Naming your ex-spouse as a beneficiary

Episode Transcript

Speaker 1 (00:01):
This is the Legal Exchange with Todd Lutsky from the
law firm of Cushing and Dolan and Susan Powers of
the Armstrong Advisory Group. Each week, Todd and Susan will
discuss many topics, including estate planning, how to avoid probate,
and protecting your money from a nursing home. If you
need assistance in any of these areas, or have a
question about another issue that may affect your future, call

(00:21):
eight six six eight four eight five six ninety nine
to make an appointment. That's eight sixty six eight four
eight five six ninety nine. Operators are standing by. Now
Here are your hosts, Todd Lutsky and Susan Powers.

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

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

Speaker 2 (00:54):
I'm great? Thank you? What do you have for us
this week?

Speaker 3 (00:57):
Couple of things? Got a Louisiana appellate court case and
head over to California, so we're all over the country.
First one is you know, basically, you know, when you
name your ex wife a beneficiary of an IRA, is
is that okay? Basically you'll see the update. Yeah, you'll
see here how these this couple was married for about

(01:17):
thirty years, got divorced and you know, had agreements and everything,
but you know, there's automatic revocation statutes and nevertheless, the
ex wife is the beneficiary on the IRA and we'll
find out how that how that plays out when when
the participant dies, So stay tuned for that and of

(01:38):
course how that could be fixed in better state planning world.
And then we're gonna head over to California. We got
an appellate court case there and it's basically, you know,
how do you revoke a will? In this case, a
holographic will was prepared and I'll have to explain what
that is, Star Treking holographic will. And then the traffic

(02:00):
will got revoked. But did it really get revoked? And
we'll see how it maybe did or didn't. And again,
it's not all about the results of these cases. It's
about what you can do to not be in this problem.
And most of the time the answer is doing planning,
and that brings me to the guide this month, which
is really really one of my favorites. I know, Susan,

(02:22):
you hate when I say that, but they.

Speaker 2 (02:24):
Are all your children in there. There's all your favorites.
That is what I've determined after twenty years of doing
this show with you.

Speaker 3 (02:30):
This is a top seven estate planning trust. Right if
you've never done your planning, and even if you have,
this is going to tell you how the different trusts
work to help you better pick the trust that might
be right for you, whether it's a revocable trust or
an irrevocable trust, and by the way, it could be
an irrevocable life insurance or gifting trust, or a medicaid

(02:52):
trust because there's many kinds of irrevocable trust. Maybe you
have a special needs child and want to understand how
a special needs trust works, or if you heading into
a nursing home and you need a pool trust. So
it explains all the different kinds of trusts that are
commonly used in estate planning and how they operate, and
the income and the state and gift tax consequences that

(03:15):
go with them. So folks call and get the guide
help you get started with your estate planning eight six
six eight four eight five six nine nine or Legal
Exchange show dot com again eight six six eight four
eight five six nine nine or Legal Exchange Show dot com.
You can download it right there. Let's head over to Louisiana.

(03:39):
So in this case, we've got you know, Jim and Jackie.
They're married for thirty years before they get a divorce.
In May of twenty fifteen, they did a partition in
a community property agreement in which they agreed to transfer
and assign any interest they had in any each other's property.

Speaker 2 (03:59):
Okay, it back completely to the other. Yeah, okay.

Speaker 3 (04:03):
So James then later died, and of course during his
estate administration, the executor discovered Jackie was listed this is
the ex wife. Jackie was listed as the designated beneficiary
on several iras and annuities. Well, the estate decided to
sue Jackie and the life insurance company to prevent the

(04:23):
distribution of the IRA and annuities to and to declare
that the estate is the lawful beneficiary, not Jackie the
ex wife. Correct. Well, arguments were made through the process
and they did discover that three of the accounts really
did belong to the estate. However, the estate pushed for

(04:44):
the IRA, saying that the IRA, under Minnesota law, there's
an automatic revocation statute of beneficiaries when you get a divorce. Therefore,
it invalidated the designated beneficiary form listing Jackie. Jackie said, no,
that's not true, because these forms were completed post divorce. Therefore,

(05:05):
this constitutes a redesignation of the beneficiary. Now, the lower
court wasn't having any of that. They granted summary judgment
in favor of the estate. Yeah, Jackie wasn't happy. No,
so Jackie appealed in the appellate court.

Speaker 2 (05:23):
Reversed, Good, it sounds like they should.

Speaker 3 (05:25):
And they said, while there is an automatic revocation statute
the designated beneficiary of a spouse following a divorce, the
holder of the IRA can redesignate the ex spouse or
anybody as a designated beneficiary. Therefore, this new designated beneficiary

(05:47):
form is not revoked, and the estate goes to Jackie
or the IRA goes to Jackie. I think ultimately that's
the right result.

Speaker 2 (05:59):
I agree.

Speaker 3 (06:00):
I'm scratching my head wondering how on earth you know
Jim in this case decided to re sign a designated
beneficiary form naming his ex wife after a divorce.

Speaker 2 (06:13):
Well, you know, it's interesting. I have a client that
did the exact same thing. He was divorced, and he
was still friendly with his wife, his ex wife his
new wife, and he wanted to name them both as
beneficiaries on an account. And I took copious notes that
Damn'm like, really you want to do this? And I
took goodness because he wanted to do it. They were

(06:34):
friendly and he wanted to take care.

Speaker 3 (06:35):
Of her too, And that's perfectly okay then, And that's
why the statute allows for that kind of activity, you know.
And again, it's not always about the result of these cases,
whether we like him or not. For us, it's the
tips and lessons that we can learn from them. And
I think in this case there's a lot to think about. Really.
It's what I got from this is when should I

(06:56):
be reviewing my est ap plan.

Speaker 2 (06:58):
And so life events? Right? The red flag slaps across
the base exactly.

Speaker 3 (07:03):
There are many of them, right, There's many times, not
just divorce, And so I figured I'd spend a few
minutes just helpful reminding us you know that there are,
in fact, many reasons. You know. They could be from aging,
it can be from moving out of state, changes in
family dynamics, loss of a spouse, you know, but of
course most importantly getting a divorce. Yes, right, So these

(07:24):
are just some of the reasons that you would do it. Now,
Remember not all states have this automatic revocation statute, so
I don't want you to rely on that.

Speaker 2 (07:34):
Do we have that here in Massachusetts?

Speaker 1 (07:35):
Do you know?

Speaker 3 (07:36):
We do? We do, But I don't love relying on it.
Let's let's play out the string. Right, So, even if
you have this designated beneficiary statute and it does work
and you get revoked or the beneficiary gets revoked, well,
now you're naming the estate the beneficiary. Well that's not
helpful because now not only is it a probate asset,

(07:59):
but it's got to come up out over five years.
So you could have a huge income tax problem if
it's an If it's an IRA, that's what I'm talking about,
the iras right. If the IRA right, it's gonna be
come out over five years, you're gonna have a huge
income tax problem. And can you imagine if you have
children that are actually working, making good money and they're
getting big distributions from an IRA, pushing them into an

(08:22):
even higher income tax bracket. So you got to probate
and an income tax problem relying on a revocation statue.
So yeah, it might get where you want it to go,
but or at least where you don't want it to go,
but you're going to have a tax problem. But then again,
even then does it go really where you want it
to go? Because if you didn't do any planning and
it is in your estate and you don't have a will,

(08:46):
well then the interstate succession statute is going to take over, and.

Speaker 2 (08:49):
Which basically means the state is deciding who gets your assets, right.

Speaker 3 (08:52):
And it may very well be your next closest next
of kin, which is your children, and that would be okay,
I guess if it's okay with you, so you know,
just being mindful.

Speaker 2 (09:00):
Of that, But there are lots of people who don't
have children, so they may I know, I have a
client without children who absolutely did not want it to
go to their siblings because a couple of them are
in the nursing home.

Speaker 3 (09:10):
Could be yeah, absolutely, yeah, that's right. So if you
don't want to go to could be siblings, nieces, nephews, depends,
so don't rely on that. But nevertheless another one, really,
death of a spouse is a really big one. Right,
make sure you fund your marital share and remainder share.
If you did planning right, you know, close out the
estate of the first and then update your own estate plan.

(09:30):
Remember you're single now, so you should redo your will,
your health care, and your power of attorney. At a
bare minimum. You probably don't need to change the trust,
but just want a new primary and a new alternate
fiduciary for yourself. And by the way, I'll just leave
you with the move idea. If you move, there's a
lot of things to do, but updating an estate plan
is one of them, because that shows you're intent to

(09:51):
be a resident of that new estate. Not the trust
so much, but just the basic will, health care proxy,
power of attorney. Those are usually state specific, so get
those updated. Just another arrow in the quiver when you move. Folks,
lots to think about when you're doing your planning, and
if you're not sure how to get started, this guide
will help you. It gives you the top seven trusts

(10:12):
and explains them. Call and get it eight six six
eight four eight five six nine nine or legal Exchange
show dot com.

Speaker 2 (10:21):
You've been listening to Todd Lutski, a partner with the
law firm of Cushing and Dolan. I'm Susan Powers, a
financial advisor with the Armstrong Advisory Group. We've got much
more to come when we return to the Legal Exchange
with Todd Lutsky.

Speaker 1 (10:35):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder law, estate planning and asset protection.
This month, they're offering a free guide called Demistifying the
Top seven estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(10:56):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules, benefits,
and tax treatment, and choosing the wrong one could cost you.
Learning the differences now can help you make smarter decisions
for your future and your loved ones. Trusts are a
critical part of any well designed estate plan, but they
can be complex. Don't guess your way through it. Get

(11:16):
the facts first. Call Cushing and Dolan now at eight
sixty six, eight four, eight, five, six nine nine to
request your free copy or visit legal exchange show dot
com the proceeding Who's paid for in the music exprest
Or Sole leaders of Cushing and Dolan. Cushing and Dolan
d or Armstrong Advisory may contact you offering legal investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each
other in or not affiliated. The holidays are just around

(11:37):
the corner, so now is the time to plan your
winter escape. Trade in the cold for sunshine, sea breezes
and island vibes in the US Virgin Islands, America's Caribbean paradise.
Whether it's a romantic retreat, a family celebration, or a
solo recharge before the new year. Saint Croix, Saint Thomas,
and Saint John offer the ultimate warm weather get away.

(12:00):
Lounge on sun drenched beaches, explore vibrant culture and celebrate
the holiday's island style. No passport, no hassle, just warm weather,
clear blue water and unforgettable memories. This is where the
stress melts away and you find yourself naturally in rhythm
with the heartbeat of the islands. Go to visit USVII

(12:21):
dot com and book your trip today. That's visit USVII
dot com the US Virgin Islands, America's Caribbean paradise. Your
holiday escape starts here at visit USVII dot com.

Speaker 4 (12:35):
The future doesn't plan itself. Hi, this is Mike Armstrong
from the Armstrong Advisory Group. Whether you've built a business,
grown your investments, or simply want to protect your family,
your legacy deserves more than a generic estate plan. From
wills and trusts to beneficiary designations and beyond. True wealth
transfer is personal, powerful, and deeply strategic. That's why we

(12:56):
created Leaving a Lasting Legacy, a comprehensive guide to legacy planning.
That's what's your vision, values and family first. Learn how
to protect your assets, avoid probate, minimize taxes, and build
a legacy that lasts for generations. Get your free copy
of Leaving a Lasting Legacy today by calling eight hundred
three nine three four zero zero one. That number again

(13:16):
is eight hundred three nine three four zero zero one,
or you can request the guide online by visiting Armstrong
Advisory dot com.

Speaker 1 (13:23):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong guide a specific financial, legal or tax advice. Consult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. You're listening to the Legal Exchange with Todd Lunsky,
an expert in elder life planning and taxation. Need help
with your estate plan? Comptid right now and make an

(13:45):
appointment eight sixty six eight four eight five six ninety nine.
That's eight sixty six eight four eight five six ninety nine.

Speaker 2 (13:52):
Welcome back into the Legal Exchange with Todd Lotsky. I'm
Susan Powers, a financial advisor with the Armstrong Advisory Group,
and I'm joined by Hod Lutsky, a partner with the
law firm of Cushing and Dolan with a master's in taxation.
Where are we headed now, Todd?

Speaker 3 (14:07):
California?

Speaker 2 (14:08):
Okay, I'll take that.

Speaker 3 (14:09):
You'll take that.

Speaker 2 (14:09):
I'll friends out there. I'd like to visit.

Speaker 3 (14:11):
That's nice. I don't want to live there, but I
could visit there.

Speaker 2 (14:15):
Yeah, I'm going into the ocean. Threat is just you
know much.

Speaker 3 (14:21):
So here's how this works. How do you revoke a will?
Seems easy, maybe not what row? So Layola in two
thousand and six executed a holographic will. I know what
that mean. So this is a will that is handwritten
and signed by Layola by the person. Okay, no witnesses,

(14:44):
no notary, Okay. Certain states recognize these. California is one
of them. Now, these can be a little harder to prove,
as you might imagine. So the will left everything to
their daughter, a nouche. In twenty eighteen, Robert I believe

(15:04):
it is the son who is not included in the
holographic will.

Speaker 2 (15:09):
Nor in the oddball naming convention.

Speaker 3 (15:12):
Right prepared a document stating that Loyola revoked all prior
estate planning documents and she signed it mm hm. And
that was in twenty eighteen. In twenty twenty, Loyola died
while Anushe of course, petitioned the court with the two
thousand and six holographic will. Makes sense, Robert countered, saying

(15:38):
that this was revoked. The Trio Court found that Loyola
died without a will intestate because the document signed was
a valid cancelation of the will even without a physical act.

Speaker 2 (15:53):
So it wasn't a new will she signed. She just
revoked everything.

Speaker 3 (15:56):
That's exactly what happened. A very good point, though, Susan. Yeah,
well you might imagine a niche wasn't happy with that result,
so a nuche appealed and the appellate court reversed. Now, really, yes,
And because the count member of state. By state laws, folks,
always these are state specific. The California Statute requires that

(16:18):
a will can be revoked two ways, by doing a
new will, which clearly was not done here, or by
a physical act with the intent purpose of revoking it
and an intent to revoke. So when you do it,
it has to be a physical act obliterate, destroy, burn, torn.

(16:42):
These are listed in there, So a physical act with
the intent of revoking it well, an intent to revoke
standing alone is insufficient. So the twenty eighteen document did
not constitute a new will, which certainly it wasn't and
therefore and it was not a testamentary act, and therefore
the holographic will wins. So you did not officially revoke

(17:07):
it here, and this, strangely enough, holographic will carries the day.
Of course, whether we like this result or we don't
isn't the issue. But I've got a lot of lessons
to learn here, and I think we'll leave it with
this idea, why are we doing this alone?

Speaker 2 (17:25):
Why are you trying to prepare the medical work? That's it.
That's the life rule. No legal, no medical.

Speaker 3 (17:31):
So that's my first comment, right, why are we trying
to do this alone? Guidance alone might have helped Loyola
a lot in this situation, and we're going to go
through that and give you some guidance. But before we do,
this is just a will. I don't know that that's enough.
I think an estate plan is more appropriate. A lot
of us think in a state plan as a will.
Call and get this guide for the month. It's the

(17:52):
top seven estate planning trusts that are most commonly used,
from irrevocable to revocable, to medicate gifting trust to special needs, trust,
pooled trusts, and the most misunderstood trust of them all
nominee realty trusts. Please don't just use those, so learn
how they work, tax issues, operation issues, and it'll help

(18:16):
you get your estate planning started. Eight six six eight
four eight five six nine nine or Legal Exchange Show
dot com again eight six six eight four eight five
six nine nine or Legal Exchange Show dot com and
you can download it right there. All right, what do

(18:36):
we learn here? What do I say?

Speaker 1 (18:37):
Right?

Speaker 3 (18:37):
We're not going to do this alone?

Speaker 2 (18:39):
No?

Speaker 3 (18:39):
Now, remember it's difficult enough to do your planning. Don't
do something leave something like this to do alone. First issue,
I see, a will doesn't even avoid probate. I mean
a little guidance here might have.

Speaker 2 (18:54):
But some people say I don't need to trust I
have a will. I'm all said on them to go
to probate.

Speaker 3 (18:58):
I know, And that's exactly why a little guy Gidans
would be helpful. You're absolutely right, Susan. I hear that
all the time, and that's my first point. A second,
you know, did she really want to protect these assets
for her daughter? I mean that would have been my
first question if you're leaving everything to one daughter. I'm
assuming now with Robert that there's more than one kid, right,

(19:20):
you know, if they're important to get to your daughter,
then and trust of some kind, probably irrevocable, would have
been needed in case you went to a nursing home
or in case you know, lost it in some other way.
So I always ask clients when you're doing your planning,
do you want to just leave things whatever happens to
be left to certain people, or do you really want

(19:41):
to make sure things get to certain people? Right, there's
two ways of looking at how you leave assets, and
so I think a little more guidance there would have helped. Again,
why are we trying to do this on our own?
We could have avoided probate. Two, we could have protected
assets a little better for our daughter, if that's our
true wish. Third, you know, the trust would have also

(20:03):
made it harder for the sun to terminate, so another
important factor. Fourth, you know, if you really wanted to
keep Robert out, maybe you should have put a no
contest clause in as well. Right, Remember, folks, whenever you're
doing planning and you're not treating the kids equally, you

(20:24):
should add a no contest.

Speaker 2 (20:25):
Clause, which means you can't complain.

Speaker 3 (20:27):
It can't complain, you get what you get and you
don't get upset, and if you do, you lose everything
if you sue. So language bad idea. And you know
it's important. And I've gotten to a point really in
our practice where you know, even if you do leave
things equally to kids, things change, and so why not

(20:47):
just have that clause in there? Is there is there
really any harm in just putting it into all your documents.

Speaker 2 (20:53):
It avoids the fighting. I'm going to say, probably noting anyways.

Speaker 3 (20:58):
Right, you know, and then what about me? You know?
Another idea might be divorce proofing, right, I mean mm hmm.
Think about how you leave it to your daughter. Maybe
you want to protect it from your daughter's future creditors
in this in this particular case. Right, So a lot
of guidance could have been offered here to Leyola. So
I think my main lesson from everybody is just don't

(21:21):
this is not a do it yourself thing, right, right?

Speaker 2 (21:24):
Because she did it herself to say this is how
I want to leave things. But then she was not
legally able to revoke it herself, right, so she didn't know.

Speaker 3 (21:32):
What you know, she missed so many things that could
have been done. And by the way, when I say
don't do it yourself, I got to tell you also,
I've had clients come in with very bad experiences on
those online wills dot com or whatever it is that
they have out there. They don't offer any guidance. You
basically are pushing buttons and are on your own.

Speaker 2 (21:51):
Trying to figure out everything. You want to do what
to do, and you don't know when something's wrong.

Speaker 3 (21:55):
Yeah, it's just I've just that's just been my feedback
from what I've gotten with clients that have tried it.
So you think it's cheaper, but again, you get what
you pay for. So this is an important part in
your life. Don't leave it alone. Also, you know it
didn't come up here, but you know, how on earth
was this not an undue influence? I mean, this was
clearly undue influence. Right, Robert drafts the document, Robert gets

(22:20):
Mom to sign the document revoking her entire estate plan.
At the end of the transaction, Robert gets more than
he would have gotten had he not acted, right. I mean,
that's that's the definition of undue influence. So I have
to believe that that should have come up in this
argument somewhere. It turns out it didn't need to be
because they weren't able to revoke it. So what and

(22:43):
then you know, when if you in this case, you know,
if this, if this didn't work out and this will
was revoked, well then he would have gotten more because
again you're dealing with an intestate succession statute there, so
he probably would have gotten more than you would have gotten,
you know, otherwise. So just keep these things in mind
when you're drafting. You know, it's it's it's good to

(23:04):
get some guidance and get some planning advice when you're
doing estate planning because just it's too big of a
deal to leave on your own. And to that end, folks,
I just want to mention the guide again, it's the
top seven estate planning trusts. Really gets into how they
operate so that you can understand the tax implications and

(23:28):
the dos and don'ts for you. It'll really help you
get started eight six six eight four, eight five six
nine nine or Legal Exchange show dot com.

Speaker 2 (23:37):
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. Todd will
be answering your listener questions when we return to the
Legal Exchange with Todd Lutsky.

Speaker 1 (23:52):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder Law, estate planning and asset protection.
This month, they're offering a free guide called Demistifying the
Top seven estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(24:13):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules, benefits,
and tax treatment, and choosing the wrong one could cost you.
Learning the differences now can help you make smarter decisions
for your future and your loved ones. Trusts are a
critical part of any well designed estate plan, but they
can be complex. Don't guess your way through it. Get

(24:33):
the facts first. Call Cushing and Dolan now at eight
sixty six eight four eight five six nine nine to
request your free copy, or visit legal exchange show dot com.
The proceeding was paid for in the views exprest Or
Sole leaders of Cushing and Dolan. Cushing and Dolan and
or Armstrong Advisory may contact you're offering legal investment services.
Cushing and Dolan and Armstrong Advisory do not endorse each other.
In or not affiliated HI.

Speaker 4 (24:53):
This is Mike Armstrong from the Armstrong Advisory Group. When
it comes to legacy planning, having a will is important,
but it may not be enough. A will only covers
probate assets, and the probate process can be slow, public,
and expensive. That's where trusts come in. Trust can help
you avoid probate, keep your wishes private, and control how
and when your assets are distributed. Whether you're looking to
support family, minimize taxes, or prepare for the unexpected, a

(25:16):
well designed plan can make a meaningful difference. Our new
free Guide, Leaving a Lasting Legacy, covers wills, trusts, and
other strategies to help you build a strong retirement plan.
Take the first step towards clarity by calling eight hundred
three nine three for zero zero one right now and
asking for your free guide today. That number again is
eight hundred three nine three four zero zero one, or

(25:37):
requested online at Armstrong Advisory dot com.

Speaker 1 (25:40):
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. The holidays are just around the corner, so
now is the time to plan your winter escape. Trade
in the cold, sunshine, sea breezes, and island vibes in

(26:03):
the US Virgin Islands, America's Caribbean paradise. Whether it's a
romantic retreat, a family celebration, or a solo recharge before
the new year, Saint Croix, Saint Thomas, and Saint John
offer the ultimate warm weather getaway. Lounge on sun drenched beaches,
explore vibrant culture and celebrate the holiday's island style. No passport,

(26:26):
no hassle, just warm weather, clear blue water and unforgettable memories.
This is where the stress melts away and you find
yourself naturally in rhythm with the heartbeat of the islands.
Go to visit USVII dot com and book your trip today.
That's visit USVII dot com, the US Virgin Islands, America's

(26:46):
Caribbean Paradise. Your holiday escape starts here at visit USVII
dot com. 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 included in the
estate planning process. Once again, here's Todd, Lutsky and Susan Powers.

Speaker 2 (27:09):
Welcome back to I have a few questions from listeners
for you. First question comes from Elane in Westboro, mass
And Elaine writes, my husband and I have irrevocable trusts
that we created in two thousand and five. This is
with you, by the way I'm going to say, and
this is a mutual client. He passed away five years
ago and at the time we worked with your office
to file the estate tax return. We both have money

(27:31):
in our trusts. I would like to make some moderate
gifts to my children to help them out. What is
the best way for me to gift from his trust,
my trust, or my bank account that isn't in the trust.

Speaker 3 (27:46):
This is really a good question, and this is what
you need to think about, folks. When you do your
planning right, they are living, breathing, sort of evolving entities.
That's the way I'd like to think of planning. Not
I signed my documents and.

Speaker 2 (28:00):
I'm done, set it and forget it.

Speaker 3 (28:02):
As much as I say that a lot, it really
does require some attention.

Speaker 2 (28:07):
It's those life events right right right.

Speaker 3 (28:10):
If you I always tell people, if you're going to
do something that you think might impact your estate plan, please.

Speaker 2 (28:18):
Call first, pick up the phone.

Speaker 3 (28:21):
Right, If you tell me, oh, by the way, here's
what I did, I might not be able to help.

Speaker 2 (28:27):
Then sometimes it's better to ask for forgiveness rather than permission.
This is not one of those times.

Speaker 3 (28:33):
Right, That's exactly right, And so so I the answer
here is I have to ask a few more questions.
So two thousand and five we did irrevocable trust.

Speaker 2 (28:45):
They had two What do we.

Speaker 3 (28:46):
Think they're worth today? From an estate valuation standpoint?

Speaker 2 (28:51):
Today his trust has about two million in it, and
her trust has about one million in it, and outside
there is probably a couple hundred thousand in the bank.

Speaker 3 (29:06):
Okay, so we're looking at a three point two million
dollar estate. The two million in his trust is tucked
away in the remainder share. Folks, that's not what you're
asking about here. But that has been sheltered for estate
taxes and will not be included in her estate when
she dies. So this is the analysis you have to
go through. Then I look at her estate and I say,

(29:30):
if she died tomorrow, she'd be worth one point two Yes,
the two outside and the one in which is also
below the million dollar threshold. So I'm sorry, the two
million dollar threshold in Mass that was changed so it's
below the two million dollar threshold. So I'm not really

(29:50):
worried about estate tax savings here, okay. And the reason
that's important is because where you gift from can help
with that. Right, Do I want to reduce the estate tax?
If I did, then I'd want to be giving things
away from the you know, the two hundred thousand in
her bank account, which will help reduce her estate tax.

(30:13):
But I don't need to do that because it doesn't
seem like there's going to be any savings in the
estate tex.

Speaker 2 (30:17):
And if she were over two million, then.

Speaker 3 (30:19):
I might focus on that, okay, But here's the flip side.
These are irrevocable trusts, and if I make a gift
from the two hundred thousand in her personal bank account,
while it would help to reduce the estate for estate
tax purposes, which here I do not need any help
because it's already going to be none, it would create
a new five year waiting period for medicaid eligibility.

Speaker 2 (30:43):
Yeah, and she is in failing health.

Speaker 3 (30:45):
So if that's the case, then I'm not going to
gift from there, right, I'm going to gift from the
irrevocable trust, probably his, Okay, well, actually it could be
hers either way, as long as they've been done in
two thousand and five, it doesn't matter which one. So
either one of these trusts, and so since his is
already sheltered for a state taxes, might as well gift

(31:07):
from hers and get the best bang for your buck.
So in this case, I would gift away from her
trust whatever she wants. There's language in there that says
distributions can come out of these irrevocable trusts to kids
of all generations. So make the gift and have at it.
And that way you don't reset the five year waiting period,
and you help reduce her state taxes. Folks, lots to

(31:30):
think about even after your plan is done. But before
your plan is done, if you don't know how to
get started, you're not sure which trust is right for you,
call and get this guide the top seven estate planning
trusts that we use generally this they deal with the revocable,
the irrevocable, many kinds of irrevocables. They deal with special

(31:51):
needs trusts and pool trusts, and more importantly, I think
than anything is they explain in here how they work.
The tax issue, the operational issues, the designated beneficiary issues.
This will help you get started or change your trust
if you need to change one from what you have started.
Get the guide eight six six eight four eight five

(32:14):
six nine nine or Legal Exchange Show dot com again
eight six six eight four eight five six nine nine
or Legal Exchange Show dot com.

Speaker 2 (32:24):
Our last question comes from Dennis in Braintree, mass and
Dennis writes, my wife and I created an irrevocable trust
with you several years ago. We put our home in
land into the trust. We did not have any liquid
assets to put into the trust before. We are now
going to be selling the land. How do I handle
the sale of the land and the proceeds.

Speaker 3 (32:47):
So again, great news. It's an irrevocable trust and as
many of you might always think, I've given up control
and it's inflexible and rigid. No, not true to any
of those, and this is a good example of that.
If you want to sell, can you absolutely you direct
the trustee to sell put it on the market. Okay?
Is there different paperwork that needs to be signed? Nope,

(33:10):
exactly the same paperwork. The only difference is the trustee
signs all the paperwork. Okay, the trustee has no liability.
The trust trustee is just signing the paperwork to do
the selling of the property for the trust. So the
trust sells it, the deed goes out, and the new
money liquid assets come in to the trust.

Speaker 2 (33:33):
So if they didn't have any liquid assets before, they
likely were an issued to tax ID numbers. So how
do they get that good point?

Speaker 3 (33:40):
So they if we've never gotten a tax ID number,
because there's no need to tell the irs you have
these trusts. Until there is a need tell the irs
you have these trusts.

Speaker 2 (33:49):
It's none y for now.

Speaker 3 (33:51):
And so when you want to open the bank account
to receive those proceeds, you need to get an ID number,
which we would help you with, and then you would
open up a bank account, would give you the name,
the name of the trust, the trustee, and then you
deposit the money into that bank account and that part
would be done. And the nice part about this is

(34:12):
that that transaction doesn't restart the waiting period because it
says and I was going to ask you about this, Susan,
if you knew it, It says that they did it
several years ago.

Speaker 2 (34:25):
Yeah, so this is actually our client. All your clients
are listening now. So this was I want to say,
probably four years ago. They created their trust and then
relocated and now selling that land.

Speaker 3 (34:38):
And again the flexibility of moving you bring up, I
didn't hear.

Speaker 2 (34:41):
That they moved out to a different state.

Speaker 3 (34:43):
Actually, so that's great. So they can move. That isn't
a problem with the irrevocable trust. And they can sell,
which they did, and they may want to buy now.
But the money that's sitting in there. If this was
done four years ago and now we sold, so.

Speaker 2 (35:02):
We had a land and then the land's been sold,
so now there'll be money.

Speaker 3 (35:06):
So the land was converted into dollars, and so now
the dollars are in the trust and the five year
waiting period is still five years, but four have ticked off.

Speaker 2 (35:18):
So don't we start that by changing that land to.

Speaker 3 (35:21):
Cash exactly right. So if that house, if that land
would have been protected in one more year, this money
will be protected in one more year. You didn't reset.

Speaker 2 (35:31):
So what can he do with that money?

Speaker 3 (35:34):
Well, now he can either invest it if he doesn't
want to rebuy a house, but you could take an
invested and really, at the breath of the market, there's
no limitation on what you can buy as an investment
inside the trust. Or I guess if he's moving out
of state and he needs that money to buy the
new home that he's going to live in in the

(35:56):
new state, that's certainly ok too. Just would write the
check again, direct your trustee to buy money, goes out,
same paperwork, and a house comes in, and.

Speaker 2 (36:07):
The tax is the same, the tax implication.

Speaker 3 (36:10):
Tax is the same. It's a grand tour trust. So
for income tax purposes we need to, you know, have
it taxed at his rate, which we do, so there's
no adverse income tax at all. Folks. This is an
example of how flexible these irrevocable trusts are. In fact,
both of them are. They are some of the trusts

(36:30):
that are in the guide. Get the guide Top seven
estate planning trusts eight six six eight four eight, five
six nine nine.

Speaker 2 (36:38):
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.

(37:00):
You'll advise with the Armstrong Advisory Group. We'll be back
with more after this quick break on the Legal Exchange
with Todd Lutsky.

Speaker 1 (37:08):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder law, estate planning, and asset protection.
This month, they're offering a free guide called Dmistifying the
Top seven estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(37:29):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules, benefits,
and tax treatment, and choosing the wrong one could cost you.
Learning the differences now can help you make smarter decisions
for your future and your loved ones. Trusts are a
critical part of any well designed estate plan, but they
can be complex. Don't guess your way through it. Get

(37:49):
the facts first. Call Cushing and Dolan now at eight
sixty six, eight four eight five six ninety nine to
request your free copy or visit legal exchange show dot com.
The proceeding was paid for in the views express Sole.
Leaders of Cushian Dolan, Cushingan Dolan d or Armstrong Advisory
may contact you offering legal or investment services. Cushing and
Dolan and Armstrong Advisory do not endorse each other, in
or not affiliated. The holidays are just around the corner,

(38:11):
so now is the time to plan your winter escape.
Trade in the cold for sunshine, sea breezes, and island
vibes in the US Virgin Islands, America's Caribbean paradise. Whether
it's a romantic retreat, a family celebration, or a solo
recharge before the new year. Saint Croix, Saint Thomas, and
Saint John offer the ultimate warm weather getaway. Lounge on

(38:34):
sun drenched beaches, explore vibrant culture and celebrate the holiday's
island style. No passport, no hassle, just warm weather, clear
blue water and unforgettable memories. This is where the stress
melts away and you find yourself naturally in rhythm with
the heartbeat of the islands. Go to visit USVII dot
com and book your trip today. That's visit USVII dot

(38:58):
com the US Virgin Islands, America's Caribbean paradise. Your holiday
escape starts here at visit USVI dot com.

Speaker 4 (39:09):
The future doesn't plan itself. Hi, this is Mike Armstrong
from the Armstrong Advisory Group. Whether you've built a business,
grown your investments, or simply want to protect your family,
your legacy deserves more than a generic estate plan. From
wills and trusts to beneficiary designations and beyond. True wealth
transfer is personal, powerful, and deeply strategic. That's why we

(39:29):
created Leaving a Lasting Legacy, a comprehensive guide to legacy
planning that puts your vision, values, and family first. Learn
how to protect your assets, avoid probate, minimize taxes, and
build a legacy that lasts for generations. Get your free
copy of Leaving a Lasting Legacy today by calling eight
hundred three nine three four zero zero one. That number

(39:49):
again is eight hundred three nine three four zero zero one,
or you can request the guide online by visiting Armstrong
Advisory dot com.

Speaker 1 (39:56):
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 cansult
your own financial tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services.

Speaker 5 (40:09):
This is Michael Valila, adjudent of the Disabled American Veterans
Department of Massachusetts. The DAV of Massachusetts has helped me
and countless others adjust to civilian life through a variety
of incredible programs. Through our Local Veterans Assistance Program, we
provide necessary services to veterans in their communities such as food, shopping, landscaping,

(40:29):
and companionship. But we need your support. You can help
by making a donation today. Please visit DAV fivek dot Boston.
That's DAV five k dot Boston.

Speaker 1 (40:40):
Your tune to the Legal Exchange with Todd Lutsky. If
you are a loved one needs a nursing homestay, call
Todd right now at eight six six eight four eight
five six ninety nine and let him make sure your
assets are protected. That's eight six six eight for eight
five six nine nine, or visit him online at Legal
Exchange show dot com.

Speaker 2 (40:58):
Welcome back into the Exchange with Todd Lutsky. I'm Susan Powers,
a financial advisor with the Armstrong Advisory Group. And I'm joined,
of course by Todd Lutsky, a partner with the law
firm of Cushing and Dolan with the Masters in Taxation. So, Todd,
I feel like we spend an awful lot of time
discussing irrevocable trust and protecting assets from the nursing home,

(41:19):
but not really as much time on revocable trusts. Okay,
So who should actually consider having a revocable trust?

Speaker 3 (41:28):
You know, it's strange that you say that, but I
would say almost almost everyone. Let's let's who would you
clarify that a little for you?

Speaker 2 (41:37):
Yeah?

Speaker 3 (41:38):
So, I mean, if you're young and single, you know,
let's say I'm I'm in my twenty five, thirty years old.
You know you're not gonna have it in college, right,
so everyone until you read out in the workforce, it
doesn't even matter. But you know, let's say you're thirty

(42:00):
years old and single, Well, it might not be overly
important for you, again, depending on how much you're worth.
I mean, you don't have any children yet, you don't
have anyone you're dying to leave assets to overly important.
Now that's sorry for the punt, but but you know,

(42:20):
might not be overly relevant, but you know, if you
have nieces and nephews you want to take care of,
or you just want to avoid probate and stuff, trust
trust is helpful.

Speaker 2 (42:28):
What about if you own real estate, like if you're
thirty years old and you you rent an apartment only
of bank accounts and investment accounts or for one case
or whatever different story.

Speaker 3 (42:37):
Right to avoid probate, that would be an item, whereas
you could do it without it, if you have just
bank accounts and so forth. You're right, you could. You
could easily just put beneficiaries on and you don't really
need an estate plan. But if you want to avoid
probate with real estate, a trust would would help you
do that. So I like that idea. But staying with
the young people, because we don't talk a lot about

(42:57):
young people doing planning, but I've gotten some lately there
and they're starting to catch on. If you're married and
have young children, it's a hard stop, right, you got
to do it. Why because the main reason might not
be to avoid a state taxes right. For federal purposes,
you might not have that much, although you'd be surprised
a couple of life insurance policies, and now you're looking

(43:18):
at state death tax. Yeah, so it's more about it
may be about avoiding state death tax and probate when
you're married with kids as well, but the bigger reason
is miners can't own anything.

Speaker 2 (43:33):
So something happens to both of you.

Speaker 3 (43:35):
Yeah, I don't want some guardian owning everything. Not to
mention the fact I need a will at least that
to appoint a guardian. I don't want the court appointing
a guardian for my kids.

Speaker 2 (43:43):
To decide who's going to take custody.

Speaker 3 (43:44):
You can take custody right, So at a bare minimum
you want a will, but you really want to trust
and a will so you can get the guardian appointed.
And you don't want the guardian owning all your stuff,
so the trust can own it. And sometimes the guardian
in the trustee can be different people.

Speaker 2 (44:01):
Well, checks and balances, Yeah, I got you.

Speaker 3 (44:03):
Take care of the kids, and this is where you
go to get the money. And then you can control
how those assets are owned and how they're used, and
how your children benefit from them because they can't own it.
So to me, young people even should have revocable trusts,
and and as you get older, then the value of
your estate grows and you're thinking now more about reprobate

(44:26):
and reducing estate taxes. But then your children might have
grown and now you're thinking about how do I leave
it to them? So divorce proofing credit or protection right through.

Speaker 2 (44:37):
The credit or protection through the revocable.

Speaker 3 (44:40):
Absolutely you can. So I think that's you know, sort
of how it evolves. Right. And then if you get
older and your kids are older and you have grandkids,
now you're talking about generation skipping, and you can do
that planning with a revocable trust, getting it to the
next generation without paying taxes. And of course if you're
even older and you have a large estate, now it's
just tax in general. So see, there's so much to

(45:03):
talk about, folks, and there's so much to learn about
in the estate planning world. This guide the top seven
estate planning trust will help you understand more about estate
planning and maybe get you started as to which one
is right for you, from revocable to irrevocable trust to
pooled trust, and if you've got special needs children, to

(45:23):
a special needs trust, and of course, most importantly the
one many of you have heard about, Nominee Realty trusts
tops the list as the most confusing of all these trusts.
But it's in here, it's explained to you and it
will help you understand how they all work. Call and
get the guide eight six six eight four eight five

(45:43):
six nine nine or Legal Exchange show dot com.

Speaker 2 (45:46):
So you figure out you need a revocable trust, what
kind of assets should you be transferring into those trusts?

Speaker 3 (45:53):
So if we're talking about revocable only, I would say,
and you hate to get quick cart blanche answers, but
this one you can, I would say, almost everything except
your IRA, your four oh one K you're qualified retire, Yes,

(46:14):
that's I would say, that's the only ones that can't
go in.

Speaker 2 (46:17):
So your home you would put in absolutely what happens
todd if you have a mortgage on your home, because
if you're younger and planning, you're likely going to have
a mortgage on there. So how do you handle that?
Can you still do it?

Speaker 3 (46:27):
Fair? Fair question? And the answer is with revocable trusts,
absolutely you can do it. And it does not need
to trigger the du on sale clause. It cannot and
there is no need to even tell the bank. Okay,
because the Guard Saint Germain Act says that when you
put it into a revocable trust, it cannot trigger the

(46:51):
due on sale clause because you really still own it
for bank purposes.

Speaker 2 (46:56):
Okay, So if you have it in your revocable trust.
I'm thinking about where we are today with mortgage rates
being so high. Let's say someone you know, a couple
of years from now rates finally drop down and they
want to refinance their home. Can they do that right
through the trust?

Speaker 3 (47:11):
Well, you know the answer is that it's going to
be up to the bank. So here's the problem. Banks
are all, you know, finicky, so there is no legal
reason why you cannot just refinance it right inside the trust.
What many of you will find out, though, is that
the bank will likely tell you, oh, it's in the trust,

(47:35):
why don't we take it out of the trust, put
it back in your name, close the deal on the
mortgage in your name, and then they'll tell you it's
okay now to put it back in the trust, the
revocable trust.

Speaker 2 (47:51):
So there's no restrictions taking it out and putting it
back in again.

Speaker 3 (47:54):
No tax issues, no restrictions, no nothing. It's just just
just comes out. Because it's revocable, you could reach into
your trust. Anytime you want, take out anything you want,
put it back in your name, and that's what they
do here. So we oftentimes just prepare the deed out,
let them close on the mortgage, and put the deed
back in.

Speaker 2 (48:13):
Okay. So, in terms of taxes, you mentioned the estate
taxes and so forth, a lot of people won't have
to worry about a state taxes when they're just starting
out if they're young. Correct specifically, so what about a
tax return? People hate taxes as it is. Do I
have to file a separate new tax return if I
have a revocable trust?

Speaker 3 (48:34):
So great question. Again, this is sort of the operational
type questions of these trusts, the dos and don'ts. Right, So,
so far we're learning that you can pretty much put
in and take out anything you want. So there's really
no do's and don'ts for you on a revocable trust,
and no problem with the mortgage. And you're going to
find also no problem with administrative issues like tax returns.

(48:59):
There's no reason to file a tax return for this
trust because it is a revocable grand tour trust. Now
there's many kinds of grand tour trusts, different ways to
create grand to r trust. But when it's a revocable trust,
that in and of itself makes it a grand tour
trust for income tax purposes, which means you're the owner

(49:23):
for income tax. So you report everything on your ten
forty and when you open up the bank accounts or
you retitle the Fidelity or Schwab accounts to the trust
right and put things in there. Everything that's retitled we
talked about earlier to the trust is in your social

(49:45):
Security number.

Speaker 2 (49:47):
Okay.

Speaker 3 (49:47):
There is no tax ID number for the trust. Don't
get one.

Speaker 2 (49:52):
Different than an irrevocable trust, like we talked about.

Speaker 3 (49:54):
Different than an irrevocable trust, No need to get an
ID number. It's your social Security number. And therefore the
ten ninety nine's that are generated from these investment portfolios
will come in your social Security number. Okay, so your
accountant will just say, oh, no problem, just put it
on the tenth.

Speaker 2 (50:13):
Even though the the ten ninety nine says powers family
revocable trust, it's got my or my husband's social audit,
so that just gets lumped in with all our other stuff.

Speaker 3 (50:22):
It's exactly right. Okay, there's absolutely no difference, So folks,
I hope that helps, but that's a really good explanation
of revocable trust. But cal and get the guide for
the top seven estate planning trust because there's many more
you can learn about to find out which one's right
for you eight six six eight four eight five six
ninety nine or Legal Exchange show dot com.

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

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

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

Speaker 1 (51:00):
A trust isn't just a document. It's a powerful tool
that can help protect your assets from the nursing home
and even reduce or eliminate a state taxes. Cushing and
Dolan are leaders in elder law, estate planning and asset protection.
This month, they're offering a free guide called Demistifying the
Top seven estate Planning Trusts. This guide breaks down the
most common types of trusts, explains the pros and cons

(51:20):
of each, and helps you understand which might be right
for you and your family. Trust come with different rules,
benefits and tax treatment and choosing the wrong one could
cost you. Learning the differences now can help you make
smarter decisions for your future and your loved ones. Trusts
are a critical part of any well designed estate plan,
but they can be complex. Don't guess your way through it.

(51:40):
Get the facts first. Call Cushing and Dolan now at
eight sixty six eight four eight five six niney nine
to request your free copy or visit legal exchange show
dot com the proceeding. Who's paid for in the views
expressed or sole leaders of Cushing and Dolin. Cushing and
Dolin in or Armstrong Advisory may contact you're offering legal
investment services. Cushing and Dolan and Armstrong Advisory do not
endorse each other. In or not affiliated HI.

Speaker 4 (52:00):
This is Mike Armstrong from the Armstrong Advisory Group. When
it comes to legacy planning, having a will is important,
but it may not be enough. A will only covers
probate assets, and the probate process can be slow, public,
and expensive. That's where trusts come in. Trust can help
you avoid probate, keep your wishes private, and control how
and when your assets are distributed. Whether you're looking to
support family, minimize taxes, or prepare for the unexpected. A

(52:23):
well designed plan can make a meaningful difference. Our new
free Guide, leaving a lasting legacy, covers wills, trusts and
other strategies to help you build a strong retirement plan.
Take the first step towards clarity by calling eight hundred
three nine three for zero zero one right now and
asking for your free guide today. That number again is
eight hundred three nine three four zero zero one, or

(52:44):
requested online at Armstrong Advisory dot com.

Speaker 1 (52:47):
The proceeding was paid for by Armstrong Advisory Group, a
registered investment advisor. Nothing in the ad or in any
Armstrong Guide a specific financial, legal, or tax advice. Consult
your own financial, tax into state planning advisors before making
any investment decisions. Armstrong make contact you to offer investment
advisory services. The holidays are just around the corner, so
now is the time to plan your winter escape. Trade
in the cold for sunshine, sea breezes and island vibes

(53:09):
in the US Virgin Islands, America's Caribbean paradise, whether it's
a romantic retreat, a family celebration, or a solo recharge
before the new year. Saint Croix, Saint Thomas and Saint
John offer the ultimate warm weather getaway. Lounge on sun
drenched beaches, explore vibrant culture, and celebrate the holiday's island style.

(53:31):
No passport, no hassle, just warm weather, clear blue water,
and unforgettable memories. This is where the stress melts away
and you find yourself naturally in rhythm with the heartbeat
of the islands. Go to visit USVII dot com and
book your trip today. That's visit USVII dot com, the
US Virgin Islands, America's Caribbean paradise. Your holiday escape starts

(53:56):
here at visit USVII dot com.