February 5, 2025 • 37 mins
Chuck Zodda and Paul Lane discuss why markets have been able to withstand the DeepSeek debut and China tariffs. Google's stock tumbles down off disappointing revenue growth. AMD takes a hit after giving questionable outlook for AI growth. Todd Lutsky joins the show for his weekly segment, Ask Todd.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:21):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Chuck Zada and Paul Lane, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends, plus branking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav I dot Boston and making a
donation today. This He's the Financial Exchange with Chuck Zada
(01:06):
and Paul Lane.
Speaker 2 (01:09):
Wednesday here on the Financial Exchange, just chuck, Paul and
soccer with you? Is Paul short for anything.
Speaker 3 (01:19):
New? Still know you've done this like one hundred times.
Speaker 2 (01:23):
I know, so I do it like every few months
just because I know that it gets under your skin
for some reason, because it's just regurgitated materials. You pissed there.
Speaker 3 (01:32):
I know. I know.
Speaker 2 (01:33):
I apologize for starting the show off on that foot.
I didn't mean to do well. I meant to do
it to you, but in hindsight I shouldn't have. But
I pulled it out of the bag just to keep
you on your toes every now and then quote me
on that. Thank you, Paul. In any case, let's talk
a little bit about what we're seeing in markets right now.
There's a piece here from Barons. It's titled Stocks of Weathered,
Deep Seek and China Tariff's market resilience is being tested
(01:56):
and ultimately, look, we've talked about for the last two years,
Paul going on like almost two and a half now,
that despite everyone wanting to proclaim an imminent recession, this
has been a resilient economy and as a result, a
resilient market. So I think that when we look at
(02:18):
this in terms of the resilience that we're seeing in markets,
ultimately it boils down to two things, in my opinion.
The first is the AI industry in the United States
and the spending and the growth that's happening on that side,
because that basically through last July that was market leadership.
The second piece is consumer spending, which has consistently been
(02:42):
robust and in particular in the last five or six months,
has been really really good. Despite concerns about you know,
the unemployment rate rising in the third quarter of last year,
we never saw any impact to consumer spending to the downside.
And it showed up in GDP, it showed up in
earnings reports, it it showed up everywhere. And so I
(03:03):
think where I get to on this is, look, both
of these things, potentially over the next six to twelve months,
are threat to each of those things that have carried
the US economy. If it turns out there is a
way to build a better mouse trap that doesn't involve
buying exponentially more chips from Nvidia each and every year,
(03:25):
we got a little bit of problem with market leadership.
If it turns out that tariffs on imported Chinese goods
start changing consumer spending habits, and if we start seeing
people adjusting, you know, how much they're spending, you know,
in different parts of the economy, could be an issue there.
To this point, we have no data suggesting any of that,
(03:45):
because both of these things are new in the last
two weeks.
Speaker 4 (03:47):
Yeah, I think really what's happened is while these threats
have loomed and cause short term i'd say market volatility,
you know, marginal volatility. If you look back at the VIX.
We were talking about this a little bit and yesterday show,
it's not as if it's spiked as significantly as some
of the periods of time that we saw in August
and early in the fall in terms of when we
(04:08):
say the vics the fear gage to just sort of
assess what investors are seeing out there, and part of
it is because those two things that you mentioned. Consumption
has been resilient these tariffs. While we've talked about them
a lot, oftentimes out outside of the Chinese ones which
which did go into effect, there has been a lot
of back and forth and we haven't felt they haven't
(04:29):
been instituted and felt the financial ramifications of those, So
that's why it seems as if the market has held ground.
We'll talk a little bit about deep Seek and AI
because that really ties in with some of the stories
that we're going to cover on some of the earnings reports.
But the short point there before we go into more detail,
would be there is after that initial report got published,
some skepticism as to and there's been some significant research
(04:52):
done to point to the fact that while some of
the training costs may have been lower on the model
for deep Seek, their was a significant amount of capital
investment to fund that initiative. And that ties into Nvidia
and the need for its GPUs, which still seems to
be the case. And we'll get into that.
Speaker 2 (05:11):
And when we talk about markets and their resilience, ultimately
it boils down to, hey, what do future earnings look
like and what's the likelihood of hitting those future earnings projections?
And there have been you know, again a couple questions here,
but you don't know anything two weeks after either of
these things happened, the imposition of tariff additional tariffs on
(05:32):
China or the revelations of you know, Deepseek's new models.
So I'm of the opinion it's probably going to take
three to six months on both of these to figure
out where things go. And yeah, there's you know, potentially
some issues on both of these, but more often than not,
(05:52):
you say, Okay, now that we know about these issues,
we can figure out ways around them. The consumer spending
one is one though, that when hey, if it becomes
somewhat of a self fulfilling prophecy, and that if you know,
consumers start pulling back because they're nervous about something, then
that results in companies pairing back their expectations, maybe laying
people off, and then you have more. So that's why
(06:15):
when you see unemployment go up, it doesn't move up
slowly over a period of five years. It moves up
quickly over a period of one to one and a half.
So there's nothing that we're seeing in any data right
now that is cause for concern. But we've got some
new developments that have you know, come into play over
the last couple of weeks, and we'll have to see
(06:37):
how they play out over the next few months. I
know that's kind of the boring thing to say, wompomp,
but that's kind of what I think our show does.
Is when everyone freaks out about something. Okay, most of
the time you can, like, you know, look at it
a little bit more rationally and it's not that big
of a deal.
Speaker 4 (06:57):
So the market's up two point seven percent, you know,
m yeah, yeah year to date off of is that
is that good? No? I know, I know, I'm with you.
It's like off the heels of a twenty three or
twenty four percent you know, gained last year. Right, So
I'm not not to you specifically, but to some of
the articles that we cover, Like, there have not been losses.
There have been there's been some volatility, but I think
(07:18):
it's important to point out that we had a significant
great year last year from the market two years, yeah,
two years, just outstanding years. Our valuations high. Absolutely, that
is a concern that loans out there. There are these
other things. But to date, even though there's been ups
and downs, we are still up. I think that's worth
pointing out because the doom and gloom headlines will we'll
(07:39):
get you from time to time.
Speaker 2 (07:41):
This is gonna sound kind of weird. I like, it's
not gonna make sense initially, but markets have been really
resilient even though investors have not. And what I mean
by that is investors today are soft, Like we we
go through like a three day sell off and you
get like the CNBC markets in turmoil, you know, Cairn
(08:03):
that pops up. It's like, guys, did we not all
live through March of twenty twenty? Did we not all
live through all of two thousand and eight? Did we
not live through any of these things? Like market volatility happens?
And if we're gonna throw a fit every time the
market goes down five percent, then.
Speaker 4 (08:23):
There's gonna be a lot of fits, a lot of fits.
That's what it feels like. It's just a lot more
of these stories where there's not actual decreases to back
some of them up from a stock market self perspective
now to say there couldn't be.
Speaker 2 (08:38):
But you get this piece here, Deep Seek and tariffs
have royal the market. Okay, let's just be clear on something.
Deep Seek. To the best of my knowledge, the first
time it impacted markets at all was last Monday.
Speaker 3 (08:50):
Yes, correct, yes.
Speaker 2 (08:52):
Now, last Monday. I did a little bit of research
on this just to make sure. Last Monday was January
twenty seventh. On January twenty seventh, the S and P
five hundred closed its six thy twelve sixty twelve, which
is today, by the way, where at sixy fourteen. So
the tariffs which have been talked about since then have
(09:15):
moved markets less than five hundredths of a percent. And
the S and P five hundred right now is at
the same place it was at, by the way, back
on November eighth, two days after the election, when it
hit six thy twelve. That was the Hyatt hit that day,
and at the exact same place is then. So it's
(09:38):
been one two three. Sorry I didn't have to do
some math there. It's been three months now since then
and markets have not budged. Does that strike you as
a royling? No, I am unroyaled. I am unroyaled. And
you know for people who are like, well, it's been
a bumpy ride to get here. The S and P
(09:58):
five hundreds low is fifty seven to seventy three in
that time. Okay, if you do the math, and I did,
that's a four percent drop from right here, not even
a five percent drop, a four percent drop. So the
S and P has been worse than you, down four
percent on one day, by the way, that was on
January thirteenth. I don't know what happened then, but that's
(10:20):
when I was trying to think, like, what did we go?
Speaker 3 (10:22):
Do you even remember that?
Speaker 2 (10:23):
I don't even know. But the S and P five
hundred has been four percent lower than this and about
one and a half percent higher. It's been in a
five and a half percent range for the last three months,
roiling markets.
Speaker 5 (10:41):
The thirteenth was the Job's report, good news, bad news.
Speaker 2 (10:45):
Okay, sure, still don't remember it. Yeah, it's like, doesn't
that feel like that was just ages ago?
Speaker 3 (10:50):
At this point, January was a long month.
Speaker 2 (10:52):
Like the last week and a half, it's just been
every day we've been, you know, moving from deepseek to
tariffs to well, I don't know what we're going to
see tomorrow, you know, like tomorrow it's gonna be like
all the soup in the US is bad or something like.
It's it's just it's it's wild right now. So let's
take a quick break when we come back. We did
get some tech earnings yesterday. Let's talk about Google because
(11:13):
they had some notable things on that AI theme, and
so we'll discuss that when we return.
Speaker 1 (11:20):
Get up to the minute market updates with Wall Street
Watch week days at ten thirty only here on the
Financial Exchange Radio Network. Missed one of our shows, Catch
up anytime by asking your alexis Smart speaker to play
the Financial Exchange. This is the Financial Exchange Radio Network.
Speaker 5 (11:42):
This segment of the Financial Exchange is brought to you
in part by the US Virgin Islands Department of Tourism.
The US Virgin Islands are Saint Croix, Saint Thomas, and
Saint John And if you act now, you can take
advantage of a special promotion to Saint Croix Experience. If
I have like no other, get a two hundred and
fifty dollars per person airline credit when you book a
minimum five night's day at participating hotels. Go to visit
(12:05):
USVII dot com and use code Vibe twenty twenty five
to reserve your trip today. Take your next vacation to
Sant Croi in America's Caribbean Paradise the United States Virgin Islands.
Go to visit USVII dot com and use code Vibe
twenty twenty five to book your trip. That's visit USVII
dot com and code Vibe twenty twenty five.
Speaker 2 (12:24):
Alphabet, the company formerly known as Google, reported earnings after
the bell yesterday and big thing is they they missed
on revenue. Their guidance was a little bit light, and
they also guided that their capex was going to be
twenty five percent higher than they had previously estimated. And
(12:45):
so as a result, Google stock or alphabet stock or
whatever we're calling it these days. Is I say these days?
Didn't they rebrand it like twelve years ago now or something?
Speaker 3 (12:54):
But Meta still has taking a little time.
Speaker 2 (12:56):
On Meta, I can at least get behind because there
it's at least, hey, we're making a concerted effort to
try to build the metaverse, and you know it's not working.
Speaker 3 (13:05):
But we're han't heard check ins.
Speaker 2 (13:07):
We're committed to the bit, you know, like at least
they're spending a ton of money each year. Google is
not trying to write an alphabet no, like, and it's
just a horrible name. Anyways, your name is alphabet Like?
Speaker 1 (13:19):
What is that?
Speaker 2 (13:20):
What does that even mean? Like you're a bunch of linguists, Like,
what's happening? So when spending goes up and revenue comes,
you know, in light generally you see your stock go down.
But what makes this kind of confusing to me is
Meta gave the exact same quarter last week. Their revenue
(13:42):
was light, their guidance was light, and their CAPEX was
higher than expected, and Meta stock didn't get hit. And
so I'm just trying to reconcile these two things because
this is what I would have expected to happen to
Meta stock, like down eight to ten percent, and instead
I think it was up like two percent after they
reported earnings. And so I guess my question is less
(14:03):
about what happened with Google. I get it, They're trying
to spend a bunch of money on AI and their
core products are just you know, not growing gangbusters anymore.
I guess maybe the one thing here is specifically Google's Cloud.
Speaker 3 (14:15):
That's that's where I was gonna get that.
Speaker 4 (14:17):
Yeah, I mean that's the only, not the only, that
is one of the structural differences between Google and Meta
in terms of where they derive revenue from. Where the
cloud sales growth was thirty percent in Q four from
a year ago. It was in Q three that same
sales growth that they saw from cloud was thirty five percent,
So that coming in lighter, it seems like, is the
only thing to point to in terms of why the stock.
(14:40):
I believe it was off seven percent earlier today I
don't know if that is eight eight now why the
stock is off yet about eight and a half percent
at the moment, they were looking to see a little
bit more growth there. They're running into a similar problem
that Microsoft, is that the supply is not requisite enough
to meet the demand for cloud gross That was one
(15:01):
of the things that they did mention over the course
of the call. Advertising revenue has been a little bit
more muted, So it seems like that's where a lot
of the scrutiny has been is on that cloud computing,
which Meta doesn't, you know, delve into those markets. So
that's perhaps why Google's taken on the chin a little
bit more. I did think that the Capax piece sort
(15:21):
of reiterates the piece that I was talking about earlier
in the show, this idea that the initial blowback from
deep Seek was a close to twenty percent sell off
and in video stock, with concerns that perhaps not as
many of their chips GPUs will be required to do
this type of AI computing and to run all these models.
You've got Meta coming out saying they're going to spend sorry, Meta,
(15:43):
sixty five billion. Microsoft is going to spend ninety billion
this year in capital expenditures, and Google, as we mentioned,
is going to spend nineteen percent of its revenue in
twenty twenty five about seventy five billion on capex, So
all of these are the biggest customers out there. We
talked about that a lot ray check of in video
reinforcing this idea that they're going to continue to spend it.
(16:04):
I did see that I think in video is up
at least three and a half percent today, which could
be not three percent, could not be directly tied to this,
but it does seem like the more we delve into
that deep seek story, the infrastructure costs did need those GPUs.
Now the training costs, that's another story. Perhaps those could
be a lesson burden, but certainly seems to be continued
(16:25):
demand for the GPUs to at least build out these.
Speaker 2 (16:27):
Models you mentioned in video. On the other hand, AMD
who is also a chip maker, the vast majority of
their revenue and profits not derived from AI. They do
a whole bunch of different things, but they do have,
you know, an AI business that they are trying to build,
and they gave a pretty disappointing outlook in terms of
(16:48):
their data center business. When you hear data center. In
this context, it's largely talking about AI and they said
that the division will grow by a quote strong double
digits this year. But obviously you've seen you know, in
video's revenue from that area doubling year after year for
the last couple of years. And so AMD stock down
(17:09):
about ten percent in trading today. And this is you know,
one that has undergone a sharp reversal over the last
you know, nine or ten months.
Speaker 6 (17:17):
Right now.
Speaker 2 (17:18):
This was a stock that was trading at two hundred
and ten dollars a share on March tenth of last year.
It's one oh seven right now. So it's been cut
in half basically over the last ten months. And look,
I'm not everyone's saying this, but if you think it
can't happen to in video, it can. And it's not
(17:39):
to say that it will. But there was all this
optimism that AMD was going to capture this business and
they just haven't to this point. Maybe, you know, there's
gonna be more pie for them to eat up and
maybe they'll be able to figure out how to capture it.
But AMD, it's hard to say that they're struggling when
you're still talking about the growth that they're seeing, you know,
(17:59):
revenues twenty five billion dollars, net income is a couple
billion dollars free cash flows positive their margins. Here's the
big difference between them and in video they're operating margins
are about five and a half percent, in videos are
sixty two. Yeah, Like, that's the whole ballgame is in
Vidio is basically just printing profit because no one else
(18:20):
is able to charge the prices they do for what
they're putting out. And that's that's the whole ballgame.
Speaker 3 (18:26):
But emphasize your point.
Speaker 4 (18:27):
When you have margins that large in an area that
everyone's constfter it exactly. There's constant innovation and there's a
constant drive to lower costs as much as possible. And
we saw that with some of the training model stuff.
There are people and other companies out there, some that
we just spoke about, Google and Meta and others that
are they're chasing after that, and the competition is going
to be steep. And Vidio had a decade head start
(18:49):
basically in this GPU business. But the longer these margins
in place, like you said, yeah, the more competition's coming
after them for those margin dollars.
Speaker 2 (18:57):
Yeah, I think I know that Microsoft has announced their
trying to develop some chips in house.
Speaker 4 (19:02):
Google has the TPUs, and there's Kuda is one of
the development models that in video has to strengthen mode.
There's there's gonna be challengers to that too.
Speaker 2 (19:12):
Yep, the company that would be kind of interesting there.
Apple's done a lot of work in the last decade
building out their own silicon for you know, phones and stuff.
Part of me wonders, hey, do they ever want to,
like try to get into the business of designing chips
for AI even though they're not, you know, developing the
AI platforms? Be kind of interesting. Quick break here Wall
(19:33):
Street watch and ask todd our next.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Markets are in negative territory as wolstret reacts to a
new flurry of fourth quarter earnings, including disappointing results from Alphabet.
At the moment, the Dow is down by only fifteen points.
SMP five hundred is down about a quarter percent, so
the Nasdaq is off over half a percent, Russell two
thousand actually up over half a percent at the moment.
Tenure Treasure reeled down by eight basis points, now at
(20:23):
four point four to two percent, and crude oil down
about one and a half percent, trading just above seventy
one dollars a barrel. Alphabet down by over eight percent
after the tech giant reported a slow down on Google's
cloud computing sales, resulting in a drag in the company's
overall revenue growth to its lowest level since twenty twenty three.
(20:44):
Sticking with tech, where AMD is down by ten percent
after the chip maker posted a big jump in revenue
in its data center business. However, the results came short
of analyst forecasts. Meanwhile, Disney posted impressive quarterly results this morning,
where the media giant topped street expectations for revenue, net income,
and streaming profits. Disney also had a strong box office showing,
(21:06):
with Mwana II lifting its studio business during the quarter.
More on Disney in the second hour of the show. Elsewhere,
Uber down by eight percent after the ride handling and
food delivery companies quarterly operating income significantly fell short of expectations.
Ozebic and wegaby maker Novo Nordis forecast sales growth would
(21:27):
slow this year, but posted stronger than expected net profit
and sales for the quarter that stock jumping by nearly
five percent and Chipotle shares down by two percent after
the burrito chain cut its sales outlook for the year.
I'm Tucker Silva and that's Wall Street Watch.
Speaker 1 (21:45):
This is Asked Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Tod Letsky is here to answer your
questions and help you plan for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts in New
England for more than thirty five years, helping families with
a state and tax planning, Medicaid planning, and probate law.
(22:06):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:12):
As promised, We're now joined by Todd Lutsky from the
law firm of Cushing and Dolan. The segment is Asked Todd,
and it is your opportunity to ask Todd your estate
planning questions. Phone lines wide open right now at eight
eight eight to zero five two two six three. We
can normally get through about two to three calls, so
if you got a call, make sure you get in
(22:34):
early so that we can get to you. Eight eight
eight to zero five two two sixty three. Again, this
is your opportunity to ask Todd Lutsky your state planning
questions live on air eight eight eight to zero five
two two sixty three. One more time. That number is
eight eight eight to zero five two two six three.
(22:54):
Mister Lutsky, how are you doing today?
Speaker 6 (22:58):
Never better? How are you? Uh?
Speaker 2 (23:00):
Pretty good?
Speaker 6 (23:00):
Uh?
Speaker 2 (23:00):
Oh, I got a question for you. What do you
call a monk who walks everywhere in bare feet, has
poor bone density and really bad breath.
Speaker 6 (23:11):
That's a lot of things I can't even think of
all those. I can't even follow this, So I'm just
gonna say I don't know a super callous, fragile mystic
hex by halitosis. Wow, I know it's wild. I can't
even remember that.
Speaker 2 (23:25):
Let's talk a little bit about estate planning. When we
talk about someone who's maybe at the beginning of the
estate planning process, yeah, probably a little bit intimidated. How
do they decide which estate planning tools are actually the
right ones for their specific situation.
Speaker 6 (23:43):
So a couple of things. When when we talk about it,
I always like to this is why we call it
the guide is back to the basics, right, it's thinking
about how do we get started? I would say the
very first thing you should do is take a look
at your assets and value them. Figure out out what
it is you own and what you roughly think it's worth,
(24:05):
because it's the value of the estate that really drives
the type of a state plan that you're going to do. Okay,
so let me try to expand on that a little.
You know, when I say how you own it? Right,
if you own it, it's it's an asset. It doesn't
mean it's a probate asset. It just means that it's
(24:25):
a gross estate asset, very different. You could have zero
probate assets, but all are still part of your gross estate.
I think the bigger question is when I say value it, intuitively,
what am I valuing? Right? What is included? Not everybody
thinks about this, right, but obviously your your bank accounts
(24:46):
and your brokerage accounts. That comes to mind, right, because
it's money, and you say, yeah, I feel it, I
see it. You know what they don't think about real estate.
They say, oh, yeah, I got a million dollar home. Oh,
but I don't feel like I'm worth a million dollars
because it's it's real estate. You know, I don't. I
don't count that. Oh, but the government does, so you
got to count that as an asset of the estate.
(25:08):
Another thing people don't think about roth iras. They say, oh,
you know roths are income tax free. Well yeah they are,
but they're estate taxable when you die, so please count them.
You know, even regular iras, they are, you knowes, state
taxable when you die, so please count them as part
of your estate. And you know. One of the other
things that that almost everybody forgets life insurance, right, Oh,
(25:35):
life insurance. Isn't that income tax free? Well it is, yeah,
when when you die, if your spouse gets it, it's
income tax free. Never mind a spouse whoever gets it,
it's income tax free to the person who gets it.
But the government values everything right when you die. The
moment you die, that's when they value it, because you
(25:55):
might say, well, you know, I got this term insurance
policy and it has zero cash sereut undervalue today because
I'm living. The next day I die, Well, it's worth
a million dollars. If that's the face value, that's when
the government values it. So now one item right, you
could be sitting here saying, well, jeez, I'm not worth
a million dollars. Oh wait, to have a million dollar
(26:16):
life insurance policy. You're all of a sudden worth a
million dollars and you haven't talked about any other assets yet.
That one asset could put you at a million dollars.
Speaker 2 (26:28):
Talking with Todd Lutski from the law firm of Cushing
and Dolan. Again. The segment is called Ask Todd because
it's your opportunity to ask Todd your estate planning questions.
We do have space on the phone line still at
eight eight eight to zero five two two sixty three.
That is the number to call to ask Todd your
estate planning question live on air again. That number is
(26:50):
eight eight eight to zero five two two sixty three.
We're gonna take a quick break right now, but when
we come back, it's gonna be right to your calls
with Todd. That phone number is eight eight eight two
zero five two two six three. One last time, eight
eight eight to zero five two two sixty three. Your
(27:11):
calls with Todd when we return Ask Todd.
Speaker 1 (27:14):
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 (27:34):
All right, all right, all right, let's get right to
your calls with Todd Lutsky. First in the queue, we've
got Mike from Drake and Mike, what's your question for Todd.
Speaker 7 (27:45):
I have a grandfather who passed away. He left everything
and as well, basically come is coming to me and
my wife. There's only one thing. One thing. There was
a bank account that was left in a trust to
my father in law. My father in law has now
had had passed before my my grandfather had passed away.
(28:08):
My grandfather had dementia. My question is where will that
money go now that was in that trust from Bank
of America. Will that go back into my grandfather's estate
or does that go to my my father in law
who remarried another woman.
Speaker 6 (28:23):
Okay, so you just added a third factor that really
that really threw me off. So let let me just
try to recap and please please try to help me
what I ask you these questions. So the first, the
first one is there's you're the grandchild of the grandfather
who died and left a will leaving assets to you
and your wife, So that that piece is clear, right,
(28:43):
we understand that that went to you, right yep? Okay,
that's not an issue. In addition to that, you said
that your stepfather or no, your your father in law,
my father in law, your father in law had a
trust in place a bank account, in a trust or
or did the account say in trust for.
Speaker 7 (29:06):
In trust for?
Speaker 6 (29:07):
So there was no actual establishment of an actual trust.
It just simply is more of a designated beneficiary on
the account, correct, I believe?
Speaker 1 (29:19):
So?
Speaker 6 (29:20):
Okay, So it said in trust for.
Speaker 7 (29:22):
Who it would be his name Harry?
Speaker 6 (29:26):
No, No, no, soho's who's Harry's not the father in law?
Speaker 8 (29:30):
Right, yes he is.
Speaker 6 (29:32):
So the father in law had an account and the
account said when I die, when father in law dies,
the assets in the tru goes to who.
Speaker 7 (29:43):
No, when grandfather passed away it would go to it
was the trust was in the grandfather's and when he
passed away it went to my father in law, which
my father in law had passed away before my grandfather.
Speaker 6 (29:57):
Okay, so let's now I'm just trying to get to
the bottom of this, right, this, This is what's complicated
about a lot of these questions. So grandfather again had
one bank account that had in trust for father in
law correct, correct, Correct, And father in law died before
grandfather correct, Okay, and that account still existed when grandfather died.
Speaker 7 (30:24):
Correct.
Speaker 6 (30:25):
And so if it said in trust for someone who's
deceased and there was no alternate beneficiary listed, then what
happens is that would be end up in the probate
estate of the father in law. So I'm sorry, not
of the father in law, it would lapse as to
the father in law. It would end up in the
probate estate of the grandfather. So then the grandfather would
(30:50):
die owning an asset with no beneficiary but in his name.
So his will should direct where that goes. So then
that would end up going to you, because his will
said everything that's a probate asset goes to you. Remember
that item initially would not have been a probate asset
because of the designated beneficiary listed. That's what keeps it
(31:14):
out of probate. But if that beneficiary does not exist,
then it's as if there is no designated beneficiary. So
then it would end up a probate asset. Now his
will says where it goes, so I think it goes
to you. If his you and your wife. If his
will says, I leave all my probate assets to my
(31:38):
grandson and his wife. So there you go. That's my answer,
and I think that's where it's going to go. But
you might have to do some probate work for your
grandfather's estate. Folks, lots of stuff going on in a
question like that, and again I think it's partly because
of the lack of planning that was done right. If
you don't do your planning, you run into these kinds
(32:00):
of problems. Learn how to do your planning. Get the
guide back to the basics. It's basically a recommendation. It's
a it's an my engagement letter to a made up
family with a bunch of assets, and it talks about
the will, the healthcare, the power of attorney. The hippa
really explains documents that we always cursory, give a cursory
example of what they are. And it also you can
(32:23):
put your fact pattern with this and learn it. In
this one, it recommends an irrevocable trust or two for
this family. See if this recommendation works for you. If not,
learn by getting the guide it will at least teach
you how to begin thinking about getting your estate plan
in order. One of my favorite guides Folks eight sixty
(32:43):
six eight four eight five six nine nine or Legal
Exchange Show dot com Back to the Basics eight sixty
six eight four eight five six nine nine or Legal
Exchange Show dot com.
Speaker 2 (32:58):
Todd, I've got another caller for you.
Speaker 1 (32:59):
Here.
Speaker 2 (32:59):
We got Steve in Bridgewater. Steve, you are on with
Todd Lutsky.
Speaker 8 (33:06):
Hi, guys, how are you doing great? You all right?
Doing good? A life of State? My mother had a
life estate. I was the remain de man. Okay, she
passed away in twenty twenty four. For a cost basis?
Would I do a cost basis when the life of
(33:29):
state was first created? Or when she passed away?
Speaker 6 (33:33):
Do you still own the house or did you sell it?
Speaker 8 (33:37):
Sold it already?
Speaker 6 (33:39):
So you sold it?
Speaker 8 (33:40):
When?
Speaker 6 (33:40):
Did you sell it.
Speaker 8 (33:43):
In December of twenty twenty four? She passed away in
April of twenty twenty four.
Speaker 6 (33:49):
Okay, So that's why I needed to know those specifics.
So here's here's the answer. One the house, I'm going
to expand. So people understand, first of all, what is
life estate.
Speaker 2 (34:00):
Right.
Speaker 6 (34:00):
A life estate is when you give something away like
a house your primary residents, Please don't do it with
any asset, and retain the right to live there. Right.
So by doing that, retaining the right to live there,
you avoid probate when she dies, and you've protected it
from the cost of long term care. I don't love
the arrangement because there's a lot of negatives that go
(34:22):
with it, but in this case we don't need to
go down that road because Mom has passed already, so
none of the negatives happened. So we now though, by
keeping that retained interest, that right to live there, that
causes that asset to be included in Mom's estate on
the date of death. So in April of twenty twenty four,
(34:43):
the full value, not just the value of the life estate,
but the full value of the property needs to be
included in her gross estate, not her probate estate. So
it's not a probate issue to determine whether or not
an a state tax return is due. So on the
date of death April, what do you think that house
(35:05):
was worth?
Speaker 8 (35:05):
Steve four fifty.
Speaker 6 (35:09):
Okay, So if we've got a four hundred and fifty
thousand dollars value on the house. That means that the
cost basis to Steve is four hundred and fifty thousand dollars. Now,
between April and December, this may have increased in value.
How much did you sell it for? Ah, for forty
(35:31):
oh even better. So in this case you cannot generate
a loss. I know, as much as you might be
thinking that's great, No, you can't generate a loss. But
in this case you will have zero gain to report
on your income tax return, right because when you report it,
you'll show the sale four forty or for four to forty,
(35:54):
you'll show the cost basis of four forty. And by
the way, when you say you thought it was worth
four ft, if you sell it within nine months of
the date of death roughly where you are, even within
a year of date of death, it's the sale price
that is the cost basis. So in this case you've
got to step up in basis. Your cost is four forty,
your proceeds are four to forty, Your gain you report
(36:17):
as zero, and you keep all the money. No federal,
no state death tax. So that's how you calculate cost
basis in a situation like this, and that's a great
thing to have. Folks. Whenever you're dealing with real estate,
you always want to think about not giving away an
asset like that and keeping it so that when the
beneficiaries get it, in fact, if they don't want it,
(36:39):
they can sell it and not have the capital gains
tax to pay. And if it happens to be a
rental property and you get a step up in basis
and you keep the property, then you have the ability
to offset the rent through depreciation over the next twenty
seven and a half years. So wonderful things step up
in basis folks. Learn learn about step up in basis.
(37:01):
Also in the guide, mister Lutsky, thank you for joining
us today. Always a pleasure.
Speaker 1 (37:07):
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 and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:28):
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
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts. Do not reflect the opinions of Armstrong Advisory
or anyone else. Investments can lose money. This program does
not offer any specific financial or investment advice. Please consult
your own financial, tax, and estate planning advisors before making
(00:21):
any investment decisions. Armstrong Advisory and the advertisers heard on
this program do not endorse each other or their services.
Armstrong and Money Matters Radio do not compensate each other
for referrals and are not affiliated. This is the Financial
Exchange with Chuck Zada and Paul Lane, your exclusive look
at business and financial news affecting your day, your city,
(00:43):
your world. Stay informed and up to date about economic
and market trends, plus branking business news every day. The
Financial Exchange is a proud partner of the Disabled American
Veterans Department of Massachusetts. Help us support our great American
heroes by visiting dav I dot Boston and making a
donation today. This He's the Financial Exchange with Chuck Zada
(01:06):
and Paul Lane.
Speaker 2 (01:09):
Wednesday here on the Financial Exchange, just chuck, Paul and
soccer with you? Is Paul short for anything.
Speaker 3 (01:19):
New? Still know you've done this like one hundred times.
Speaker 2 (01:23):
I know, so I do it like every few months
just because I know that it gets under your skin
for some reason, because it's just regurgitated materials. You pissed there.
Speaker 3 (01:32):
I know. I know.
Speaker 2 (01:33):
I apologize for starting the show off on that foot.
I didn't mean to do well. I meant to do
it to you, but in hindsight I shouldn't have. But
I pulled it out of the bag just to keep
you on your toes every now and then quote me
on that. Thank you, Paul. In any case, let's talk
a little bit about what we're seeing in markets right now.
There's a piece here from Barons. It's titled Stocks of Weathered,
Deep Seek and China Tariff's market resilience is being tested
(01:56):
and ultimately, look, we've talked about for the last two years,
Paul going on like almost two and a half now,
that despite everyone wanting to proclaim an imminent recession, this
has been a resilient economy and as a result, a
resilient market. So I think that when we look at
(02:18):
this in terms of the resilience that we're seeing in markets,
ultimately it boils down to two things, in my opinion.
The first is the AI industry in the United States
and the spending and the growth that's happening on that side,
because that basically through last July that was market leadership.
The second piece is consumer spending, which has consistently been
(02:42):
robust and in particular in the last five or six months,
has been really really good. Despite concerns about you know,
the unemployment rate rising in the third quarter of last year,
we never saw any impact to consumer spending to the downside.
And it showed up in GDP, it showed up in
earnings reports, it it showed up everywhere. And so I
(03:03):
think where I get to on this is, look, both
of these things, potentially over the next six to twelve months,
are threat to each of those things that have carried
the US economy. If it turns out there is a
way to build a better mouse trap that doesn't involve
buying exponentially more chips from Nvidia each and every year,
(03:25):
we got a little bit of problem with market leadership.
If it turns out that tariffs on imported Chinese goods
start changing consumer spending habits, and if we start seeing
people adjusting, you know, how much they're spending, you know,
in different parts of the economy, could be an issue there.
To this point, we have no data suggesting any of that,
(03:45):
because both of these things are new in the last
two weeks.
Speaker 4 (03:47):
Yeah, I think really what's happened is while these threats
have loomed and cause short term i'd say market volatility,
you know, marginal volatility. If you look back at the VIX.
We were talking about this a little bit and yesterday show,
it's not as if it's spiked as significantly as some
of the periods of time that we saw in August
and early in the fall in terms of when we
(04:08):
say the vics the fear gage to just sort of
assess what investors are seeing out there, and part of
it is because those two things that you mentioned. Consumption
has been resilient these tariffs. While we've talked about them
a lot, oftentimes out outside of the Chinese ones which
which did go into effect, there has been a lot
of back and forth and we haven't felt they haven't
(04:29):
been instituted and felt the financial ramifications of those, So
that's why it seems as if the market has held ground.
We'll talk a little bit about deep Seek and AI
because that really ties in with some of the stories
that we're going to cover on some of the earnings reports.
But the short point there before we go into more detail,
would be there is after that initial report got published,
some skepticism as to and there's been some significant research
(04:52):
done to point to the fact that while some of
the training costs may have been lower on the model
for deep Seek, their was a significant amount of capital
investment to fund that initiative. And that ties into Nvidia
and the need for its GPUs, which still seems to
be the case. And we'll get into that.
Speaker 2 (05:11):
And when we talk about markets and their resilience, ultimately
it boils down to, hey, what do future earnings look
like and what's the likelihood of hitting those future earnings projections?
And there have been you know, again a couple questions here,
but you don't know anything two weeks after either of
these things happened, the imposition of tariff additional tariffs on
(05:32):
China or the revelations of you know, Deepseek's new models.
So I'm of the opinion it's probably going to take
three to six months on both of these to figure
out where things go. And yeah, there's you know, potentially
some issues on both of these, but more often than not,
(05:52):
you say, Okay, now that we know about these issues,
we can figure out ways around them. The consumer spending
one is one though, that when hey, if it becomes
somewhat of a self fulfilling prophecy, and that if you know,
consumers start pulling back because they're nervous about something, then
that results in companies pairing back their expectations, maybe laying
people off, and then you have more. So that's why
(06:15):
when you see unemployment go up, it doesn't move up
slowly over a period of five years. It moves up
quickly over a period of one to one and a half.
So there's nothing that we're seeing in any data right
now that is cause for concern. But we've got some
new developments that have you know, come into play over
the last couple of weeks, and we'll have to see
(06:37):
how they play out over the next few months. I
know that's kind of the boring thing to say, wompomp,
but that's kind of what I think our show does.
Is when everyone freaks out about something. Okay, most of
the time you can, like, you know, look at it
a little bit more rationally and it's not that big
of a deal.
Speaker 4 (06:57):
So the market's up two point seven percent, you know,
m yeah, yeah year to date off of is that
is that good? No? I know, I know, I'm with you.
It's like off the heels of a twenty three or
twenty four percent you know, gained last year. Right, So
I'm not not to you specifically, but to some of
the articles that we cover, Like, there have not been losses.
There have been there's been some volatility, but I think
(07:18):
it's important to point out that we had a significant
great year last year from the market two years, yeah,
two years, just outstanding years. Our valuations high. Absolutely, that
is a concern that loans out there. There are these
other things. But to date, even though there's been ups
and downs, we are still up. I think that's worth
pointing out because the doom and gloom headlines will we'll
(07:39):
get you from time to time.
Speaker 2 (07:41):
This is gonna sound kind of weird. I like, it's
not gonna make sense initially, but markets have been really
resilient even though investors have not. And what I mean
by that is investors today are soft, Like we we
go through like a three day sell off and you
get like the CNBC markets in turmoil, you know, Cairn
(08:03):
that pops up. It's like, guys, did we not all
live through March of twenty twenty? Did we not all
live through all of two thousand and eight? Did we
not live through any of these things? Like market volatility happens?
And if we're gonna throw a fit every time the
market goes down five percent, then.
Speaker 4 (08:23):
There's gonna be a lot of fits, a lot of fits.
That's what it feels like. It's just a lot more
of these stories where there's not actual decreases to back
some of them up from a stock market self perspective
now to say there couldn't be.
Speaker 2 (08:38):
But you get this piece here, Deep Seek and tariffs
have royal the market. Okay, let's just be clear on something.
Deep Seek. To the best of my knowledge, the first
time it impacted markets at all was last Monday.
Speaker 3 (08:50):
Yes, correct, yes.
Speaker 2 (08:52):
Now, last Monday. I did a little bit of research
on this just to make sure. Last Monday was January
twenty seventh. On January twenty seventh, the S and P
five hundred closed its six thy twelve sixty twelve, which
is today, by the way, where at sixy fourteen. So
the tariffs which have been talked about since then have
(09:15):
moved markets less than five hundredths of a percent. And
the S and P five hundred right now is at
the same place it was at, by the way, back
on November eighth, two days after the election, when it
hit six thy twelve. That was the Hyatt hit that day,
and at the exact same place is then. So it's
(09:38):
been one two three. Sorry I didn't have to do
some math there. It's been three months now since then
and markets have not budged. Does that strike you as
a royling? No, I am unroyaled. I am unroyaled. And
you know for people who are like, well, it's been
a bumpy ride to get here. The S and P
(09:58):
five hundreds low is fifty seven to seventy three in
that time. Okay, if you do the math, and I did,
that's a four percent drop from right here, not even
a five percent drop, a four percent drop. So the
S and P has been worse than you, down four
percent on one day, by the way, that was on
January thirteenth. I don't know what happened then, but that's
(10:20):
when I was trying to think, like, what did we go?
Speaker 3 (10:22):
Do you even remember that?
Speaker 2 (10:23):
I don't even know. But the S and P five
hundred has been four percent lower than this and about
one and a half percent higher. It's been in a
five and a half percent range for the last three months,
roiling markets.
Speaker 5 (10:41):
The thirteenth was the Job's report, good news, bad news.
Speaker 2 (10:45):
Okay, sure, still don't remember it. Yeah, it's like, doesn't
that feel like that was just ages ago?
Speaker 3 (10:50):
At this point, January was a long month.
Speaker 2 (10:52):
Like the last week and a half, it's just been
every day we've been, you know, moving from deepseek to
tariffs to well, I don't know what we're going to
see tomorrow, you know, like tomorrow it's gonna be like
all the soup in the US is bad or something like.
It's it's just it's it's wild right now. So let's
take a quick break when we come back. We did
get some tech earnings yesterday. Let's talk about Google because
(11:13):
they had some notable things on that AI theme, and
so we'll discuss that when we return.
Speaker 1 (11:20):
Get up to the minute market updates with Wall Street
Watch week days at ten thirty only here on the
Financial Exchange Radio Network. Missed one of our shows, Catch
up anytime by asking your alexis Smart speaker to play
the Financial Exchange. This is the Financial Exchange Radio Network.
Speaker 5 (11:42):
This segment of the Financial Exchange is brought to you
in part by the US Virgin Islands Department of Tourism.
The US Virgin Islands are Saint Croix, Saint Thomas, and
Saint John And if you act now, you can take
advantage of a special promotion to Saint Croix Experience. If
I have like no other, get a two hundred and
fifty dollars per person airline credit when you book a
minimum five night's day at participating hotels. Go to visit
(12:05):
USVII dot com and use code Vibe twenty twenty five
to reserve your trip today. Take your next vacation to
Sant Croi in America's Caribbean Paradise the United States Virgin Islands.
Go to visit USVII dot com and use code Vibe
twenty twenty five to book your trip. That's visit USVII
dot com and code Vibe twenty twenty five.
Speaker 2 (12:24):
Alphabet, the company formerly known as Google, reported earnings after
the bell yesterday and big thing is they they missed
on revenue. Their guidance was a little bit light, and
they also guided that their capex was going to be
twenty five percent higher than they had previously estimated. And
(12:45):
so as a result, Google stock or alphabet stock or
whatever we're calling it these days. Is I say these days?
Didn't they rebrand it like twelve years ago now or something?
Speaker 3 (12:54):
But Meta still has taking a little time.
Speaker 2 (12:56):
On Meta, I can at least get behind because there
it's at least, hey, we're making a concerted effort to
try to build the metaverse, and you know it's not working.
Speaker 3 (13:05):
But we're han't heard check ins.
Speaker 2 (13:07):
We're committed to the bit, you know, like at least
they're spending a ton of money each year. Google is
not trying to write an alphabet no, like, and it's
just a horrible name. Anyways, your name is alphabet Like?
Speaker 1 (13:19):
What is that?
Speaker 2 (13:20):
What does that even mean? Like you're a bunch of linguists, Like,
what's happening? So when spending goes up and revenue comes,
you know, in light generally you see your stock go down.
But what makes this kind of confusing to me is
Meta gave the exact same quarter last week. Their revenue
(13:42):
was light, their guidance was light, and their CAPEX was
higher than expected, and Meta stock didn't get hit. And
so I'm just trying to reconcile these two things because
this is what I would have expected to happen to
Meta stock, like down eight to ten percent, and instead
I think it was up like two percent after they
reported earnings. And so I guess my question is less
(14:03):
about what happened with Google. I get it, They're trying
to spend a bunch of money on AI and their
core products are just you know, not growing gangbusters anymore.
I guess maybe the one thing here is specifically Google's Cloud.
Speaker 3 (14:15):
That's that's where I was gonna get that.
Speaker 4 (14:17):
Yeah, I mean that's the only, not the only, that
is one of the structural differences between Google and Meta
in terms of where they derive revenue from. Where the
cloud sales growth was thirty percent in Q four from
a year ago. It was in Q three that same
sales growth that they saw from cloud was thirty five percent,
So that coming in lighter, it seems like, is the
only thing to point to in terms of why the stock.
(14:40):
I believe it was off seven percent earlier today I
don't know if that is eight eight now why the
stock is off yet about eight and a half percent
at the moment, they were looking to see a little
bit more growth there. They're running into a similar problem
that Microsoft, is that the supply is not requisite enough
to meet the demand for cloud gross That was one
(15:01):
of the things that they did mention over the course
of the call. Advertising revenue has been a little bit
more muted, So it seems like that's where a lot
of the scrutiny has been is on that cloud computing,
which Meta doesn't, you know, delve into those markets. So
that's perhaps why Google's taken on the chin a little
bit more. I did think that the Capax piece sort
(15:21):
of reiterates the piece that I was talking about earlier
in the show, this idea that the initial blowback from
deep Seek was a close to twenty percent sell off
and in video stock, with concerns that perhaps not as
many of their chips GPUs will be required to do
this type of AI computing and to run all these models.
You've got Meta coming out saying they're going to spend sorry, Meta,
(15:43):
sixty five billion. Microsoft is going to spend ninety billion
this year in capital expenditures, and Google, as we mentioned,
is going to spend nineteen percent of its revenue in
twenty twenty five about seventy five billion on capex, So
all of these are the biggest customers out there. We
talked about that a lot ray check of in video
reinforcing this idea that they're going to continue to spend it.
(16:04):
I did see that I think in video is up
at least three and a half percent today, which could
be not three percent, could not be directly tied to this,
but it does seem like the more we delve into
that deep seek story, the infrastructure costs did need those GPUs.
Now the training costs, that's another story. Perhaps those could
be a lesson burden, but certainly seems to be continued
(16:25):
demand for the GPUs to at least build out these.
Speaker 2 (16:27):
Models you mentioned in video. On the other hand, AMD
who is also a chip maker, the vast majority of
their revenue and profits not derived from AI. They do
a whole bunch of different things, but they do have,
you know, an AI business that they are trying to build,
and they gave a pretty disappointing outlook in terms of
(16:48):
their data center business. When you hear data center. In
this context, it's largely talking about AI and they said
that the division will grow by a quote strong double
digits this year. But obviously you've seen you know, in
video's revenue from that area doubling year after year for
the last couple of years. And so AMD stock down
(17:09):
about ten percent in trading today. And this is you know,
one that has undergone a sharp reversal over the last
you know, nine or ten months.
Speaker 6 (17:17):
Right now.
Speaker 2 (17:18):
This was a stock that was trading at two hundred
and ten dollars a share on March tenth of last year.
It's one oh seven right now. So it's been cut
in half basically over the last ten months. And look,
I'm not everyone's saying this, but if you think it
can't happen to in video, it can. And it's not
(17:39):
to say that it will. But there was all this
optimism that AMD was going to capture this business and
they just haven't to this point. Maybe, you know, there's
gonna be more pie for them to eat up and
maybe they'll be able to figure out how to capture it.
But AMD, it's hard to say that they're struggling when
you're still talking about the growth that they're seeing, you know,
(17:59):
revenues twenty five billion dollars, net income is a couple
billion dollars free cash flows positive their margins. Here's the
big difference between them and in video they're operating margins
are about five and a half percent, in videos are
sixty two. Yeah, Like, that's the whole ballgame is in
Vidio is basically just printing profit because no one else
(18:20):
is able to charge the prices they do for what
they're putting out. And that's that's the whole ballgame.
Speaker 3 (18:26):
But emphasize your point.
Speaker 4 (18:27):
When you have margins that large in an area that
everyone's constfter it exactly. There's constant innovation and there's a
constant drive to lower costs as much as possible. And
we saw that with some of the training model stuff.
There are people and other companies out there, some that
we just spoke about, Google and Meta and others that
are they're chasing after that, and the competition is going
to be steep. And Vidio had a decade head start
(18:49):
basically in this GPU business. But the longer these margins
in place, like you said, yeah, the more competition's coming
after them for those margin dollars.
Speaker 2 (18:57):
Yeah, I think I know that Microsoft has announced their
trying to develop some chips in house.
Speaker 4 (19:02):
Google has the TPUs, and there's Kuda is one of
the development models that in video has to strengthen mode.
There's there's gonna be challengers to that too.
Speaker 2 (19:12):
Yep, the company that would be kind of interesting there.
Apple's done a lot of work in the last decade
building out their own silicon for you know, phones and stuff.
Part of me wonders, hey, do they ever want to,
like try to get into the business of designing chips
for AI even though they're not, you know, developing the
AI platforms? Be kind of interesting. Quick break here Wall
(19:33):
Street watch and ask todd our next.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch a complete look at what's moving markets so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (20:00):
Markets are in negative territory as wolstret reacts to a
new flurry of fourth quarter earnings, including disappointing results from Alphabet.
At the moment, the Dow is down by only fifteen points.
SMP five hundred is down about a quarter percent, so
the Nasdaq is off over half a percent, Russell two
thousand actually up over half a percent at the moment.
Tenure Treasure reeled down by eight basis points, now at
(20:23):
four point four to two percent, and crude oil down
about one and a half percent, trading just above seventy
one dollars a barrel. Alphabet down by over eight percent
after the tech giant reported a slow down on Google's
cloud computing sales, resulting in a drag in the company's
overall revenue growth to its lowest level since twenty twenty three.
(20:44):
Sticking with tech, where AMD is down by ten percent
after the chip maker posted a big jump in revenue
in its data center business. However, the results came short
of analyst forecasts. Meanwhile, Disney posted impressive quarterly results this morning,
where the media giant topped street expectations for revenue, net income,
and streaming profits. Disney also had a strong box office showing,
(21:06):
with Mwana II lifting its studio business during the quarter.
More on Disney in the second hour of the show. Elsewhere,
Uber down by eight percent after the ride handling and
food delivery companies quarterly operating income significantly fell short of expectations.
Ozebic and wegaby maker Novo Nordis forecast sales growth would
(21:27):
slow this year, but posted stronger than expected net profit
and sales for the quarter that stock jumping by nearly
five percent and Chipotle shares down by two percent after
the burrito chain cut its sales outlook for the year.
I'm Tucker Silva and that's Wall Street Watch.
Speaker 1 (21:45):
This is Asked Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Tod Letsky is here to answer your
questions and help you plan for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts in New
England for more than thirty five years, helping families with
a state and tax planning, Medicaid planning, and probate law.
(22:06):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:12):
As promised, We're now joined by Todd Lutsky from the
law firm of Cushing and Dolan. The segment is Asked Todd,
and it is your opportunity to ask Todd your estate
planning questions. Phone lines wide open right now at eight
eight eight to zero five two two six three. We
can normally get through about two to three calls, so
if you got a call, make sure you get in
(22:34):
early so that we can get to you. Eight eight
eight to zero five two two sixty three. Again, this
is your opportunity to ask Todd Lutsky your state planning
questions live on air eight eight eight to zero five
two two sixty three. One more time. That number is
eight eight eight to zero five two two six three.
(22:54):
Mister Lutsky, how are you doing today?
Speaker 6 (22:58):
Never better? How are you? Uh?
Speaker 2 (23:00):
Pretty good?
Speaker 6 (23:00):
Uh?
Speaker 2 (23:00):
Oh, I got a question for you. What do you
call a monk who walks everywhere in bare feet, has
poor bone density and really bad breath.
Speaker 6 (23:11):
That's a lot of things I can't even think of
all those. I can't even follow this, So I'm just
gonna say I don't know a super callous, fragile mystic
hex by halitosis. Wow, I know it's wild. I can't
even remember that.
Speaker 2 (23:25):
Let's talk a little bit about estate planning. When we
talk about someone who's maybe at the beginning of the
estate planning process, yeah, probably a little bit intimidated. How
do they decide which estate planning tools are actually the
right ones for their specific situation.
Speaker 6 (23:43):
So a couple of things. When when we talk about it,
I always like to this is why we call it
the guide is back to the basics, right, it's thinking
about how do we get started? I would say the
very first thing you should do is take a look
at your assets and value them. Figure out out what
it is you own and what you roughly think it's worth,
(24:05):
because it's the value of the estate that really drives
the type of a state plan that you're going to do. Okay,
so let me try to expand on that a little.
You know, when I say how you own it? Right,
if you own it, it's it's an asset. It doesn't
mean it's a probate asset. It just means that it's
(24:25):
a gross estate asset, very different. You could have zero
probate assets, but all are still part of your gross estate.
I think the bigger question is when I say value it, intuitively,
what am I valuing? Right? What is included? Not everybody
thinks about this, right, but obviously your your bank accounts
(24:46):
and your brokerage accounts. That comes to mind, right, because
it's money, and you say, yeah, I feel it, I
see it. You know what they don't think about real estate.
They say, oh, yeah, I got a million dollar home. Oh,
but I don't feel like I'm worth a million dollars
because it's it's real estate. You know, I don't. I
don't count that. Oh, but the government does, so you
got to count that as an asset of the estate.
(25:08):
Another thing people don't think about roth iras. They say, oh,
you know roths are income tax free. Well yeah they are,
but they're estate taxable when you die, so please count them.
You know, even regular iras, they are, you knowes, state
taxable when you die, so please count them as part
of your estate. And you know. One of the other
things that that almost everybody forgets life insurance, right, Oh,
(25:35):
life insurance. Isn't that income tax free? Well it is, yeah,
when when you die, if your spouse gets it, it's
income tax free. Never mind a spouse whoever gets it,
it's income tax free to the person who gets it.
But the government values everything right when you die. The
moment you die, that's when they value it, because you
(25:55):
might say, well, you know, I got this term insurance
policy and it has zero cash sereut undervalue today because
I'm living. The next day I die, Well, it's worth
a million dollars. If that's the face value, that's when
the government values it. So now one item right, you
could be sitting here saying, well, jeez, I'm not worth
a million dollars. Oh wait, to have a million dollar
(26:16):
life insurance policy. You're all of a sudden worth a
million dollars and you haven't talked about any other assets yet.
That one asset could put you at a million dollars.
Speaker 2 (26:28):
Talking with Todd Lutski from the law firm of Cushing
and Dolan. Again. The segment is called Ask Todd because
it's your opportunity to ask Todd your estate planning questions.
We do have space on the phone line still at
eight eight eight to zero five two two sixty three.
That is the number to call to ask Todd your
estate planning question live on air again. That number is
(26:50):
eight eight eight to zero five two two sixty three.
We're gonna take a quick break right now, but when
we come back, it's gonna be right to your calls
with Todd. That phone number is eight eight eight two
zero five two two six three. One last time, eight
eight eight to zero five two two sixty three. Your
(27:11):
calls with Todd when we return Ask Todd.
Speaker 1 (27:14):
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 (27:34):
All right, all right, all right, let's get right to
your calls with Todd Lutsky. First in the queue, we've
got Mike from Drake and Mike, what's your question for Todd.
Speaker 7 (27:45):
I have a grandfather who passed away. He left everything
and as well, basically come is coming to me and
my wife. There's only one thing. One thing. There was
a bank account that was left in a trust to
my father in law. My father in law has now
had had passed before my my grandfather had passed away.
(28:08):
My grandfather had dementia. My question is where will that
money go now that was in that trust from Bank
of America. Will that go back into my grandfather's estate
or does that go to my my father in law
who remarried another woman.
Speaker 6 (28:23):
Okay, so you just added a third factor that really
that really threw me off. So let let me just
try to recap and please please try to help me
what I ask you these questions. So the first, the
first one is there's you're the grandchild of the grandfather
who died and left a will leaving assets to you
and your wife, So that that piece is clear, right,
(28:43):
we understand that that went to you, right yep? Okay,
that's not an issue. In addition to that, you said
that your stepfather or no, your your father in law,
my father in law, your father in law had a
trust in place a bank account, in a trust or
or did the account say in trust for.
Speaker 7 (29:06):
In trust for?
Speaker 6 (29:07):
So there was no actual establishment of an actual trust.
It just simply is more of a designated beneficiary on
the account, correct, I believe?
Speaker 1 (29:19):
So?
Speaker 6 (29:20):
Okay, So it said in trust for.
Speaker 7 (29:22):
Who it would be his name Harry?
Speaker 6 (29:26):
No, No, no, soho's who's Harry's not the father in law?
Speaker 8 (29:30):
Right, yes he is.
Speaker 6 (29:32):
So the father in law had an account and the
account said when I die, when father in law dies,
the assets in the tru goes to who.
Speaker 7 (29:43):
No, when grandfather passed away it would go to it
was the trust was in the grandfather's and when he
passed away it went to my father in law, which
my father in law had passed away before my grandfather.
Speaker 6 (29:57):
Okay, so let's now I'm just trying to get to
the bottom of this, right, this, This is what's complicated
about a lot of these questions. So grandfather again had
one bank account that had in trust for father in
law correct, correct, Correct, And father in law died before
grandfather correct, Okay, and that account still existed when grandfather died.
Speaker 7 (30:24):
Correct.
Speaker 6 (30:25):
And so if it said in trust for someone who's
deceased and there was no alternate beneficiary listed, then what
happens is that would be end up in the probate
estate of the father in law. So I'm sorry, not
of the father in law, it would lapse as to
the father in law. It would end up in the
probate estate of the grandfather. So then the grandfather would
(30:50):
die owning an asset with no beneficiary but in his name.
So his will should direct where that goes. So then
that would end up going to you, because his will
said everything that's a probate asset goes to you. Remember
that item initially would not have been a probate asset
because of the designated beneficiary listed. That's what keeps it
(31:14):
out of probate. But if that beneficiary does not exist,
then it's as if there is no designated beneficiary. So
then it would end up a probate asset. Now his
will says where it goes, so I think it goes
to you. If his you and your wife. If his
will says, I leave all my probate assets to my
(31:38):
grandson and his wife. So there you go. That's my answer,
and I think that's where it's going to go. But
you might have to do some probate work for your
grandfather's estate. Folks, lots of stuff going on in a
question like that, and again I think it's partly because
of the lack of planning that was done right. If
you don't do your planning, you run into these kinds
(32:00):
of problems. Learn how to do your planning. Get the
guide back to the basics. It's basically a recommendation. It's
a it's an my engagement letter to a made up
family with a bunch of assets, and it talks about
the will, the healthcare, the power of attorney. The hippa
really explains documents that we always cursory, give a cursory
example of what they are. And it also you can
(32:23):
put your fact pattern with this and learn it. In
this one, it recommends an irrevocable trust or two for
this family. See if this recommendation works for you. If not,
learn by getting the guide it will at least teach
you how to begin thinking about getting your estate plan
in order. One of my favorite guides Folks eight sixty
(32:43):
six eight four eight five six nine nine or Legal
Exchange Show dot com Back to the Basics eight sixty
six eight four eight five six nine nine or Legal
Exchange Show dot com.
Speaker 2 (32:58):
Todd, I've got another caller for you.
Speaker 1 (32:59):
Here.
Speaker 2 (32:59):
We got Steve in Bridgewater. Steve, you are on with
Todd Lutsky.
Speaker 8 (33:06):
Hi, guys, how are you doing great? You all right?
Doing good? A life of State? My mother had a
life estate. I was the remain de man. Okay, she
passed away in twenty twenty four. For a cost basis?
Would I do a cost basis when the life of
(33:29):
state was first created? Or when she passed away?
Speaker 6 (33:33):
Do you still own the house or did you sell it?
Speaker 8 (33:37):
Sold it already?
Speaker 6 (33:39):
So you sold it?
Speaker 8 (33:40):
When?
Speaker 6 (33:40):
Did you sell it.
Speaker 8 (33:43):
In December of twenty twenty four? She passed away in
April of twenty twenty four.
Speaker 6 (33:49):
Okay, So that's why I needed to know those specifics.
So here's here's the answer. One the house, I'm going
to expand. So people understand, first of all, what is
life estate.
Speaker 2 (34:00):
Right.
Speaker 6 (34:00):
A life estate is when you give something away like
a house your primary residents, Please don't do it with
any asset, and retain the right to live there. Right.
So by doing that, retaining the right to live there,
you avoid probate when she dies, and you've protected it
from the cost of long term care. I don't love
the arrangement because there's a lot of negatives that go
(34:22):
with it, but in this case we don't need to
go down that road because Mom has passed already, so
none of the negatives happened. So we now though, by
keeping that retained interest, that right to live there, that
causes that asset to be included in Mom's estate on
the date of death. So in April of twenty twenty four,
(34:43):
the full value, not just the value of the life estate,
but the full value of the property needs to be
included in her gross estate, not her probate estate. So
it's not a probate issue to determine whether or not
an a state tax return is due. So on the
date of death April, what do you think that house
(35:05):
was worth?
Speaker 8 (35:05):
Steve four fifty.
Speaker 6 (35:09):
Okay, So if we've got a four hundred and fifty
thousand dollars value on the house. That means that the
cost basis to Steve is four hundred and fifty thousand dollars. Now,
between April and December, this may have increased in value.
How much did you sell it for? Ah, for forty
(35:31):
oh even better. So in this case you cannot generate
a loss. I know, as much as you might be
thinking that's great, No, you can't generate a loss. But
in this case you will have zero gain to report
on your income tax return, right because when you report it,
you'll show the sale four forty or for four to forty,
(35:54):
you'll show the cost basis of four forty. And by
the way, when you say you thought it was worth
four ft, if you sell it within nine months of
the date of death roughly where you are, even within
a year of date of death, it's the sale price
that is the cost basis. So in this case you've
got to step up in basis. Your cost is four forty,
your proceeds are four to forty, Your gain you report
(36:17):
as zero, and you keep all the money. No federal,
no state death tax. So that's how you calculate cost
basis in a situation like this, and that's a great
thing to have. Folks. Whenever you're dealing with real estate,
you always want to think about not giving away an
asset like that and keeping it so that when the
beneficiaries get it, in fact, if they don't want it,
(36:39):
they can sell it and not have the capital gains
tax to pay. And if it happens to be a
rental property and you get a step up in basis
and you keep the property, then you have the ability
to offset the rent through depreciation over the next twenty
seven and a half years. So wonderful things step up
in basis folks. Learn learn about step up in basis.
(37:01):
Also in the guide, mister Lutsky, thank you for joining
us today. Always a pleasure.
Speaker 1 (37:07):
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 and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:28):
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
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Las Culturistas with Matt Rogers and Bowen Yang
Ding dong! Join your culture consultants, Matt Rogers and Bowen Yang, on an unforgettable journey into the beating heart of CULTURE. Alongside sizzling special guests, they GET INTO the hottest pop-culture moments of the day and the formative cultural experiences that turned them into Culturistas. Produced by the Big Money Players Network and iHeartRadio.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com