November 5, 2025 • 37 mins
Chuck Zodda and Marc Fandetti discuss private payrolls rebound in October, adding 42,000 jobs. The AI stock sell off could be a bust or a blip. What will decide the outcome? Todd Lutsky joins the show for his weekly segment, Ask Todd. This week, Todd explains the benefits of utilizing revocable trusts.
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Episode Transcript
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Speaker 1 (00:00):
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(00:43):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Chuck Mark Tucker with you here, and as we kick
things off today, we're gonna talk a little bit about
some jobs data. No, we don't get a BOS jobs
report this week, but this morning at eight point fifteen
Eastern time, ADP came out with their employment change report
(01:34):
for the month of October. It showed forty two thousand
jobs created for the month. Uh, this is in excess
of the twenty to twenty five thousand expected and a
rebound from twenty nine thousand job losses in the prior month.
It does bring the three month average, which again, you
(01:56):
know how I tend to work on these, you know,
data series, like don't read too much into any one
kind of look at the trend, and the trend unfortunately
continues down on this series, where the three month average
is now basically zero like when you look at it,
and that is the lowest that we've seen this during
(02:18):
this business cycle here. So I think ultimately this report
is one way, you say, okay, like an improved report
relative to the numbers that we got for September. But
ultimately it's unclear if this is a one time move
or the start of a new trend, and the only
(02:40):
way that we're going to figure that out is by
getting the November and December reports in to see what
happens afterwards.
Speaker 3 (02:46):
Yeah, the reason we care, the main reason we care,
at least most of us, is that the FED thinks
the labor market is weakening. It buys into that view
of the economy, so they will probably continue to ease
because the Fed, through its effective control over short term
interest rate, can't stimulate demand, and that generally helps to
push employment up. Employment is one component of the Fed's mandate.
(03:08):
The other is, of course, price stability, which they've interpreted
is two percent inflation. We all know they haven't hit
two percent inflation, so they must be really concerned about
the labor market. And if you're in the camp of indeed,
the labor market is weakening, and I think a reasonable
objective observer would say that it probably is now. It's
weakening from unusually on naturally strong levels. It's important to
(03:28):
keep that point I think in mind. This could just
be an rmalization, not a weakening. If indeed this weakening
leads to recession or something close to it, the FED
will have been proven right. They're not going to be
able to act in time to stop it, because policy
works with a lag. But again, this probably just validates
the view that the labor market is indeed softening.
Speaker 2 (03:47):
And I think a couple things can be true at
the same time. The first is the labor marketing, and
I'll get into some of these other measures, but just
about any measure out there does appear to be weakening.
It's tough to find anything out there you say, yes,
you know, labor is you know, inflecting upward, and there's
you know, a renewed push for hiring. There's there's not
really anything out there that says that. The interesting thing
(04:11):
is that labor a is typically a lagging indicator because
if you're a business, the way things typically move. In
good times, it's hey, my sales are up. I need
to hire more people to make the stuff or sell
the stuff. I'm going to do that, so it's consumption
leads hiring. In bad times, it's hey, I'm not selling
(04:34):
as much stuff. My margins are under pressure, and I
want to make sure I can keep the lights on.
I've got to lay some people off because I'm not
as busy, and we'll make do with what we have.
So again, a lack of consumption in that case leads
hiring or firing. What's interesting about this situation is retail
sales data generally been fine. The overall GDP data has
(04:59):
been in fine. There's nothing out there that suggests any
widespread lack of demand in the aggregate. But I do
think the interesting thing that we're seeing is this clear
bifurcation in spending by different demographic groups, and the ones
(05:20):
that are being highlighted quite simply, high income groups are
spending more, low income are spending less, and younger groups
in particular are spending less as well. That twenty five
to thirty five demo is being brought up by a
bunch of different places. So I think, you know, does
that mean, hey, you know, on a net basis, you know,
(05:41):
because there are far more people that are lower income
than higher income. You know, again, like you you talk about,
you know, where the wage distribution is, and you know,
there's a big swath of people sixty seventy percent of
the population that is out there saying I'm struggling right now,
the top ten to fifteen percent that are saying yeah,
(06:02):
I'm doing, you know, really well. Still, hey, if that
bottom seventy percent isn't buying as much? Well, just from
a volume perspective, do companies not need as many employees?
Maybe like that that could be the case in terms
of what we're seeing, even though aggregate spending is fine.
Other labor market data again, you might be you know,
listening saying, you know, okay, this is you know, one
(06:24):
data series ADP that's showing you know, a few months
of weakness.
Speaker 4 (06:27):
What else is out there?
Speaker 2 (06:29):
Indeed, who back in twenty twenty started they put out
their Hiring Lab Portal, which is again just a fantastic
data set. They're really transparent about their methodology. They tell
you what they're doing, how they're doing it, why they're
doing it. They have a job postings index that they
publish for the month. If I'm sorry for the week
(06:49):
ending October thirty first, it fell another point two percent
to a reading of one oh one point seven the
benchmark that they start from from when they started publishing.
This was in February of twenty twenty. The benchmarks one hundred.
So it's telling you the number of postings they're seeing
is about one point seven percent above February of twenty twenty,
(07:09):
the peak that we saw and this was when the
labor market was crazy, So this is not somewhere that
you would expect to get back to the peak. Was
it a reading of about one hundred and sixty one
back in March of twenty twenty two, And if you
look at where we were a year ago, we were
six point five percent higher. So the number of job openings, indeed,
is saying is down six and a half percent year
(07:31):
over year and another point two percent week over week.
So job openings continue to contract other things that we're seeing.
When we take a look at payroll tax withholding, it's
a great metric for trying to understand what's happening just
with aggregate wages, because ultimately there's a limit on how
(07:52):
much income you can earn through wages and still be
subject to payroll tax. If you look at the UH
payroll tax limit for twenty twenty five, UH, it is
capped out at one hundred and seventy six one hundred dollars,
And what this means is once you get past that limit,
there's no more payroll tax that is withheld. So this
(08:15):
is a great way to tell what's going on with
the vast majority of Americans who don't make more than
one hundred and seventy six thousand dollars a year. It
kind of filters out the high earners. And so what
we've been seeing this is the the four month trend
in terms of payroll tax withholding relative to twenty twenty four.
(08:37):
June was up seven point four percent year over year.
It's good. Like that means that in the aggregate, households
have seven point four percent more income to spend in
June than they did in the prior June. That's good,
It's what you wanted. Like, those are really good numbers.
July seven point two percent, modest deceleration. I'm sorry, I'm
(08:58):
one month ahead. This was July, and then August September
four point three percent relative growth relative to September of
twenty four. Okay, it's a little bit more of a sizable,
you know, down shift. And remember September there was no
government shutdown going on or anything like that, and so
you look at that and you say, okay, yeah, that
(09:18):
could be a shift. October three percent growth, so a
further down shift. The government shutdown does contribute a portion
to that, about half of it, but the other half
is you know, slow down in tax withholding. None of
this is cataclysmic, Like, none of it is, Hey, the
economy's falling off a cliff. But it is something where
(09:39):
you say, look, if that trajectory continues, it gets you
to the point where typically things start to get dodgy
when you start to see you know, a couple months
of negative readings there, and we could potentially be in
that area by February or March of next year if
this pace were to continue.
Speaker 4 (09:57):
Will it continue?
Speaker 2 (09:58):
I have no idea. So this is not you know,
the world is ending. This is not you know, the
economy's falling off a cliff. It is Yeah, there are
kind of broad based signs that payroll growth is slowing
and that overall earnings by employees are seeing slower growth.
If it continues, it means there's probably some problems you know,
four to six months from now. If it reverses, then
(10:20):
this was just one of those little peaks and valleys
that you see in the economy quite often on a
regular basis, and it might not mean anything. But like,
I don't think you can look at this data and say, hey,
everything's hunky dory in the labor market. But I also
think there's nothing that suggests it's falling off the cliff
or accelerating towards a worse spot right now.
Speaker 3 (10:41):
Yeah, this is why the FEST job is challenging. Think
about the FED as the economy's thermostat, and that's not
that's not just a corny analogy. That's probably the closest
you can get to you every day experience. Their job
is to cool things down when things are overheating and
vice versa. The challenge for the FED, to extend the
(11:01):
analogy is they have to adjust the thermostat using the
seven day forecast, not what the temperature is right now.
Imagine if you tried to do.
Speaker 4 (11:09):
That, you'd be all over the place. We all would.
Speaker 3 (11:11):
A seven day forecast is general, is probably on average
correct in terms of temperature and the state of the weather,
but minute to minute it's not going to be a
useful tool. The FED has to decide what the weather's
going to be like tomorrow, but it's not just tomorrow,
but it's quarters sometimes many quarters ahead, because policy works
with a lag, and this is why their job is
(11:32):
so challenging.
Speaker 2 (11:34):
Take a quick break. When we return, we'll talk about
what we saw yesterday from artificial intelligence stocks. Right after
this This.
Speaker 1 (11:43):
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Speaker 5 (12:05):
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Speaker 2 (12:43):
All right, we got a piece in barns that AI
stock sell off could be a bust or a blip.
This will decide which. Okay, now that we've covered all
the bases like, hey, great, it could be something or
it could not. What are they actually talking about? Will
decide whether it's a bust or a blip?
Speaker 3 (13:03):
Mark, Well, I have my own sort of interpretation, but
it's far longer term than there. Look, I think anything other,
anything other than a long term view on this is
not likely to be productive. We'll know in several years.
And I know this isn't a satisfying answer for those
of us myself included around the edge of our seat.
Speaker 2 (13:24):
The financial exchange is rarely satisfying. That's why people keep coming.
Speaker 3 (13:27):
Back for more, because we never actually give We.
Speaker 2 (13:29):
Never give you the full thing. It's just okay, here's
a little.
Speaker 3 (13:33):
Bit if I may give a slightly different perspective on this, Chuck,
I think it's gonna take.
Speaker 2 (13:37):
You think our show is satisfying?
Speaker 3 (13:38):
No, I think personally, yes, I think it's gonna take.
Pardon me, Uh, It's gonna take years before we know
whether or not investments were excessive. They almost certainly are
excessive at this point, but that's normal in the early
stages of adoption of a new i'll just call it
technology to the extent that it is life changing, and
(14:04):
I mean I literally, if it increases productivity, it will
be life changing. But we're not gonna have definitive and
I use that word with some hesitancy, because you could
always quibble, but we're not gonna have solid evidence on
it for years, Chuck.
Speaker 4 (14:19):
I think we're gonna know sooner than you think you do.
Speaker 2 (14:21):
Okay, I still think it's measured in years, but I'm
now at the point where I say, twenty six and
twenty seven are where it's gonna have to either pay.
Speaker 3 (14:29):
Off if you're closer to the spirit of this.
Speaker 4 (14:32):
Is that fast enough?
Speaker 6 (14:33):
Though?
Speaker 3 (14:34):
For given the multiple particular movies, no are multiple is
gonna sit where they are today stratospheric levels for the
next twenty four months while we all just kind of wait.
Speaker 2 (14:44):
They could oh yeah, yea, because they've already been there
for the last twenty four Yeah Okay, man, I didn't
put that. And so I like where I've gotten to that.
And this is something that I've I've kind of gotten
to in the last couple of weeks now because I've
gone through like this this whole earnings period. Two things
make complete sense to me. The first is the financial
incentives to build as excessively in AI as possible right now,
(15:07):
they're fully understandable. I totally get why Mark Zuckerberg is like, hey,
I got to spend two hundred and fifty billion dollars
on data centers in the next five years. I get
it because if there's a multi trillion dollar payoff at
the end of it for you, of course, like, I
totally get it. It's no different from the financial incentives
during the run up to the financial crisis. I get
(15:30):
why the guys selling mortgage backed securities were like, give
me more, mortgage brokers, give me more, because they made
out really well during that time. I'm not saying this
is good or bad. It it was very bad in retrospect,
but I understand the financial incentives that led us there,
just like I understand the financial incentives that have led
us here.
Speaker 7 (15:50):
That's good.
Speaker 2 (15:51):
The place that I then get to is ultimately, when
you talk about how all of this capex is eventually
going to hit the financial statements for Meta and Google
and Amazon and Microsoft, when that heightened depreciation starts showing
up and impacting the financial statements to the point where
(16:12):
it's like, hey, we now actually need revenue, otherwise we're
gonna start seeing problems, that's where and that's gonna start
showing up in the next couple of years because it's
now going to be okay, it's your depreciation from twenty
twenty four, twenty five, twenty six, twenty seven, like that's
all starting to hit then, and so it's going to
(16:34):
start mattering at that point. The other piece that I
find really interesting when looking at this, just like in
the context of again things that we've seen and heard
over the last week or so, sat Ya Nadella was
(16:54):
on a podcast somewhere I can't remember where the heck
it was, but Nadella was on a podcast and he said, Look,
the thing that I am seeing right now is that
the bottleneck is no longer in trying to get enough
compute power. It's that we can't actually get enough power
(17:18):
to power the compute like there's not enough electricity to
do so. And what I find interesting about that is
if that's actually true, then Microsoft is saying we've got
enough chips, we don't have enough electricity. Is the market
pricing for we have enough chips right now? No, it's
(17:42):
basically taking in video and Jensen Huang and it's at
his word and saying Okay, like you're telling us you've
got this robust demand, but these chips, like you can't
just have them like sitting in a warehouse and Video's
rolling out new ones every one to two years. You
can't just sit on them and then be like, oh,
well them later, they're obsolete by the time you're deploying.
(18:03):
If that's the case, And so you've got that going on,
which is potentially shortening the refresh cycle on these chips
you've got, you know, potentially then faster depreciation on these
data centers because if you're replacing the chips in them
every year instead of every two to three years, that's
an additional expense that you've got to account for. And
(18:23):
in the depreciation cycles faster, it's gonna hit your financial
statements faster.
Speaker 4 (18:28):
And so this is.
Speaker 2 (18:30):
How I get to the place of totally understand why
these guys are doing what they're doing because the financial
incentives are immense. But if Nadella is telling us this
and it's true, then that's a shift. And we're seeing
this by the way, and how these companies are being priced.
Look at what's happened to Meta in the last week.
They've gotten hit Oracle has given back all of its
(18:52):
post earnings bump in the last month and a half.
Now there's something that's different there, and I do want
under are investors starting to wake up to this? But
the counterpoint is, Okay, maybe the really robust profit growth
for AI's coming in the next couple of years and that'll,
you know, lift things. But the next two years, twenty
(19:13):
six and twenty seven, they're meady ones. They're they're big ones, juicy.
It's like, it's this is this is for all of
the artificial marbles. Let's take a quick break. When we return,
it's Wall Street Watch and ask da da da da
da da da da da da.
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 markets so
far today, right here on the Financial Exchange Radio Network.
Speaker 5 (20:02):
Well after yesterday's sell off driven by losses in the
tech sector, markets today are slightly rebounding as Wall Street
is reacting to a stronger than expected ADP private payrolls
report posted earlier this morning. Right now, the Dow is
up two tenths of one percent or ninety one points,
SMB five hundreds up four tenths of one percent or
(20:23):
twenty eight points, NASDAC up two thirds of a percent
or one hundred and fifty one points, Russell two thousand
also up two thirds of one percent, ten Youre Treasury
realed up five basis points at four point one four
to two percent, and Crude oiled down about two thirds
of a percent, trading right around sixty dollars a barrel.
Shares an AMD off about half a percent after the
(20:45):
chip maker beat third quarter earnings in revenue forecast. However,
sentiment took a slight hit after AMD's adjusted margin guidance
before the current quarter came in line with expectations. Sticking
with the chip sector, where Super Microcomputer posted quarterly results
that missed estimates, sending shares down over eight percent. Meanwhile,
McDonald's reported third quarter earnings in revenue that missed expectations,
(21:09):
where the company said its value meals and new products
we're helping revive sales and a challenging environment for fast food.
US same store sales increase two point four percent, stronger
than analysts had anticipated, while global same store sales climb
three point six percent. McDonald's is up over two percent.
Fast casual restaurant chain Cava offered a lower full year guidance,
(21:33):
downwardly revising its same store sales outlook in addition to
a lower profit margin range. Cava shares are now up
one percent after a lower starts of the day. Elsewhere,
Pinterest shares plunging twenty one percent after the social media
company reported weaker than expected earnings, and after today's closing bell,
we'll see more third quarter results from app Lovin, Qualcomm, Armholdings,
(21:57):
Robin Hood, and door Dash. I'm Silva and that is
Wolf Rewatch.
Speaker 1 (22:03):
This is Ask Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is 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
estate and tax planning, Medicaid planning, and probate law. Visit
(22:24):
Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:29):
As promised, We've got Todd Lutzky live in studio here
to answer your estate planning questions. Phone lines wide open
right now at eight eight eight to zero five two
two six three. That is the number to call to
ask Todd your estate planning questions live on air again.
It is eight eight eight two zero five two two
(22:51):
six three. Remember we can usually get to about two
or three of your calls, so make sure you get
in line early so that you can ask Todd your
estate planning question uestions. Again, that number is eight eight
eight two zero five two two six three. Mister Lutsky,
how are you doing today?
Speaker 4 (23:10):
I am never better? How are you? I'm good?
Speaker 2 (23:12):
Did you see that these scientists they tried to cross
a cheetah with a crab.
Speaker 4 (23:20):
A cheetah and a crab. Yeah, that doesn't seem like
a good mix.
Speaker 2 (23:24):
No, it went sideways real fast. Yeah, not great, Todd.
Let's talk a little bit about revocable trust to day
everyone likes to talk about like the big brother irrevocable,
like the irrevocable trust, revocable trusts. Yes, what can they accomplish?
Speaker 8 (23:44):
So they can accomplish certainly, you know, estate tax planning.
They can accomplish avoiding probate, and they can accomplish you know,
dynasty trust planning. They can they can allow you to
continue you to control the asset after you die for
a very long time. Some states have no rule against perpetuities,
(24:06):
means it can go on forever. Not in Massachusetts, of course,
it allows you to do it, but only up for
about yeah, one hundred years give or take is the
rule about how long it can last. But it can
also help you skip generations, meaning you can do generations
skipping tax planning where you can take care of the family,
protect from creditors and divorces, and still make it go
(24:29):
to another generation without paying any estate tax at each generation.
So to me, generational building wealth is phenomenal. And I
think also it's important when we talk about you know,
we always talk about irrevocable a lot, but with revocable,
like with irrevocable, there are many kinds of trusts. There
are many kinds of irrevocable trusts. Even with the revocable world,
(24:51):
now there's you know, the idea of two trusts versus
one trust, So we got to think about that as well.
Speaker 2 (24:56):
Talk with Todd Lutsky from Cushing and Dolan. Again, phone
lines are open and for you to ask Todd your
estate planning questions. The phone number is eight eight eight
to zero five two two sixty three. Again, that is
eight eight eight two zero five two two six three.
Still have a little bit of space there for you
to ask Todd your questions. Again, it's eight eight eight
(25:18):
to zero five two two six three.
Speaker 4 (25:21):
Todd.
Speaker 2 (25:21):
These revocable trusts on a daily basis, What are changes
that people would notice from how their finances worked before
and what stays the same?
Speaker 8 (25:34):
Yeah, And I think that's part of the beauty of
revocable trusts is that they are really simple. You know,
you don't you don't have any separate income tax returns
to file. So let's like you say, with your finances,
let's say I put my investment portfolio inside the trust.
Let's say I put my bank account inside the trust.
(25:55):
What's gonna happen. Am I going to not have access
to my money?
Speaker 4 (25:58):
Absolutely not.
Speaker 8 (25:59):
So the difference is the name. Let's say, the name
on my on my investment account, if it was in
my trust, would be called that. You know, maybe if
I'm doing a joint trust, it might be the Lutsky
Family Trust. Okay, that's all that You're gonna see the
difference is you're gonna see that on your statements that
you get from your your you know, investment advisor, and
your access is exactly the same. Your investments are exactly
(26:20):
the same. And since that account might have the Lutsky
Family Trust as the name, it don't have my Social
Security on it. So there's no income tax returns need
to be filed. Just keep filing your own ten forty
just like you always do. So really becomes, you know,
just simple and uneventful for you, which is what we
want when we do our planning.
Speaker 2 (26:41):
Talking with Tod Lutsky from the law firm of Cushing
and Dolan. If you've got a question for Todd, eight
eight eight two zero five two two sixty three is
the number to call to ask him your question live
on air. Right now, we're going to take a quick
break and when we come back we'll get to your
questions with Todd. That phone number is eight eight eight
to zero five two two six three. Again it is
(27:05):
eight eight eight to zero five two two six three.
Speaker 1 (27:10):
Ask Todd with Todd Letsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. Todd Letsky
answers your questions about a State and elder life Planning
every Wednesday at ten thirty right here on the Financial
Exchange Radio Network.
Speaker 4 (27:35):
Talking with Todd Lutsky.
Speaker 2 (27:36):
You got a question for Todd. The number to call
is eight eight eight to zero five two two six
three to get your estate planning question answered again. That
is eight eight eight to zero five two two six three.
Let's go to Mark in Danvers. Mark, you are on
with Todd Lutsky.
Speaker 7 (27:55):
Good morning, that's great show.
Speaker 4 (27:56):
Thank you.
Speaker 7 (27:59):
Of course you are talking about revocable trust and you
would mentioned that the trust has no Social Security number
assigned to it. Does that mean you do not have
to pay capital gains on the trust if you put
investments in there.
Speaker 8 (28:13):
Well, I'm sure there's a miscommunication on how we did that.
By the way, I love your creativity so awesome. I'd
love to figure out ways not to pay tax. Unfortunately,
what I said was that the revocable trust does not
have its own tax ID number, So you're correct about that. Instead,
like if it was the Lutsky family trust, it would
(28:35):
have my social Security number on it.
Speaker 4 (28:38):
Okay.
Speaker 8 (28:39):
So the beauty of the of the trust is that
that when you put your investment portfolio in and your
bank accounts in and I don't care if it's a
rental property, et cetera, that the trust itself is.
Speaker 4 (28:54):
Not going to have to file an income tax return.
Speaker 8 (28:56):
So many people think that you know when you put
assets in a trust that you pay higher taxes, not
no taxes. They say, oh, I heard that you put
assets in a trust. You have a much higher tax rate.
So let me explain what that means. First of all,
with revocable trust that's not the issue at all. With
irrevocable trusts, it can be if it's not a grand
(29:18):
tour trust for income tax purposes.
Speaker 4 (29:20):
So if you put it.
Speaker 8 (29:21):
In an irrevocable trust and it's not a grand tour trust.
When I say they have higher tax rates if you
make more than and this number changes a lot, I
think it's somewhere around fourteen thousand, maybe a little higher.
If the trust earns a little more than that in income, interest, dividends,
capital gains, it's at the top tax rate whatever that
(29:45):
thirty nine percent thirty seven percent tax rate federally, whereas
with human beings our tax rate, we don't get into
that tax level until we're in the hundreds of thousands
of dot depending on whether you're married or single. So
that's what I mean when I say trusts can have
higher tax rates and be compressed as they are, But
(30:09):
in the revocable trust situation, the beauty is we don't
have to worry about that at all.
Speaker 4 (30:13):
You don't have to file a tax return.
Speaker 8 (30:15):
But it's not that good unfortunately, Mark, I wish I
could make it as good as you like it. The
trust doesn't pay the gain or the tax I do.
The grant tour does. The person who creates the trust does.
So it just continues to be taxed in my Social
Security number at my rates on my tax return on
my ten forty and I don't have to file a
(30:35):
tax return. So to me, that helps it to be
what I like to call simple and uneventful in my life,
not disrupting my life. And folks, that's important because that
really leads me into a brand new guide that we've
never given away before. It's one that the BBBA passed,
as we all know, and it really just drives home
something that we've been doing at Cushing and Dolan for
(30:56):
a long time, joint revocable trust trusts, and it's catching
on now people are realizing that it is important. And
for a lot of people with you know, what's a
moderate estate these days under like fifteen million dollars. The
exemption federally is going to go up because of the
passage of the new Act, and it's going to be
fifteen million January one. Well, for a lot of people,
(31:18):
I don't have to give away stuff anymore. I can
keep stuff, avoid a forty percent estate tax, and get
a step up in basis when I die, eliminating the
built in gain that like Mark was talking about, eliminating
the built in gain and winning on the twenty eight
point eight percent front. Wow, even if I got to
give mass ten percent, I don't care. And these joint
(31:39):
revocable trusts are so simple. You don't have to divide
assets between husband and wife. You just fund them simply,
all with all your assets at one time, and you
can cram down way more assets than you could if
you had two trusts. And they're really wonderful if you
have large iras folks learn about joint revocable trusts, how
they work the tax saving, it might be the way
(32:01):
to go for you. Eight six six eight four eight
five six nine nine or Legal Exchange show dot Com
again brand New Guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.
Speaker 2 (32:17):
Todd, we got another one for you here. Let's go
to Martin in Springfield. Martin, what is your question for Todd?
Speaker 6 (32:24):
Okay, my question is I filled out a will. I'm
seventy nine years old. Uh. And my concern is about
probate from northern Vermont that came down here to a
senior community. And so that will is done. But my
(32:48):
concerns are probates. And do I need to get a trust?
How much does a trust cost? And h you're talking
about vocable trust and irrevocable trust. I have an irrevocable
trust for my cremation. Uh. And so so.
Speaker 8 (33:13):
Let me let me try to interject you so I
can get your question answered. The irrevocable trust for your cremation,
I'm sure has nothing. I don't think that's an estate
planning trust, correct, I don't. I don't know what you
did there, right, that's just something.
Speaker 6 (33:24):
So I don't know anything.
Speaker 4 (33:26):
So so you only have a will? Correct, That's that's
the extent of your estate plan. Okay, so let's see
your will. Yes, So one last question that.
Speaker 8 (33:34):
Might be helpful is you said you came down here
to a senior community from Vermont?
Speaker 4 (33:39):
Did did? Do you own real estate in Vermont? Still?
Speaker 6 (33:43):
No? Okay, sold the house and from there I understand
that it was it was a real property because I
owned the land and the house here. I own the
house I lived in complete lately, but it's in the
senior community and they told me that the land is
(34:05):
owned by somebody else.
Speaker 4 (34:07):
Right, I got it, I understand.
Speaker 8 (34:09):
So basically, in these senior communities you get to you
kind of get a place to live, but you don't
own the property. I totally get it. So that may
not be an issue then. So you may not own
any real estate in Massachusetts, which can be helpful, I
guess from an avoiding probate standpoint. So from your point
of view and your question, let me help others that
are listening to if he owned real estate in Vermont
(34:32):
and in mass his question is doubly important. I want
to avoid probate because when you own real estate in
multiple states, you got to go to probate in multiple states,
even though you're not a resident of the state in
which you own real estate. So that's important. Sounds like
for you, Martin However, there's no Vermont real estates. I
don't have to worry there, And it sounds like there's
(34:53):
probably no Massachusetts real estate because you own it in
this senior community and you just have an in in
the house.
Speaker 4 (35:01):
Basically you just have that house.
Speaker 8 (35:03):
Now, other assets you might own we have to think about,
which would be investments, stocks, bonds, mutual funds, iras. So
to the extent, all you want to do is avoid probate,
and you're not concerned about estate tax planning or nursing
home planning and protecting assets. You can kind of do
that if you have no real estate by simply making
(35:25):
sure these accounts all have designated beneficiaries on them. If
they do, they will pass to those designated beneficiaries outside
of probate.
Speaker 4 (35:34):
Still subject to a state tax.
Speaker 8 (35:36):
But if you're under two million dollars here in mass
you're not going to have any estate tax to worry about,
and that would successfully help you avoid probate, again, assuming
no real estate. But a lot of times and I
heard you mentioned that maybe it's an irrevocable Well, if
you want to protect assets from a nursing home, then
you kind of need to think about an irrevocable trust
and putting some of these items into the irrevocable trust
(35:59):
so that they will be protected from the cost of
long term care. And by putting them in there, Yes,
it takes five years, but it's immediately protected from immediately
avoids probate when you pass right. So what I like
to tell folks a lot when they just have a will,
a will is really a won't. It's better than nothing.
It certainly will direct where your assets go, but it
(36:22):
goes to probate, and it will not help you reduce
the state taxes, So if you're married, you're not going
to shelter a state taxes.
Speaker 4 (36:29):
And it will not.
Speaker 8 (36:30):
Protect assets from a nursing home, so it won't avoid probate,
won't reduce the state taxes, and won't protect an asset
from a nursing home.
Speaker 4 (36:37):
But it will say where they go. So if that's
all you want, that works.
Speaker 8 (36:41):
And if you want to also, then just throw in
the avoidance of probate, at least in your case, Martin,
I think naming the designated beneficiaries on these investment accounts
and brokerage accounts and bank accounts will get you there.
Speaker 4 (36:54):
Hope that helps a little.
Speaker 2 (36:56):
Mister Lutsky, thank you so much for the time. We
appreciate you joining us today.
Speaker 4 (37:00):
It is always my pleasure.
Speaker 1 (37:03):
This has been asked Todd on the Financial Exchange Radio Network.
Asked 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 three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:23):
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or tax advice. Please consult with your illegal or tax
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The Financial Exchange is produced by Money Matters Radio and
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(00:20):
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Exchange with Chuck Zada and Mark Fandetty, your exclusive look
at business and financial news affecting your day, your city,
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Chuck Mark Tucker with you here, and as we kick
things off today, we're gonna talk a little bit about
some jobs data. No, we don't get a BOS jobs
report this week, but this morning at eight point fifteen
Eastern time, ADP came out with their employment change report
(01:34):
for the month of October. It showed forty two thousand
jobs created for the month. Uh, this is in excess
of the twenty to twenty five thousand expected and a
rebound from twenty nine thousand job losses in the prior month.
It does bring the three month average, which again, you
(01:56):
know how I tend to work on these, you know,
data series, like don't read too much into any one
kind of look at the trend, and the trend unfortunately
continues down on this series, where the three month average
is now basically zero like when you look at it,
and that is the lowest that we've seen this during
(02:18):
this business cycle here. So I think ultimately this report
is one way, you say, okay, like an improved report
relative to the numbers that we got for September. But
ultimately it's unclear if this is a one time move
or the start of a new trend, and the only
(02:40):
way that we're going to figure that out is by
getting the November and December reports in to see what
happens afterwards.
Speaker 3 (02:46):
Yeah, the reason we care, the main reason we care,
at least most of us, is that the FED thinks
the labor market is weakening. It buys into that view
of the economy, so they will probably continue to ease
because the Fed, through its effective control over short term
interest rate, can't stimulate demand, and that generally helps to
push employment up. Employment is one component of the Fed's mandate.
(03:08):
The other is, of course, price stability, which they've interpreted
is two percent inflation. We all know they haven't hit
two percent inflation, so they must be really concerned about
the labor market. And if you're in the camp of indeed,
the labor market is weakening, and I think a reasonable
objective observer would say that it probably is now. It's
weakening from unusually on naturally strong levels. It's important to
(03:28):
keep that point I think in mind. This could just
be an rmalization, not a weakening. If indeed this weakening
leads to recession or something close to it, the FED
will have been proven right. They're not going to be
able to act in time to stop it, because policy
works with a lag. But again, this probably just validates
the view that the labor market is indeed softening.
Speaker 2 (03:47):
And I think a couple things can be true at
the same time. The first is the labor marketing, and
I'll get into some of these other measures, but just
about any measure out there does appear to be weakening.
It's tough to find anything out there you say, yes,
you know, labor is you know, inflecting upward, and there's
you know, a renewed push for hiring. There's there's not
really anything out there that says that. The interesting thing
(04:11):
is that labor a is typically a lagging indicator because
if you're a business, the way things typically move. In
good times, it's hey, my sales are up. I need
to hire more people to make the stuff or sell
the stuff. I'm going to do that, so it's consumption
leads hiring. In bad times, it's hey, I'm not selling
(04:34):
as much stuff. My margins are under pressure, and I
want to make sure I can keep the lights on.
I've got to lay some people off because I'm not
as busy, and we'll make do with what we have.
So again, a lack of consumption in that case leads
hiring or firing. What's interesting about this situation is retail
sales data generally been fine. The overall GDP data has
(04:59):
been in fine. There's nothing out there that suggests any
widespread lack of demand in the aggregate. But I do
think the interesting thing that we're seeing is this clear
bifurcation in spending by different demographic groups, and the ones
(05:20):
that are being highlighted quite simply, high income groups are
spending more, low income are spending less, and younger groups
in particular are spending less as well. That twenty five
to thirty five demo is being brought up by a
bunch of different places. So I think, you know, does
that mean, hey, you know, on a net basis, you know,
(05:41):
because there are far more people that are lower income
than higher income. You know, again, like you you talk about,
you know, where the wage distribution is, and you know,
there's a big swath of people sixty seventy percent of
the population that is out there saying I'm struggling right now,
the top ten to fifteen percent that are saying yeah,
(06:02):
I'm doing, you know, really well. Still, hey, if that
bottom seventy percent isn't buying as much? Well, just from
a volume perspective, do companies not need as many employees?
Maybe like that that could be the case in terms
of what we're seeing, even though aggregate spending is fine.
Other labor market data again, you might be you know,
listening saying, you know, okay, this is you know, one
(06:24):
data series ADP that's showing you know, a few months
of weakness.
Speaker 4 (06:27):
What else is out there?
Speaker 2 (06:29):
Indeed, who back in twenty twenty started they put out
their Hiring Lab Portal, which is again just a fantastic
data set. They're really transparent about their methodology. They tell
you what they're doing, how they're doing it, why they're
doing it. They have a job postings index that they
publish for the month. If I'm sorry for the week
(06:49):
ending October thirty first, it fell another point two percent
to a reading of one oh one point seven the
benchmark that they start from from when they started publishing.
This was in February of twenty twenty. The benchmarks one hundred.
So it's telling you the number of postings they're seeing
is about one point seven percent above February of twenty twenty,
(07:09):
the peak that we saw and this was when the
labor market was crazy, So this is not somewhere that
you would expect to get back to the peak. Was
it a reading of about one hundred and sixty one
back in March of twenty twenty two, And if you
look at where we were a year ago, we were
six point five percent higher. So the number of job openings, indeed,
is saying is down six and a half percent year
(07:31):
over year and another point two percent week over week.
So job openings continue to contract other things that we're seeing.
When we take a look at payroll tax withholding, it's
a great metric for trying to understand what's happening just
with aggregate wages, because ultimately there's a limit on how
(07:52):
much income you can earn through wages and still be
subject to payroll tax. If you look at the UH
payroll tax limit for twenty twenty five, UH, it is
capped out at one hundred and seventy six one hundred dollars,
And what this means is once you get past that limit,
there's no more payroll tax that is withheld. So this
(08:15):
is a great way to tell what's going on with
the vast majority of Americans who don't make more than
one hundred and seventy six thousand dollars a year. It
kind of filters out the high earners. And so what
we've been seeing this is the the four month trend
in terms of payroll tax withholding relative to twenty twenty four.
(08:37):
June was up seven point four percent year over year.
It's good. Like that means that in the aggregate, households
have seven point four percent more income to spend in
June than they did in the prior June. That's good,
It's what you wanted. Like, those are really good numbers.
July seven point two percent, modest deceleration. I'm sorry, I'm
(08:58):
one month ahead. This was July, and then August September
four point three percent relative growth relative to September of
twenty four. Okay, it's a little bit more of a sizable,
you know, down shift. And remember September there was no
government shutdown going on or anything like that, and so
you look at that and you say, okay, yeah, that
(09:18):
could be a shift. October three percent growth, so a
further down shift. The government shutdown does contribute a portion
to that, about half of it, but the other half
is you know, slow down in tax withholding. None of
this is cataclysmic, Like, none of it is, Hey, the
economy's falling off a cliff. But it is something where
(09:39):
you say, look, if that trajectory continues, it gets you
to the point where typically things start to get dodgy
when you start to see you know, a couple months
of negative readings there, and we could potentially be in
that area by February or March of next year if
this pace were to continue.
Speaker 4 (09:57):
Will it continue?
Speaker 2 (09:58):
I have no idea. So this is not you know,
the world is ending. This is not you know, the
economy's falling off a cliff. It is Yeah, there are
kind of broad based signs that payroll growth is slowing
and that overall earnings by employees are seeing slower growth.
If it continues, it means there's probably some problems you know,
four to six months from now. If it reverses, then
(10:20):
this was just one of those little peaks and valleys
that you see in the economy quite often on a
regular basis, and it might not mean anything. But like,
I don't think you can look at this data and say, hey,
everything's hunky dory in the labor market. But I also
think there's nothing that suggests it's falling off the cliff
or accelerating towards a worse spot right now.
Speaker 3 (10:41):
Yeah, this is why the FEST job is challenging. Think
about the FED as the economy's thermostat, and that's not
that's not just a corny analogy. That's probably the closest
you can get to you every day experience. Their job
is to cool things down when things are overheating and
vice versa. The challenge for the FED, to extend the
(11:01):
analogy is they have to adjust the thermostat using the
seven day forecast, not what the temperature is right now.
Imagine if you tried to do.
Speaker 4 (11:09):
That, you'd be all over the place. We all would.
Speaker 3 (11:11):
A seven day forecast is general, is probably on average
correct in terms of temperature and the state of the weather,
but minute to minute it's not going to be a
useful tool. The FED has to decide what the weather's
going to be like tomorrow, but it's not just tomorrow,
but it's quarters sometimes many quarters ahead, because policy works
with a lag, and this is why their job is
(11:32):
so challenging.
Speaker 2 (11:34):
Take a quick break. When we return, we'll talk about
what we saw yesterday from artificial intelligence stocks. Right after
this This.
Speaker 1 (11:43):
Is your home for the most comprehensive coverage of the
economy and the trends on Wall Street. This is the
Financial Exchange Radio Network. Tex does six one seven, three,
six two one three eight five with your comments and
questions about today's show. This is the Financial Exchange Change
Radio Network.
Speaker 5 (12:05):
This segment of the Financial Exchange is brought to you
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Speaker 2 (12:43):
All right, we got a piece in barns that AI
stock sell off could be a bust or a blip.
This will decide which. Okay, now that we've covered all
the bases like, hey, great, it could be something or
it could not. What are they actually talking about? Will
decide whether it's a bust or a blip?
Speaker 3 (13:03):
Mark, Well, I have my own sort of interpretation, but
it's far longer term than there. Look, I think anything other,
anything other than a long term view on this is
not likely to be productive. We'll know in several years.
And I know this isn't a satisfying answer for those
of us myself included around the edge of our seat.
Speaker 2 (13:24):
The financial exchange is rarely satisfying. That's why people keep coming.
Speaker 3 (13:27):
Back for more, because we never actually give We.
Speaker 2 (13:29):
Never give you the full thing. It's just okay, here's
a little.
Speaker 3 (13:33):
Bit if I may give a slightly different perspective on this, Chuck,
I think it's gonna take.
Speaker 2 (13:37):
You think our show is satisfying?
Speaker 3 (13:38):
No, I think personally, yes, I think it's gonna take.
Pardon me, Uh, It's gonna take years before we know
whether or not investments were excessive. They almost certainly are
excessive at this point, but that's normal in the early
stages of adoption of a new i'll just call it
technology to the extent that it is life changing, and
(14:04):
I mean I literally, if it increases productivity, it will
be life changing. But we're not gonna have definitive and
I use that word with some hesitancy, because you could
always quibble, but we're not gonna have solid evidence on
it for years, Chuck.
Speaker 4 (14:19):
I think we're gonna know sooner than you think you do.
Speaker 2 (14:21):
Okay, I still think it's measured in years, but I'm
now at the point where I say, twenty six and
twenty seven are where it's gonna have to either pay.
Speaker 3 (14:29):
Off if you're closer to the spirit of this.
Speaker 4 (14:32):
Is that fast enough?
Speaker 6 (14:33):
Though?
Speaker 3 (14:34):
For given the multiple particular movies, no are multiple is
gonna sit where they are today stratospheric levels for the
next twenty four months while we all just kind of wait.
Speaker 2 (14:44):
They could oh yeah, yea, because they've already been there
for the last twenty four Yeah Okay, man, I didn't
put that. And so I like where I've gotten to that.
And this is something that I've I've kind of gotten
to in the last couple of weeks now because I've
gone through like this this whole earnings period. Two things
make complete sense to me. The first is the financial
incentives to build as excessively in AI as possible right now,
(15:07):
they're fully understandable. I totally get why Mark Zuckerberg is like, hey,
I got to spend two hundred and fifty billion dollars
on data centers in the next five years. I get
it because if there's a multi trillion dollar payoff at
the end of it for you, of course, like, I
totally get it. It's no different from the financial incentives
during the run up to the financial crisis. I get
(15:30):
why the guys selling mortgage backed securities were like, give
me more, mortgage brokers, give me more, because they made
out really well during that time. I'm not saying this
is good or bad. It it was very bad in retrospect,
but I understand the financial incentives that led us there,
just like I understand the financial incentives that have led
us here.
Speaker 7 (15:50):
That's good.
Speaker 2 (15:51):
The place that I then get to is ultimately, when
you talk about how all of this capex is eventually
going to hit the financial statements for Meta and Google
and Amazon and Microsoft, when that heightened depreciation starts showing
up and impacting the financial statements to the point where
(16:12):
it's like, hey, we now actually need revenue, otherwise we're
gonna start seeing problems, that's where and that's gonna start
showing up in the next couple of years because it's
now going to be okay, it's your depreciation from twenty
twenty four, twenty five, twenty six, twenty seven, like that's
all starting to hit then, and so it's going to
(16:34):
start mattering at that point. The other piece that I
find really interesting when looking at this, just like in
the context of again things that we've seen and heard
over the last week or so, sat Ya Nadella was
(16:54):
on a podcast somewhere I can't remember where the heck
it was, but Nadella was on a podcast and he said, Look,
the thing that I am seeing right now is that
the bottleneck is no longer in trying to get enough
compute power. It's that we can't actually get enough power
(17:18):
to power the compute like there's not enough electricity to
do so. And what I find interesting about that is
if that's actually true, then Microsoft is saying we've got
enough chips, we don't have enough electricity. Is the market
pricing for we have enough chips right now? No, it's
(17:42):
basically taking in video and Jensen Huang and it's at
his word and saying Okay, like you're telling us you've
got this robust demand, but these chips, like you can't
just have them like sitting in a warehouse and Video's
rolling out new ones every one to two years. You
can't just sit on them and then be like, oh,
well them later, they're obsolete by the time you're deploying.
(18:03):
If that's the case, And so you've got that going on,
which is potentially shortening the refresh cycle on these chips
you've got, you know, potentially then faster depreciation on these
data centers because if you're replacing the chips in them
every year instead of every two to three years, that's
an additional expense that you've got to account for. And
(18:23):
in the depreciation cycles faster, it's gonna hit your financial
statements faster.
Speaker 4 (18:28):
And so this is.
Speaker 2 (18:30):
How I get to the place of totally understand why
these guys are doing what they're doing because the financial
incentives are immense. But if Nadella is telling us this
and it's true, then that's a shift. And we're seeing
this by the way, and how these companies are being priced.
Look at what's happened to Meta in the last week.
They've gotten hit Oracle has given back all of its
(18:52):
post earnings bump in the last month and a half.
Now there's something that's different there, and I do want
under are investors starting to wake up to this? But
the counterpoint is, Okay, maybe the really robust profit growth
for AI's coming in the next couple of years and that'll,
you know, lift things. But the next two years, twenty
(19:13):
six and twenty seven, they're meady ones. They're they're big ones, juicy.
It's like, it's this is this is for all of
the artificial marbles. Let's take a quick break. When we return,
it's Wall Street Watch and ask da da da da
da da da da da da.
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 markets so
far today, right here on the Financial Exchange Radio Network.
Speaker 5 (20:02):
Well after yesterday's sell off driven by losses in the
tech sector, markets today are slightly rebounding as Wall Street
is reacting to a stronger than expected ADP private payrolls
report posted earlier this morning. Right now, the Dow is
up two tenths of one percent or ninety one points,
SMB five hundreds up four tenths of one percent or
(20:23):
twenty eight points, NASDAC up two thirds of a percent
or one hundred and fifty one points, Russell two thousand
also up two thirds of one percent, ten Youre Treasury
realed up five basis points at four point one four
to two percent, and Crude oiled down about two thirds
of a percent, trading right around sixty dollars a barrel.
Shares an AMD off about half a percent after the
(20:45):
chip maker beat third quarter earnings in revenue forecast. However,
sentiment took a slight hit after AMD's adjusted margin guidance
before the current quarter came in line with expectations. Sticking
with the chip sector, where Super Microcomputer posted quarterly results
that missed estimates, sending shares down over eight percent. Meanwhile,
McDonald's reported third quarter earnings in revenue that missed expectations,
(21:09):
where the company said its value meals and new products
we're helping revive sales and a challenging environment for fast food.
US same store sales increase two point four percent, stronger
than analysts had anticipated, while global same store sales climb
three point six percent. McDonald's is up over two percent.
Fast casual restaurant chain Cava offered a lower full year guidance,
(21:33):
downwardly revising its same store sales outlook in addition to
a lower profit margin range. Cava shares are now up
one percent after a lower starts of the day. Elsewhere,
Pinterest shares plunging twenty one percent after the social media
company reported weaker than expected earnings, and after today's closing bell,
we'll see more third quarter results from app Lovin, Qualcomm, Armholdings,
(21:57):
Robin Hood, and door Dash. I'm Silva and that is
Wolf Rewatch.
Speaker 1 (22:03):
This is Ask Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is 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
estate and tax planning, Medicaid planning, and probate law. Visit
(22:24):
Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:29):
As promised, We've got Todd Lutzky live in studio here
to answer your estate planning questions. Phone lines wide open
right now at eight eight eight to zero five two
two six three. That is the number to call to
ask Todd your estate planning questions live on air again.
It is eight eight eight two zero five two two
(22:51):
six three. Remember we can usually get to about two
or three of your calls, so make sure you get
in line early so that you can ask Todd your
estate planning question uestions. Again, that number is eight eight
eight two zero five two two six three. Mister Lutsky,
how are you doing today?
Speaker 4 (23:10):
I am never better? How are you? I'm good?
Speaker 2 (23:12):
Did you see that these scientists they tried to cross
a cheetah with a crab.
Speaker 4 (23:20):
A cheetah and a crab. Yeah, that doesn't seem like
a good mix.
Speaker 2 (23:24):
No, it went sideways real fast. Yeah, not great, Todd.
Let's talk a little bit about revocable trust to day
everyone likes to talk about like the big brother irrevocable,
like the irrevocable trust, revocable trusts. Yes, what can they accomplish?
Speaker 8 (23:44):
So they can accomplish certainly, you know, estate tax planning.
They can accomplish avoiding probate, and they can accomplish you know,
dynasty trust planning. They can they can allow you to
continue you to control the asset after you die for
a very long time. Some states have no rule against perpetuities,
(24:06):
means it can go on forever. Not in Massachusetts, of course,
it allows you to do it, but only up for
about yeah, one hundred years give or take is the
rule about how long it can last. But it can
also help you skip generations, meaning you can do generations
skipping tax planning where you can take care of the family,
protect from creditors and divorces, and still make it go
(24:29):
to another generation without paying any estate tax at each generation.
So to me, generational building wealth is phenomenal. And I
think also it's important when we talk about you know,
we always talk about irrevocable a lot, but with revocable,
like with irrevocable, there are many kinds of trusts. There
are many kinds of irrevocable trusts. Even with the revocable world,
(24:51):
now there's you know, the idea of two trusts versus
one trust, So we got to think about that as well.
Speaker 2 (24:56):
Talk with Todd Lutsky from Cushing and Dolan. Again, phone
lines are open and for you to ask Todd your
estate planning questions. The phone number is eight eight eight
to zero five two two sixty three. Again, that is
eight eight eight two zero five two two six three.
Still have a little bit of space there for you
to ask Todd your questions. Again, it's eight eight eight
(25:18):
to zero five two two six three.
Speaker 4 (25:21):
Todd.
Speaker 2 (25:21):
These revocable trusts on a daily basis, What are changes
that people would notice from how their finances worked before
and what stays the same?
Speaker 8 (25:34):
Yeah, And I think that's part of the beauty of
revocable trusts is that they are really simple. You know,
you don't you don't have any separate income tax returns
to file. So let's like you say, with your finances,
let's say I put my investment portfolio inside the trust.
Let's say I put my bank account inside the trust.
(25:55):
What's gonna happen. Am I going to not have access
to my money?
Speaker 4 (25:58):
Absolutely not.
Speaker 8 (25:59):
So the difference is the name. Let's say, the name
on my on my investment account, if it was in
my trust, would be called that. You know, maybe if
I'm doing a joint trust, it might be the Lutsky
Family Trust. Okay, that's all that You're gonna see the
difference is you're gonna see that on your statements that
you get from your your you know, investment advisor, and
your access is exactly the same. Your investments are exactly
(26:20):
the same. And since that account might have the Lutsky
Family Trust as the name, it don't have my Social
Security on it. So there's no income tax returns need
to be filed. Just keep filing your own ten forty
just like you always do. So really becomes, you know,
just simple and uneventful for you, which is what we
want when we do our planning.
Speaker 2 (26:41):
Talking with Tod Lutsky from the law firm of Cushing
and Dolan. If you've got a question for Todd, eight
eight eight two zero five two two sixty three is
the number to call to ask him your question live
on air. Right now, we're going to take a quick
break and when we come back we'll get to your
questions with Todd. That phone number is eight eight eight
to zero five two two six three. Again it is
(27:05):
eight eight eight to zero five two two six three.
Speaker 1 (27:10):
Ask Todd with Todd Letsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. Todd Letsky
answers your questions about a State and elder life Planning
every Wednesday at ten thirty right here on the Financial
Exchange Radio Network.
Speaker 4 (27:35):
Talking with Todd Lutsky.
Speaker 2 (27:36):
You got a question for Todd. The number to call
is eight eight eight to zero five two two six
three to get your estate planning question answered again. That
is eight eight eight to zero five two two six three.
Let's go to Mark in Danvers. Mark, you are on
with Todd Lutsky.
Speaker 7 (27:55):
Good morning, that's great show.
Speaker 4 (27:56):
Thank you.
Speaker 7 (27:59):
Of course you are talking about revocable trust and you
would mentioned that the trust has no Social Security number
assigned to it. Does that mean you do not have
to pay capital gains on the trust if you put
investments in there.
Speaker 8 (28:13):
Well, I'm sure there's a miscommunication on how we did that.
By the way, I love your creativity so awesome. I'd
love to figure out ways not to pay tax. Unfortunately,
what I said was that the revocable trust does not
have its own tax ID number, So you're correct about that. Instead,
like if it was the Lutsky family trust, it would
(28:35):
have my social Security number on it.
Speaker 4 (28:38):
Okay.
Speaker 8 (28:39):
So the beauty of the of the trust is that
that when you put your investment portfolio in and your
bank accounts in and I don't care if it's a
rental property, et cetera, that the trust itself is.
Speaker 4 (28:54):
Not going to have to file an income tax return.
Speaker 8 (28:56):
So many people think that you know when you put
assets in a trust that you pay higher taxes, not
no taxes. They say, oh, I heard that you put
assets in a trust. You have a much higher tax rate.
So let me explain what that means. First of all,
with revocable trust that's not the issue at all. With
irrevocable trusts, it can be if it's not a grand
(29:18):
tour trust for income tax purposes.
Speaker 4 (29:20):
So if you put it.
Speaker 8 (29:21):
In an irrevocable trust and it's not a grand tour trust.
When I say they have higher tax rates if you
make more than and this number changes a lot, I
think it's somewhere around fourteen thousand, maybe a little higher.
If the trust earns a little more than that in income, interest, dividends,
capital gains, it's at the top tax rate whatever that
(29:45):
thirty nine percent thirty seven percent tax rate federally, whereas
with human beings our tax rate, we don't get into
that tax level until we're in the hundreds of thousands
of dot depending on whether you're married or single. So
that's what I mean when I say trusts can have
higher tax rates and be compressed as they are, But
(30:09):
in the revocable trust situation, the beauty is we don't
have to worry about that at all.
Speaker 4 (30:13):
You don't have to file a tax return.
Speaker 8 (30:15):
But it's not that good unfortunately, Mark, I wish I
could make it as good as you like it. The
trust doesn't pay the gain or the tax I do.
The grant tour does. The person who creates the trust does.
So it just continues to be taxed in my Social
Security number at my rates on my tax return on
my ten forty and I don't have to file a
(30:35):
tax return. So to me, that helps it to be
what I like to call simple and uneventful in my life,
not disrupting my life. And folks, that's important because that
really leads me into a brand new guide that we've
never given away before. It's one that the BBBA passed,
as we all know, and it really just drives home
something that we've been doing at Cushing and Dolan for
(30:56):
a long time, joint revocable trust trusts, and it's catching
on now people are realizing that it is important. And
for a lot of people with you know, what's a
moderate estate these days under like fifteen million dollars. The
exemption federally is going to go up because of the
passage of the new Act, and it's going to be
fifteen million January one. Well, for a lot of people,
(31:18):
I don't have to give away stuff anymore. I can
keep stuff, avoid a forty percent estate tax, and get
a step up in basis when I die, eliminating the
built in gain that like Mark was talking about, eliminating
the built in gain and winning on the twenty eight
point eight percent front. Wow, even if I got to
give mass ten percent, I don't care. And these joint
(31:39):
revocable trusts are so simple. You don't have to divide
assets between husband and wife. You just fund them simply,
all with all your assets at one time, and you
can cram down way more assets than you could if
you had two trusts. And they're really wonderful if you
have large iras folks learn about joint revocable trusts, how
they work the tax saving, it might be the way
(32:01):
to go for you. Eight six six eight four eight
five six nine nine or Legal Exchange show dot Com
again brand New Guide eight six six eight four eight
five six nine nine or Legal Exchange Show dot com.
Speaker 2 (32:17):
Todd, we got another one for you here. Let's go
to Martin in Springfield. Martin, what is your question for Todd?
Speaker 6 (32:24):
Okay, my question is I filled out a will. I'm
seventy nine years old. Uh. And my concern is about
probate from northern Vermont that came down here to a
senior community. And so that will is done. But my
(32:48):
concerns are probates. And do I need to get a trust?
How much does a trust cost? And h you're talking
about vocable trust and irrevocable trust. I have an irrevocable
trust for my cremation. Uh. And so so.
Speaker 8 (33:13):
Let me let me try to interject you so I
can get your question answered. The irrevocable trust for your cremation,
I'm sure has nothing. I don't think that's an estate
planning trust, correct, I don't. I don't know what you
did there, right, that's just something.
Speaker 6 (33:24):
So I don't know anything.
Speaker 4 (33:26):
So so you only have a will? Correct, That's that's
the extent of your estate plan. Okay, so let's see
your will. Yes, So one last question that.
Speaker 8 (33:34):
Might be helpful is you said you came down here
to a senior community from Vermont?
Speaker 4 (33:39):
Did did? Do you own real estate in Vermont? Still?
Speaker 6 (33:43):
No? Okay, sold the house and from there I understand
that it was it was a real property because I
owned the land and the house here. I own the
house I lived in complete lately, but it's in the
senior community and they told me that the land is
(34:05):
owned by somebody else.
Speaker 4 (34:07):
Right, I got it, I understand.
Speaker 8 (34:09):
So basically, in these senior communities you get to you
kind of get a place to live, but you don't
own the property. I totally get it. So that may
not be an issue then. So you may not own
any real estate in Massachusetts, which can be helpful, I
guess from an avoiding probate standpoint. So from your point
of view and your question, let me help others that
are listening to if he owned real estate in Vermont
(34:32):
and in mass his question is doubly important. I want
to avoid probate because when you own real estate in
multiple states, you got to go to probate in multiple states,
even though you're not a resident of the state in
which you own real estate. So that's important. Sounds like
for you, Martin However, there's no Vermont real estates. I
don't have to worry there, And it sounds like there's
(34:53):
probably no Massachusetts real estate because you own it in
this senior community and you just have an in in
the house.
Speaker 4 (35:01):
Basically you just have that house.
Speaker 8 (35:03):
Now, other assets you might own we have to think about,
which would be investments, stocks, bonds, mutual funds, iras. So
to the extent, all you want to do is avoid probate,
and you're not concerned about estate tax planning or nursing
home planning and protecting assets. You can kind of do
that if you have no real estate by simply making
(35:25):
sure these accounts all have designated beneficiaries on them. If
they do, they will pass to those designated beneficiaries outside
of probate.
Speaker 4 (35:34):
Still subject to a state tax.
Speaker 8 (35:36):
But if you're under two million dollars here in mass
you're not going to have any estate tax to worry about,
and that would successfully help you avoid probate, again, assuming
no real estate. But a lot of times and I
heard you mentioned that maybe it's an irrevocable Well, if
you want to protect assets from a nursing home, then
you kind of need to think about an irrevocable trust
and putting some of these items into the irrevocable trust
(35:59):
so that they will be protected from the cost of
long term care. And by putting them in there, Yes,
it takes five years, but it's immediately protected from immediately
avoids probate when you pass right. So what I like
to tell folks a lot when they just have a will,
a will is really a won't. It's better than nothing.
It certainly will direct where your assets go, but it
(36:22):
goes to probate, and it will not help you reduce
the state taxes, So if you're married, you're not going
to shelter a state taxes.
Speaker 4 (36:29):
And it will not.
Speaker 8 (36:30):
Protect assets from a nursing home, so it won't avoid probate,
won't reduce the state taxes, and won't protect an asset
from a nursing home.
Speaker 4 (36:37):
But it will say where they go. So if that's
all you want, that works.
Speaker 8 (36:41):
And if you want to also, then just throw in
the avoidance of probate, at least in your case, Martin,
I think naming the designated beneficiaries on these investment accounts
and brokerage accounts and bank accounts will get you there.
Speaker 4 (36:54):
Hope that helps a little.
Speaker 2 (36:56):
Mister Lutsky, thank you so much for the time. We
appreciate you joining us today.
Speaker 4 (37:00):
It is always my pleasure.
Speaker 1 (37:03):
This has been asked Todd on the Financial Exchange Radio Network.
Asked 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 three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:23):
Cushing and Dolan. Armstrong Advisory does not provide any legal
or tax advice. Please consult with your illegal or tax
advisor on such matters. Cushing and Armstrong do not endorse
each other and are not affiliated.
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