October 1, 2025 • 15 mins
Todd Lutsky shares his expertise on making the most of gifting assets, understanding the different ways of gifting, and deciding which assets should be gifted.
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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 and we've got Todd Lutsky joining us now for
Ask Todd. It's your opportunity to ask Todd your estate
planning questions. Phone lines are wide open at eight eight
eight to zero five two two six three, so get
calling early and often. We can usually get through two
to three questions with Todd, so make sure that you
(00:47):
get in line again. That phone number is eight eight
eight to zero five two two six three. One more
time it is eight eight eight two zero five two
two six three. That's the number to call to ask
Todd your estate planning questions, live on air right now.
Mister Lutsky, how are you doing today?
Speaker 3 (01:08):
I am never better? How's that?
Speaker 1 (01:11):
Is that?
Speaker 4 (01:12):
Good?
Speaker 2 (01:12):
Right, it's good. I'm struggling a bit. Fell for a
scam at the florist the other day.
Speaker 3 (01:20):
At the florist.
Speaker 2 (01:20):
Yeah, it was a pansy scheme. Oh yeah, well yeah,
it just totally took me for a ride. But hey,
you live and learn and you move on. Todd, I
want to talk a little bit about gifting, if you
don't mind, because we're rapidly approaching the holiday season and
tims the season to talk about gifting. Yes, well, we
look at the annual gifting limits that are in place
(01:41):
for twenty twenty five. What is that threshold?
Speaker 3 (01:45):
So there's two different thresholds really to think about. One
would be what we call a present interest gift exclusion.
And this is what I like to call the freebie.
It's complete freebie, meaning you can do it, make the transfer,
make the gift, and there is no filing requirement for
(02:06):
a gift tax return and no reporting whatsoever. Freebe how
much nineteen thousand per person per year. So it's if
you are married and you want to give to your child,
(02:27):
you and your spouse can give nineteen each to that child.
So it's about thirty eight thousand. So that's a good
a good amount, and you can do it for every
single kid, every grandkid. And remember it's also not limited
to family. So in case you want to send Chucks
some money, you can, right, just nineteen thousand, no reporting,
(02:50):
So excellent way of gifting. And it's just an outright freebee.
Now what happens if you go one dollar over that?
Speaker 2 (02:59):
Like what happened if I write a check, just like
I'm like, hey, look at me, I'm doing nineteen thousand
and one dollars dollar? What do I do with that?
What happens because of that extra dollar?
Speaker 3 (03:09):
So and again, whether it's an extra dollar, which is
your example, or an extra million dollars same event, you
now technically have a taxable gift. Okay, a taxable gift
taxable to whom I know. I know, it's it's crazy,
but I'd like to always say that no good deed
goes unpunished. Right, Guess who pays the gift tax? The giver, well,
(03:32):
not the recipient, say it. It's so not the recipient,
it's the giver. And it makes sense in the grand
scheme of things, right, because if you have an estate
tax and you could say, hey, right before I die,
I'll just give everything away to avoid the estate tax,
and you didn't have a gift tax, then the estate
tax would have no teeth. So I get why they
do it, but it does sound funny that the giver
has to pay the tax. So the giver pays tax.
(03:54):
Last exemption fifteen million come January one, twenty twenty. Right
now it's thirteen nine. It's going to be fifteen million
as your federal estate tax exemption. It's also your gift
tax exemption. So if you start making taxable gifts and
going over this nineteen grand. So like, for example, if
(04:16):
I file a million dollar, let's just make it easy numbers.
I file a million, I pay, I make a gift
of a million dollars, and let's say I could shelter
the first twenty as a freebe that would make eight
eight hundred thousand dollars taxable. Right, No, I'm sorry more
than that, right, if you twenty thousand would be a
milli it would be it would be a nine eighty
thousand dollars taxable sure, because you can only shelter the
(04:39):
first twenty or nineteen in this case, right, So you
have a nine hundred and eighty thousand dollars gift taxable gift.
Need to file a Form seven h nine gift tax
return to report the amount over the nineteen thousand. That's
the piece that's the taxable gift. You get to back
out the nineteen file the the gift tax return. The
(05:01):
only good news here is when I say this is
an exemption, you then eat into your million dollar exemption
by the taxable gift amount and you end up paying
no tax. But you got a file.
Speaker 2 (05:12):
Talking with Todd Lotski from the law firm of Cushing
and Dolan. You got questions for Todd. He's got answers.
Eight eight eight to zero five two two sixty three
is the phone number, so you can ask Todd your
estate planning questions live on air. Right now, that number
is eight eight eight to zero five two two six three.
(05:33):
We're gonna take a quick break here, but when we return,
we're gonna get to your questions with Todd. Right after
the break again. It's eight eight eight to zero five
two two six three. One last time, that number is
eight eight eight to zero five two two sixty three.
Speaker 1 (05:51):
Ask Todd with Todd Letsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. If You're
listening to Ask Todd with Todd Lutsky on the Financial
Exchange Radio Network.
Speaker 2 (06:20):
If you've got a question for Todd, Lutsky's still room
on the phone lines at eight eight eight to zero
five two two sixty three. That is eight eight eight
to zero five two two six three. Let's go to
Mic from Boston. Michael, you are on with Todd Lutsky.
Speaker 4 (06:38):
Good morning. I had a question about the cost of
an irrevocable trust. Uh, there never seems to be any
talk or referral to what that cost is. Sure hear
a lot about it. I've done some research myself. I've
read a few. I guess she'd call them relatively simple.
(07:02):
But in nineteen twenty pages roughly eighteen pages is legal jargon,
they were the same from trust to trust. The only
thing that changed was the names of the trustees, the beneficiary,
how he will receive his money or her money, and
(07:25):
any little other stipulations in there. Additional which took about
a page and a half or two. What does it
cost to what I considered to be relatively simple, the
same from trust to trust. As far as the work
you put in, the terminology seems to be the same.
(07:46):
From trust to trust.
Speaker 3 (07:47):
Well, I'm going to beg to differ with you tremendously
on that front, because, first of all, there's many kinds
of irrevocable trusts out there. There's qualified personal residence trusts
that are irrevocable, their spousal lifetime outs access trust for
high net worth clients that are irrevocable when you give
them away. There are Medicaid income only trust the kind
we talk about a lot on the show when you
(08:08):
give those away, so you know, you know, there's there's
gifting trust, there's irrevocable life insurance trust. So when you
say they're the same, I'm not sure what you've read
that makes you think that one irrevocable trust should have
the same language as the other. And secondly that our
trust anyway are god But they're not nineteen twenty pages.
They're sixty or fifty.
Speaker 4 (08:30):
You know.
Speaker 3 (08:31):
But that isn't what we don't charge based on the page.
That isn't That isn't how you do it. It's it's like
someone thinks it's simple. But then so I have this
it's a great question because I have a real life
story on it where I the client come in and
say well, I need to set up this irrevocable trust,
and and I'm going to be giving assets away to
my to my family, and and so how does this work?
(08:52):
And then I started asking them, well, do you want
it to be a completed gift for gift tax purposes?
Yes or no? Do you want it do you want
to retain control? Yes or no? Well what about for
income tax purposes? Do I want to make it a
grand tour trust for income tax purposes? Which means that
while I don't own it and it's out of my
estate for a state tax purposes, which is great, I
don't want to pay income tax on what's in there
(09:14):
growing at a much higher rate because remember, taxation at
the trust level after about fourteen thousand dollars is taxable
at the top rate, whereas humans we have a much bigger,
you know, rate structure, so we don't have to pay
tax like that. So the answer is, you got to
make it a grand tour trust for income tax purposes.
(09:37):
So even though it's an irrevocable trust and out of
your estate, it can still be taxed in your state
for income tax purposes. You know, then you have to
think about, well do I want it to be a
gift so that it's protected from perhaps like the nursing
home and creditors. But I want to keep control over it.
I want to be able to enjoy it. I want
to be able to control it. Maybe get the income. Well,
(09:58):
that's important because if I do that, then I'm including
it in my estate and I'm going to get a
step up in basis for capital gains tax purposes on
the item that's in there, say my home that might
be worth a lot of money, or a rental property
that I put in there. Oh, I certainly want to
get to step up in basis when I die so
that I don't have capital gains tax for my beneficiaries
to pay when they get it. But I also want
(10:21):
to reduce my estate taxes. And then you have to
run those numbers and see what works. So, in terms
of this simply being a simple thing that somebody does
is absolutely incorrect, and so there's a lot to think
about that goes in there, and the way we draft
it changes based on that. Now, it is true that
there are some people, some attorneys that go out and
(10:43):
just buy a package off the internet somewhere and then
sell it. We don't do that we've drafted our document,
so our intellectual property, Like when I started our trust
was twenty five pages long, it's now fifty Why because
we add to it. We put our own intellection, vitual
property into it. As laws change, as revenue rulings come out,
(11:04):
as issues we see with clients in terms of how
they get it come out, how you leave the assets
to the children to prevent fighting. So I think there's
an awful lot involved in there and when you're doing this,
and so I think you need to figure out all
of that when you're trying to come up with what
the cost is. And that cost is unfortunately going to vary.
It's a flat fee at least at our firm, but
(11:26):
it's going to vary based on what kind of trust
you're doing. What you know, whether it's a cupert, whether
it's an irrevocable life insurance trust or a medicaid trust.
So I think that's the safest and from everybody listening,
you should get a flat fee from your attorney before
you would go forward. I think flat fees are the
way to go. That way you know exactly what you're
getting into. Before you would you would actually, you know,
(11:51):
do this kind of trust. So I hope that helps
a little. But folks, the newest guide that's out there
that we're doing for this month, which is not just
about estate planning, it's more about gifting, which is exactly
what some of the issues we were talking about with
this caller, and that is that when you're gifting assets,
you know, do I want to gift it? Do I
(12:12):
want to make something a gift one way or another?
Do I want to give it outright to my kids?
Do I want to hold it in espousal Lifetime Access
trust so that I can enjoy what I gave away?
Remember I said, you got to figure out how can
I enjoy what I gave away and keep it outside
my estate first date taxes. So that's where spousal Lifetime
Access trust comes in. You always got to think about
(12:32):
what kind of asset you're giving away, high basis assets
versus low basis assets. Think about it from a medicaid
nursing home perspective. You know, if I own an account
jointly with a non spouse, is it half protected already?
Is it not half protected? If I own my house
with somebody that's a non spouse, is it half protected?
Speaker 1 (12:50):
Is it not?
Speaker 3 (12:50):
Half protected, So you got to think about it from
every angle when you're gifting folks. The guide getting the
most out of gifting assets is eight six six eight
four eight five six nine to nine or Legal Exchange
Show dot com New Guide for the Month eight six
six eight four eight five six nine nine or Legal
(13:11):
Exchange Show dot com.
Speaker 2 (13:14):
Todd talking more about the gifting side of things there,
how does one make the decision on what are kind
of good assets to gift versus poor ones?
Speaker 1 (13:25):
Like?
Speaker 2 (13:26):
How do you decide when it makes sense to gift
versus not?
Speaker 3 (13:29):
Yeah, and that's uh. And again, I know with our caller,
I gave a lot of information really fast, but this
would be break it down. One of the things I
was trying to explain to the caller was, you know, okay,
I do want to make an irrevocable trust. Now I
want to know if that irrevocable trust is going to
be a completed gift or not a completed gift. And
then once we determined from your question, Chuck, that it
(13:51):
is going to be a completed gift, now we have
to determine what asset should we gift? Easy, easiest one
cash cash is all always good? Why because there's no
basis problem with cash, right, Cash is cash. There is
no built in gain that I need to worry about. Whereas, Oh,
I've got this rental property that I bought thirty years
(14:13):
ago and fully depreciated it over time, meaning my basis
in the property is now a zero because I've rented
it for more than twenty seven and a half years.
If I give that away, let's say it's a million
dollar property and my basis is zero, now I've trapped
for my family twenty eight point eight percent capital gain
(14:34):
on a million dollars. Not just twenty eight point eight percent,
but the depreciation piece of the gain is taxed at
ordinary income, So the rate is not just capital gain,
but the appreciation portion of the gain is taxed as
ordinary income. I mean, it's tax as capital gain. So
(14:54):
then you have to figure out that the rate we're
trapping is actually higher than that. So great question, Chuck.
I think that's just the beginning the tip of the
gifting Iceberg, if you will as to what you need
to think about before you make a gift.
Speaker 2 (15:07):
Mister Lutsky, thank you so much for joining us today.
Speaker 3 (15:10):
Are always a pleasure.
Speaker 1 (15:12):
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 and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:32):
Cushing and Dolan Armstrong advisor. He does not provide any
legal or tax advice. Please consult with your legal or
tax advisor on such matters. Cushing and Armstrong do not
endorse each other and are not affiliated.
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 and we've got Todd Lutsky joining us now for
Ask Todd. It's your opportunity to ask Todd your estate
planning questions. Phone lines are wide open at eight eight
eight to zero five two two six three, so get
calling early and often. We can usually get through two
to three questions with Todd, so make sure that you
(00:47):
get in line again. That phone number is eight eight
eight to zero five two two six three. One more
time it is eight eight eight two zero five two
two six three. That's the number to call to ask
Todd your estate planning questions, live on air right now.
Mister Lutsky, how are you doing today?
Speaker 3 (01:08):
I am never better? How's that?
Speaker 1 (01:11):
Is that?
Speaker 4 (01:12):
Good?
Speaker 2 (01:12):
Right, it's good. I'm struggling a bit. Fell for a
scam at the florist the other day.
Speaker 3 (01:20):
At the florist.
Speaker 2 (01:20):
Yeah, it was a pansy scheme. Oh yeah, well yeah,
it just totally took me for a ride. But hey,
you live and learn and you move on. Todd, I
want to talk a little bit about gifting, if you
don't mind, because we're rapidly approaching the holiday season and
tims the season to talk about gifting. Yes, well, we
look at the annual gifting limits that are in place
(01:41):
for twenty twenty five. What is that threshold?
Speaker 3 (01:45):
So there's two different thresholds really to think about. One
would be what we call a present interest gift exclusion.
And this is what I like to call the freebie.
It's complete freebie, meaning you can do it, make the transfer,
make the gift, and there is no filing requirement for
(02:06):
a gift tax return and no reporting whatsoever. Freebe how
much nineteen thousand per person per year. So it's if
you are married and you want to give to your child,
(02:27):
you and your spouse can give nineteen each to that child.
So it's about thirty eight thousand. So that's a good
a good amount, and you can do it for every
single kid, every grandkid. And remember it's also not limited
to family. So in case you want to send Chucks
some money, you can, right, just nineteen thousand, no reporting,
(02:50):
So excellent way of gifting. And it's just an outright freebee.
Now what happens if you go one dollar over that?
Speaker 2 (02:59):
Like what happened if I write a check, just like
I'm like, hey, look at me, I'm doing nineteen thousand
and one dollars dollar? What do I do with that?
What happens because of that extra dollar?
Speaker 3 (03:09):
So and again, whether it's an extra dollar, which is
your example, or an extra million dollars same event, you
now technically have a taxable gift. Okay, a taxable gift
taxable to whom I know. I know, it's it's crazy,
but I'd like to always say that no good deed
goes unpunished. Right, Guess who pays the gift tax? The giver, well,
(03:32):
not the recipient, say it. It's so not the recipient,
it's the giver. And it makes sense in the grand
scheme of things, right, because if you have an estate
tax and you could say, hey, right before I die,
I'll just give everything away to avoid the estate tax,
and you didn't have a gift tax, then the estate
tax would have no teeth. So I get why they
do it, but it does sound funny that the giver
has to pay the tax. So the giver pays tax.
(03:54):
Last exemption fifteen million come January one, twenty twenty. Right
now it's thirteen nine. It's going to be fifteen million
as your federal estate tax exemption. It's also your gift
tax exemption. So if you start making taxable gifts and
going over this nineteen grand. So like, for example, if
(04:16):
I file a million dollar, let's just make it easy numbers.
I file a million, I pay, I make a gift
of a million dollars, and let's say I could shelter
the first twenty as a freebe that would make eight
eight hundred thousand dollars taxable. Right, No, I'm sorry more
than that, right, if you twenty thousand would be a
milli it would be it would be a nine eighty
thousand dollars taxable sure, because you can only shelter the
(04:39):
first twenty or nineteen in this case, right, So you
have a nine hundred and eighty thousand dollars gift taxable gift.
Need to file a Form seven h nine gift tax
return to report the amount over the nineteen thousand. That's
the piece that's the taxable gift. You get to back
out the nineteen file the the gift tax return. The
(05:01):
only good news here is when I say this is
an exemption, you then eat into your million dollar exemption
by the taxable gift amount and you end up paying
no tax. But you got a file.
Speaker 2 (05:12):
Talking with Todd Lotski from the law firm of Cushing
and Dolan. You got questions for Todd. He's got answers.
Eight eight eight to zero five two two sixty three
is the phone number, so you can ask Todd your
estate planning questions live on air. Right now, that number
is eight eight eight to zero five two two six three.
(05:33):
We're gonna take a quick break here, but when we return,
we're gonna get to your questions with Todd. Right after
the break again. It's eight eight eight to zero five
two two six three. One last time, that number is
eight eight eight to zero five two two sixty three.
Speaker 1 (05:51):
Ask Todd with Todd Letsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. If You're
listening to Ask Todd with Todd Lutsky on the Financial
Exchange Radio Network.
Speaker 2 (06:20):
If you've got a question for Todd, Lutsky's still room
on the phone lines at eight eight eight to zero
five two two sixty three. That is eight eight eight
to zero five two two six three. Let's go to
Mic from Boston. Michael, you are on with Todd Lutsky.
Speaker 4 (06:38):
Good morning. I had a question about the cost of
an irrevocable trust. Uh, there never seems to be any
talk or referral to what that cost is. Sure hear
a lot about it. I've done some research myself. I've
read a few. I guess she'd call them relatively simple.
(07:02):
But in nineteen twenty pages roughly eighteen pages is legal jargon,
they were the same from trust to trust. The only
thing that changed was the names of the trustees, the beneficiary,
how he will receive his money or her money, and
(07:25):
any little other stipulations in there. Additional which took about
a page and a half or two. What does it
cost to what I considered to be relatively simple, the
same from trust to trust. As far as the work
you put in, the terminology seems to be the same.
(07:46):
From trust to trust.
Speaker 3 (07:47):
Well, I'm going to beg to differ with you tremendously
on that front, because, first of all, there's many kinds
of irrevocable trusts out there. There's qualified personal residence trusts
that are irrevocable, their spousal lifetime outs access trust for
high net worth clients that are irrevocable when you give
them away. There are Medicaid income only trust the kind
we talk about a lot on the show when you
(08:08):
give those away, so you know, you know, there's there's
gifting trust, there's irrevocable life insurance trust. So when you
say they're the same, I'm not sure what you've read
that makes you think that one irrevocable trust should have
the same language as the other. And secondly that our
trust anyway are god But they're not nineteen twenty pages.
They're sixty or fifty.
Speaker 4 (08:30):
You know.
Speaker 3 (08:31):
But that isn't what we don't charge based on the page.
That isn't That isn't how you do it. It's it's like
someone thinks it's simple. But then so I have this
it's a great question because I have a real life
story on it where I the client come in and
say well, I need to set up this irrevocable trust,
and and I'm going to be giving assets away to
my to my family, and and so how does this work?
(08:52):
And then I started asking them, well, do you want
it to be a completed gift for gift tax purposes?
Yes or no? Do you want it do you want
to retain control? Yes or no? Well what about for
income tax purposes? Do I want to make it a
grand tour trust for income tax purposes? Which means that
while I don't own it and it's out of my
estate for a state tax purposes, which is great, I
don't want to pay income tax on what's in there
(09:14):
growing at a much higher rate because remember, taxation at
the trust level after about fourteen thousand dollars is taxable
at the top rate, whereas humans we have a much bigger,
you know, rate structure, so we don't have to pay
tax like that. So the answer is, you got to
make it a grand tour trust for income tax purposes.
(09:37):
So even though it's an irrevocable trust and out of
your estate, it can still be taxed in your state
for income tax purposes. You know, then you have to
think about, well do I want it to be a
gift so that it's protected from perhaps like the nursing
home and creditors. But I want to keep control over it.
I want to be able to enjoy it. I want
to be able to control it. Maybe get the income. Well,
(09:58):
that's important because if I do that, then I'm including
it in my estate and I'm going to get a
step up in basis for capital gains tax purposes on
the item that's in there, say my home that might
be worth a lot of money, or a rental property
that I put in there. Oh, I certainly want to
get to step up in basis when I die so
that I don't have capital gains tax for my beneficiaries
to pay when they get it. But I also want
(10:21):
to reduce my estate taxes. And then you have to
run those numbers and see what works. So, in terms
of this simply being a simple thing that somebody does
is absolutely incorrect, and so there's a lot to think
about that goes in there, and the way we draft
it changes based on that. Now, it is true that
there are some people, some attorneys that go out and
(10:43):
just buy a package off the internet somewhere and then
sell it. We don't do that we've drafted our document,
so our intellectual property, Like when I started our trust
was twenty five pages long, it's now fifty Why because
we add to it. We put our own intellection, vitual
property into it. As laws change, as revenue rulings come out,
(11:04):
as issues we see with clients in terms of how
they get it come out, how you leave the assets
to the children to prevent fighting. So I think there's
an awful lot involved in there and when you're doing this,
and so I think you need to figure out all
of that when you're trying to come up with what
the cost is. And that cost is unfortunately going to vary.
It's a flat fee at least at our firm, but
(11:26):
it's going to vary based on what kind of trust
you're doing. What you know, whether it's a cupert, whether
it's an irrevocable life insurance trust or a medicaid trust.
So I think that's the safest and from everybody listening,
you should get a flat fee from your attorney before
you would go forward. I think flat fees are the
way to go. That way you know exactly what you're
getting into. Before you would you would actually, you know,
(11:51):
do this kind of trust. So I hope that helps
a little. But folks, the newest guide that's out there
that we're doing for this month, which is not just
about estate planning, it's more about gifting, which is exactly
what some of the issues we were talking about with
this caller, and that is that when you're gifting assets,
you know, do I want to gift it? Do I
(12:12):
want to make something a gift one way or another?
Do I want to give it outright to my kids?
Do I want to hold it in espousal Lifetime Access
trust so that I can enjoy what I gave away?
Remember I said, you got to figure out how can
I enjoy what I gave away and keep it outside
my estate first date taxes. So that's where spousal Lifetime
Access trust comes in. You always got to think about
(12:32):
what kind of asset you're giving away, high basis assets
versus low basis assets. Think about it from a medicaid
nursing home perspective. You know, if I own an account
jointly with a non spouse, is it half protected already?
Is it not half protected? If I own my house
with somebody that's a non spouse, is it half protected?
Speaker 1 (12:50):
Is it not?
Speaker 3 (12:50):
Half protected, So you got to think about it from
every angle when you're gifting folks. The guide getting the
most out of gifting assets is eight six six eight
four eight five six nine to nine or Legal Exchange
Show dot com New Guide for the Month eight six
six eight four eight five six nine nine or Legal
(13:11):
Exchange Show dot com.
Speaker 2 (13:14):
Todd talking more about the gifting side of things there,
how does one make the decision on what are kind
of good assets to gift versus poor ones?
Speaker 1 (13:25):
Like?
Speaker 2 (13:26):
How do you decide when it makes sense to gift
versus not?
Speaker 3 (13:29):
Yeah, and that's uh. And again, I know with our caller,
I gave a lot of information really fast, but this
would be break it down. One of the things I
was trying to explain to the caller was, you know, okay,
I do want to make an irrevocable trust. Now I
want to know if that irrevocable trust is going to
be a completed gift or not a completed gift. And
then once we determined from your question, Chuck, that it
(13:51):
is going to be a completed gift, now we have
to determine what asset should we gift? Easy, easiest one
cash cash is all always good? Why because there's no
basis problem with cash, right, Cash is cash. There is
no built in gain that I need to worry about. Whereas, Oh,
I've got this rental property that I bought thirty years
(14:13):
ago and fully depreciated it over time, meaning my basis
in the property is now a zero because I've rented
it for more than twenty seven and a half years.
If I give that away, let's say it's a million
dollar property and my basis is zero, now I've trapped
for my family twenty eight point eight percent capital gain
(14:34):
on a million dollars. Not just twenty eight point eight percent,
but the depreciation piece of the gain is taxed at
ordinary income, So the rate is not just capital gain,
but the appreciation portion of the gain is taxed as
ordinary income. I mean, it's tax as capital gain. So
(14:54):
then you have to figure out that the rate we're
trapping is actually higher than that. So great question, Chuck.
I think that's just the beginning the tip of the
gifting Iceberg, if you will as to what you need
to think about before you make a gift.
Speaker 2 (15:07):
Mister Lutsky, thank you so much for joining us today.
Speaker 3 (15:10):
Are always a pleasure.
Speaker 1 (15:12):
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 and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:32):
Cushing and Dolan Armstrong advisor. He does not provide any
legal or tax advice. Please consult with your legal or
tax advisor on such matters. Cushing and Armstrong do not
endorse each other and are not affiliated.
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