January 7, 2026 • 37 mins
Paul Lane and Marc Fandetti discuss the ADP report that shows private payrolls gained 41,000 jobs in December and US JOLTS coming in well short of expectations. AI fatigue leaves investors focused on the S&P 500's other 493 stocks. Todd Lutsky joins the show for his weekly segment, Ask Todd. This week, Todd explains how procrastinators can plan for long term care at the last minute.
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Episode Transcript
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Speaker 1 (00:00):
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(01:06):
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Speaker 2 (01:10):
Welcome to this Wednesday edition of the Financial Exchange. Paul Lane,
Tucker Silva, and Mark Vendetti here with you as we
dive into a very busy show and an important week
and a half or so for the US economy. As
we will get several different economic reports to digest over
the next few days and some early next week as well.
(01:31):
The focus for this week is largely the labor market
that has been the biggest concern of the Federal Reserve.
The story last year was the announcement of tariffs precipitated
a lot of concerns about rising inflation and increased costs
across the economy. Those largely haven't bared out just yet,
and so as a result, you've seen the Federal Reserve
(01:52):
shift its focus more largely to the employment market. We
see the unemployment rate as of last month's jobs reports
sitting about four point six percent. We will get another
jobs report this Friday where we will get another read
on the unemployment rate for the month of December, and
we did get several labor reports today that will go
(02:13):
into We're going to start right off the bat ADP,
which is a private service that reports payroll data noted
that private payrolls rose forty one thousand in the month
of December. That was slightly below expectations, which I believe
that they had projected for about forty eight thousand jobs
to be added for the month of December. In November
(02:36):
that was a negative number. We had a loss of
about twenty nine thousand. So it's important to note with
the ADP data, it's not something that is focused on
as significantly as the Bureau of Labor Statistic report that
is going to come out on Friday, but it is
something that you do take into account with some of
these other economic data pieces out here. And we also
had a Jolts report that just came out moments ago.
(02:59):
This is the job Openings in Labor Turnover Survey, and
that one seemed to be a relatively low reading. And
we're gonna have to break this down a little bit
more as the show progresses, because it did just come
out within the last few minutes. But now we sit
from November's data again, this is a little bit backwards
looking how they do these Jolts reports. With seven point
(03:20):
one five million job openings, that was below, well below
estimates of seven point six five million jobs. So that
is a pretty significant drop off if you look back
at the Jolts reports and the job openings over the
course of the last five years ago five years or so.
We hit our peak back in March of twenty twenty two,
where there was about twelve million jobs available in March
(03:44):
of twenty twenty two. Since then, it's trend to downward.
I don't want to make it seem as if this is,
you know, a huge area of concern, that twelve million
to seven and a half or seven point one five
million drop off, because that was a true peak in
the labor market in March of twenty two when we
hit that three and a half percent unemployment rate. But
still market has been treading to have less job openings
(04:08):
and another sort of kernel of data that is somewhat
pessimistic about the direction of the labor market could be
going in twenty twenty six.
Speaker 3 (04:17):
Yeah, Jolts has received a lot of attention because it
became a better forecaster of inflation than the traditional measure
of slack in the economy, which is the unemployment rate.
So if you're an economic forecaster, Jolts has been more
useful over the past. Really couple of decades than the
unemployment rate as an indicator of whether the FED is
(04:38):
over or understimulating or getting things just right. Unemployment is
a measure of slack in the economy. It's a measure
of how healthy demand is, so the FED pays a
lot of attention to measures of slack in the labor market,
historically unemployment. More recently, Jolts, you mentioned that the number
of job openings fell from the original October number Paul
(05:02):
was about seven point six and change million. Right, That
means businesses were advertising for about I'm gonna round up,
businesses were advertising for about seven point seven million positions.
The number reported this morning was seven point one four million.
I can't really round that up. You know the rule
if it's greater than a five year rounded up. So
I'm gonna round this up. I'm gonna call it seven
(05:23):
point one. So it looks like six hundred million job
openings just disappeared, But in fact October got revised downward
down looks like it's seven point four to four nine million,
is the actual. It was originally reported at seven as
I mentioned, point six seven zero million. So there goes
a couple hundred million, A couple hundred thousand, excuse me,
job openings into thin air because they never existed. So, nevertheless,
(05:47):
the number of advertised positions so called job openings, has
dropped a lot from its peak. At its peak, it
was eleven twelve excuse me, point one million. Now it's
seven point one million. One way to make sense of
it is to take the ratio of number of people
(06:08):
looking for jobs or the unemployment relative. Take the number
of job openings now seven point one to the ratio
of the number of people looking for jobs, which is
just the unemployment level, the same level that we used
to derive that we used to calculate the unemployment rate.
That level is now below one. It's the the quotion
is seven point one divided by seven point z. I'm
just going to call that point nine and.
Speaker 4 (06:29):
How many how many unemployed on the seven.
Speaker 3 (06:32):
Point eight some point is the unemployment level. So yeah,
seven point eight million people looking for work.
Speaker 4 (06:37):
So the the.
Speaker 3 (06:42):
Stat that's that that comes from jolts that receives a
lot of attention is that supply to that demand for
workers relative to supply. That ratio was well over two
in early twenty twenty two, when the economy was everybody agrees.
Now overheating due to too much stimulus and the opening
up of the of the economy following the COVID lockdowns.
(07:05):
We're now back to that ratio now is back to
something closer to the late twenty tens, still higher, though
much higher than its historical value. I'm not I don't
know that that's a good reference point. I don't know
that the right ratio of openings to unemployed people Z
point seventy five, and by right I mean non inflationary.
(07:25):
So this is good news, I guess if you're looking
for downward pressure on inflation. Bad news if you fear
that the labor market is cooling too fast. I just
I don't know what to make of it. The labor
market was so unnaturally hot a few years ago, and
we saw the inflationary consequences, right.
Speaker 2 (07:43):
Yeah, it seems like it reset all expectations a little bit.
It's hard to do it justice when you're looking back
at these five year figures. You mentioned the twelve million
of openings. I mean that was a once in a
one hundred year shot, naturally that we were dealing with
where the economy shut down and reopened, And that's why
you had just a flood of jobs on the market,
(08:04):
and now the data looks more similar, like you were
saying to the late twenty tens numbers that we had
seen in terms of the job openings out there. But
I want to hit that point that you made again
because I think it is important. Right now, according to
the survey, seven point one four million jobs available to
seven point you said seven to eight looking for jobs
in terms of the unemployment level.
Speaker 3 (08:23):
Unemployment level, right, So that's just.
Speaker 2 (08:26):
Something that is worth you know, focusing on that level
was much a much higher ratio when you had twelve
million jobs available to those looking for jobs out there.
Speaker 4 (08:37):
So again, this is the big focus.
Speaker 2 (08:39):
I think for twenty twenty six, it would be one
of the headline pieces to look at.
Speaker 4 (08:43):
It is the labor market. And I'm not saying that.
Speaker 3 (08:45):
The Joe the be all, but I'm going to disagree.
I don't know if it's still the right slack variable.
That's what slack variable sounds technical. It just means the
measure that an economist would use to well to to
measure slack in the economy. So I guess it is
pretty self explanatory. It might be the unemployment right now
is a better predictor of inflationary pressures. Either way, both
these things I guess we should sum up by pointing
(09:06):
out that both these things are pointing in the same direction.
There's more slack now in the economy than a year
and two years ago. Certainly, I just don't know if
that means the FED needs to goose demand, which they
have decided is the right course, or this is a
welcome normalization. Inflation has slowed, labor markets kind of getting
back to normal. Four point six percent unemployment historically speaking,
(09:28):
is awesome. That may sound flip because if you're looking
for a job and you're hearing me say that, you say, well,
it's not awesome to meet jerk, but it is pretty good.
So we have to talk in terms of averages here.
We can't address everybody's situation. That's pretty darn good historically speaking.
We know GDP growth was awesome in the second and
third quarter, if you average those two quarters. We're not
(09:49):
talking about GDP right now, but it's lurking in the background.
You can't avoid it. We're talking about four percent real
GDP growth. I'm dropping the first quarter, which was terrible,
but last two quarters have been pretty good.
Speaker 4 (10:01):
For context for listeners out there.
Speaker 2 (10:02):
Four percent, I mean two percent is sort of the
average that we run on to see that four percent
number is pretty tremendous.
Speaker 3 (10:08):
By the way, unsustainably awesome. I should have added that
I'm not like really excited about it because I think
it's sustainable. It actually worries me a little bit because
it's clearly not sustainable. The economy is not The supply
side of the economy is not growing fast enough to
support growth the four percent unless unless there's some AI
miracle going on that we can't measure more specifically yet
(10:31):
and it's just showing up somehow in GDP and productivity
too very very possible.
Speaker 2 (10:37):
Yeah, there certainly is just a lot of interesting indicators
out there. Like you mentioned on the labor front, it
does seem like there is a bit of slowing here
in terms of market reaction. There really isn't a tremendous
amount to this data that we see today. I think
there will be far more focus on the Bureau of
Labor Statistic report that is going to come out on Friday.
Right now, you have the Dow Jones off about two
(10:58):
hundred points. There are close to half in the s
and p. Five hundred is barely budging here, So we're
gonna take a quick break here on the Finish Exchange,
and when we come back, we're going to be covering
AI fatigue leaving investors focusing on companies outside of that
magnificent seven. We're going to talk about that and much
more right after this break here on the Financial Exchange.
Speaker 1 (11:18):
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Speaker 2 (12:20):
The SMP five hundred has achieved a cumuative gain of
about close to eighty percent over the course of the
last three years, and largely a significant portion of that
seventy eight percent cumtive game has come off the backs
of the quote unquote Magnificent seven, which encompasses a lot
of the companies that we talk about quite frequently on
the show and that have the largest waiting within the
(12:42):
SMP five hundred and Video Microsoft, Amazon, Facebook, Google, et cetera.
Those are the companies that have contributed a tremendous amount
to the gains that we've seen in the stock market
of the last few years. There's a piece here in
Bloomberg that is titled AI Fatigue leaves the investors focusing
(13:03):
on the S and P five hundreds other four hundred
and ninety three stocks away from the Magnificent seven. If
you look at the earnings growth that we've seen from
the S and P five hundred, the Magnificent seven that
I was mentioning before is a huge contributor to the
earnings growth that we've seen there. If we were to
strip out the earnings growth of those big names, it
(13:24):
would be a far worse picture in terms of what
we've seen from the other four hundred ninety three companies.
To me, this piece goes into this idea that you
should focus on the other four ninety three. Perhaps you
could focus on the other four ninety three, but to me,
this year, and at least the story for this year
(13:44):
is still going to be the momentum from those those
seven companies.
Speaker 4 (13:48):
I just don't see how you have a.
Speaker 2 (13:49):
Year where they perform poorly and the other four ninety
three pick us up and we have a good year
for the market.
Speaker 3 (13:58):
The problem with that argument, well, if you strip out
the best performers, everything else stinks. The problem with that argument,
and journalists make it a lot, it's a an economist
would say that's partial I'll use a fancy term. I
don't mean to sound high falutine, because I barely understand
it myself. That's partial equilibrium. Thinking you can't just take
a slice of the economy, change that and then put
it back in and then and then resum everything because
(14:21):
the other parts would have changed. So suppose there was
less investment in AI over the last five years, leading
to less fast earnings growth from AI and AI adjacent stocks,
where would that investment have gone. Instead, it would have
gone into other sects rights there would have been innovations elsewhere,
not AI, but innovations elsewhere that would have propelled the
earnings of those companies that investment would have so there
(14:43):
would have been growth elsewhere. That sentence, and you see
that repeated a lot. Take these companies out in the
s and p stinks.
Speaker 4 (14:50):
Now, you can't.
Speaker 3 (14:51):
You can't just remove the chance of something. It's like
these movies about time travel. You change one thing. They
finally caught on to the fact if you change one thing,
you change everything. So you need an alternate univers just
to make everything make sense. And now you've got this
genre of multiverses. You can't just change one thing about
the economy and then slide it back in and then
measure the whole again. Yeah, that's why I don't like
(15:12):
I'm sorry, I'm I'm digressing on this point, but that's
why I don't like that reasoning. It just occurred to
me why that's flawed.
Speaker 4 (15:18):
No, I don't. I don't particularly you weren't.
Speaker 3 (15:20):
You weren't espousing it by this no craizing what's in
the article.
Speaker 2 (15:23):
It's I just don't think that's the way to focus
on investing. Is this idea that, hey, these these companies
have performed significantly well, this idea of making a case
for for the other four ninety three, to me, that's
that's not really an approach to.
Speaker 4 (15:39):
You made it.
Speaker 3 (15:40):
You made the point that if if those tank like
I think what you were say, I'm gonna put words
you like, make the case to me that everything else
is gonna go gangbusters when those tanks. Yeah, like those tanks,
we're kind of up a creek.
Speaker 4 (15:51):
Absolutely.
Speaker 2 (15:52):
To me, if there's no I would be shocked to
see a year where those big seven tank and somehow
we come out with positive market performance. I mean the
size of them alone, You're talking about close to thirty
five percent of the waiting of the s and P
five hundred from those big seven right there. So it
would be very difficult for the other sixty five percent
(16:13):
to counterbalance any negative declines there. I could certainly see
a story where the whole five hundred goes down because unemployment,
you know, gets out of control. But obviously when you're
doing any of these kind of projections and there's a
couple pieces that will cover in the sack today, nobody
really knows. But again, when you look at the s
and P. Five hundred, I'm in agreement with you. You know,
(16:35):
it's not something that you can just focus on. Well,
if you take out seven, this is the deal. You
got to focus on the whole thing, for good or
for bad, all of it. Venezuela is going to give
the US up to fifty million.
Speaker 3 (16:47):
Give sorry, sorry to jump in, I'm not going to
shoot the messenger. Interesting choice of verb.
Speaker 2 (16:57):
They're going to provide fifty million barrels of oil to
the United States. This is about an approximate value based
on the heavy crew that we would be extrava taking from, giving, receiving,
whatever verb you want to use them again from Venezuela
is a market value of about two billion dollars. Venezuela
(17:18):
produces a heavier crude than what is produced here domestically
in the United States. That's about as far as I'll
go in terms of my knowledge on crude and refinery processes.
But it does set up for a situation where to me,
and again, energy prices are these one area that is
a fool errand to try and project. Also in addition
(17:40):
to interest rates and some of the other economic variables
out there. But it seems like mark that you're going
to have a tremendous amount of bump. And I'm not
saying this this incident alone really changes the forecast for
twenty twenty six, but it seems like there's going to
continue to be a surplus of energy. Whether you look
at OPEC and its increasing supply and non opluck as well,
(18:01):
it seems like there will be a lot of surplus.
So from a strategic standpoint, I just don't understand why
this oil is such a huge focus. Don't get me wrong,
I understand the importance of it, but it's not like
we're talking about the seventies where the US doesn't produce
fourteen or FI.
Speaker 3 (18:19):
Yeah, So the strategic.
Speaker 2 (18:20):
Standpoint on this maneuver, I don't really understand the focus
behind it. One of the things that popped in my
head is maybe this is the best way to try
and keep inflation down under the control of the political.
Speaker 3 (18:35):
I don't know, environments, I'll say again, it depends on
what happens elsewhere in the economy. Fifty million. Your point
is I should be well taken. It's a drop in
the bucket relative to yeah, one hundred million barrels of
oil the world economy consumes every day. I'm not saying
it couldn't move the price. I suppose it could. But
what's going to happen? What are other producers going to
do if we continue to extract oil from Venezuela. It's
(18:58):
Jesus just sounds crazy to say that. I'm thinking about
the state the world is in today that countries feel
like they can do that, and we're only doing it
because other countries have done It doesn't make it right.
But anyway, so this is the world we live in now.
You want something, if you're strong enough, you just kind
of take it. Different than the world I grew up in.
But we play the hand where dealt What effect will
that have on production? I suppose we decide to do
(19:18):
it again in a few months, What effect will that
have on production elsewhere?
Speaker 2 (19:21):
I think fantastic investment. Yeah, certainly a lot to get
into there. We're gonna take a quick break here in
the financial exchange when we come back, we're gonna have
ass Tod, So get all your questions ready for ask
Todd and Todd Lutsky eight of eight two zero five
two two sixty three as Tod right after this break.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look at what's moving market so far
today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Markets are a little changed in mixed as investors react
to jobs data posted this morning, including the ADP Private
Pales Report in addition to the Joltz Report for the
latest on job openings, The all important December Jobs report
will be released on Friday morning. Right now, the Dow
is off by over four tenths of a percent or
two hundred and nineteen points. SMP five hundred is edging
(20:23):
only two points higher, Nasdaq is up by about a
third of a percent or a four points higher. Rusted
two thousand down by seven tenths of a percent. Ten
Your Treasure reeled down two basis points at four point
one five five percent. Crew to oiled down about one
and a half percent. Trading a fifty six dollars and
thirty two cents a barrel. The Financial Tabs reported that
(20:45):
Chevron and Quantum Capital are planning to are planning a
bid to buy Luke Oil's international assets. If a deal
is agreed upon, Chevron and Quantum plan to divvy up
the assets between them, valued at twenty two billion dollars
by Luke Oil. Chevreun stock is dipping. Meanwhile, Warner Brothers
told shareholders to reject Paramount's amended hostile bid for the company,
(21:08):
saying its existing deal with Netflix is stronger. In a letter,
Warner's board said Paramounts offer quote remains inadequate. Warner stock
is up modestly on that news. Elsewhere, shares in Game
Stop jumping five percent after the video game retailer unveiled
its compensation package for CEO Ryan Cohen that included performance
(21:29):
objectives to grow the company to one hundred billion dollars.
And Mobile Eye shares are up by about three percent
after the self driving systems company said it would buy
humanoid robot maker Mentee for nine hundred million dollars. I'm
Tucker Silva, and that is a Wall Street watch.
Speaker 1 (21:52):
This is asked Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd, Let's here to answer your questions
and help you plan for later life. Ask Todd is
presented by Cushing and Dolan, serving Massachusetts and New England
for more than thirty five years, helping families with a
state and tax planning, medicaid planning, and probate law. Visit
(22:14):
Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:19):
As is the case every Wednesday here on the Fantasy Exchange,
we are joined by Todd Lutsky from Cushion Dolan. If
you have any questions regarding a state planning, gifting, Medicaid protection,
give our studio line a call at eight eight eight
to zero five two two six three. Again, any of
your questions for Todd Lutsky, give our studio line of
call at eight eight eight two zero five two to six'. Three,
(22:43):
todd thank you so much for joining.
Speaker 6 (22:44):
Us always a. Pleasure thank.
Speaker 2 (22:47):
YOU i would Say Happy New, year but my producer
here hates that and says that the time has passed
to Say Happy New year on, that SO i will
not do that to make SURE i don't get beaten
up By.
Speaker 6 (22:57):
Tucker, well, Great i'm not gonna Say Happy New year, either,
right two of us didn't Say Happy New, year merving one.
Speaker 4 (23:02):
Time moving, On.
Speaker 2 (23:04):
Todd one big subject that comes up often meeting with
clients is long term care costs and the planning surrounding.
That and for some people it's just too costly to
afford a long term care insurance, policy and it can
be a situation where they just fall behind the eight
ball and they find themselves in a situation where they're
just not prepared for the long term care costs that they.
(23:26):
Face what are some of the suggestions or tips that
you have for folks for those who have not done
their planning in terms of long term care, costs because
it's a big issue around this, area quite.
Speaker 6 (23:37):
Expensive, yeah so a couple of. Things if you haven't
done any long term care, planning you, know and you're
of course not not faced with you, know going into
the nursing home anytime, soon then you have, time right
to do some advanced planning and to figure out our
way to protect some of these. Assets and by the,
(23:59):
way not necessarily pooh pooing long term care. Insurance but you're,
right you, Know, paul it does. Take it can cost
a lot of, money and quite, frankly people that are,
like when you get to age, seventy it's kind of.
Tough it gets harder and harder to afford. It and,
again you never need long term care insurance to be you,
know the end all be. All it can just be you,
(24:20):
know you, know don't have to be A cadillac. Policy
it can be a smaller policy that sort of supplements the.
Care but either, way it's it's generally never enough to
cover sixteen seventeen thousand dollars a. Month it just. Isn't
but so people in fact will, say, well, fine what
CAN i? Do, well that's where these Irrevocable medicaid trusts come.
(24:41):
In AND i know we spend a lot of time
on them over the, years but they truly are you,
know they're really the only way THAT i know of
to protect assets from the nursing. Home so many people, say,
well isn't there like a ton of, Options AND i always, say,
no there's. Not like it's not like protect it's not
like you, know looking paint where you have tons of it's,
really you, know do nothing give your assets away to your,
(25:06):
kids which is a horrible idea across the, board or
do any irrevocable medicaid. Trust so those are really your
three options if you want to protect. It and these
trusts are are, really you, know designed in a way
to keep you in. Control AND i think that's the
most important message THAT i can send to people When
(25:29):
i'm talking about irrevocable. Trusts in, FACT i had one
recently real life. Story we got hired to do the estate,
plan and about two weeks later he called back and,
Said i'm just so afraid of the word. Irrevocable and
THEN i had to call him back and we talked,
again AND i had to explain to him that you're
reading the engagement letter and it seems, scary but it
(25:49):
just needed. Clarification and by the time we hung, up he's, like, oh,
yeah you're, Right i'm really not giving up any control
BECAUSE i explained to, him AS i explained to, everybody
that you, know you live in your, house you pay your,
bills you sell your, house you buy another, house all
through the, trust very easily, done no, effort no adverse tax.
Consequences you, know you can also have investment accounts in
(26:12):
there now Not ira, accounts but investment, accounts you, know, stocks,
bonds mutual. Funds you can manage the. Money you can you,
know invest the money the same as you always. Did
you can live off the, income take it, out enjoy the,
income and even pay the taxes on that income at your,
rates not at trust. Rates people get concerned all the.
(26:34):
Time they hear or they go on the website or
internet and they, say you, know my, GOSH i read
about your vocable trusts and there's huge income tax problems with. Them,
well there can, be but if they're drafted as grant
our trust and they're not sure and everything is taxed
at your own, rate so you, know just a. Little
that's just an overall summary of these irrevocable trusts to
(26:55):
let people know that it's really the best, way the
only way to actually tech assets and to not really
be frightened off by the word.
Speaker 4 (27:03):
Irrevocable certainly a lot of nuanced to the.
Speaker 2 (27:06):
Subject if you have any, questions we're here With Todd
lutsky From Cushian dolan on the, estate paying realm or
regarding irrevocable Trust give our studio line a call at
eighty eight to zero five two two sixty three. Again
that studio line number for any of your questions For
Todd lutsky From Cushian dolan eighty eight two zero five
two two sixty. Three we're gonna take a quick break,
(27:26):
here but when we come, back we'll have your questions
With todd right after this.
Speaker 1 (27:30):
Break Ask todd With Todd lutsky Every wednesday at ten
thirty only here on The Financial Exchange Radio. Network you're
listening To Ask todd With Todd lutsky on The Financial
Exchange Radio.
Speaker 2 (27:45):
Network we are back here With Todd lutsky From Cushian.
Dolan if you have any questions regarding gifting irrevocable trusts
or a state, planning give our studio line a call
at eighty eight the two zero five two two six three.
Again any of your questions heading into twenty twenty six
(28:05):
on a state planning gifting air vocable trust give our
studio on a call eight eight eight two zero five
two two six. Three we're gonna go to our first, Caller,
jim who is in a. Truck, jim you're on With Todd.
Speaker 4 (28:16):
Lutsky, Hi, JOHN.
Speaker 7 (28:19):
I did A i did irrevocable trust with you five
years ago past the getting just getting desk a look
back period and come to a realization that my state
is it is apt to want to deal with the
rental properties that are contained within the. TRUST i have
(28:40):
been And i'm trying to plan my strategy going. Forward
balancing ten thirty one exchanges With, uh how to DO
i sell the? Properties put it in a B I?
Speaker 4 (28:54):
Ira?
Speaker 7 (28:54):
Uh WHAT i just do that whole process of moving.
Forward IF i sold the proper pay the. Taxes does
that money go into MY? Ira or DO i have
to set up a separate? Account how does that? All
how does that all?
Speaker 6 (29:09):
Work, Yeah so stay on the line and keep it
open BECAUSE i have a bunch of follow up questions
just to make SURE i understand what you're asking SO
i can ask another. Question. One you've had the trust
for five years and you've had rental property in, it
and you've been collecting rent and paying your bills and
living off the. Income all that's been fine so. Far?
Correct that is? Correct, Okay now you're at a point
(29:32):
where you're saying and that's important for listeners to, know
by the, way just so they can understand that you, Know,
HEY i can have an irrevocable, trust have rental property in,
it and live my. Life and it's so important that
someone like you sort of you, know you, know justifies
and verifies that that that can be. Done now the next, question,
oh what IF i want to sell? It absolutely no
(29:53):
problem in selling it. Now i'm going to strongly suggest
that you reach out to us when you're ready to do,
that just because you, know some real estate attorneys don't
understand the trust and how to do. It but absolutely
you can sell. It out will go the? MONEY i
mean out we'll. Go let's say rental property number, one
and in will come the. Money make sure that the
(30:14):
money gets deposited into a bank account in the name
of the trust under the TRUST id, number Which i'm
sure you already, have because if you had rental, property
we would have gotten you AN id number when we created.
It and so now the real estate is gone and
the money's. Here now you said a couple of. Things, one, Well, Geez,
todd CAN i put the money in MY? Ira, no,
(30:37):
right please don't do, that because the money that's in
the trust is now just as protected as the house
was when it was in the, trust and there is
no new five year waiting. Period so don't take the
money out and put in THE. Ira that would be
(30:58):
a bad idea because, remember, member THE ira is not
in your, trust it is outside the. Trust it has
to be outside the, trust otherwise there'd be a huge
income tax if you were to pull the money out
of THE ira and put it into the. Trust, now
if you don't like that, approach you mentioned the word
(31:20):
ten thirty one. Exchange, well listeners don't know what that,
is so let me tell. THEM a ten thirty one
exchange is a way for, You, jim or any of
you listening to, SAY i want to sell my, property
my rental, property which might have a very low basis
Because i've been renting. It so let's SAY i bought
(31:40):
it a long time, ago and so my cost basis is.
Low in addition to, That i've been renting, it so
my basis has been reduced even further via depreciation deduction
every year THAT i take on my income tax. Return
and IF i sell, It i'm going to have a
large capital gains. Tax, WELL i don't want to do,
(32:02):
that SO i want to defer that capital gain till. Later,
well you can defer it by selling it and buying
another property within one hundred and eighty. Days you have
one hundred and eighty days to buy the replacement property
if you're going to do a delayed ten thirty one,
exchange and then the replacement property takes on the basis
(32:27):
of the property that you, sold so there's no gain
recognized and it's still built, in but you're not paying any.
Taxes but if you die owning it because you decided
never to sell this replacement property that you, bought well
then you'll get a step up in basis inside this irrevocable,
(32:49):
Trust So, jim this trust is designed as a grand
tour trust for income tax, Purposes so not only can
you direct the sale and the purchase of another, property
since you are treated as the owner for income tax,
purposes you are also able to do a ten thirty one.
(33:11):
Exchange just make sure the trust sells it and the
trust buys the new, property and you will be able
to defer the gain and then die owning the replacement,
property and everything in the trust will get a new
step up in, basis eliminating the built in gains for the,
(33:31):
beneficiaries so then they can sell the property and pay
no capital gains. Tax and depending on the size of your.
Estate there may be no estate taxes when you pay
when you die, either so hopefully that gives you some
indication of the flexibility and the benefits of doing. This and,
yes you can do all of those things with the
(33:52):
trust you, have and anybody else who's got an irrevocable,
trust at least ones that we've prepared At cushing And
dolan can do these things. Well SO i long winded, answer,
sorry but there was a lot going on in that.
Question hopefully that was. Helpful but reach, out don't sell
it on your. Own please contact the office and let's
make sure we do it.
Speaker 1 (34:11):
Right.
Speaker 6 (34:13):
Folks jim in this case did advance. Planning so kudos To.
Jim he's already gotten past the five year waiting. Period
you've heard all about that and all the things he can.
Do but you know, what there's people who don't do.
It and the guide we're giving away this month allows
you to figure out how to protect. Assets last. Minute
(34:36):
never as, good but better than. Nothing if you're faced
with nursing home, care it's called long term care. Planning
for the. Procrastinator it talks about the look back period
that we discussed. Here it talks about. Annuities how do
you use these to protect? Money last, minute it talks
about pooled, trusts how to work with a, home a rental,
(34:57):
property a vacation. Home they're all tree, differently iras treated
differently for married couples and single. People if you're faced
with nursing home, care don't just write the. Check so
for folks who have done no, planning or folks who
have done planning but still have assets outside of this irrevocable.
(35:19):
Trust there's something for everyone in this. Guide if you're
faced with going in the nursing, home call and get
it eight six six eight four eight five six nine
nine Or Legal Exchange show dot. Com you can download
it there again eight six six eight four eight five
six nine nine Or Legal Exchange show dot com.
Speaker 2 (35:41):
Tud quick question for. You we're running out of time,
here but what are the differences for planning for long
term care costs for a married couple versus an? Individual
what are some of the key takeaways between those two?
Speaker 6 (35:52):
Differences you mean from a planning perspective or a cost.
Speaker 2 (35:57):
A planning perspective between a married couple considerations versus a single.
Speaker 6 (36:01):
Person, yeah and you know, what there's still the same irrevocable.
Trust so it's a it's a great question for the
amount of time we have, left it's it's it is
still going to be an irrevocable. Trust the difference, is you,
know one is obviously a single person trust and one
is a married couple. Trust and the operational differences are
(36:22):
very much the, same but for tax, purposes, uh they're
a little. Different not for income tax, purposes but for
estate tax. Purposes so for income tax, purposes operational day to,
day you, know using investing the, money living on the,
income all of that is the. Same paying the income
(36:43):
taxes is the. Same but when you're, married the benefit
there is the trust is designed to shelter assets for
estate taxes as, well so you're able to do both,
nursing home planning and estate tax reduction by doubling the
exemption to four million dollars rather than just.
Speaker 2 (37:02):
TWO a lot of great information. There thanks so much
for the, Time. Todd we really appreciate. It good luck
to your steelers this, weekend AND i hope you have
a great rest of the. Week thanks so much for joining, Us.
Speaker 6 (37:11):
Todd thank you always a.
Speaker 1 (37:13):
Pleasure this has been Ask todd on the Financial exchange radio.
Network Ask todd With Todd lutsky has been presented By
cushing And, dolan Serving massachusetts And New england for more
than thirty, years helping families with the state and tax,
Planning medicaid, planning and probate. Law call eight hundred and
three nine three four thousand and one or Visit cushingdolan dot.
Com the views expressed in this segment are solely those
(37:34):
Of cushing And Dolan Armstrong. Advisory he does not provide
any legal or tax. Advice please consult with your legal
or tax advisor on such. Matters cushing And armstrong do
not endorse each other and are not. Affiliated
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
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(00:20):
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Armstrong and Money Matters Radio do not compensate each other
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and Mark Vandetti.
Speaker 2 (01:10):
Welcome to this Wednesday edition of the Financial Exchange. Paul Lane,
Tucker Silva, and Mark Vendetti here with you as we
dive into a very busy show and an important week
and a half or so for the US economy. As
we will get several different economic reports to digest over
the next few days and some early next week as well.
(01:31):
The focus for this week is largely the labor market
that has been the biggest concern of the Federal Reserve.
The story last year was the announcement of tariffs precipitated
a lot of concerns about rising inflation and increased costs
across the economy. Those largely haven't bared out just yet,
and so as a result, you've seen the Federal Reserve
(01:52):
shift its focus more largely to the employment market. We
see the unemployment rate as of last month's jobs reports
sitting about four point six percent. We will get another
jobs report this Friday where we will get another read
on the unemployment rate for the month of December, and
we did get several labor reports today that will go
(02:13):
into We're going to start right off the bat ADP,
which is a private service that reports payroll data noted
that private payrolls rose forty one thousand in the month
of December. That was slightly below expectations, which I believe
that they had projected for about forty eight thousand jobs
to be added for the month of December. In November
(02:36):
that was a negative number. We had a loss of
about twenty nine thousand. So it's important to note with
the ADP data, it's not something that is focused on
as significantly as the Bureau of Labor Statistic report that
is going to come out on Friday, but it is
something that you do take into account with some of
these other economic data pieces out here. And we also
had a Jolts report that just came out moments ago.
(02:59):
This is the job Openings in Labor Turnover Survey, and
that one seemed to be a relatively low reading. And
we're gonna have to break this down a little bit
more as the show progresses, because it did just come
out within the last few minutes. But now we sit
from November's data again, this is a little bit backwards
looking how they do these Jolts reports. With seven point
(03:20):
one five million job openings, that was below, well below
estimates of seven point six five million jobs. So that
is a pretty significant drop off if you look back
at the Jolts reports and the job openings over the
course of the last five years ago five years or so.
We hit our peak back in March of twenty twenty two,
where there was about twelve million jobs available in March
(03:44):
of twenty twenty two. Since then, it's trend to downward.
I don't want to make it seem as if this is,
you know, a huge area of concern, that twelve million
to seven and a half or seven point one five
million drop off, because that was a true peak in
the labor market in March of twenty two when we
hit that three and a half percent unemployment rate. But
still market has been treading to have less job openings
(04:08):
and another sort of kernel of data that is somewhat
pessimistic about the direction of the labor market could be
going in twenty twenty six.
Speaker 3 (04:17):
Yeah, Jolts has received a lot of attention because it
became a better forecaster of inflation than the traditional measure
of slack in the economy, which is the unemployment rate.
So if you're an economic forecaster, Jolts has been more
useful over the past. Really couple of decades than the
unemployment rate as an indicator of whether the FED is
(04:38):
over or understimulating or getting things just right. Unemployment is
a measure of slack in the economy. It's a measure
of how healthy demand is, so the FED pays a
lot of attention to measures of slack in the labor market,
historically unemployment. More recently, Jolts, you mentioned that the number
of job openings fell from the original October number Paul
(05:02):
was about seven point six and change million. Right, That
means businesses were advertising for about I'm gonna round up,
businesses were advertising for about seven point seven million positions.
The number reported this morning was seven point one four million.
I can't really round that up. You know the rule
if it's greater than a five year rounded up. So
I'm gonna round this up. I'm gonna call it seven
(05:23):
point one. So it looks like six hundred million job
openings just disappeared, But in fact October got revised downward
down looks like it's seven point four to four nine million,
is the actual. It was originally reported at seven as
I mentioned, point six seven zero million. So there goes
a couple hundred million, A couple hundred thousand, excuse me,
job openings into thin air because they never existed. So, nevertheless,
(05:47):
the number of advertised positions so called job openings, has
dropped a lot from its peak. At its peak, it
was eleven twelve excuse me, point one million. Now it's
seven point one million. One way to make sense of
it is to take the ratio of number of people
(06:08):
looking for jobs or the unemployment relative. Take the number
of job openings now seven point one to the ratio
of the number of people looking for jobs, which is
just the unemployment level, the same level that we used
to derive that we used to calculate the unemployment rate.
That level is now below one. It's the the quotion
is seven point one divided by seven point z. I'm
just going to call that point nine and.
Speaker 4 (06:29):
How many how many unemployed on the seven.
Speaker 3 (06:32):
Point eight some point is the unemployment level. So yeah,
seven point eight million people looking for work.
Speaker 4 (06:37):
So the the.
Speaker 3 (06:42):
Stat that's that that comes from jolts that receives a
lot of attention is that supply to that demand for
workers relative to supply. That ratio was well over two
in early twenty twenty two, when the economy was everybody agrees.
Now overheating due to too much stimulus and the opening
up of the of the economy following the COVID lockdowns.
(07:05):
We're now back to that ratio now is back to
something closer to the late twenty tens, still higher, though
much higher than its historical value. I'm not I don't
know that that's a good reference point. I don't know
that the right ratio of openings to unemployed people Z
point seventy five, and by right I mean non inflationary.
(07:25):
So this is good news, I guess if you're looking
for downward pressure on inflation. Bad news if you fear
that the labor market is cooling too fast. I just
I don't know what to make of it. The labor
market was so unnaturally hot a few years ago, and
we saw the inflationary consequences, right.
Speaker 2 (07:43):
Yeah, it seems like it reset all expectations a little bit.
It's hard to do it justice when you're looking back
at these five year figures. You mentioned the twelve million
of openings. I mean that was a once in a
one hundred year shot, naturally that we were dealing with
where the economy shut down and reopened, And that's why
you had just a flood of jobs on the market,
(08:04):
and now the data looks more similar, like you were
saying to the late twenty tens numbers that we had
seen in terms of the job openings out there. But
I want to hit that point that you made again
because I think it is important. Right now, according to
the survey, seven point one four million jobs available to
seven point you said seven to eight looking for jobs
in terms of the unemployment level.
Speaker 3 (08:23):
Unemployment level, right, So that's just.
Speaker 2 (08:26):
Something that is worth you know, focusing on that level
was much a much higher ratio when you had twelve
million jobs available to those looking for jobs out there.
Speaker 4 (08:37):
So again, this is the big focus.
Speaker 2 (08:39):
I think for twenty twenty six, it would be one
of the headline pieces to look at.
Speaker 4 (08:43):
It is the labor market. And I'm not saying that.
Speaker 3 (08:45):
The Joe the be all, but I'm going to disagree.
I don't know if it's still the right slack variable.
That's what slack variable sounds technical. It just means the
measure that an economist would use to well to to
measure slack in the economy. So I guess it is
pretty self explanatory. It might be the unemployment right now
is a better predictor of inflationary pressures. Either way, both
these things I guess we should sum up by pointing
(09:06):
out that both these things are pointing in the same direction.
There's more slack now in the economy than a year
and two years ago. Certainly, I just don't know if
that means the FED needs to goose demand, which they
have decided is the right course, or this is a
welcome normalization. Inflation has slowed, labor markets kind of getting
back to normal. Four point six percent unemployment historically speaking,
(09:28):
is awesome. That may sound flip because if you're looking
for a job and you're hearing me say that, you say, well,
it's not awesome to meet jerk, but it is pretty good.
So we have to talk in terms of averages here.
We can't address everybody's situation. That's pretty darn good historically speaking.
We know GDP growth was awesome in the second and
third quarter, if you average those two quarters. We're not
(09:49):
talking about GDP right now, but it's lurking in the background.
You can't avoid it. We're talking about four percent real
GDP growth. I'm dropping the first quarter, which was terrible,
but last two quarters have been pretty good.
Speaker 4 (10:01):
For context for listeners out there.
Speaker 2 (10:02):
Four percent, I mean two percent is sort of the
average that we run on to see that four percent
number is pretty tremendous.
Speaker 3 (10:08):
By the way, unsustainably awesome. I should have added that
I'm not like really excited about it because I think
it's sustainable. It actually worries me a little bit because
it's clearly not sustainable. The economy is not The supply
side of the economy is not growing fast enough to
support growth the four percent unless unless there's some AI
miracle going on that we can't measure more specifically yet
(10:31):
and it's just showing up somehow in GDP and productivity
too very very possible.
Speaker 2 (10:37):
Yeah, there certainly is just a lot of interesting indicators
out there. Like you mentioned on the labor front, it
does seem like there is a bit of slowing here
in terms of market reaction. There really isn't a tremendous
amount to this data that we see today. I think
there will be far more focus on the Bureau of
Labor Statistic report that is going to come out on Friday.
Right now, you have the Dow Jones off about two
(10:58):
hundred points. There are close to half in the s
and p. Five hundred is barely budging here, So we're
gonna take a quick break here on the Finish Exchange,
and when we come back, we're going to be covering
AI fatigue leaving investors focusing on companies outside of that
magnificent seven. We're going to talk about that and much
more right after this break here on the Financial Exchange.
Speaker 1 (11:18):
Stick with US breaking business and financial news first throughout
the day, only here on the Financial Exchange Radio Network.
Thanks to US six one, seven, three, six two thirteen
eighty five. With your comments and questions about today's show,
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
Speaker 5 (11:45):
This segment of the Financial Exchange is brought to you
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Speaker 2 (12:20):
The SMP five hundred has achieved a cumuative gain of
about close to eighty percent over the course of the
last three years, and largely a significant portion of that
seventy eight percent cumtive game has come off the backs
of the quote unquote Magnificent seven, which encompasses a lot
of the companies that we talk about quite frequently on
the show and that have the largest waiting within the
(12:42):
SMP five hundred and Video Microsoft, Amazon, Facebook, Google, et cetera.
Those are the companies that have contributed a tremendous amount
to the gains that we've seen in the stock market
of the last few years. There's a piece here in
Bloomberg that is titled AI Fatigue leaves the investors focusing
(13:03):
on the S and P five hundreds other four hundred
and ninety three stocks away from the Magnificent seven. If
you look at the earnings growth that we've seen from
the S and P five hundred, the Magnificent seven that
I was mentioning before is a huge contributor to the
earnings growth that we've seen there. If we were to
strip out the earnings growth of those big names, it
(13:24):
would be a far worse picture in terms of what
we've seen from the other four hundred ninety three companies.
To me, this piece goes into this idea that you
should focus on the other four ninety three. Perhaps you
could focus on the other four ninety three, but to me,
this year, and at least the story for this year
(13:44):
is still going to be the momentum from those those
seven companies.
Speaker 4 (13:48):
I just don't see how you have a.
Speaker 2 (13:49):
Year where they perform poorly and the other four ninety
three pick us up and we have a good year
for the market.
Speaker 3 (13:58):
The problem with that argument, well, if you strip out
the best performers, everything else stinks. The problem with that argument,
and journalists make it a lot, it's a an economist
would say that's partial I'll use a fancy term. I
don't mean to sound high falutine, because I barely understand
it myself. That's partial equilibrium. Thinking you can't just take
a slice of the economy, change that and then put
it back in and then and then resum everything because
(14:21):
the other parts would have changed. So suppose there was
less investment in AI over the last five years, leading
to less fast earnings growth from AI and AI adjacent stocks,
where would that investment have gone. Instead, it would have
gone into other sects rights there would have been innovations elsewhere,
not AI, but innovations elsewhere that would have propelled the
earnings of those companies that investment would have so there
(14:43):
would have been growth elsewhere. That sentence, and you see
that repeated a lot. Take these companies out in the
s and p stinks.
Speaker 4 (14:50):
Now, you can't.
Speaker 3 (14:51):
You can't just remove the chance of something. It's like
these movies about time travel. You change one thing. They
finally caught on to the fact if you change one thing,
you change everything. So you need an alternate univers just
to make everything make sense. And now you've got this
genre of multiverses. You can't just change one thing about
the economy and then slide it back in and then
measure the whole again. Yeah, that's why I don't like
(15:12):
I'm sorry, I'm I'm digressing on this point, but that's
why I don't like that reasoning. It just occurred to
me why that's flawed.
Speaker 4 (15:18):
No, I don't. I don't particularly you weren't.
Speaker 3 (15:20):
You weren't espousing it by this no craizing what's in
the article.
Speaker 2 (15:23):
It's I just don't think that's the way to focus
on investing. Is this idea that, hey, these these companies
have performed significantly well, this idea of making a case
for for the other four ninety three, to me, that's
that's not really an approach to.
Speaker 4 (15:39):
You made it.
Speaker 3 (15:40):
You made the point that if if those tank like
I think what you were say, I'm gonna put words
you like, make the case to me that everything else
is gonna go gangbusters when those tanks. Yeah, like those tanks,
we're kind of up a creek.
Speaker 4 (15:51):
Absolutely.
Speaker 2 (15:52):
To me, if there's no I would be shocked to
see a year where those big seven tank and somehow
we come out with positive market performance. I mean the
size of them alone, You're talking about close to thirty
five percent of the waiting of the s and P
five hundred from those big seven right there. So it
would be very difficult for the other sixty five percent
(16:13):
to counterbalance any negative declines there. I could certainly see
a story where the whole five hundred goes down because unemployment,
you know, gets out of control. But obviously when you're
doing any of these kind of projections and there's a
couple pieces that will cover in the sack today, nobody
really knows. But again, when you look at the s
and P. Five hundred, I'm in agreement with you. You know,
(16:35):
it's not something that you can just focus on. Well,
if you take out seven, this is the deal. You
got to focus on the whole thing, for good or
for bad, all of it. Venezuela is going to give
the US up to fifty million.
Speaker 3 (16:47):
Give sorry, sorry to jump in, I'm not going to
shoot the messenger. Interesting choice of verb.
Speaker 2 (16:57):
They're going to provide fifty million barrels of oil to
the United States. This is about an approximate value based
on the heavy crew that we would be extrava taking from, giving, receiving,
whatever verb you want to use them again from Venezuela
is a market value of about two billion dollars. Venezuela
(17:18):
produces a heavier crude than what is produced here domestically
in the United States. That's about as far as I'll
go in terms of my knowledge on crude and refinery processes.
But it does set up for a situation where to me,
and again, energy prices are these one area that is
a fool errand to try and project. Also in addition
(17:40):
to interest rates and some of the other economic variables
out there. But it seems like mark that you're going
to have a tremendous amount of bump. And I'm not
saying this this incident alone really changes the forecast for
twenty twenty six, but it seems like there's going to
continue to be a surplus of energy. Whether you look
at OPEC and its increasing supply and non opluck as well,
(18:01):
it seems like there will be a lot of surplus.
So from a strategic standpoint, I just don't understand why
this oil is such a huge focus. Don't get me wrong,
I understand the importance of it, but it's not like
we're talking about the seventies where the US doesn't produce
fourteen or FI.
Speaker 3 (18:19):
Yeah, So the strategic.
Speaker 2 (18:20):
Standpoint on this maneuver, I don't really understand the focus
behind it. One of the things that popped in my
head is maybe this is the best way to try
and keep inflation down under the control of the political.
Speaker 3 (18:35):
I don't know, environments, I'll say again, it depends on
what happens elsewhere in the economy. Fifty million. Your point
is I should be well taken. It's a drop in
the bucket relative to yeah, one hundred million barrels of
oil the world economy consumes every day. I'm not saying
it couldn't move the price. I suppose it could. But
what's going to happen? What are other producers going to
do if we continue to extract oil from Venezuela. It's
(18:58):
Jesus just sounds crazy to say that. I'm thinking about
the state the world is in today that countries feel
like they can do that, and we're only doing it
because other countries have done It doesn't make it right.
But anyway, so this is the world we live in now.
You want something, if you're strong enough, you just kind
of take it. Different than the world I grew up in.
But we play the hand where dealt What effect will
that have on production? I suppose we decide to do
(19:18):
it again in a few months, What effect will that
have on production elsewhere?
Speaker 2 (19:21):
I think fantastic investment. Yeah, certainly a lot to get
into there. We're gonna take a quick break here in
the financial exchange when we come back, we're gonna have
ass Tod, So get all your questions ready for ask
Todd and Todd Lutsky eight of eight two zero five
two two sixty three as Tod right after this break.
Speaker 1 (19:40):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall Street.
Watch a complete look at what's moving market so far
today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Markets are a little changed in mixed as investors react
to jobs data posted this morning, including the ADP Private
Pales Report in addition to the Joltz Report for the
latest on job openings, The all important December Jobs report
will be released on Friday morning. Right now, the Dow
is off by over four tenths of a percent or
two hundred and nineteen points. SMP five hundred is edging
(20:23):
only two points higher, Nasdaq is up by about a
third of a percent or a four points higher. Rusted
two thousand down by seven tenths of a percent. Ten
Your Treasure reeled down two basis points at four point
one five five percent. Crew to oiled down about one
and a half percent. Trading a fifty six dollars and
thirty two cents a barrel. The Financial Tabs reported that
(20:45):
Chevron and Quantum Capital are planning to are planning a
bid to buy Luke Oil's international assets. If a deal
is agreed upon, Chevron and Quantum plan to divvy up
the assets between them, valued at twenty two billion dollars
by Luke Oil. Chevreun stock is dipping. Meanwhile, Warner Brothers
told shareholders to reject Paramount's amended hostile bid for the company,
(21:08):
saying its existing deal with Netflix is stronger. In a letter,
Warner's board said Paramounts offer quote remains inadequate. Warner stock
is up modestly on that news. Elsewhere, shares in Game
Stop jumping five percent after the video game retailer unveiled
its compensation package for CEO Ryan Cohen that included performance
(21:29):
objectives to grow the company to one hundred billion dollars.
And Mobile Eye shares are up by about three percent
after the self driving systems company said it would buy
humanoid robot maker Mentee for nine hundred million dollars. I'm
Tucker Silva, and that is a Wall Street watch.
Speaker 1 (21:52):
This is asked Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd, Let's here to answer your questions
and help you plan for later life. Ask Todd is
presented by Cushing and Dolan, serving Massachusetts and New England
for more than thirty five years, helping families with a
state and tax planning, medicaid planning, and probate law. Visit
(22:14):
Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:19):
As is the case every Wednesday here on the Fantasy Exchange,
we are joined by Todd Lutsky from Cushion Dolan. If
you have any questions regarding a state planning, gifting, Medicaid protection,
give our studio line a call at eight eight eight
to zero five two two six three. Again, any of
your questions for Todd Lutsky, give our studio line of
call at eight eight eight two zero five two to six'. Three,
(22:43):
todd thank you so much for joining.
Speaker 6 (22:44):
Us always a. Pleasure thank.
Speaker 2 (22:47):
YOU i would Say Happy New, year but my producer
here hates that and says that the time has passed
to Say Happy New year on, that SO i will
not do that to make SURE i don't get beaten
up By.
Speaker 6 (22:57):
Tucker, well, Great i'm not gonna Say Happy New year, either,
right two of us didn't Say Happy New, year merving one.
Speaker 4 (23:02):
Time moving, On.
Speaker 2 (23:04):
Todd one big subject that comes up often meeting with
clients is long term care costs and the planning surrounding.
That and for some people it's just too costly to
afford a long term care insurance, policy and it can
be a situation where they just fall behind the eight
ball and they find themselves in a situation where they're
just not prepared for the long term care costs that they.
(23:26):
Face what are some of the suggestions or tips that
you have for folks for those who have not done
their planning in terms of long term care, costs because
it's a big issue around this, area quite.
Speaker 6 (23:37):
Expensive, yeah so a couple of. Things if you haven't
done any long term care, planning you, know and you're
of course not not faced with you, know going into
the nursing home anytime, soon then you have, time right
to do some advanced planning and to figure out our
way to protect some of these. Assets and by the,
(23:59):
way not necessarily pooh pooing long term care. Insurance but you're,
right you, Know, paul it does. Take it can cost
a lot of, money and quite, frankly people that are,
like when you get to age, seventy it's kind of.
Tough it gets harder and harder to afford. It and,
again you never need long term care insurance to be you,
know the end all be. All it can just be you,
(24:20):
know you, know don't have to be A cadillac. Policy
it can be a smaller policy that sort of supplements the.
Care but either, way it's it's generally never enough to
cover sixteen seventeen thousand dollars a. Month it just. Isn't
but so people in fact will, say, well, fine what
CAN i? Do, well that's where these Irrevocable medicaid trusts come.
(24:41):
In AND i know we spend a lot of time
on them over the, years but they truly are you,
know they're really the only way THAT i know of
to protect assets from the nursing. Home so many people, say,
well isn't there like a ton of, Options AND i always, say,
no there's. Not like it's not like protect it's not
like you, know looking paint where you have tons of it's,
really you, know do nothing give your assets away to your,
(25:06):
kids which is a horrible idea across the, board or
do any irrevocable medicaid. Trust so those are really your
three options if you want to protect. It and these
trusts are are, really you, know designed in a way
to keep you in. Control AND i think that's the
most important message THAT i can send to people When
(25:29):
i'm talking about irrevocable. Trusts in, FACT i had one
recently real life. Story we got hired to do the estate,
plan and about two weeks later he called back and,
Said i'm just so afraid of the word. Irrevocable and
THEN i had to call him back and we talked,
again AND i had to explain to him that you're
reading the engagement letter and it seems, scary but it
(25:49):
just needed. Clarification and by the time we hung, up he's, like, oh,
yeah you're, Right i'm really not giving up any control
BECAUSE i explained to, him AS i explained to, everybody
that you, know you live in your, house you pay your,
bills you sell your, house you buy another, house all
through the, trust very easily, done no, effort no adverse tax.
Consequences you, know you can also have investment accounts in
(26:12):
there now Not ira, accounts but investment, accounts you, know, stocks,
bonds mutual. Funds you can manage the. Money you can you,
know invest the money the same as you always. Did
you can live off the, income take it, out enjoy the,
income and even pay the taxes on that income at your,
rates not at trust. Rates people get concerned all the.
(26:34):
Time they hear or they go on the website or
internet and they, say you, know my, GOSH i read
about your vocable trusts and there's huge income tax problems with. Them,
well there can, be but if they're drafted as grant
our trust and they're not sure and everything is taxed
at your own, rate so you, know just a. Little
that's just an overall summary of these irrevocable trusts to
(26:55):
let people know that it's really the best, way the
only way to actually tech assets and to not really
be frightened off by the word.
Speaker 4 (27:03):
Irrevocable certainly a lot of nuanced to the.
Speaker 2 (27:06):
Subject if you have any, questions we're here With Todd
lutsky From Cushian dolan on the, estate paying realm or
regarding irrevocable Trust give our studio line a call at
eighty eight to zero five two two sixty three. Again
that studio line number for any of your questions For
Todd lutsky From Cushian dolan eighty eight two zero five
two two sixty. Three we're gonna take a quick break,
(27:26):
here but when we come, back we'll have your questions
With todd right after this.
Speaker 1 (27:30):
Break Ask todd With Todd lutsky Every wednesday at ten
thirty only here on The Financial Exchange Radio. Network you're
listening To Ask todd With Todd lutsky on The Financial
Exchange Radio.
Speaker 2 (27:45):
Network we are back here With Todd lutsky From Cushian.
Dolan if you have any questions regarding gifting irrevocable trusts
or a state, planning give our studio line a call
at eighty eight the two zero five two two six three.
Again any of your questions heading into twenty twenty six
(28:05):
on a state planning gifting air vocable trust give our
studio on a call eight eight eight two zero five
two two six. Three we're gonna go to our first, Caller,
jim who is in a. Truck, jim you're on With Todd.
Speaker 4 (28:16):
Lutsky, Hi, JOHN.
Speaker 7 (28:19):
I did A i did irrevocable trust with you five
years ago past the getting just getting desk a look
back period and come to a realization that my state
is it is apt to want to deal with the
rental properties that are contained within the. TRUST i have
(28:40):
been And i'm trying to plan my strategy going. Forward
balancing ten thirty one exchanges With, uh how to DO
i sell the? Properties put it in a B I?
Speaker 4 (28:54):
Ira?
Speaker 7 (28:54):
Uh WHAT i just do that whole process of moving.
Forward IF i sold the proper pay the. Taxes does
that money go into MY? Ira or DO i have
to set up a separate? Account how does that? All
how does that all?
Speaker 6 (29:09):
Work, Yeah so stay on the line and keep it
open BECAUSE i have a bunch of follow up questions
just to make SURE i understand what you're asking SO
i can ask another. Question. One you've had the trust
for five years and you've had rental property in, it
and you've been collecting rent and paying your bills and
living off the. Income all that's been fine so. Far?
Correct that is? Correct, Okay now you're at a point
(29:32):
where you're saying and that's important for listeners to, know
by the, way just so they can understand that you, Know,
HEY i can have an irrevocable, trust have rental property in,
it and live my. Life and it's so important that
someone like you sort of you, know you, know justifies
and verifies that that that can be. Done now the next, question,
oh what IF i want to sell? It absolutely no
(29:53):
problem in selling it. Now i'm going to strongly suggest
that you reach out to us when you're ready to do,
that just because you, know some real estate attorneys don't
understand the trust and how to do. It but absolutely
you can sell. It out will go the? MONEY i
mean out we'll. Go let's say rental property number, one
and in will come the. Money make sure that the
(30:14):
money gets deposited into a bank account in the name
of the trust under the TRUST id, number Which i'm
sure you already, have because if you had rental, property
we would have gotten you AN id number when we created.
It and so now the real estate is gone and
the money's. Here now you said a couple of. Things, one, Well, Geez,
todd CAN i put the money in MY? Ira, no,
(30:37):
right please don't do, that because the money that's in
the trust is now just as protected as the house
was when it was in the, trust and there is
no new five year waiting. Period so don't take the
money out and put in THE. Ira that would be
(30:58):
a bad idea because, remember, member THE ira is not
in your, trust it is outside the. Trust it has
to be outside the, trust otherwise there'd be a huge
income tax if you were to pull the money out
of THE ira and put it into the. Trust, now
if you don't like that, approach you mentioned the word
(31:20):
ten thirty one. Exchange, well listeners don't know what that,
is so let me tell. THEM a ten thirty one
exchange is a way for, You, jim or any of
you listening to, SAY i want to sell my, property
my rental, property which might have a very low basis
Because i've been renting. It so let's SAY i bought
(31:40):
it a long time, ago and so my cost basis is.
Low in addition to, That i've been renting, it so
my basis has been reduced even further via depreciation deduction
every year THAT i take on my income tax. Return
and IF i sell, It i'm going to have a
large capital gains. Tax, WELL i don't want to do,
(32:02):
that SO i want to defer that capital gain till. Later,
well you can defer it by selling it and buying
another property within one hundred and eighty. Days you have
one hundred and eighty days to buy the replacement property
if you're going to do a delayed ten thirty one,
exchange and then the replacement property takes on the basis
(32:27):
of the property that you, sold so there's no gain
recognized and it's still built, in but you're not paying any.
Taxes but if you die owning it because you decided
never to sell this replacement property that you, bought well
then you'll get a step up in basis inside this irrevocable,
(32:49):
Trust So, jim this trust is designed as a grand
tour trust for income tax, Purposes so not only can
you direct the sale and the purchase of another, property
since you are treated as the owner for income tax,
purposes you are also able to do a ten thirty one.
(33:11):
Exchange just make sure the trust sells it and the
trust buys the new, property and you will be able
to defer the gain and then die owning the replacement,
property and everything in the trust will get a new
step up in, basis eliminating the built in gains for the,
(33:31):
beneficiaries so then they can sell the property and pay
no capital gains. Tax and depending on the size of your.
Estate there may be no estate taxes when you pay
when you die, either so hopefully that gives you some
indication of the flexibility and the benefits of doing. This and,
yes you can do all of those things with the
(33:52):
trust you, have and anybody else who's got an irrevocable,
trust at least ones that we've prepared At cushing And
dolan can do these things. Well SO i long winded, answer,
sorry but there was a lot going on in that.
Question hopefully that was. Helpful but reach, out don't sell
it on your. Own please contact the office and let's
make sure we do it.
Speaker 1 (34:11):
Right.
Speaker 6 (34:13):
Folks jim in this case did advance. Planning so kudos To.
Jim he's already gotten past the five year waiting. Period
you've heard all about that and all the things he can.
Do but you know, what there's people who don't do.
It and the guide we're giving away this month allows
you to figure out how to protect. Assets last. Minute
(34:36):
never as, good but better than. Nothing if you're faced
with nursing home, care it's called long term care. Planning
for the. Procrastinator it talks about the look back period
that we discussed. Here it talks about. Annuities how do
you use these to protect? Money last, minute it talks
about pooled, trusts how to work with a, home a rental,
(34:57):
property a vacation. Home they're all tree, differently iras treated
differently for married couples and single. People if you're faced
with nursing home, care don't just write the. Check so
for folks who have done no, planning or folks who
have done planning but still have assets outside of this irrevocable.
(35:19):
Trust there's something for everyone in this. Guide if you're
faced with going in the nursing, home call and get
it eight six six eight four eight five six nine
nine Or Legal Exchange show dot. Com you can download
it there again eight six six eight four eight five
six nine nine Or Legal Exchange show dot com.
Speaker 2 (35:41):
Tud quick question for. You we're running out of time,
here but what are the differences for planning for long
term care costs for a married couple versus an? Individual
what are some of the key takeaways between those two?
Speaker 6 (35:52):
Differences you mean from a planning perspective or a cost.
Speaker 2 (35:57):
A planning perspective between a married couple considerations versus a single.
Speaker 6 (36:01):
Person, yeah and you know, what there's still the same irrevocable.
Trust so it's a it's a great question for the
amount of time we have, left it's it's it is
still going to be an irrevocable. Trust the difference, is you,
know one is obviously a single person trust and one
is a married couple. Trust and the operational differences are
(36:22):
very much the, same but for tax, purposes, uh they're
a little. Different not for income tax, purposes but for
estate tax. Purposes so for income tax, purposes operational day to,
day you, know using investing the, money living on the,
income all of that is the. Same paying the income
(36:43):
taxes is the. Same but when you're, married the benefit
there is the trust is designed to shelter assets for
estate taxes as, well so you're able to do both,
nursing home planning and estate tax reduction by doubling the
exemption to four million dollars rather than just.
Speaker 2 (37:02):
TWO a lot of great information. There thanks so much
for the, Time. Todd we really appreciate. It good luck
to your steelers this, weekend AND i hope you have
a great rest of the. Week thanks so much for joining, Us.
Speaker 6 (37:11):
Todd thank you always a.
Speaker 1 (37:13):
Pleasure this has been Ask todd on the Financial exchange radio.
Network Ask todd With Todd lutsky has been presented By
cushing And, dolan Serving massachusetts And New england for more
than thirty, years helping families with the state and tax,
Planning medicaid, planning and probate. Law call eight hundred and
three nine three four thousand and one or Visit cushingdolan dot.
Com the views expressed in this segment are solely those
(37:34):
Of cushing And Dolan Armstrong. Advisory he does not provide
any legal or tax. Advice please consult with your legal
or tax advisor on such. Matters cushing And armstrong do
not endorse each other and are not. Affiliated
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