October 8, 2025 • 15 mins
This week, Todd Lutsky explains when it makes sense to include gifting assets in your estate plan. Todd also takes questions from the audience about switching from revocable to irrevocable, withdrawing money from a bank account in a trust, and selling inherited property.
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Episode Transcript
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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 Lutsky Ask Problems.
Speaker 2 (00:28):
We're now joined by Todd Lutsky from Cushing and Dolan.
It's your chance to ask Todd your estate planning questions.
That's why the segment is named Ask Todd. Phone lines
wide open right now at eight eight eight to zero
five two two six three, So get calling early and
often to make sure you've got a chance to ask
Todd your estate planning questions. That number is eight eight
(00:51):
eight to zero five two two six three. Remember we
can only get through two to three of these, so
make sure that you get your calls in again. Eight
eight eight two zero five two two six three. That
is the number to call to ask Todd your estate
planning questions. Live on air, mister Lutsky, how are you
doing today?
Speaker 3 (01:11):
I am doing great? How about you doing well?
Speaker 2 (01:14):
Do you know what's green and lightweight?
Speaker 3 (01:17):
Green and lightweight? Yeah? No, like green? Yeah, that's true,
that would be true.
Speaker 2 (01:23):
Todd, want to talk to you a little bit about
gifting as part of an estate planning strategy.
Speaker 3 (01:28):
Okay, A lot of times we talk about the perils
of gifting assets. There's plenty.
Speaker 2 (01:34):
I want to be optimistic today. Yeah, when can gifting
actually fit into an estate plan and what tools are
needed in order to make it as effective as it
can possibly be?
Speaker 4 (01:47):
So I'd say gifting when you're there's there's so many
things entwined in that question that people don't even realize
how many issues you just brought up.
Speaker 3 (01:55):
But gifting can make sense. We do have a time limit.
There is a lot to think about. You're absolutely right.
Speaker 4 (02:01):
So one I think you got to look at the
size of your state, right sure do I you know
right now with the federal exemption come January one being
fifteen million dollars each if you're married, So now you
can shelter thirty million dollars without doing any gifting at
all from mistate taxes. So That kind of eliminates the
need for a lot of people to say I need
(02:21):
to gift away assets to what to save federal death taxes?
Speaker 3 (02:26):
Right, that takes a lot of people off the table.
I don't need to because I'm under that.
Speaker 4 (02:30):
Well, if I'm under that, then I only want to
gift away assets because I have what a Massachusetts let's say,
or your state, but a Massachusetts estate tax that I
have to worry about.
Speaker 3 (02:41):
Why do I worry about that? Because that's over.
Speaker 4 (02:43):
If I'm married, I can only shelter four million dollars
in assets with the same basic estate planning that can
shelter thirty million dollars federally. Okay, well, maybe I should
start thinking about gifting away some assets to save Massachusetts taxes.
H But hold the horses. Why because what am I
going to give away? Well, I don't want to give
(03:06):
away anything with a very low cost basis, which translates
into a large built in capital gain associated with that asset.
Why Well, if I give away any of those assets
like stock portfolios, like real estate that I've rented over
the years and maybe depreciated it to zero, or even
(03:28):
a vacation home that just has grown in value over
the years. If I give that away, then what am
I saving? Oh well, Massachusetts is about ten twelve percent
on average for the estate tax. Okay, well, I'll lower
my estate and save ten twelve percent. But I've given
away an asset that has a built in gain associated
(03:50):
with it, which will be taxed at almost thirty percent,
not factoring in depreciation recapture. Well, I don't want to
give away something to save ten percent, but trap thirty
percent tax capital gains tax doesn't make sense.
Speaker 3 (04:06):
So there's a lot to think.
Speaker 4 (04:07):
About in what you're giving. Now, if I have cash,
that's different, Okay, well, cash is cash. I can give
that away and it won't hurt me as much. And
remember there's no gift tax in the state, but there's
a federal gift tax if you exceed the present interest
exclusion of nineteen thousand dollars per year per person. So
those are freebies and you can just give those away.
(04:28):
And as you might imagine, we are limited in time.
But there's also how do we gifted? Do we use
gifting trusts to?
Speaker 1 (04:34):
You know?
Speaker 4 (04:35):
So many things to think about, Chuck, But I'm glad
you at least you know sort of sparked that curiosity
for people talking.
Speaker 2 (04:43):
With Todd A Lotski from Kushingan doan. We still got
a little bit of room on the phone line, So
get calling at eight eight eight to zero five two
two six three so you can ask Todd your estate
planning questions. That number again is eight eight eight to
zero five two two six three. Let's take a quick
break here, and when we come back, we are going
to get right to your questions with Todd Lotsky. That
(05:05):
phone number one more time eight eight eight two zero
five two two sixty three.
Speaker 1 (05:13):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (05:33):
All right, right to your calls with Tod Letsky. First up,
we got Dan in PVD. Dan, you're on with Todd.
Speaker 5 (05:41):
Good morning, Todd. I have a revocable trust right now? Okay,
if I switched to an irrevocable trust the two thousand
two million dollar exemption, what does zecho do I get
an exemption for that too million if I put it
(06:01):
in that irrevocable trust.
Speaker 4 (06:03):
Well, sure, it would depend on the type of irrevocable
trust that we do. So let me just ask you this.
Speaker 3 (06:08):
Are you married, well?
Speaker 6 (06:11):
I was?
Speaker 3 (06:12):
And do you do you have children?
Speaker 6 (06:15):
Yes? Three?
Speaker 3 (06:16):
Okay?
Speaker 4 (06:17):
So is the value of your estate way over that
two million dollar number or under it?
Speaker 5 (06:24):
No, it's over how.
Speaker 3 (06:25):
Much over.
Speaker 5 (06:27):
I would say another two?
Speaker 4 (06:29):
All right, so you're at four million. Was there any
planning done when your wife passed?
Speaker 2 (06:35):
No?
Speaker 1 (06:35):
All right.
Speaker 4 (06:36):
So that's part of the problem, is the fact that
we weren't able to shelter anything on the first death.
Now with a four million dollar estate, just for everybody
else's edification as well as yours, if it was a
four million dollar estate and planning had been done, meaning
trusts were in place, like that revocable trust that you
mentioned that you have.
Speaker 3 (06:53):
Did your wife have one of those when she passed?
Speaker 6 (06:56):
Or no?
Speaker 5 (06:57):
Yes she did?
Speaker 4 (06:58):
Oh okay, so you did have planning done. So now
you need to say how much of that four million
is sheltered in your wife's trust so that it's not
going to be taxed when you die?
Speaker 3 (07:10):
Do we know?
Speaker 4 (07:12):
So let's assume that your wife's trust had roughly two
million dollars in it. Well, that two million dollars would
be sitting in now an irrevocable trust for the benefit
of you, in what was called a remainder share, and
there would be no tax due when your wife died
because it was two million or less. And that two million,
no matter what it grows to, would not be taxable
in your estate when you pass. So if you pass tomorrow,
(07:35):
assuming my hypothetical fact pattern is accurate, you'd be worth
two million. If you're worth two million and you have
either the revocable trust that you are currently speaking about
or the newly created irrevocable trust, you'd still be able
to shelter your two million thereby eliminating Massachusetts estate tax entirely. Now,
(07:59):
to your point, regardless of what your wife has done,
at least your two million probably should be put into
an irrevocable trust so that you can get it protected
from the cost of long term care at the same
time not giving up your two million dollar exemption, so
you will keep your two million dollar exemption to shelter
(08:21):
it for a state taxes. And you also might want
to get some guidance on thinking about your wife's trust
and see how you can change that to make it
also nursing home protected without creating an estate tax problem
for you. So you're on the right track. You absolutely
could get stuff done there and go ahead and make
(08:42):
that change. Folks, that was interesting because that's more about
estate planning. But some people do gifting to try and
reduce their estate for a state taxes. As Chuck had
asked me earlier. You know, gifting is not easy. There's
so many things. As we talked about it, whether there's
a gift tax and we have estate taxes we have
to consider, We have to consider income taxes and basis.
(09:05):
We have to consider if we want to give away
an asset and retain control over it, enjoy it. So
those are spousal lifetime access trusts, you know, do we
want to understand what owning assets jointly do from even
a medicaid perspective, a nursing home perspective. So so much
to think about when you're giving away assets. So get
the guide Learning about Making the Most of Gifting Assets
(09:28):
eight six six eight four eight five six nine nine
or Legal Exchange Show dot com again eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com to get your guy.
Speaker 2 (09:43):
Todd got another one for you here, let's go to
Rick in Foulmouth. Rick, what's your question for Todd Alotski?
Speaker 7 (09:49):
Hey, good morning, Todd.
Speaker 6 (09:50):
How were you good?
Speaker 7 (09:52):
Hey?
Speaker 5 (09:52):
Todd?
Speaker 7 (09:52):
About a year and a half ago you set up
a near revocable trust for my wife and I and
did a great job.
Speaker 3 (09:58):
Well, thank you.
Speaker 7 (09:59):
We we were talking about it the other day and
she her and I have a little misunderstanding on part
of it. And it's got to do with the savings account. Okay,
we put it in my name, and you had gotten
me a sa duly day.
Speaker 3 (10:13):
We put it in your trust, not your name, that's correct,
it might trust. Okay, your trust got it?
Speaker 7 (10:19):
Now can I withdraw funds from that?
Speaker 3 (10:23):
So give me a let's use a number, like how
much is in there?
Speaker 7 (10:26):
Okay, it's like three hundred thousand.
Speaker 4 (10:28):
So you got three hundred thousand and basically a bank
account in the name of the trust.
Speaker 3 (10:32):
Correct, correct, So you can invest that money anyway you want.
Speaker 4 (10:36):
If you don't like the bank, you can put it
in an investment account, earn interest in dividends. Any interest
and dividends that it earns, you can take directly.
Speaker 3 (10:45):
So you can have it.
Speaker 4 (10:45):
And let's say you went to a brokerage house, set
it up, invested it. You can take that money directly
and put it into your personal bank account, not the
trust bank account, anytime you want. It's the three hundred
thousand dollars principle that's protected and you can't take it directly.
There is a way to get it in directly. But
before you start accessing it indirectly, I would tell you
(11:08):
please spend money that you have outside the trust first,
like IRA money either you or your wife, or any
other investments that you left outside the trust, because we
never put everything in right, so spend those first. Why
because those are at risk for the nursing home, whereas
what's in the trust is not. So if you do
(11:29):
need to access that money though, there is a way
to get it and certainly happy to help you with that.
You can give me a ring off air and we
can get you that information. So hopefully that helps clarify
your situation.
Speaker 2 (11:41):
Tod got another for you with Tony in Falmouth. Tony,
you are on with Tom Lunsky. Tony are you there,
lost Tony?
Speaker 6 (11:52):
Hello?
Speaker 3 (11:53):
Oh there's Tony.
Speaker 6 (11:55):
Yes, yes, Scott, thank you for your time. My sister
and I recently inherit at mother's condo, and we've already
sold it and we're going to end up with roughly
two hundred thousand dollars each. And my question is is
this a taxable event?
Speaker 4 (12:11):
So when you say you inherited your mother's condo, she
did not need it to you folks while you were alive. Correct, well,
she is alive.
Speaker 6 (12:23):
She had it in her will that we would get it.
Speaker 3 (12:26):
Great, that's exactly what I want to hear.
Speaker 4 (12:28):
So if if she died owning it, and then the
deed went from her at death or from her estate
to you and your sister, then you inherited the property
and it was not gifted to you during life, which
is all about this guide, right, don't just give things away.
It sounds like your mom did the right thing. She
didn't give it away, and so she passed away owning it.
(12:52):
Then you then it was included in her estate for
estate tax purposes, passed to the kids. So if the
property at the date of your mom's death was worth
four hundred thousand dollars and you sell it for four
hundred thousand dollars, you kids will have gotten something known
as a step up in cost basis, which means that
(13:14):
your cost of that property is four hundred thousand dollars
even though you paid nothing for it. So now if
you sell it for four four hundred fair market value
minus four hundred thousand dollars stepped up cost basis equals
a capital gain of zero. And so their answer, the
(13:35):
long winded answer to your question, is no capital gains
tax on the sale.
Speaker 3 (13:41):
So hopefully that's helpful.
Speaker 2 (13:43):
Todd appreciate you joining us today. I know you gave
a bunch of information there on gifting and answered some
great questions from our listeners. There anything else on the
gifting side that you want to touch on? We got
about a minute or so still to go here.
Speaker 4 (13:58):
Yes, yes, I think back to you know, to Tony's
point is that the everything was done, you know, good
for the mother the way she did it, although the
one thing that maybe we could have improved on there
was I guess we're fortunate and happy that she didn't
end up in a nursing home, but you know, if
she did, then there might not have been any you know,
(14:19):
house left to get a step up. So people always say,
how come on, I put assets in an irrevocable trust,
I get a step up in basis. Well, I can
get the same step up by just dying owning it.
That's true, But why is there still a benefit. Why
do I mention that as a benefit with the irrevocable trust. Well,
because at least in the irrevocable trust, I know there
will be a house there to pass on to the
(14:42):
family to get that step up in basis, so they
can sell it with capital gains tax. Whereas here if
unfortunately Tony's mother, if she had gone into a nursing home,
you know, there could have been a very different outcome
because there may not have been that house you know,
still there.
Speaker 2 (14:58):
Mister Lutski, Thank you so so much for joining us today.
We appreciate the time.
Speaker 3 (15:03):
Always a pleasure. Thank you.
Speaker 1 (15:05):
This has been Asked Todd on the Financial Exchange Radio Network.
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:26):
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.
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 Lutsky Ask Problems.
Speaker 2 (00:28):
We're now joined by Todd Lutsky from Cushing and Dolan.
It's your chance to ask Todd your estate planning questions.
That's why the segment is named Ask Todd. Phone lines
wide open right now at eight eight eight to zero
five two two six three, So get calling early and
often to make sure you've got a chance to ask
Todd your estate planning questions. That number is eight eight
(00:51):
eight to zero five two two six three. Remember we
can only get through two to three of these, so
make sure that you get your calls in again. Eight
eight eight two zero five two two six three. That
is the number to call to ask Todd your estate
planning questions. Live on air, mister Lutsky, how are you
doing today?
Speaker 3 (01:11):
I am doing great? How about you doing well?
Speaker 2 (01:14):
Do you know what's green and lightweight?
Speaker 3 (01:17):
Green and lightweight? Yeah? No, like green? Yeah, that's true,
that would be true.
Speaker 2 (01:23):
Todd, want to talk to you a little bit about
gifting as part of an estate planning strategy.
Speaker 3 (01:28):
Okay, A lot of times we talk about the perils
of gifting assets. There's plenty.
Speaker 2 (01:34):
I want to be optimistic today. Yeah, when can gifting
actually fit into an estate plan and what tools are
needed in order to make it as effective as it
can possibly be?
Speaker 4 (01:47):
So I'd say gifting when you're there's there's so many
things entwined in that question that people don't even realize
how many issues you just brought up.
Speaker 3 (01:55):
But gifting can make sense. We do have a time limit.
There is a lot to think about. You're absolutely right.
Speaker 4 (02:01):
So one I think you got to look at the
size of your state, right sure do I you know
right now with the federal exemption come January one being
fifteen million dollars each if you're married, So now you
can shelter thirty million dollars without doing any gifting at
all from mistate taxes. So That kind of eliminates the
need for a lot of people to say I need
(02:21):
to gift away assets to what to save federal death taxes?
Speaker 3 (02:26):
Right, that takes a lot of people off the table.
I don't need to because I'm under that.
Speaker 4 (02:30):
Well, if I'm under that, then I only want to
gift away assets because I have what a Massachusetts let's say,
or your state, but a Massachusetts estate tax that I
have to worry about.
Speaker 3 (02:41):
Why do I worry about that? Because that's over.
Speaker 4 (02:43):
If I'm married, I can only shelter four million dollars
in assets with the same basic estate planning that can
shelter thirty million dollars federally. Okay, well, maybe I should
start thinking about gifting away some assets to save Massachusetts taxes.
H But hold the horses. Why because what am I
going to give away? Well, I don't want to give
(03:06):
away anything with a very low cost basis, which translates
into a large built in capital gain associated with that asset.
Why Well, if I give away any of those assets
like stock portfolios, like real estate that I've rented over
the years and maybe depreciated it to zero, or even
(03:28):
a vacation home that just has grown in value over
the years. If I give that away, then what am
I saving? Oh well, Massachusetts is about ten twelve percent
on average for the estate tax. Okay, well, I'll lower
my estate and save ten twelve percent. But I've given
away an asset that has a built in gain associated
(03:50):
with it, which will be taxed at almost thirty percent,
not factoring in depreciation recapture. Well, I don't want to
give away something to save ten percent, but trap thirty
percent tax capital gains tax doesn't make sense.
Speaker 3 (04:06):
So there's a lot to think.
Speaker 4 (04:07):
About in what you're giving. Now, if I have cash,
that's different, Okay, well, cash is cash. I can give
that away and it won't hurt me as much. And
remember there's no gift tax in the state, but there's
a federal gift tax if you exceed the present interest
exclusion of nineteen thousand dollars per year per person. So
those are freebies and you can just give those away.
(04:28):
And as you might imagine, we are limited in time.
But there's also how do we gifted? Do we use
gifting trusts to?
Speaker 1 (04:34):
You know?
Speaker 4 (04:35):
So many things to think about, Chuck, But I'm glad
you at least you know sort of sparked that curiosity
for people talking.
Speaker 2 (04:43):
With Todd A Lotski from Kushingan doan. We still got
a little bit of room on the phone line, So
get calling at eight eight eight to zero five two
two six three so you can ask Todd your estate
planning questions. That number again is eight eight eight to
zero five two two six three. Let's take a quick
break here, and when we come back, we are going
to get right to your questions with Todd Lotsky. That
(05:05):
phone number one more time eight eight eight two zero
five two two sixty three.
Speaker 1 (05:13):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (05:33):
All right, right to your calls with Tod Letsky. First up,
we got Dan in PVD. Dan, you're on with Todd.
Speaker 5 (05:41):
Good morning, Todd. I have a revocable trust right now? Okay,
if I switched to an irrevocable trust the two thousand
two million dollar exemption, what does zecho do I get
an exemption for that too million if I put it
(06:01):
in that irrevocable trust.
Speaker 4 (06:03):
Well, sure, it would depend on the type of irrevocable
trust that we do. So let me just ask you this.
Speaker 3 (06:08):
Are you married, well?
Speaker 6 (06:11):
I was?
Speaker 3 (06:12):
And do you do you have children?
Speaker 6 (06:15):
Yes? Three?
Speaker 3 (06:16):
Okay?
Speaker 4 (06:17):
So is the value of your estate way over that
two million dollar number or under it?
Speaker 5 (06:24):
No, it's over how.
Speaker 3 (06:25):
Much over.
Speaker 5 (06:27):
I would say another two?
Speaker 4 (06:29):
All right, so you're at four million. Was there any
planning done when your wife passed?
Speaker 2 (06:35):
No?
Speaker 1 (06:35):
All right.
Speaker 4 (06:36):
So that's part of the problem, is the fact that
we weren't able to shelter anything on the first death.
Now with a four million dollar estate, just for everybody
else's edification as well as yours, if it was a
four million dollar estate and planning had been done, meaning
trusts were in place, like that revocable trust that you
mentioned that you have.
Speaker 3 (06:53):
Did your wife have one of those when she passed?
Speaker 6 (06:56):
Or no?
Speaker 5 (06:57):
Yes she did?
Speaker 4 (06:58):
Oh okay, so you did have planning done. So now
you need to say how much of that four million
is sheltered in your wife's trust so that it's not
going to be taxed when you die?
Speaker 3 (07:10):
Do we know?
Speaker 4 (07:12):
So let's assume that your wife's trust had roughly two
million dollars in it. Well, that two million dollars would
be sitting in now an irrevocable trust for the benefit
of you, in what was called a remainder share, and
there would be no tax due when your wife died
because it was two million or less. And that two million,
no matter what it grows to, would not be taxable
in your estate when you pass. So if you pass tomorrow,
(07:35):
assuming my hypothetical fact pattern is accurate, you'd be worth
two million. If you're worth two million and you have
either the revocable trust that you are currently speaking about
or the newly created irrevocable trust, you'd still be able
to shelter your two million thereby eliminating Massachusetts estate tax entirely. Now,
(07:59):
to your point, regardless of what your wife has done,
at least your two million probably should be put into
an irrevocable trust so that you can get it protected
from the cost of long term care at the same
time not giving up your two million dollar exemption, so
you will keep your two million dollar exemption to shelter
(08:21):
it for a state taxes. And you also might want
to get some guidance on thinking about your wife's trust
and see how you can change that to make it
also nursing home protected without creating an estate tax problem
for you. So you're on the right track. You absolutely
could get stuff done there and go ahead and make
(08:42):
that change. Folks, that was interesting because that's more about
estate planning. But some people do gifting to try and
reduce their estate for a state taxes. As Chuck had
asked me earlier. You know, gifting is not easy. There's
so many things. As we talked about it, whether there's
a gift tax and we have estate taxes we have
to consider, We have to consider income taxes and basis.
(09:05):
We have to consider if we want to give away
an asset and retain control over it, enjoy it. So
those are spousal lifetime access trusts, you know, do we
want to understand what owning assets jointly do from even
a medicaid perspective, a nursing home perspective. So so much
to think about when you're giving away assets. So get
the guide Learning about Making the Most of Gifting Assets
(09:28):
eight six six eight four eight five six nine nine
or Legal Exchange Show dot com again eight six six
eight four eight five six nine nine or Legal Exchange
Show dot com to get your guy.
Speaker 2 (09:43):
Todd got another one for you here, let's go to
Rick in Foulmouth. Rick, what's your question for Todd Alotski?
Speaker 7 (09:49):
Hey, good morning, Todd.
Speaker 6 (09:50):
How were you good?
Speaker 7 (09:52):
Hey?
Speaker 5 (09:52):
Todd?
Speaker 7 (09:52):
About a year and a half ago you set up
a near revocable trust for my wife and I and
did a great job.
Speaker 3 (09:58):
Well, thank you.
Speaker 7 (09:59):
We we were talking about it the other day and
she her and I have a little misunderstanding on part
of it. And it's got to do with the savings account. Okay,
we put it in my name, and you had gotten
me a sa duly day.
Speaker 3 (10:13):
We put it in your trust, not your name, that's correct,
it might trust. Okay, your trust got it?
Speaker 7 (10:19):
Now can I withdraw funds from that?
Speaker 3 (10:23):
So give me a let's use a number, like how
much is in there?
Speaker 7 (10:26):
Okay, it's like three hundred thousand.
Speaker 4 (10:28):
So you got three hundred thousand and basically a bank
account in the name of the trust.
Speaker 3 (10:32):
Correct, correct, So you can invest that money anyway you want.
Speaker 4 (10:36):
If you don't like the bank, you can put it
in an investment account, earn interest in dividends. Any interest
and dividends that it earns, you can take directly.
Speaker 3 (10:45):
So you can have it.
Speaker 4 (10:45):
And let's say you went to a brokerage house, set
it up, invested it. You can take that money directly
and put it into your personal bank account, not the
trust bank account, anytime you want. It's the three hundred
thousand dollars principle that's protected and you can't take it directly.
There is a way to get it in directly. But
before you start accessing it indirectly, I would tell you
(11:08):
please spend money that you have outside the trust first,
like IRA money either you or your wife, or any
other investments that you left outside the trust, because we
never put everything in right, so spend those first. Why
because those are at risk for the nursing home, whereas
what's in the trust is not. So if you do
(11:29):
need to access that money though, there is a way
to get it and certainly happy to help you with that.
You can give me a ring off air and we
can get you that information. So hopefully that helps clarify
your situation.
Speaker 2 (11:41):
Tod got another for you with Tony in Falmouth. Tony,
you are on with Tom Lunsky. Tony are you there,
lost Tony?
Speaker 6 (11:52):
Hello?
Speaker 3 (11:53):
Oh there's Tony.
Speaker 6 (11:55):
Yes, yes, Scott, thank you for your time. My sister
and I recently inherit at mother's condo, and we've already
sold it and we're going to end up with roughly
two hundred thousand dollars each. And my question is is
this a taxable event?
Speaker 4 (12:11):
So when you say you inherited your mother's condo, she
did not need it to you folks while you were alive. Correct, well,
she is alive.
Speaker 6 (12:23):
She had it in her will that we would get it.
Speaker 3 (12:26):
Great, that's exactly what I want to hear.
Speaker 4 (12:28):
So if if she died owning it, and then the
deed went from her at death or from her estate
to you and your sister, then you inherited the property
and it was not gifted to you during life, which
is all about this guide, right, don't just give things away.
It sounds like your mom did the right thing. She
didn't give it away, and so she passed away owning it.
(12:52):
Then you then it was included in her estate for
estate tax purposes, passed to the kids. So if the
property at the date of your mom's death was worth
four hundred thousand dollars and you sell it for four
hundred thousand dollars, you kids will have gotten something known
as a step up in cost basis, which means that
(13:14):
your cost of that property is four hundred thousand dollars
even though you paid nothing for it. So now if
you sell it for four four hundred fair market value
minus four hundred thousand dollars stepped up cost basis equals
a capital gain of zero. And so their answer, the
(13:35):
long winded answer to your question, is no capital gains
tax on the sale.
Speaker 3 (13:41):
So hopefully that's helpful.
Speaker 2 (13:43):
Todd appreciate you joining us today. I know you gave
a bunch of information there on gifting and answered some
great questions from our listeners. There anything else on the
gifting side that you want to touch on? We got
about a minute or so still to go here.
Speaker 4 (13:58):
Yes, yes, I think back to you know, to Tony's
point is that the everything was done, you know, good
for the mother the way she did it, although the
one thing that maybe we could have improved on there
was I guess we're fortunate and happy that she didn't
end up in a nursing home, but you know, if
she did, then there might not have been any you know,
(14:19):
house left to get a step up. So people always say,
how come on, I put assets in an irrevocable trust,
I get a step up in basis. Well, I can
get the same step up by just dying owning it.
That's true, But why is there still a benefit. Why
do I mention that as a benefit with the irrevocable trust. Well,
because at least in the irrevocable trust, I know there
will be a house there to pass on to the
(14:42):
family to get that step up in basis, so they
can sell it with capital gains tax. Whereas here if
unfortunately Tony's mother, if she had gone into a nursing home,
you know, there could have been a very different outcome
because there may not have been that house you know,
still there.
Speaker 2 (14:58):
Mister Lutski, Thank you so so much for joining us today.
We appreciate the time.
Speaker 3 (15:03):
Always a pleasure. Thank you.
Speaker 1 (15:05):
This has been Asked Todd on the Financial Exchange Radio Network.
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred three nine
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:26):
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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