residence, which of
course you have had to own and use as your
primary residence for two of the last five years. Yeah,
I don't know that I want to give that up. So,
if it's a rental and I'm living there. Even if
(36:14):
I sell it, half of the gain would be available
for my capital gains exclusion. The half that I'm renting
wouldn't be But you know I still want that half.
M So think about that. So lots to think about
when you're dealing with LLCs. At the end of the day, folks,
call get the guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com
(36:37):
and learn how to leave your assets to your family.
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 Cushing and Dolan. I'm Susan Powers,
(37:01):
a financial advisor with the Armstrong Advisory Group. We'll be
right back with more on the legal exchange with Todd Letsky.
Speaker 1 (37:08):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called how to
Leave Assets to Beneficiaries and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(37:31):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight six six eight four eight five
six nine nine, or you can request it online from
(37:53):
our website Legal exchange show dot com. That's a Legal
exchange show dot com. The proceeding was paid for in
the US. Expressed are solely those of Krishmian Dolan, Krishinga,
Dolan in or Armstrong Advisory may contact you're offering legal
or investment services. Chrishiingan Dolan and Armstrong Advisory do not
endorse each other and are not affiliated consistently voted one
of the top Caribbean destinations. The United States Virgin Islands
(38:14):
is the perfect place for your next vacation. Whether you're
looking for romantic getaway, a long weekend with friends, or
a family vacation, Saint Croix, Saint Thomas, and Saint John
have everything you need to enjoy that special time away
from home. Take advantage of a variety of incredible promotions
that are available right now. Go to visit USVII dot
com slash promotions, where you'll find the details about all
(38:37):
of these amazing experiences, including a stay at the Divvy
Karina Bay all inclusive beach resort and casino on Saint Croix.
From the moment you arrive, you'll fall naturally in rhythm
with the heartbeat of the islands. There's no money to exchange,
and travel from New England could not be easier. Don't
miss your chance to enjoy America's Caribbean paradise, the United
States Virgin Islands. Head to visit USVII dot com SA
(39:00):
promotions from more information and to book your trip today.
That's visit USBI dot com slash promotions.
Speaker 6 (39:09):
This is Michael Valila, adged of the Disabled American Veterans
Department of Massachusetts. We focus on the people returning from service,
not their specific illness or injury. Our number one goal
is to make sure our veterans have the necessary services
they need, be it physical, emotional, or financial, so that
their transition can be seamless. You can help our great
(39:30):
American heroes as well by making a donation today by
visiting Dav five k dot Boston. That's dav five k
dot Boston.
Speaker 4 (39:39):
One of the keys to enjoying a peaceful retirement is
flexibility hi. This has chucks out of from the Armstrong
Advisory Group today. Retirement planning involves lots of possible changes
and challenges given all of the external factors that may
affect your goals, so creating a budget for your retirement
is vital to financial stability. Retirement comes with a number
of monetary considerations, from how much money you'll need every
(40:00):
month to managing your existing investments through market volatility. Our
new guide is called how to Build a Retirement Budget,
and it will offer a variety of options for your
consideration that may lessen your risks when it comes to
your planning. Call right now at eight hundred three nine
three for zero zero one and ask for our new
guide today. That's eight hundred three nine three for zero
zero one, or requested online from our website Armstrong Advisory
(40:23):
dot com. That's Armstrong Advisory dot com.
Speaker 1 (40:26):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. Your tune to the Legal Exchange with Todd Lutsky.
If you are a loved one needs a nursing homestay,
call Todd right now at eight sixty six eight four
(40:48):
eight five six nine nine and let him make sure
your assets are protected. That's eight sixty six eight for
eight five six nine nine, or visit him online at
Legal Exchange show dot com.
Speaker 2 (41:00):
Welcome back into the Legal Exchange with Todd Lutsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined, of course by Todd Lutsky, a partner
with a law firm of Cushing and Dolan with a
Master's in Taxation Todd. I was meeting with a couple
recently and we were doing some financial planning and figuring out,
(41:21):
you know, how much money they're going to have left
on the table when they both pass away, and they
were surprised by how large the amount was, and they
immediately started displaying concern for potential future divorces for one
of their children. And I'd ask the question if they
had done, you know, had the divorce proofing, if you will,
(41:44):
in with their estate plan, because they do have a
trust in place, and they didn't realize that that was
even a possibility to divorce proof their kid's future inheritance.
And I think there may be a lot of people
out there that don't realize. So how do you actually
accomplish divorce proofing?
Speaker 3 (42:02):
Soance Again, I can't stress enough the importance is what
you're saying here as well of not only doing your
trust planning, but but learning how the trust can live on.
Like I don't think they realized that the trust could
actually live on after you die. And I oftentimes explain
(42:24):
to a lot of my clients that that you know,
you're going to find that the trust does more for
you after you're gone sometimes than it does when you're living,
especially with a revocable trust. I mean, I might spend
an hour at the whiteboard with a client explaining all
the intricacies of the revocable trust and how it works,
and I'm like, guess what, Your life didn't change it all.
(42:46):
It's revocable, it's yours. Do what you want to do,
and at the end of the day you realize in
summary that, oh, this is pretty good. But most of
the explanation was what happens when one spouse dies, what
happens when the other spouse dies, and how does it
go and live on? So in this case, you would
still treat the kids equally, no problem, if that's their wish.
(43:07):
You're just divide it into equal buckets, and then you
can name a child as trustee. You know, I'm not
a fan of all kids serving as trustees, but you
could and they serve though as a general trustee, which
means what so they would be in charge. So let's
say in this case, I don't.
Speaker 2 (43:27):
Got two buckets.
Speaker 3 (43:28):
Let's say we've got two buckets and each bucket has
three million bucks in it. I don't know if they're
worth six million dollars. That would be three million in
each bucket. Whatever the number is, the concept is the same.
Speaker 2 (43:39):
Yeah.
Speaker 3 (43:40):
And so you know, even now, if there's only two kids,
you could put both kids on as trustees. What does
that mean general trustees, Well, they get to do ninety
nine percent of what they would do with those assets
as if they own them personally.
Speaker 2 (43:56):
So for example, making decisions about how to wind vass
things like that, would to buy in them.
Speaker 3 (44:01):
Yep, they could call you up and say, let's talk
about my investment portfolio. Yeah. Not only that, they could
call you and say liquidate. I'm buying a beach house
in Florida. Sure where inside the trust? Okay?
Speaker 2 (44:14):
So the trust would continue to be the owner.
Speaker 3 (44:16):
Right, And that's the key the ownership, Susan, Just like
you said it right, it's it's the trust owns these
two buckets, not the kids.
Speaker 2 (44:26):
So you could have both kids, or you would have
two trustees on each trust bucket.
Speaker 3 (44:30):
So there, Yeah, they could work together and they can't
rob Peter to pay Paul, So that's another piece that's
in there. They don't ever have to worry about one
kid reaching into the other kid's bucket and taking assets.
Speaker 2 (44:40):
So you create two separate buckets when the.
Speaker 3 (44:43):
Parents pass right inside the trust got it and so,
and they could be trustees over their own buckets if
you really wanted to draft it that way. Doesn't really matter.
But again I said, they're doing ninety nine percent of
the things right there.
Speaker 2 (44:57):
So there's one percent they're not doing.
Speaker 3 (45:00):
Yeah, they're investing, they're buying and selling properties, rental properties.
They just can't reach in and make a withdrawal from
their account and give it to themself or their kids. Okay,
but I'm going to explain how they can do that
in a minute. But folks, this idea that we're talking
(45:21):
about right here, how to leave your assets to your beneficiaries,
is exactly what's in the guide. There's an example like
this one in the guide for divorce proofing that also
leads to generations skipping tax planning. It's a tremendous way
of getting the assets to your kids controlling it without
really causing them any grief. They can still enjoy use
(45:45):
and have it protected from creditors and get to a
generation below tax free. Many other examples of how to
leave assets are in this guide to your children, Learn
what's best for you and your estate planning needs. Get
the guide eight six six eight four eight five six
ninety nine or legal Exchange show dot com again eight
(46:07):
six six eight four eight five six ninety nine or
Legal Exchange Show dot com to get how to leave
your assets to your beneficiaries so.
Speaker 2 (46:16):
They can't reach into their own buckets and pull principle out.
Then who actually decides whether a distribution is okay for them?
Speaker 3 (46:24):
Yeah, and so that's where you start to again delve
into the drafting of the document. How much ConTroll do
we want to give the kids? So let's lean on
the idea of lots of power, lots of control. And
I like that until a client reels me in and says, no,
I want to make it less. Yeah, that's up to
(46:45):
the client. So let's start with great power. Now what
is that great power? They have the ability to pick
an independent trustee.
Speaker 2 (46:56):
And who is that?
Speaker 3 (46:56):
Typically, so, an independent trustee is defined as some not
related or subordinate tokay, the family, an accountant, a lawyer.
I mean, you could do a trust company. I mean,
but I like to stay with the licensed people because
they understand the dynamics of the trust right. And so
(47:19):
let's say for fun that they picked me, you be
the independent trustee. Well, it's the great power piece that
we want to remind you of here. Not only are
the kids given the power to appoint me, they also
should be given the power to remove me any time
(47:42):
for any reason. In that way, there's what no risk
to them? When I say no risk to them? What
no risk of them not being able to get the
assets because I'm a curmudgeon trustee and never give it
to them?
Speaker 2 (47:56):
What do they do if they can't you? If you
say don't say it's.
Speaker 3 (47:59):
Okay, they remove me, Absolutely, you're out. Remember, no reason needed. Okay. So,
now now that we know what their great power is,
what are they what are they doing? Well, they're going
to say, Todd, we need an independent trustee because the
one percent, the one thing that they can't do would
(48:19):
be the one thing that I can do. And the
one thing that the independent trustee does is say yes
or no to distribution requests by the beneficiaries.
Speaker 2 (48:31):
For the future ex or the grandchildren.
Speaker 3 (48:35):
So let's play out that strength.
Speaker 2 (48:38):
Yeah.
Speaker 3 (48:38):
So now life goes on, and you know, let's say
Billy says, you know, I'd like to take some money
out because we're buying a family car and he's happily married,
or we're taking a family vacation that's fine, or the
kids going to prep school or college or whatever the
case might be. They ask, yeah, I get to say
(49:02):
yes or no. That's my job. I get one job
and so and I don't have to give a reason
to say yes or no. So I go along and
I say yes lots. And then life goes on, and
let's say ten years after you're dead, the three million
has doubled to six, even though they've been taking money
(49:24):
out and enjoying it and the grandkids have enjoying it.
And then the divorce comes, and then the other side says,
I want three million of the six because half, you know,
we get half. That's how it works. And that's when
Billy says, great idea. But ask Todd, Oh right right,
that's the problem. Right, But I think we go it's
(49:46):
even better, Susan. We go back to your point, which
was ownership. Forget the fact that I have discretion to
say yes or no, which of course is very important
in protection. The other side of the coin would be
he doesn't own it, right, If he's never owned it,
it's not a marital asset to begin with, I simply
(50:08):
tell the other lawyer it's not even subject to the divorce.
Only marital assets are subject to the divorce. Oh good folks.
This kind of arrangement is amazing not only for credit
or protection, but it also can be used for generation
skipping tax planning. Call and get the guide how to
(50:29):
Leave your Assets to your Beneficiaries For existing estate planners
and for planners that are just beginning. There's something in
here for you eight sixty six eight four eight five
six ninety nine or Legal Exchange show dot com.
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):
Beneficiary planning and asset protection go hand in hand. Cushing
and Dolan has a new guide out called How to
Leave Assets to Beneficiaries and it can help make your
planning process smooth and easy. Leaving your assets to your
children isn't as simple as it sounds, especially if they
have problems of their own. If you're retired or nearing retirement,
it's time to consider the best way to keep your
assets in your family while avoiding significant financial consequences down
(51:23):
the road. Call Cushing and Dolan right now at eight
sixty six eight four eight five six ninety nine and
get their new guide called how to Leave Assets to Beneficiaries.
You'll learn which paths are the safest when it comes
to protecting yourself and your children while avoiding unnecessary risks
that can create substantial problems in the long run. That
number again is eight sixty six eight four eight five
six nine nine, or you can request it online from
(51:45):
our website 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 int or Armstrong Advisory may contact your offering
legal or investment services. Cushing and Dolan and Armstrong Advisory
do not endorse each other and are not a fit.
Speaker 5 (52:00):
The breadth of the stock market sell off in recent
days hasn't been seen since the early days of the pandemic,
and while it's easy to say, don't panic if you're
concerned about your portfolio given the impact of these teriffs,
Now's the time to have that conversation. Hi, this is
Mike Armstrong from the Armstrong Advisory Group. If the market
correction has you anxious or worse rattled, give us a
call at eight hundred three nine three four zero zero one.
(52:21):
Let's get together and talk through your financial strategy, evaluate
at strengths and weaknesses, and make decisions for the future
that are in your best interest. These are challenging times,
but we've dealt with them before and are prepared to
deal with them again. Our goal is to help you
protect the assets that you've worked so hard to attain.
You can give us a call at eight hundred three
nine three four zero zero one and request a no
obligation consultation. That number again is eight hundred three nine
(52:44):
three four zero zero one.
Speaker 1 (52:46):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong may contact you to offer investment
advisory soervices consistently voted one of the top Caribbean destinations.
The United States Virgin Islands is the perfect place for
(53:07):
your next vacation. Whether you're looking for romantic getaway, a
long weekend with friends, or a family vacation, Saint Croix,
Saint Thomas, and Saint John have everything you need to
enjoy that special time away from home. Take advantage of
a variety of incredible promotions that are available right now.
Go to visit usvii dot com slash promotions, where you'll
find the details about all of these amazing experiences, including
(53:30):
a stay at the Divvy Karina Bay all inclusive beach
resort and casino on Saint Croix. From the moment you arrive,
you'll fall naturally in rhythm with the heartbeat of the islands.
There's no money to exchange, and travel from New England
could not be easier. Don't miss your chance to enjoy
America's Caribbean paradise, the United States Virgin Islands. Head to
visit USVII dot com slash promotions from more information and
(53:53):
to book your trip today. That's visit USVII dot com
slash Promotions
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