August 27, 2025 • 15 mins
This week, Todd Lutsky explains why naming beneficiaries in a trust is a better path than direct naming on accounts. Todd also explains some of the biggest problems people run into when starting the estate planning process.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
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 a 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.
(00:22):
Visit Cushingdolan dot com. Now here's Todd.
Speaker 2 (00:25):
Lutsky as problems were now joined by Todd Lutsky from
Cushing and Dolan. We've got the phone lines open and
room for your calls about your estate plans. Why we
call the segment Ask Todd is you get to Ask
Todd your questions live on air right now. Phone number
is eight eight eight to zero five two two six three. Again,
(00:47):
that is eight eight eight two zero five two two
six three. So make sure you call early and often,
because we usually only get through two or three calls
with Todd in any particular day. That number again is
eight eight eight two zero five two two six three.
Again it's eight eight eight two zero five two two
six three. Mister Lutsky, how are you doing today?
Speaker 3 (01:10):
I am never better? How about you?
Speaker 2 (01:13):
I'm good. I saw over the weekend actually that the
Navy Navy the training dolphins to carry first aid kits
really medicinal porposes only.
Speaker 3 (01:26):
That's good.
Speaker 2 (01:27):
Yeah, So it's it's exciting news. Todd want to talk
to you a little bit about trusts and beneficiaries. Can
you talk a little bit about are there any benefits
to using a trust to name beneficiaries for assets as
opposed to simply naming them directly on an account.
Speaker 3 (01:47):
So there's obviously different kinds of trust that we have
to deal with, uh when we talk about this, but
and certain things that will go into trust in certain
things that want So first of all, on IRA would
would generally not go into truy period, So I wouldn't
wouldn't even wouldn't even do it because you have a
big tax problem.
Speaker 2 (02:04):
What about naming a trust as a beneficiary of an IRA?
Speaker 3 (02:06):
And that's that's where I was headed. So you can't
change the owner, and I think this is important owner
versus beneficiaries, which what you're asking me for an IRA,
I would say, you know, based on the kind of
planning you're doing, So if you're trying to put you know,
do it you know, married couple, or trying to ultimately
get your IRA to your to your kids the next
(02:27):
generation and maybe protect it from nursing home, not from
nursing homes, but protecting it from your kids future creditors,
future divorces, UH passing it down to a generation even
below the children tax free. So if you're looking to
do all of those things, then the designated beneficiary always
primary is spouse, So always start with that. The primary
(02:49):
should be the spouse from an income tax perspective, and
the contingent could be the trust. So while you cannot
put an IRA in the trust while you're alive, you
can get it there when you die, so the beneficiary
could be named that.
Speaker 2 (03:06):
Now for non IRA question sure pros and cons of
that approach? What are the good things you get from
doing that? What are the bad things that happen from
doing that?
Speaker 3 (03:16):
If if the goal is to protect the IRA, let's
take two to three million dollar IRA, sure big money, right,
So we want to make sure that it's protected from
the kid's future divorces, creditors, and generation skipping. Then there,
I see there is no negative why because one I
want it not going outright to the kids, because then
(03:36):
all bets are off as to what happens to it.
I want it getting into the trust is there, And
I think what you're driving at, Chuck, is is there
a tax problem doing that?
Speaker 1 (03:46):
Uh?
Speaker 3 (03:46):
And as long as the trust is designed to hold
the IRA asset, which it should be, the required minimum
distributions is what we talk about and what we care
about from an income tax perspective, these required minimum distributions.
If I name the children outright, it's ten years. Generally speaking,
(04:07):
there's some exceptions. If I name the trust the beneficiary
and the kids are beneficiaries inside the trust, it still
comes out over ten years, but it doesn't come out
to the kid. That's the difference. Sure, the required minimum
distribution is still reaching into the IRA, pulling it out,
(04:28):
subjecting that withdrawal to income taxes, but it goes to
the trust. Now, I guess there could be a tax
difference if the amount that goes to the trust remains
in the trust and doesn't come out to the kids.
It could be taxed at the trust level, which would
be a higher rate than kids or human levels. Let's
(04:49):
put it that way. So, but again, if I'm trying
to protect it. I still want to make that distribution
because every year I can decide whether I make a
distribution or not. If someone's going through a divorce, we're
going to build up inside the trust. But if if
I don't have a problem, allow the distribution to come
out and let the kid pay the tax.
Speaker 2 (05:07):
Talking with Todd Lutsky. If you've got estate planning questions,
this is your chance to ask them to Todd live
on air right now. Phone number is eight eight eight
to zero five two two six three. That number again
is eight eight eight to zero five two two six three.
We're gonna take a quick break here, but when we return,
(05:28):
we're gonna get right to your questions with Todd. That
phone number eight eight eight to zero five two two
six three. One last time eight eight eight to zero
five two two six y three.
Speaker 1 (05:41):
Ask Todd with Todd Lutsky 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 2 (06:08):
Talk with Todd Lensky from Kushigan Dolan. If you've got
a question to ask Todd still Room on the phone
lines eight eight eight two zero five two two six three.
That number again is eight eight eight two zero five
two two six three Todd. When we talk about beneficiaries
and how you know families might might think about them
(06:29):
when it comes to revocable versus irrevocable trusts, any difference
there in terms of how beneficiaries may or may not
be treated, or is it pretty much the exact same?
Speaker 3 (06:40):
So I think it's probably the same. Let's let's run
through it, though it's always better to sort of understand
how that works. So if I've got a revocable trust
and I want to put stuff in it, my first
comment is I'm going to probably put everything in except iras.
Of course, always we already talked about iras. They don't
go in. So I would check change on an investment account,
(07:02):
a brokerage account, a bank account, a CD. I don't
care what it is. I don't see why I wouldn't
just put it all in there. When I say put
it in there, I mean change the owner. I don't
need to change the beneficiary anymore. And the reason I
don't is because once it's in the trust. The trust
will dictate where everything goes when you die, and that's great.
(07:24):
That's what I want to have happen, and I don't
have to worry. And this is why sometimes people say, well,
I'll just put one kid on one account, one kid
on another account, and you know, but you don't know
which account's going to grow faster than another, and you
don't know if that's going to end up an unequal treatment.
I don't want that. Plus I want to control it.
I can't really control it by naming beneficiaries, so I
would retitle it, changing the owner on those accounts to
(07:47):
the name of the revocable trust. Now, similarly, with an
irrevocable trust, if I wanted to fund it, I would
do the same thing. I would change the owner on
the these items to the irrevocable trust. The difference is
what I put in before. With they're revocable, I'm likely
(08:09):
to put everything in. With an irrevocable I'm probably not
gonna do that. I always want to leave some stuff out,
some access, you know, direct access to assets outside of
these irrevocable medicaid trusts, or leave some stuff out. And
the other reason I leave some stuff out is especially
especially my bank account that receives my direct deposits social
(08:33):
security or pension, because remember, when I'm talking about Medicaid trusts,
I'm talking about people that are probably retired.
Speaker 2 (08:41):
Now, sure you're not talking about thirty year olds generally
going that route, right, there's no need to be thinking
about it, right.
Speaker 3 (08:47):
So these are generally folks that are either retiring, close
to retirement, et cetera, and more on a fixed income.
So you never want to put in that main operating
bank account into a Medicaid irrevocable trust like you would
where a revocable because you get these checks every month,
whether it's pension, soci security, if it was owned by
(09:08):
the irrevocable Medicaid trust, every single time it goes in there,
it's a new five year waiting period for Medicaid because
you added new money. People don't think about that. But
I actually had someone who came to me. We didn't
we didn't do the planning, but they were going on
trying to apply for Medicaid and they came in and
I saw this when we were going through the application process.
(09:30):
I'm like, what are all these deposits? And they said, oh,
it's our it's our soci security and pension. I'm like, oh,
you're gonna have a big problem here. So for years
we had to go back and count everything that went
in there to figure out what the amount of the
deposits were to get them out so basically cure the problem.
I said, you're never going to be eligible for medicaid
(09:51):
because this ongoing five year waiting period is every single.
Speaker 2 (09:55):
Month, it just keeps going.
Speaker 3 (09:57):
Yeah, it keeps extending it out right, And so we
had to go back and undo all that and fix
it to cure all that money back into their personal name,
to eliminate the waiting period, and then deal with the
money that's outside the trust to get them eligible for Medicaid.
So so I think that's the biggest difference between the two.
Speaker 2 (10:16):
Just dig it in on that. It seems like that
seems like obviously kind of a big problem in an
estate plan. What other kinds of things do you see
as being really common If someone comes to you and says, oh, hey,
like I've done my estate plan, like I think I'm
all ready to go, do you see an issue with this?
What other common ones do you typically see that cause
problems for people?
Speaker 3 (10:35):
Oh, common questions like an example would be.
Speaker 2 (10:38):
Not even not even common questions like things where someone
thinks they're doing things right, right, okay, and then you
look at it you like, no, do you realize what
you've done here?
Speaker 3 (10:47):
Yeah? I see, so an example like that would be
And again, partly this is where the guide comes in, right,
we want to figure out what trust is right for you.
I've had people come in and say say to me, uh, oh, okay,
you know so and so is going into the nursing home,
and you know, we know all about the five year
waiting period. So we're all set because my mom, you know,
(11:07):
she did the planning years ago. And again to your point, Chuck,
we think we did it right. And then I sit
down and I say, great, give me a copy of
the trust. That's going to be a real helpful to us,
and let's start figuring out how we can apply for medicaid.
And then I look at the top of the trust
and I see it's the you know, the you know,
Tom Smith revocable trust. Okay, you didn't do it right.
(11:32):
You did revocable trust planning right, sure, but you didn't
do nursing home planning right because the five year waiting
period never begins to run on assets in a revocable trust.
So that would be an example of somebody who thinks
they did it right and they didn't. But folks, that's
what this guide is about this month rights. As we
(11:54):
approach the end of the month, this is the top
seven estate planning trusts, the ones I think are used
most frequently and some of them most frequently misunderstood. Like
it starts with the nominee realty trust. What is that
It's not even really a trust. You'll learn when you
get the guide. Revocable trusts and irrevocable trust We just
(12:14):
talked about two with you, Chuck, about the Medicaid and
revocable trust. Well, there's other kinds of irrevocable trusts, life
insurance trusts, first to die, second to die variety. People
who have special needs children have you know, needs to
figure out a special needs trust. They're in here. What
about a pool trust? There's so many different trusts. These
(12:36):
are the top seven. They explain how they work, the
tax savings, the operation. If you've never done your planning,
this is going to help you get started. Pick which
one's right for you. Eight six six eight four eight
five six nine to nine or Legal Exchange Show dot com.
You can download it right there again eight six six
(12:56):
eight four eight five six nine nine or Legal Exchange
Show dot com.
Speaker 1 (13:01):
Todd.
Speaker 2 (13:02):
Do you see instances where I guess people will use
a combination of different vehicles for their estate planning because
of different needs? You know, maybe, hey, they've got a
revocable trust that eventually spits out a special needs trust
for a child of theirs, Or sometimes do people ever
use revocable trusts and irrevocable trusts in the same estate plan?
(13:22):
Are those things possible or useful in situations?
Speaker 3 (13:26):
Yeah, I think it's very important that when you're doing
your planning, we you know, we use we first gather
like all of your assets, and it's the amount of
assets you have and the type of assets that you
have that will dictate what kind of trust we do.
So let's say we start with your foundation and it's
a revocable trust, and you're worth about four million dollars,
(13:49):
but you have a two million dollar life insurance policy. Well,
now all of a sudden, I'm worth six million dollars,
And that changes the estate tax game here in mass
at least, even though it might not affect you federally,
so it changes the game here. So now what, Well,
maybe it makes sense to take that two million dollar
life insurance policy and put it in an irrevocable medical
(14:09):
an irrevocable life insurance trust. Right, so I would put
all the other assets in my revocable trust. And by
the way, many kinds of revocable trusts. With an estate
worth well under fifteen million dollars, I'm probably putting together
a joint revocable trust for this married couple hypothetical example.
(14:31):
But that's great. It does avoid probate and reduce my taxes,
but it's not going to quite eliminate them.
Speaker 1 (14:36):
Why.
Speaker 3 (14:36):
Because I got this two million dollar policy, I move
that into an irrevocable life insurance trust, and as long
as I live three years, the death benefit will now
be estate and income tax free when I die, thereby
reducing and helping to eliminate my state taxes. So a
combination of the two trusts work good in that arrangement.
(14:57):
And yes, sometimes special needs trusts are built in to
please revocable trusts as well.
Speaker 2 (15:02):
Mister Lutsky, thank you so much for joining us today.
Speaker 3 (15:04):
We appreciate it always pleasure. Thank you.
Speaker 1 (15:07):
This has been Asked Odd 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 three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:27):
Cushing and Dolan. Armstrong Advisory 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
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 a 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.
(00:22):
Visit Cushingdolan dot com. Now here's Todd.
Speaker 2 (00:25):
Lutsky as problems were now joined by Todd Lutsky from
Cushing and Dolan. We've got the phone lines open and
room for your calls about your estate plans. Why we
call the segment Ask Todd is you get to Ask
Todd your questions live on air right now. Phone number
is eight eight eight to zero five two two six three. Again,
(00:47):
that is eight eight eight two zero five two two
six three. So make sure you call early and often,
because we usually only get through two or three calls
with Todd in any particular day. That number again is
eight eight eight two zero five two two six three.
Again it's eight eight eight two zero five two two
six three. Mister Lutsky, how are you doing today?
Speaker 3 (01:10):
I am never better? How about you?
Speaker 2 (01:13):
I'm good. I saw over the weekend actually that the
Navy Navy the training dolphins to carry first aid kits
really medicinal porposes only.
Speaker 3 (01:26):
That's good.
Speaker 2 (01:27):
Yeah, So it's it's exciting news. Todd want to talk
to you a little bit about trusts and beneficiaries. Can
you talk a little bit about are there any benefits
to using a trust to name beneficiaries for assets as
opposed to simply naming them directly on an account.
Speaker 3 (01:47):
So there's obviously different kinds of trust that we have
to deal with, uh when we talk about this, but
and certain things that will go into trust in certain
things that want So first of all, on IRA would
would generally not go into truy period, So I wouldn't
wouldn't even wouldn't even do it because you have a
big tax problem.
Speaker 2 (02:04):
What about naming a trust as a beneficiary of an IRA?
Speaker 3 (02:06):
And that's that's where I was headed. So you can't
change the owner, and I think this is important owner
versus beneficiaries, which what you're asking me for an IRA,
I would say, you know, based on the kind of
planning you're doing, So if you're trying to put you know,
do it you know, married couple, or trying to ultimately
get your IRA to your to your kids the next
(02:27):
generation and maybe protect it from nursing home, not from
nursing homes, but protecting it from your kids future creditors,
future divorces, UH passing it down to a generation even
below the children tax free. So if you're looking to
do all of those things, then the designated beneficiary always
primary is spouse, So always start with that. The primary
(02:49):
should be the spouse from an income tax perspective, and
the contingent could be the trust. So while you cannot
put an IRA in the trust while you're alive, you
can get it there when you die, so the beneficiary
could be named that.
Speaker 2 (03:06):
Now for non IRA question sure pros and cons of
that approach? What are the good things you get from
doing that? What are the bad things that happen from
doing that?
Speaker 3 (03:16):
If if the goal is to protect the IRA, let's
take two to three million dollar IRA, sure big money, right,
So we want to make sure that it's protected from
the kid's future divorces, creditors, and generation skipping. Then there,
I see there is no negative why because one I
want it not going outright to the kids, because then
(03:36):
all bets are off as to what happens to it.
I want it getting into the trust is there, And
I think what you're driving at, Chuck, is is there
a tax problem doing that?
Speaker 1 (03:46):
Uh?
Speaker 3 (03:46):
And as long as the trust is designed to hold
the IRA asset, which it should be, the required minimum
distributions is what we talk about and what we care
about from an income tax perspective, these required minimum distributions.
If I name the children outright, it's ten years. Generally speaking,
(04:07):
there's some exceptions. If I name the trust the beneficiary
and the kids are beneficiaries inside the trust, it still
comes out over ten years, but it doesn't come out
to the kid. That's the difference. Sure, the required minimum
distribution is still reaching into the IRA, pulling it out,
(04:28):
subjecting that withdrawal to income taxes, but it goes to
the trust. Now, I guess there could be a tax
difference if the amount that goes to the trust remains
in the trust and doesn't come out to the kids.
It could be taxed at the trust level, which would
be a higher rate than kids or human levels. Let's
(04:49):
put it that way. So, but again, if I'm trying
to protect it. I still want to make that distribution
because every year I can decide whether I make a
distribution or not. If someone's going through a divorce, we're
going to build up inside the trust. But if if
I don't have a problem, allow the distribution to come
out and let the kid pay the tax.
Speaker 2 (05:07):
Talking with Todd Lutsky. If you've got estate planning questions,
this is your chance to ask them to Todd live
on air right now. Phone number is eight eight eight
to zero five two two six three. That number again
is eight eight eight to zero five two two six three.
We're gonna take a quick break here, but when we return,
(05:28):
we're gonna get right to your questions with Todd. That
phone number eight eight eight to zero five two two
six three. One last time eight eight eight to zero
five two two six y three.
Speaker 1 (05:41):
Ask Todd with Todd Lutsky 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 2 (06:08):
Talk with Todd Lensky from Kushigan Dolan. If you've got
a question to ask Todd still Room on the phone
lines eight eight eight two zero five two two six three.
That number again is eight eight eight two zero five
two two six three Todd. When we talk about beneficiaries
and how you know families might might think about them
(06:29):
when it comes to revocable versus irrevocable trusts, any difference
there in terms of how beneficiaries may or may not
be treated, or is it pretty much the exact same?
Speaker 3 (06:40):
So I think it's probably the same. Let's let's run
through it, though it's always better to sort of understand
how that works. So if I've got a revocable trust
and I want to put stuff in it, my first
comment is I'm going to probably put everything in except iras.
Of course, always we already talked about iras. They don't
go in. So I would check change on an investment account,
(07:02):
a brokerage account, a bank account, a CD. I don't
care what it is. I don't see why I wouldn't
just put it all in there. When I say put
it in there, I mean change the owner. I don't
need to change the beneficiary anymore. And the reason I
don't is because once it's in the trust. The trust
will dictate where everything goes when you die, and that's great.
(07:24):
That's what I want to have happen, and I don't
have to worry. And this is why sometimes people say, well,
I'll just put one kid on one account, one kid
on another account, and you know, but you don't know
which account's going to grow faster than another, and you
don't know if that's going to end up an unequal treatment.
I don't want that. Plus I want to control it.
I can't really control it by naming beneficiaries, so I
would retitle it, changing the owner on those accounts to
(07:47):
the name of the revocable trust. Now, similarly, with an
irrevocable trust, if I wanted to fund it, I would
do the same thing. I would change the owner on
the these items to the irrevocable trust. The difference is
what I put in before. With they're revocable, I'm likely
(08:09):
to put everything in. With an irrevocable I'm probably not
gonna do that. I always want to leave some stuff out,
some access, you know, direct access to assets outside of
these irrevocable medicaid trusts, or leave some stuff out. And
the other reason I leave some stuff out is especially
especially my bank account that receives my direct deposits social
(08:33):
security or pension, because remember, when I'm talking about Medicaid trusts,
I'm talking about people that are probably retired.
Speaker 2 (08:41):
Now, sure you're not talking about thirty year olds generally
going that route, right, there's no need to be thinking
about it, right.
Speaker 3 (08:47):
So these are generally folks that are either retiring, close
to retirement, et cetera, and more on a fixed income.
So you never want to put in that main operating
bank account into a Medicaid irrevocable trust like you would
where a revocable because you get these checks every month,
whether it's pension, soci security, if it was owned by
(09:08):
the irrevocable Medicaid trust, every single time it goes in there,
it's a new five year waiting period for Medicaid because
you added new money. People don't think about that. But
I actually had someone who came to me. We didn't
we didn't do the planning, but they were going on
trying to apply for Medicaid and they came in and
I saw this when we were going through the application process.
(09:30):
I'm like, what are all these deposits? And they said, oh,
it's our it's our soci security and pension. I'm like, oh,
you're gonna have a big problem here. So for years
we had to go back and count everything that went
in there to figure out what the amount of the
deposits were to get them out so basically cure the problem.
I said, you're never going to be eligible for medicaid
(09:51):
because this ongoing five year waiting period is every single.
Speaker 2 (09:55):
Month, it just keeps going.
Speaker 3 (09:57):
Yeah, it keeps extending it out right, And so we
had to go back and undo all that and fix
it to cure all that money back into their personal name,
to eliminate the waiting period, and then deal with the
money that's outside the trust to get them eligible for Medicaid.
So so I think that's the biggest difference between the two.
Speaker 2 (10:16):
Just dig it in on that. It seems like that
seems like obviously kind of a big problem in an
estate plan. What other kinds of things do you see
as being really common If someone comes to you and says, oh, hey,
like I've done my estate plan, like I think I'm
all ready to go, do you see an issue with this?
What other common ones do you typically see that cause
problems for people?
Speaker 3 (10:35):
Oh, common questions like an example would be.
Speaker 2 (10:38):
Not even not even common questions like things where someone
thinks they're doing things right, right, okay, and then you
look at it you like, no, do you realize what
you've done here?
Speaker 3 (10:47):
Yeah? I see, so an example like that would be
And again, partly this is where the guide comes in, right,
we want to figure out what trust is right for you.
I've had people come in and say say to me, uh, oh, okay,
you know so and so is going into the nursing home,
and you know, we know all about the five year
waiting period. So we're all set because my mom, you know,
(11:07):
she did the planning years ago. And again to your point, Chuck,
we think we did it right. And then I sit
down and I say, great, give me a copy of
the trust. That's going to be a real helpful to us,
and let's start figuring out how we can apply for medicaid.
And then I look at the top of the trust
and I see it's the you know, the you know,
Tom Smith revocable trust. Okay, you didn't do it right.
(11:32):
You did revocable trust planning right, sure, but you didn't
do nursing home planning right because the five year waiting
period never begins to run on assets in a revocable trust.
So that would be an example of somebody who thinks
they did it right and they didn't. But folks, that's
what this guide is about this month rights. As we
(11:54):
approach the end of the month, this is the top
seven estate planning trusts, the ones I think are used
most frequently and some of them most frequently misunderstood. Like
it starts with the nominee realty trust. What is that
It's not even really a trust. You'll learn when you
get the guide. Revocable trusts and irrevocable trust We just
(12:14):
talked about two with you, Chuck, about the Medicaid and
revocable trust. Well, there's other kinds of irrevocable trusts, life
insurance trusts, first to die, second to die variety. People
who have special needs children have you know, needs to
figure out a special needs trust. They're in here. What
about a pool trust? There's so many different trusts. These
(12:36):
are the top seven. They explain how they work, the
tax savings, the operation. If you've never done your planning,
this is going to help you get started. Pick which
one's right for you. Eight six six eight four eight
five six nine to nine or Legal Exchange Show dot com.
You can download it right there again eight six six
(12:56):
eight four eight five six nine nine or Legal Exchange
Show dot com.
Speaker 1 (13:01):
Todd.
Speaker 2 (13:02):
Do you see instances where I guess people will use
a combination of different vehicles for their estate planning because
of different needs? You know, maybe, hey, they've got a
revocable trust that eventually spits out a special needs trust
for a child of theirs, Or sometimes do people ever
use revocable trusts and irrevocable trusts in the same estate plan?
(13:22):
Are those things possible or useful in situations?
Speaker 3 (13:26):
Yeah, I think it's very important that when you're doing
your planning, we you know, we use we first gather
like all of your assets, and it's the amount of
assets you have and the type of assets that you
have that will dictate what kind of trust we do.
So let's say we start with your foundation and it's
a revocable trust, and you're worth about four million dollars,
(13:49):
but you have a two million dollar life insurance policy. Well,
now all of a sudden, I'm worth six million dollars,
And that changes the estate tax game here in mass
at least, even though it might not affect you federally,
so it changes the game here. So now what, Well,
maybe it makes sense to take that two million dollar
life insurance policy and put it in an irrevocable medical
(14:09):
an irrevocable life insurance trust. Right, so I would put
all the other assets in my revocable trust. And by
the way, many kinds of revocable trusts. With an estate
worth well under fifteen million dollars, I'm probably putting together
a joint revocable trust for this married couple hypothetical example.
(14:31):
But that's great. It does avoid probate and reduce my taxes,
but it's not going to quite eliminate them.
Speaker 1 (14:36):
Why.
Speaker 3 (14:36):
Because I got this two million dollar policy, I move
that into an irrevocable life insurance trust, and as long
as I live three years, the death benefit will now
be estate and income tax free when I die, thereby
reducing and helping to eliminate my state taxes. So a
combination of the two trusts work good in that arrangement.
(14:57):
And yes, sometimes special needs trusts are built in to
please revocable trusts as well.
Speaker 2 (15:02):
Mister Lutsky, thank you so much for joining us today.
Speaker 3 (15:04):
We appreciate it always pleasure. Thank you.
Speaker 1 (15:07):
This has been Asked Odd 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 three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:27):
Cushing and Dolan. Armstrong Advisory 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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