April 23, 2025 • 37 mins
Chuck Zodda and Marc Fandetti discuss US Treasury secretary says trade war with China is not ‘sustainable’. Trump says he won't fire Jerome Powell. China is signaling an openess to trade with the US. Todd Lutsky joins the show for his weekly segment, Ask Todd.
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Wednesday here on the Financial Exchange, and top story for
the day is going.
Speaker 3 (01:14):
To be the continued, continued situation.
Speaker 2 (01:19):
That's developing between the United States and China. So just
to bring up to speed on what happened over the
last twenty four hours here yesterday. I forget exactly what
time I think it was. Maybe actually I can just
pull up the chart of the S and P from
yesterday and I'll tell you it looks like it was
right around noon yesterday. A story broke from I don't
(01:46):
know who broke it initially, actually that Scott Bessen, in
a private meeting that JP Morgan was putting on, gave
a message that I think by many was interpreted as
positive for the situation between China and the United States
(02:07):
to have some kind of step down in the future.
I'm gonna quote here from CNBC's emon Javers, who is
again his official title is Senior Washington correspondent for CNBC.
I don't believe he broke this, but a little bit
afterwards he was, you know, giving some some quotes on this,
(02:28):
and I'll quote from his tweet about it. Source in
the room tells me this is a rough transcript of
the comments Treasury Secretary Besset made yesterday at a closed
door event that are moving markets today? Quote, the next
steps with China are No one thinks the current status
quot sustainable at one hundred and forty five and one
hundred and twenty five percent. So I would posit that
over the very near future there will be a de escalation,
(02:50):
and I should think that that should give the world,
the markets a sigh of relief. We have an embargo
now on both sides right. Besson also said, if you look,
I think I saw number that the container bookings between
China and the US, and this is from two weeks ago,
is down sixty four percent. So the goal isn't to decouple.
The goal isn't to decouple. I'll interject here and just
state we talked about that on our very show before
(03:14):
this happened. So I just want to point out that
the Secretary of the Treasury is referencing numbers that we
are speaking about.
Speaker 3 (03:21):
On our show.
Speaker 2 (03:22):
So Gollag Wilkers makes me feel kind of good that
we're on the right track on this. And so the
market looked at that and interpreted it positively. Is saying, hey,
there's going to be a de escalation, which means things
won't be as bad as they are. Lost in this
a little bit is the very next sentence, which is,
(03:43):
and I do say that China is going to be
a slog in terms of negotiations because that engagement is
not started yet. But I think again, neither side thinks
the status quo is sustainable, and I've said it quite
a bit. So the market rallied on that after the
close yesterday. And I watched this this morning just because
I wanted to see the full video of it. So
(04:04):
I watched the twenty minute Q and A from the
Oval Office, which originally started, by the way, it was
President Trump introducing the new head of the SEC during this,
and then he took a Q and A afterwards, and
a couple of questions that he was asked, one of
which was, Hey, are you planning on firing Jerome Powell,
to which he said, no, never thought about it, never have,
(04:26):
like not not gonna happen. And this is something where
on Friday, the head of the National Economic Council, Kevin Hassett, said,
and again National Economic Council is directly appointed by the President,
like Kevin Hassett you've seen them all over TV directly
said we're actively exploring options for how to fire Powell,
(04:47):
so like like quite literally from I'm not done Mark.
So that obviously then got markets all excited about, Okay,
he's not going to fire Powell. So you see bonds
being bought today and equity is you know, being bought
after that comment, and immediately after that, the President also said, yeah,
(05:08):
you know, we're we're gonna have to, you know, do
something about the tariff right in China. We're probably not
gonna keep it, you know, where it is right now.
It's probably gonna have to be lower. We'll figure out
how to make the deal. If China will come to
the table, you know, we'll set the deal. YadA YadA.
Markets interpreted that positively as well. So I think there's
a few things here to unpack. By the way, it's Chuck,
Mark and Tucker with you. A few things here to unpack.
(05:30):
The first is and now, by the way, sorry, This
continued to this morning. Wall Street Journal with an exclusive
headline is White House considers slashing slashing China tariffs to.
Speaker 3 (05:42):
De escalate trade war. I'll quote from them.
Speaker 2 (05:45):
One senior White House officials said China tariffs were likely
to come down to between fifty and sixty five percent. Remember,
the Trump campaign specifically discussed a sixty percent tariff on China,
so this would fall right into that range. The administration
is also considering a tiered top approach, similar to the
one proposed by the House Committee on China late last year.
Thirty five percent levees for items of the US deems
(06:07):
not a threat to national security socks, tickle me elmos,
things of that nature, and at least one hundred percent
for items deemed strategic to America's interest, probably Chinese steal
things along those lines. The bill also had proposed phasing
in those levees over five years, so I think that
(06:28):
And by the way, they've subsequently updated this, I'm now
reading the updated version from four minutes ago. This from
White House spokesman pushed Asai. President Trump has been clear
China needs to make a deal with the United States
of America. When tariff decisions on tariffs are made, they
will come directly from the President. Anything else is just
pure speculation. So the way I was kind of pushing
back and saying, hey, like you don't know what you don't.
Speaker 3 (06:50):
Know, so I think all of this.
Speaker 2 (06:53):
Look, the market is interpreting this over the last two
days as hey, tariffs are going to come down and
we are are going to avert that worst case scenario,
which is very much possible. The counter to this, and
I'm just laying this out as possibility is we still
don't have any timing that's been laid out for when
this change would happen. We still don't have any confirmed details.
(07:17):
And so, as I've said kind of all along during
this year, let's wait for confirmation before we, you know,
go anywhere on this, and we're gonna have to see
what comes of it, how long it's in place, what
the specifics are. It's simply because as I said on
April third, after the tariff announcement, Hey, this is not
(07:38):
the start the end of tariff uncertainty. This is the
start of it. And we're seeing that there's you know,
continued evolution as we go forward here. So I think
market's reacting as if, hey, the worst case scenario is
off the table from a tariff perspective, and to be honest,
it probably is. I think something spooped them again in
(07:59):
the last couple of days. Otherwise you wouldn't have the
Treasury Secretary and the President talking like this. But we
still don't know what the outcome is going to be
and how long it stays in place and how it
evolves from here. So I try not to jump to
too many conclusions about what the world is going to
look like a week, a month, or a year from now,
just because we're still seeing the situation changing.
Speaker 4 (08:23):
They always ask Pole what, I'm sorry for interrupting you earlier.
They always ask Trump if he's going to fire poll.
It's the wrong question. They're trying to get him with
a gut your question, something that will allow them to
lead the news with something novel. It's the wrong question.
The real question is for those of us that follow
the FED because we enjoy it or because we have to,
(08:45):
is what's your view of monetary policy? Generally? Under what
condition should the FED be pushing leaning against the wind
as central bankers like to call it, or easing. What's
your beef with the current state of monetar Harry policy?
How would you do things differently? How would you have
done things differently during COVID? Those to me are smarter
(09:05):
questions that tease out his views on the FED. Because
those are more likely to be relevant over the next
four years. They'll be that would the response that would
be more telling is to what type of chairman he's
going to appoint any year from Powell's going to be
gone in a year, and that's going to come in
a heartbeat right.
Speaker 3 (09:22):
Part of this very much.
Speaker 2 (09:25):
I was thinking about this over the last week or so,
where you know, I said, look, if you're going to
see something on Palelet's, it's gonna be relatively soon, simply
because otherwise you can just literally wait one year and
appoint whoever you want into that position.
Speaker 4 (09:39):
Or name the appointment. It may name your nominee in
three months, six months, get the process going. I want
to hear what type of look the Fed's already compromised
by the by the statements, and I was gonna say actions,
not quite to this point, but his pick for the
Fed's probably already compromised people view People are gonna view
(09:59):
them as a puppet. They know based on appointments he's
made elsewhere, and based on the very strong feelings he's
expressed that the next FED chairman probably won't have independence.
That's what warriors man, I wish they'd ask him that question,
do you view FED independence is sacriss.
Speaker 3 (10:13):
Do you think that's true?
Speaker 4 (10:14):
Yes, I do.
Speaker 2 (10:15):
I guess what I'll say is a counter to it is, Look,
once any FED chairs in that seat, they have that
protection that the seat affords them of being not able
to be fired by the president based on the historical precedents.
Speaker 4 (10:33):
But that's not what the President said yesterday. The President
said I have no intention of firing him. The President
did not admit that he could or could not fire him.
Speaker 3 (10:40):
That's more to me than anything.
Speaker 2 (10:43):
So okay, So the read through on that could be
like when you are hearing the owner of an NFL team,
you know, in the last week of a season, saying, yes,
so and so is our head coach right now, and
then the head coach gets fired a week later. That's
kind of how you're seeing that is Sure, I have
no intention of firing him, but I still may.
Speaker 4 (11:00):
The more interesting question to me would be do you
have the power to? Because that gets to the heart
of the matter. Sure, his response, you could infer from
his response that he believes he does have the power.
That is inherently destabilizing. So more interesting to me is
how this plays out over the next three years, not
the fact that Trump uncocked the hammer on the trigger.
(11:23):
I'm not using the right metaphora, but you know what
I mean. Trump may have stood down a little bit,
but he hasn't conceded, and he typically doesn't. This is
pretty effective. I think this is one of his more
effective negotiating techniques. He didn't concede a thing, but he
got the markets to think that he did.
Speaker 3 (11:39):
Let's take a quick break here.
Speaker 2 (11:40):
When we come back, I want to talk about the
Chinese response to the last twenty four hours and kind
of what they've heard from the US. We'll discuss that
when we return.
Speaker 5 (11:51):
Market volatility is at its highest point since the pandemic.
Keep it here for the most comprehensive coverage of the
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Speaker 2 (12:45):
So we've been talking about the last twenty four hours
of basically what's been going on with the US and
China from a tariff perspective. This morning, we noted in
the first segment, the Wall Street Journal has a piece
noting that the Trump administration could end up with an
(13:08):
effective tariff rate on China somewhere between fifty and sixty
five percent, and a few.
Speaker 3 (13:13):
Different ways that you can view this.
Speaker 2 (13:14):
I don't really want to get into like, you know,
who wins or who loses, because quite honestly, like that's
not what matters to us and our show. What really
matters is, Hey, how does this impact the broader economy?
And I think that when you look at this, the
questions that we need to answer in order to determine
(13:36):
that there are a few of them. The first is
when does let's assume that we end up in that spot,
when does it get announced is question number one. Not
even let's assume we end up in that spot, because
we have no idea. I'm not going to speculate on
what happens. But there are three questions that matter. When
is the announcement and implementation of whatever the new tariff
(13:57):
rate is. Obviously, the sooner, the less damage that is
done to the broader economy. Two, what is the new
tariff rate going to be? There's obviously a world of
difference between one hundred and forty five percent and sixty
percent and thirty five percent?
Speaker 3 (14:15):
Uh. And Three.
Speaker 2 (14:18):
How convinced are companies, countries and everyone else that these
tariff rates are going to be there for an extended
period of time? And you know, walking through these three questions,
So the first one is, hey, look, if you still
don't get an announcement on any change in the China
tarif rate over the next you know, a few weeks
if it's if it's Memorial Day before we get something,
(14:40):
which given the Wall Street Journal reporting now you would
see what it would be sooner. But if let's play
worst case scenario, if it's like six weeks before we
get something, you get all kinds of problems because supply
chain snarl in that time. If it is today, you
have minimal you know, overall time that the forty five
rate's been in effect. It's been for you know, fourteen
(15:02):
days now, because they went into effect on April ninth. Okay, yeah,
it's two weeks of discomfort, but you can manage through
that and kind of go from there. The next is
where do these tariff rates end up if they are
at sixty percent, which, by the way, is right in
the middle of that fifty to sixty five percent range.
At the Wall Street Journal piece notes, Hey, that's right
(15:23):
where the Trump administration proposed tariffing China during the campaign.
So you kind of end up, you know, right back
in that that area where people were not expecting, but
where it was at least being discussed. What does that
do to overall levels of trade? Well, it's not a
straight trade embargo in that case, because there are ways
(15:46):
that you know, combinations of shippers and producers and things
can figure it out where basically it's a combination of
margins do get shredded somewhat, consumers have to pay somewhat
higher prices. No one really comes out happy, but you
can still sell a lot of the goods just at
higher prices and lower margins than you used to. If
(16:07):
you go back to kind of what the deal is
with everyone else where, Hey, you know we went back
to the ten percent rate that the baseline rate that
was proposed at during the ninety day pause. Okay, China
was already at twenty percent before the October, before the
April second announcement. Maybe you say, hey, China is going
back to twenty percent. That's kind of your best case
(16:28):
scenario in terms of minimizing disruption. The third one is
the one that's going to complicate everything, which is how
much do businesses and or people trust that this is
going to be where the rate stays and it it
gets dodgy for two different reasons. Because remember if you
(16:48):
move the rate down to sixty as an example, it
could in theory, move in either direction depending on how
the relationship between the US and China develops. So on
one hand, you might have some people who say, hey,
the tariff freight is moving down, it could move back up.
This is a great time for me to like buy
something that I've been waiting on because you know, I
(17:09):
need to do it, because the ray could go back up.
The counter to that is, other people could say, hey,
the tariffright already went down from one forty five to sixty.
If this happens, I'm gonna wait it out longer because
maybe it'll come down to thirty and things will get
even cheaper. And you could have both households and businesses
saying that, And so there's gonna be further distortion of
(17:31):
the economic data because of how different individuals and companies
make these decisions, which again gets to I don't think
we're going to have any great idea of how the
economy is doing over the next few months because the
data is going to be all over the place and inconsistent.
The one caveat being, hey if they if they really
did do nothing on this tariff rate until you know,
(17:54):
Memorial Day. Yeah, the economic data is going to get
pretty bad pretty quickly as we head into the summer.
Speaker 3 (17:59):
But I don't know.
Speaker 2 (18:02):
It still points towards the economy likely slowing down because
this is still a significant hindrance in economic activity. But
the data is going to be all over the place.
You could have some businesses and people stocking up left
and right. You could have others that are pausing like
it's it's gonna get really messy.
Speaker 4 (18:18):
Yeah, high volatility is inherently bad for growth, or I
should say, is associated with lower levels of growth. We're
in a low growth regime anyway, we have been for
this entire century. So more volatility means more dips into
negative territory. It's very, very unhelpful. If the tariffs are
(18:39):
less severe, that should result in less of a drag,
less of a stagflationary shocked if you will, But there
will still be adverse supply consequences, as you've talked about
at length, and adverse inflation consequences. How persistent those inflation
consequences are depends in part on how the FED response.
Speaker 2 (18:57):
So I think the big thing in all this is
is continue to try to not get too excited about
things in either direction on any one particular day. I
think that when you're talking about imposing tariffs at any level,
it's likely going to create some additional drag in the economy,
and we're gonna have to see how that plays out.
But try not to get too hyped up about you know, Hey,
(19:21):
Monday stocks were down three percent. Tuesday they're up, you know,
to today they're back up another three Like things are
still very volatile, and no one has a great idea
of exactly what all this means.
Speaker 3 (19:32):
Let just take a quick break here.
Speaker 2 (19:34):
When we come back, we got Wall Street Watch and
we're joined by Todd Lutsky for Ask Todd.
Speaker 5 (19:41):
Like us on Facebook and follow us on Twitter. Act
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network.
Speaker 1 (19:52):
Time now for Wall Street Watch.
Speaker 5 (19:54):
A complete look at what's moving markets so far today
right here on the Financial Exchange Radio Network.
Speaker 6 (20:01):
Markets are in rally mode again today. Market sentiment received
a boost this morning surrounding the trade war with China
after The Wall Street Journal reported about an hour ago
that the Trump administration is considering slashing its steep tariffs
on Chinese imports, in some cases by more than half,
in a bid to de escalate tensions with Beijing. However,
(20:24):
Trump has not made a final determination at the moment.
The Dow is up by two point seven percent, over
one thousand points higher. S and P five hundred is
up three point three percent or one hundred and seventy
six points in the tech heavy Nasdaq up over four
percent or seven hundred points higher. Russell two thousand, also
(20:45):
in rally Mode up three point four percent, Tenure Treasure
reiled down by five basis points at four point three
three percent, and crude oil is down about two percent today,
trading at sixty two dollars in forty one cents a barrel.
Tesla jumping by seven percent after the ev maker posted
disappointing first quarter results. However, optimism is up after CEO
(21:07):
Elon Musk said he would devote less time to his
work with the Trump administration beginning in May. Meanwhile, Boeing
reported first quarter results, posting a narrower than expected loss
for the first quarter. CEO Kelly Ortberg also said the
aircraft maker will ask the FAA to approve increased production
of its seven thirty seven Max jets. Boeing up by
(21:28):
six percent. Elsewhere, in Phase Energy misstreet earnings and revenue expectations,
where as CEO said Terris will hurt the company's battery business,
which sources from China, that stock pulling back by eight percent.
Fast Casual Mediterranean chain CAVA upgraded to outperform from market
perform at Bernstein, where the analyst believes the company can
(21:50):
be shielded from a downturn in the economy Kava up
by ten percent. Capital One up by six percent after
its first quarter earnings beat expectation, while multiple Wall Street
firms up their price target of the stock. Bloomberg reported
that Intel is readying to announce plans to cut more
than twenty percent of its staff. Intel up by seven
(22:10):
percent on that news. And after today's close, we'll see
earnings from IBM Service Now in Texas Instruments on Tucker Silvan.
That's Wall Street Watch.
Speaker 5 (22:22):
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 the state and tax planning, Medicaid planning, and probate law.
(22:43):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:48):
We are now joined by the one and only Todd
Lutsky from the law firm of Cushing and Dolan. We
got the phone lines open because we call the segment
Ask Todd. You get to Ask Todd your estate planning questions.
Speaker 3 (23:00):
Live on air right now.
Speaker 2 (23:02):
As I mentioned, phone lines are open at eight eight
eight to zero five two two sixty three. That is
the number to call again. Eight eight eight to zero
five two two six three is the number to call
to ask Todd your estate planning questions. Reminder, we usually
get through maybe two, occasionally three of these, so do
(23:23):
get calling early and often to make sure we get
to you. That number again is eight eight eight to
zero five two two six three. Mister Lutsky, how are
you doing today?
Speaker 7 (23:37):
I am doing just fine, Hugh, I'm good.
Speaker 8 (23:39):
I'm uh.
Speaker 2 (23:40):
I'm looking actually for someone to brush their teeth with
me every morning.
Speaker 7 (23:44):
You don't like doing it alone.
Speaker 2 (23:45):
Well, my dentist says that brushing alone won't prevent cavities.
Speaker 3 (23:49):
Well, that's that's true.
Speaker 2 (23:51):
I'm looking for someone, you know, to kind of help
out a little bit, Todd. I want to talk a
little bit about concerns about leaving money to the next generation. Yes,
if someone is nervous about leaving a large sum of
money to a child or grandchild because they don't want
them to blow all that money at once, what tools
(24:12):
are available to spread out when someone receives an inheritance.
Speaker 7 (24:17):
And so when you use a trust, and we use
them for many things, and we focus lots of times
on using trusts for things like probate and taxes. But
I think, and what you're asking me, Chuck, is also
true that the family behind the estate plan is even
better and that's where the trust lives on after you're dead.
Speaker 3 (24:37):
To control things.
Speaker 7 (24:38):
Just like you mentioned, how and when people get assets
to me can be more important than the other stuff.
Although you need to protect the asset to make sure
it's there to provide for the family, so you need
the trust for that part. But if you're going to
leave assets for children or any beneficiary of your choosing,
one way to do it is, you know, stagger distributions.
(25:01):
It's pretty simple. You could say, you know what, my
kids are pretty level headed. I think they're pretty good
with money. We don't have a big drug problem, we
don't have an alcohol problem, they're not spend thrifts. So
what I'll do is just because they're young. And this
would depend on how old you are. Of course, when
when you're doing your planning, you know I've got younger
kids and so if we die today, I would want
(25:24):
my kids to get it at certain ages twenty five, thirty,
thirty five years of age, you know, And that way,
as they reach those ages, the trustee would have to
make a distribution. So at twenty five, the trustee or
I should say, the kid could pound the table and
say I want one third of my bucket and the
(25:47):
trustee would have to comply. Now at thirty, I want,
you know, half the balance, which is another third, and
the trustee would have to comply. And so prior to
those ages, however, the true trusty will have discretionary power
for distributions such as you know, the kids going Usually
(26:07):
we tie it to certain standards like health, education, welfare,
and support. We call it maintenance and support the hem's standards.
And so that way, if the kid is going to
college and needs money for college, the trustee would not
be able to say no. But if the trustee is
if the kid is going to say, you know, I'm
taking a weekend in Vegas, well maybe that's not a
(26:29):
good distribution time. And so the trustee would have some
discretionary play over distributions during those ages. But again, as
they reach those predetermined ages, mandatorily, the trustee couldn't say no.
If the kid wants.
Speaker 2 (26:45):
It with Toddletski from the law firm of Cushing and Dolan.
Phone lines still have space on them. If you've got
estate planning questions that you want answered, eight eight eight
two zero five two two six three is the number again.
That number is eight eight eight to zero five two
two six three. Maybe you've got a question about in
a state plan you've already done. Maybe you got in
(27:06):
a question. Maybe you got a question about, Hey, should
I be doing something? Or am I taking the right
approach within the state plan that I'm working on? Either way,
Todd's available right now to answer your questions live on
air eight eight eight to zero five two two six three.
We're gonna take a quick break here, but when we
come back, it's right to your questions with Todd. That
(27:28):
number again is eight eight eight to zero five two
two six three.
Speaker 5 (27:35):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
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Radio Network.
Speaker 2 (27:55):
Alright, let's get right to your questions with Todd Lutsky.
First up, we got Nancy in Norwell Nancy, what's your
question for Todd?
Speaker 8 (28:03):
Hi, I happen to be a beneficiary the tuna state
that my father set up. And he set it up
and he had my older brother and sister as the executors. Okay,
but unbeknownst to him, the executors met with the attorney
that originally set up the irrevocable trust and then decided
(28:24):
to rearrange it and change it without my parents wishing
for that to be done. Okay, that allowed, So.
Speaker 7 (28:35):
I'm a little confused. Let me ask some more questions. So,
first of all, you mentioned the word executor. So brother
and sister are executor. That means their executor. Executor means
over the will, just so you they have control. As
an executor, they would only have power over a will
or in other words, only controlling assets that would be
(28:57):
in the hands of the decedent in their own name,
not joint no designated beneficiary on it, just like a
bank account that was in let's say dad's name when
he died. So two things, One, they only have control
over assets that are in the decedent's name alone on
the date of death, and two, no power whatsoever until
(29:19):
the parent dies. So when you're asking the question they're
trying to change the trust, but parents are alive.
Speaker 3 (29:27):
At this time.
Speaker 7 (29:28):
Yeah, okay, are your parents still alive?
Speaker 8 (29:31):
No?
Speaker 7 (29:32):
Okay, So while your parents were alive, that irrevocable trust,
which I've never read, so it's hard for me to address,
it could be changed like our medicaid. Irrevocable trusts can
be changed right by something known as a limited power
of appointment. But that limited power of appointment is granted
to the parents, the creators of the trust donors, if
(29:56):
you will, not a trustee, and not an executor. So
first of all, the executor has no power over the
trust because that has nothing to do with it. It's
only a will. And so then the only other person
that could change the trust would be a trustee, who
has no power to change beneficiaries on a trust. But
your parents, while they're alive, might have that power if
(30:20):
it's built in called a limited power of appointment. So
I think what you're going to need to do is
you're going to need to really find out your question
is spot on. You should be asking these questions. But
while your parents were alive, they very well may have
had the power to change the document. Now do you
know in fact that the document was changed before they died. Yeah,
(30:41):
and did that change in the document cut out you?
Speaker 8 (30:45):
Uh? Not that I'm aware of.
Speaker 7 (30:47):
No, did it benefit the brother and sister more.
Speaker 8 (30:50):
Than you yep, and his children?
Speaker 7 (30:53):
So then what you need to do is even if
the parents did make the change while they were alive,
then you're only argument might be was their undue influence
by the brother and sister over the parents manipulating them
to make the change. And if you want, that's going
to require litigation. I'm not telling you to do it.
Litigation is ugly and expensive, but and you've got to
(31:15):
find out make sure there's a not a no contest
clause in there, because then you could lose everything if
you challenge it and there isn't no contest clause. So
you got to tap dance around and really pay attention
before you just litigate. But I think a good hire
a good lawyer before you do that, and they'll decide
whether litigation makes sense or not. Okay, So I hope
(31:35):
that helps a little bit. You really are gonna need
to just check into this before you litigate. But it
is possible mom and Dad had the power to change
it and if they did and it wasn't by undue influence,
then it is what it is. But if you feel
really strongly that it was done by undue influence, then
hire a litigator in and get it, you know, look into.
Speaker 3 (31:56):
It, folks.
Speaker 7 (31:57):
That is exactly why we're giving away. The guide this
month called how to Leave Assets to Beneficiaries. Because the
trusts do that, they control how the assets get to
your family, how when why. They can do things from
credit or protection, generation, skipping tax benefits, divorce protection. They
(32:19):
can provide outright distributions, They can provide staggered or distributions
or distributions based on you know, who gets what. Maybe
that sounds like what was going on in this case
with Nancy. But folks, this can be one of the
most important parts of your estate plan. So if you've
done your plan, call and get the guide because it
might give you ideas on how to change it. If
(32:40):
you haven't done your plan, certainly call and get it
because it will give you ideas on how to leave
your assets to your families 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.
Speaker 2 (33:01):
Todd, I get another one for you here. Let's go
to Stephen in Spencer. Stephen, you are on with Todd Lutsky.
Speaker 1 (33:07):
Hey, Todd, how you doing?
Speaker 6 (33:08):
Thanks for having me?
Speaker 3 (33:10):
What's up?
Speaker 7 (33:11):
Hey?
Speaker 3 (33:12):
I get a question. I'm thinking about doing a trust
for my kids.
Speaker 2 (33:16):
I'm just wondering if I put the money in the trust.
Speaker 3 (33:19):
Obviously I pay fees to the firm.
Speaker 2 (33:22):
Are there fees that they would have to pay to
finalize the trust to get the money or is it
a one time deal?
Speaker 7 (33:30):
So, Stephen, a couple of questions. First one, just so
I can help you with the kind of trust.
Speaker 3 (33:35):
How old are you I'm fifty eight.
Speaker 7 (33:39):
And how many kids there'll be three?
Speaker 5 (33:43):
Three?
Speaker 3 (33:44):
Are you married, divorced? Single?
Speaker 8 (33:46):
Married?
Speaker 7 (33:47):
Married? Okay? Good, so you know again the size of
your estate will matter, right if you want revocable trusts.
But let's just focus on your trust question. In general,
when you create a trust, you should pay a fee
to the firm to create the trust. Generally it's a
one time flat fee.
Speaker 3 (34:09):
Pay it so.
Speaker 7 (34:10):
And in fact, I recommend that when clients are going
to get their firm get their estate planning done, they
should ask and it should probably be a fat flat
fee hourly. You kind of get a little nervous, so
flat fee one time to the firm. Ongoing. No, you've
signed everything, you executed, everything you pay. Your flat fee
trust lives on during your life. There is no annual
(34:31):
fee to the firm. At least, we don't charge an
annual fee just because you have a trust. No, maybe
you've got to pay an annual fee to have an
income tax return done for the trust, you know, if
it's an irrevocable trust. A revocable trust does not even
require the filing of tax return, So no fee there.
(34:54):
Short of that, I don't see any fees, and even operationally,
you know, kids taking money out of the trust is
not a fee. In fact, they might be trustees when
you pass away, So hopefully that helps a little. I
don't think there's any big ongoing fee for you. There
you go, Todd, Let's do one more here. We've got
(35:14):
Dave on the cape. Dave, you only got a couple
of minutes here, so you've got to be quick. But
what's your question for Todd?
Speaker 9 (35:20):
Okay, my father in lost houses in an irrevocable trust. Okay,
if he sells the house and moves into an assisted
living facility, can he use that to pay rent there?
The money could pay the rent at the assistant living
So one.
Speaker 7 (35:34):
You're gonna I'm gonna have to know more about the trust.
But let me give you my thoughts. So, if it's
a medicaid irrevocable trust and was designed ultimately to protect
assets from the cost of nursing home care, I understand
he's going into assisted living and not a nursing home
at the moment. That doesn't mean that he might not
end up there, but at this point he's not there.
(35:54):
And so what will happen is you sell the house,
the money will go into the trust, remained protected. If
it was designed to be protected, there should be no
adverse capital gains tax. In the event that it's a
grant or trust, taxes will be paid. Money will sit there.
There might be language in the trust that says he's
entitled to the income from the trust. So if there's
a million dollars in the trust because he sold a
(36:16):
house and it's generating fifty thousand a year in income, yeah,
he's entitled to that income and he can certainly use
that money to pay the assisted living facility. So I
just don't know how much income is going to be
generated by the trust, and then you would really have
to read the document pretty closely to find out what
(36:37):
his access to principle is in the trust.
Speaker 3 (36:41):
So, in my example, if it was a.
Speaker 7 (36:43):
Million dollar home, that million dollars less taxes is principal
and not sure what his access to principle is, so
you have to read it to see if there's any
way for him to access to principle to pay for
the assisted living. But at least I hope that was
a little helpful and best I could do with that
reading the document.
Speaker 2 (37:01):
Mister Lutsky, thank you so much for joining us today.
We appreciate the time. Always pleasure.
Speaker 5 (37:06):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Wednesday here on the Financial Exchange, and top story for
the day is going.
Speaker 3 (01:14):
To be the continued, continued situation.
Speaker 2 (01:19):
That's developing between the United States and China. So just
to bring up to speed on what happened over the
last twenty four hours here yesterday. I forget exactly what
time I think it was. Maybe actually I can just
pull up the chart of the S and P from
yesterday and I'll tell you it looks like it was
right around noon yesterday. A story broke from I don't
(01:46):
know who broke it initially, actually that Scott Bessen, in
a private meeting that JP Morgan was putting on, gave
a message that I think by many was interpreted as
positive for the situation between China and the United States
(02:07):
to have some kind of step down in the future.
I'm gonna quote here from CNBC's emon Javers, who is
again his official title is Senior Washington correspondent for CNBC.
I don't believe he broke this, but a little bit
afterwards he was, you know, giving some some quotes on this,
(02:28):
and I'll quote from his tweet about it. Source in
the room tells me this is a rough transcript of
the comments Treasury Secretary Besset made yesterday at a closed
door event that are moving markets today? Quote, the next
steps with China are No one thinks the current status
quot sustainable at one hundred and forty five and one
hundred and twenty five percent. So I would posit that
over the very near future there will be a de escalation,
(02:50):
and I should think that that should give the world,
the markets a sigh of relief. We have an embargo
now on both sides right. Besson also said, if you look,
I think I saw number that the container bookings between
China and the US, and this is from two weeks ago,
is down sixty four percent. So the goal isn't to decouple.
The goal isn't to decouple. I'll interject here and just
state we talked about that on our very show before
(03:14):
this happened. So I just want to point out that
the Secretary of the Treasury is referencing numbers that we
are speaking about.
Speaker 3 (03:21):
On our show.
Speaker 2 (03:22):
So Gollag Wilkers makes me feel kind of good that
we're on the right track on this. And so the
market looked at that and interpreted it positively. Is saying, hey,
there's going to be a de escalation, which means things
won't be as bad as they are. Lost in this
a little bit is the very next sentence, which is,
(03:43):
and I do say that China is going to be
a slog in terms of negotiations because that engagement is
not started yet. But I think again, neither side thinks
the status quo is sustainable, and I've said it quite
a bit. So the market rallied on that after the
close yesterday. And I watched this this morning just because
I wanted to see the full video of it. So
(04:04):
I watched the twenty minute Q and A from the
Oval Office, which originally started, by the way, it was
President Trump introducing the new head of the SEC during this,
and then he took a Q and A afterwards, and
a couple of questions that he was asked, one of
which was, Hey, are you planning on firing Jerome Powell,
to which he said, no, never thought about it, never have,
(04:26):
like not not gonna happen. And this is something where
on Friday, the head of the National Economic Council, Kevin Hassett, said,
and again National Economic Council is directly appointed by the President,
like Kevin Hassett you've seen them all over TV directly
said we're actively exploring options for how to fire Powell,
(04:47):
so like like quite literally from I'm not done Mark.
So that obviously then got markets all excited about, Okay,
he's not going to fire Powell. So you see bonds
being bought today and equity is you know, being bought
after that comment, and immediately after that, the President also said, yeah,
(05:08):
you know, we're we're gonna have to, you know, do
something about the tariff right in China. We're probably not
gonna keep it, you know, where it is right now.
It's probably gonna have to be lower. We'll figure out
how to make the deal. If China will come to
the table, you know, we'll set the deal. YadA YadA.
Markets interpreted that positively as well. So I think there's
a few things here to unpack. By the way, it's Chuck,
Mark and Tucker with you. A few things here to unpack.
(05:30):
The first is and now, by the way, sorry, This
continued to this morning. Wall Street Journal with an exclusive
headline is White House considers slashing slashing China tariffs to.
Speaker 3 (05:42):
De escalate trade war. I'll quote from them.
Speaker 2 (05:45):
One senior White House officials said China tariffs were likely
to come down to between fifty and sixty five percent. Remember,
the Trump campaign specifically discussed a sixty percent tariff on China,
so this would fall right into that range. The administration
is also considering a tiered top approach, similar to the
one proposed by the House Committee on China late last year.
Thirty five percent levees for items of the US deems
(06:07):
not a threat to national security socks, tickle me elmos,
things of that nature, and at least one hundred percent
for items deemed strategic to America's interest, probably Chinese steal
things along those lines. The bill also had proposed phasing
in those levees over five years, so I think that
(06:28):
And by the way, they've subsequently updated this, I'm now
reading the updated version from four minutes ago. This from
White House spokesman pushed Asai. President Trump has been clear
China needs to make a deal with the United States
of America. When tariff decisions on tariffs are made, they
will come directly from the President. Anything else is just
pure speculation. So the way I was kind of pushing
back and saying, hey, like you don't know what you don't.
Speaker 3 (06:50):
Know, so I think all of this.
Speaker 2 (06:53):
Look, the market is interpreting this over the last two
days as hey, tariffs are going to come down and
we are are going to avert that worst case scenario,
which is very much possible. The counter to this, and
I'm just laying this out as possibility is we still
don't have any timing that's been laid out for when
this change would happen. We still don't have any confirmed details.
(07:17):
And so, as I've said kind of all along during
this year, let's wait for confirmation before we, you know,
go anywhere on this, and we're gonna have to see
what comes of it, how long it's in place, what
the specifics are. It's simply because as I said on
April third, after the tariff announcement, Hey, this is not
(07:38):
the start the end of tariff uncertainty. This is the
start of it. And we're seeing that there's you know,
continued evolution as we go forward here. So I think
market's reacting as if, hey, the worst case scenario is
off the table from a tariff perspective, and to be honest,
it probably is. I think something spooped them again in
(07:59):
the last couple of days. Otherwise you wouldn't have the
Treasury Secretary and the President talking like this. But we
still don't know what the outcome is going to be
and how long it stays in place and how it
evolves from here. So I try not to jump to
too many conclusions about what the world is going to
look like a week, a month, or a year from now,
just because we're still seeing the situation changing.
Speaker 4 (08:23):
They always ask Pole what, I'm sorry for interrupting you earlier.
They always ask Trump if he's going to fire poll.
It's the wrong question. They're trying to get him with
a gut your question, something that will allow them to
lead the news with something novel. It's the wrong question.
The real question is for those of us that follow
the FED because we enjoy it or because we have to,
(08:45):
is what's your view of monetary policy? Generally? Under what
condition should the FED be pushing leaning against the wind
as central bankers like to call it, or easing. What's
your beef with the current state of monetar Harry policy?
How would you do things differently? How would you have
done things differently during COVID? Those to me are smarter
(09:05):
questions that tease out his views on the FED. Because
those are more likely to be relevant over the next
four years. They'll be that would the response that would
be more telling is to what type of chairman he's
going to appoint any year from Powell's going to be
gone in a year, and that's going to come in
a heartbeat right.
Speaker 3 (09:22):
Part of this very much.
Speaker 2 (09:25):
I was thinking about this over the last week or so,
where you know, I said, look, if you're going to
see something on Palelet's, it's gonna be relatively soon, simply
because otherwise you can just literally wait one year and
appoint whoever you want into that position.
Speaker 4 (09:39):
Or name the appointment. It may name your nominee in
three months, six months, get the process going. I want
to hear what type of look the Fed's already compromised
by the by the statements, and I was gonna say actions,
not quite to this point, but his pick for the
Fed's probably already compromised people view People are gonna view
(09:59):
them as a puppet. They know based on appointments he's
made elsewhere, and based on the very strong feelings he's
expressed that the next FED chairman probably won't have independence.
That's what warriors man, I wish they'd ask him that question,
do you view FED independence is sacriss.
Speaker 3 (10:13):
Do you think that's true?
Speaker 4 (10:14):
Yes, I do.
Speaker 2 (10:15):
I guess what I'll say is a counter to it is, Look,
once any FED chairs in that seat, they have that
protection that the seat affords them of being not able
to be fired by the president based on the historical precedents.
Speaker 4 (10:33):
But that's not what the President said yesterday. The President
said I have no intention of firing him. The President
did not admit that he could or could not fire him.
Speaker 3 (10:40):
That's more to me than anything.
Speaker 2 (10:43):
So okay, So the read through on that could be
like when you are hearing the owner of an NFL team,
you know, in the last week of a season, saying, yes,
so and so is our head coach right now, and
then the head coach gets fired a week later. That's
kind of how you're seeing that is Sure, I have
no intention of firing him, but I still may.
Speaker 4 (11:00):
The more interesting question to me would be do you
have the power to? Because that gets to the heart
of the matter. Sure, his response, you could infer from
his response that he believes he does have the power.
That is inherently destabilizing. So more interesting to me is
how this plays out over the next three years, not
the fact that Trump uncocked the hammer on the trigger.
(11:23):
I'm not using the right metaphora, but you know what
I mean. Trump may have stood down a little bit,
but he hasn't conceded, and he typically doesn't. This is
pretty effective. I think this is one of his more
effective negotiating techniques. He didn't concede a thing, but he
got the markets to think that he did.
Speaker 3 (11:39):
Let's take a quick break here.
Speaker 2 (11:40):
When we come back, I want to talk about the
Chinese response to the last twenty four hours and kind
of what they've heard from the US. We'll discuss that
when we return.
Speaker 5 (11:51):
Market volatility is at its highest point since the pandemic.
Keep it here for the most comprehensive coverage of the
global trade war. This is the Financial Exchange Radio Network,
breaking business and financial news first throughout the day, only
here on the Financial Exchange Radio Network.
Speaker 6 (12:12):
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you in part by the US Virgin Islands Department of Tourism.
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That's visit USVII dot com.
Speaker 2 (12:45):
So we've been talking about the last twenty four hours
of basically what's been going on with the US and
China from a tariff perspective. This morning, we noted in
the first segment, the Wall Street Journal has a piece
noting that the Trump administration could end up with an
(13:08):
effective tariff rate on China somewhere between fifty and sixty
five percent, and a few.
Speaker 3 (13:13):
Different ways that you can view this.
Speaker 2 (13:14):
I don't really want to get into like, you know,
who wins or who loses, because quite honestly, like that's
not what matters to us and our show. What really
matters is, Hey, how does this impact the broader economy?
And I think that when you look at this, the
questions that we need to answer in order to determine
(13:36):
that there are a few of them. The first is
when does let's assume that we end up in that spot,
when does it get announced is question number one. Not
even let's assume we end up in that spot, because
we have no idea. I'm not going to speculate on
what happens. But there are three questions that matter. When
is the announcement and implementation of whatever the new tariff
(13:57):
rate is. Obviously, the sooner, the less damage that is
done to the broader economy. Two, what is the new
tariff rate going to be? There's obviously a world of
difference between one hundred and forty five percent and sixty
percent and thirty five percent?
Speaker 3 (14:15):
Uh. And Three.
Speaker 2 (14:18):
How convinced are companies, countries and everyone else that these
tariff rates are going to be there for an extended
period of time? And you know, walking through these three questions,
So the first one is, hey, look, if you still
don't get an announcement on any change in the China
tarif rate over the next you know, a few weeks
if it's if it's Memorial Day before we get something,
(14:40):
which given the Wall Street Journal reporting now you would
see what it would be sooner. But if let's play
worst case scenario, if it's like six weeks before we
get something, you get all kinds of problems because supply
chain snarl in that time. If it is today, you
have minimal you know, overall time that the forty five
rate's been in effect. It's been for you know, fourteen
(15:02):
days now, because they went into effect on April ninth. Okay, yeah,
it's two weeks of discomfort, but you can manage through
that and kind of go from there. The next is
where do these tariff rates end up if they are
at sixty percent, which, by the way, is right in
the middle of that fifty to sixty five percent range.
At the Wall Street Journal piece notes, Hey, that's right
(15:23):
where the Trump administration proposed tariffing China during the campaign.
So you kind of end up, you know, right back
in that that area where people were not expecting, but
where it was at least being discussed. What does that
do to overall levels of trade? Well, it's not a
straight trade embargo in that case, because there are ways
(15:46):
that you know, combinations of shippers and producers and things
can figure it out where basically it's a combination of
margins do get shredded somewhat, consumers have to pay somewhat
higher prices. No one really comes out happy, but you
can still sell a lot of the goods just at
higher prices and lower margins than you used to. If
(16:07):
you go back to kind of what the deal is
with everyone else where, Hey, you know we went back
to the ten percent rate that the baseline rate that
was proposed at during the ninety day pause. Okay, China
was already at twenty percent before the October, before the
April second announcement. Maybe you say, hey, China is going
back to twenty percent. That's kind of your best case
(16:28):
scenario in terms of minimizing disruption. The third one is
the one that's going to complicate everything, which is how
much do businesses and or people trust that this is
going to be where the rate stays and it it
gets dodgy for two different reasons. Because remember if you
(16:48):
move the rate down to sixty as an example, it
could in theory, move in either direction depending on how
the relationship between the US and China develops. So on
one hand, you might have some people who say, hey,
the tariff freight is moving down, it could move back up.
This is a great time for me to like buy
something that I've been waiting on because you know, I
(17:09):
need to do it, because the ray could go back up.
The counter to that is, other people could say, hey,
the tariffright already went down from one forty five to sixty.
If this happens, I'm gonna wait it out longer because
maybe it'll come down to thirty and things will get
even cheaper. And you could have both households and businesses
saying that, And so there's gonna be further distortion of
(17:31):
the economic data because of how different individuals and companies
make these decisions, which again gets to I don't think
we're going to have any great idea of how the
economy is doing over the next few months because the
data is going to be all over the place and inconsistent.
The one caveat being, hey if they if they really
did do nothing on this tariff rate until you know,
(17:54):
Memorial Day. Yeah, the economic data is going to get
pretty bad pretty quickly as we head into the summer.
Speaker 3 (17:59):
But I don't know.
Speaker 2 (18:02):
It still points towards the economy likely slowing down because
this is still a significant hindrance in economic activity. But
the data is going to be all over the place.
You could have some businesses and people stocking up left
and right. You could have others that are pausing like
it's it's gonna get really messy.
Speaker 4 (18:18):
Yeah, high volatility is inherently bad for growth, or I
should say, is associated with lower levels of growth. We're
in a low growth regime anyway, we have been for
this entire century. So more volatility means more dips into
negative territory. It's very, very unhelpful. If the tariffs are
(18:39):
less severe, that should result in less of a drag,
less of a stagflationary shocked if you will, But there
will still be adverse supply consequences, as you've talked about
at length, and adverse inflation consequences. How persistent those inflation
consequences are depends in part on how the FED response.
Speaker 2 (18:57):
So I think the big thing in all this is
is continue to try to not get too excited about
things in either direction on any one particular day. I
think that when you're talking about imposing tariffs at any level,
it's likely going to create some additional drag in the economy,
and we're gonna have to see how that plays out.
But try not to get too hyped up about you know, Hey,
(19:21):
Monday stocks were down three percent. Tuesday they're up, you know,
to today they're back up another three Like things are
still very volatile, and no one has a great idea
of exactly what all this means.
Speaker 3 (19:32):
Let just take a quick break here.
Speaker 2 (19:34):
When we come back, we got Wall Street Watch and
we're joined by Todd Lutsky for Ask Todd.
Speaker 5 (19:41):
Like us on Facebook and follow us on Twitter. Act
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network.
Speaker 1 (19:52):
Time now for Wall Street Watch.
Speaker 5 (19:54):
A complete look at what's moving markets so far today
right here on the Financial Exchange Radio Network.
Speaker 6 (20:01):
Markets are in rally mode again today. Market sentiment received
a boost this morning surrounding the trade war with China
after The Wall Street Journal reported about an hour ago
that the Trump administration is considering slashing its steep tariffs
on Chinese imports, in some cases by more than half,
in a bid to de escalate tensions with Beijing. However,
(20:24):
Trump has not made a final determination at the moment.
The Dow is up by two point seven percent, over
one thousand points higher. S and P five hundred is
up three point three percent or one hundred and seventy
six points in the tech heavy Nasdaq up over four
percent or seven hundred points higher. Russell two thousand, also
(20:45):
in rally Mode up three point four percent, Tenure Treasure
reiled down by five basis points at four point three
three percent, and crude oil is down about two percent today,
trading at sixty two dollars in forty one cents a barrel.
Tesla jumping by seven percent after the ev maker posted
disappointing first quarter results. However, optimism is up after CEO
(21:07):
Elon Musk said he would devote less time to his
work with the Trump administration beginning in May. Meanwhile, Boeing
reported first quarter results, posting a narrower than expected loss
for the first quarter. CEO Kelly Ortberg also said the
aircraft maker will ask the FAA to approve increased production
of its seven thirty seven Max jets. Boeing up by
(21:28):
six percent. Elsewhere, in Phase Energy misstreet earnings and revenue expectations,
where as CEO said Terris will hurt the company's battery business,
which sources from China, that stock pulling back by eight percent.
Fast Casual Mediterranean chain CAVA upgraded to outperform from market
perform at Bernstein, where the analyst believes the company can
(21:50):
be shielded from a downturn in the economy Kava up
by ten percent. Capital One up by six percent after
its first quarter earnings beat expectation, while multiple Wall Street
firms up their price target of the stock. Bloomberg reported
that Intel is readying to announce plans to cut more
than twenty percent of its staff. Intel up by seven
(22:10):
percent on that news. And after today's close, we'll see
earnings from IBM Service Now in Texas Instruments on Tucker Silvan.
That's Wall Street Watch.
Speaker 5 (22:22):
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 the state and tax planning, Medicaid planning, and probate law.
(22:43):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:48):
We are now joined by the one and only Todd
Lutsky from the law firm of Cushing and Dolan. We
got the phone lines open because we call the segment
Ask Todd. You get to Ask Todd your estate planning questions.
Speaker 3 (23:00):
Live on air right now.
Speaker 2 (23:02):
As I mentioned, phone lines are open at eight eight
eight to zero five two two sixty three. That is
the number to call again. Eight eight eight to zero
five two two six three is the number to call
to ask Todd your estate planning questions. Reminder, we usually
get through maybe two, occasionally three of these, so do
(23:23):
get calling early and often to make sure we get
to you. That number again is eight eight eight to
zero five two two six three. Mister Lutsky, how are
you doing today?
Speaker 7 (23:37):
I am doing just fine, Hugh, I'm good.
Speaker 8 (23:39):
I'm uh.
Speaker 2 (23:40):
I'm looking actually for someone to brush their teeth with
me every morning.
Speaker 7 (23:44):
You don't like doing it alone.
Speaker 2 (23:45):
Well, my dentist says that brushing alone won't prevent cavities.
Speaker 3 (23:49):
Well, that's that's true.
Speaker 2 (23:51):
I'm looking for someone, you know, to kind of help
out a little bit, Todd. I want to talk a
little bit about concerns about leaving money to the next generation. Yes,
if someone is nervous about leaving a large sum of
money to a child or grandchild because they don't want
them to blow all that money at once, what tools
(24:12):
are available to spread out when someone receives an inheritance.
Speaker 7 (24:17):
And so when you use a trust, and we use
them for many things, and we focus lots of times
on using trusts for things like probate and taxes. But
I think, and what you're asking me, Chuck, is also
true that the family behind the estate plan is even
better and that's where the trust lives on after you're dead.
Speaker 3 (24:37):
To control things.
Speaker 7 (24:38):
Just like you mentioned, how and when people get assets
to me can be more important than the other stuff.
Although you need to protect the asset to make sure
it's there to provide for the family, so you need
the trust for that part. But if you're going to
leave assets for children or any beneficiary of your choosing,
one way to do it is, you know, stagger distributions.
(25:01):
It's pretty simple. You could say, you know what, my
kids are pretty level headed. I think they're pretty good
with money. We don't have a big drug problem, we
don't have an alcohol problem, they're not spend thrifts. So
what I'll do is just because they're young. And this
would depend on how old you are. Of course, when
when you're doing your planning, you know I've got younger
kids and so if we die today, I would want
(25:24):
my kids to get it at certain ages twenty five, thirty,
thirty five years of age, you know, And that way,
as they reach those ages, the trustee would have to
make a distribution. So at twenty five, the trustee or
I should say, the kid could pound the table and
say I want one third of my bucket and the
(25:47):
trustee would have to comply. Now at thirty, I want,
you know, half the balance, which is another third, and
the trustee would have to comply. And so prior to
those ages, however, the true trusty will have discretionary power
for distributions such as you know, the kids going Usually
(26:07):
we tie it to certain standards like health, education, welfare,
and support. We call it maintenance and support the hem's standards.
And so that way, if the kid is going to
college and needs money for college, the trustee would not
be able to say no. But if the trustee is
if the kid is going to say, you know, I'm
taking a weekend in Vegas, well maybe that's not a
(26:29):
good distribution time. And so the trustee would have some
discretionary play over distributions during those ages. But again, as
they reach those predetermined ages, mandatorily, the trustee couldn't say no.
If the kid wants.
Speaker 2 (26:45):
It with Toddletski from the law firm of Cushing and Dolan.
Phone lines still have space on them. If you've got
estate planning questions that you want answered, eight eight eight
two zero five two two six three is the number again.
That number is eight eight eight to zero five two
two six three. Maybe you've got a question about in
a state plan you've already done. Maybe you got in
(27:06):
a question. Maybe you got a question about, Hey, should
I be doing something? Or am I taking the right
approach within the state plan that I'm working on? Either way,
Todd's available right now to answer your questions live on
air eight eight eight to zero five two two six three.
We're gonna take a quick break here, but when we
come back, it's right to your questions with Todd. That
(27:28):
number again is eight eight eight to zero five two
two six three.
Speaker 5 (27:35):
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 (27:55):
Alright, let's get right to your questions with Todd Lutsky.
First up, we got Nancy in Norwell Nancy, what's your
question for Todd?
Speaker 8 (28:03):
Hi, I happen to be a beneficiary the tuna state
that my father set up. And he set it up
and he had my older brother and sister as the executors. Okay,
but unbeknownst to him, the executors met with the attorney
that originally set up the irrevocable trust and then decided
(28:24):
to rearrange it and change it without my parents wishing
for that to be done. Okay, that allowed, So.
Speaker 7 (28:35):
I'm a little confused. Let me ask some more questions. So,
first of all, you mentioned the word executor. So brother
and sister are executor. That means their executor. Executor means
over the will, just so you they have control. As
an executor, they would only have power over a will
or in other words, only controlling assets that would be
(28:57):
in the hands of the decedent in their own name,
not joint no designated beneficiary on it, just like a
bank account that was in let's say dad's name when
he died. So two things, One, they only have control
over assets that are in the decedent's name alone on
the date of death, and two, no power whatsoever until
(29:19):
the parent dies. So when you're asking the question they're
trying to change the trust, but parents are alive.
Speaker 3 (29:27):
At this time.
Speaker 7 (29:28):
Yeah, okay, are your parents still alive?
Speaker 8 (29:31):
No?
Speaker 7 (29:32):
Okay, So while your parents were alive, that irrevocable trust,
which I've never read, so it's hard for me to address,
it could be changed like our medicaid. Irrevocable trusts can
be changed right by something known as a limited power
of appointment. But that limited power of appointment is granted
to the parents, the creators of the trust donors, if
(29:56):
you will, not a trustee, and not an executor. So
first of all, the executor has no power over the
trust because that has nothing to do with it. It's
only a will. And so then the only other person
that could change the trust would be a trustee, who
has no power to change beneficiaries on a trust. But
your parents, while they're alive, might have that power if
(30:20):
it's built in called a limited power of appointment. So
I think what you're going to need to do is
you're going to need to really find out your question
is spot on. You should be asking these questions. But
while your parents were alive, they very well may have
had the power to change the document. Now do you
know in fact that the document was changed before they died. Yeah,
(30:41):
and did that change in the document cut out you?
Speaker 8 (30:45):
Uh? Not that I'm aware of.
Speaker 7 (30:47):
No, did it benefit the brother and sister more.
Speaker 8 (30:50):
Than you yep, and his children?
Speaker 7 (30:53):
So then what you need to do is even if
the parents did make the change while they were alive,
then you're only argument might be was their undue influence
by the brother and sister over the parents manipulating them
to make the change. And if you want, that's going
to require litigation. I'm not telling you to do it.
Litigation is ugly and expensive, but and you've got to
(31:15):
find out make sure there's a not a no contest
clause in there, because then you could lose everything if
you challenge it and there isn't no contest clause. So
you got to tap dance around and really pay attention
before you just litigate. But I think a good hire
a good lawyer before you do that, and they'll decide
whether litigation makes sense or not. Okay, So I hope
(31:35):
that helps a little bit. You really are gonna need
to just check into this before you litigate. But it
is possible mom and Dad had the power to change
it and if they did and it wasn't by undue influence,
then it is what it is. But if you feel
really strongly that it was done by undue influence, then
hire a litigator in and get it, you know, look into.
Speaker 3 (31:56):
It, folks.
Speaker 7 (31:57):
That is exactly why we're giving away. The guide this
month called how to Leave Assets to Beneficiaries. Because the
trusts do that, they control how the assets get to
your family, how when why. They can do things from
credit or protection, generation, skipping tax benefits, divorce protection. They
(32:19):
can provide outright distributions, They can provide staggered or distributions
or distributions based on you know, who gets what. Maybe
that sounds like what was going on in this case
with Nancy. But folks, this can be one of the
most important parts of your estate plan. So if you've
done your plan, call and get the guide because it
might give you ideas on how to change it. If
(32:40):
you haven't done your plan, certainly call and get it
because it will give you ideas on how to leave
your assets to your families 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.
Speaker 2 (33:01):
Todd, I get another one for you here. Let's go
to Stephen in Spencer. Stephen, you are on with Todd Lutsky.
Speaker 1 (33:07):
Hey, Todd, how you doing?
Speaker 6 (33:08):
Thanks for having me?
Speaker 3 (33:10):
What's up?
Speaker 7 (33:11):
Hey?
Speaker 3 (33:12):
I get a question. I'm thinking about doing a trust
for my kids.
Speaker 2 (33:16):
I'm just wondering if I put the money in the trust.
Speaker 3 (33:19):
Obviously I pay fees to the firm.
Speaker 2 (33:22):
Are there fees that they would have to pay to
finalize the trust to get the money or is it
a one time deal?
Speaker 7 (33:30):
So, Stephen, a couple of questions. First one, just so
I can help you with the kind of trust.
Speaker 3 (33:35):
How old are you I'm fifty eight.
Speaker 7 (33:39):
And how many kids there'll be three?
Speaker 5 (33:43):
Three?
Speaker 3 (33:44):
Are you married, divorced? Single?
Speaker 8 (33:46):
Married?
Speaker 7 (33:47):
Married? Okay? Good, so you know again the size of
your estate will matter, right if you want revocable trusts.
But let's just focus on your trust question. In general,
when you create a trust, you should pay a fee
to the firm to create the trust. Generally it's a
one time flat fee.
Speaker 3 (34:09):
Pay it so.
Speaker 7 (34:10):
And in fact, I recommend that when clients are going
to get their firm get their estate planning done, they
should ask and it should probably be a fat flat
fee hourly. You kind of get a little nervous, so
flat fee one time to the firm. Ongoing. No, you've
signed everything, you executed, everything you pay. Your flat fee
trust lives on during your life. There is no annual
(34:31):
fee to the firm. At least, we don't charge an
annual fee just because you have a trust. No, maybe
you've got to pay an annual fee to have an
income tax return done for the trust, you know, if
it's an irrevocable trust. A revocable trust does not even
require the filing of tax return, So no fee there.
(34:54):
Short of that, I don't see any fees, and even operationally,
you know, kids taking money out of the trust is
not a fee. In fact, they might be trustees when
you pass away, So hopefully that helps a little. I
don't think there's any big ongoing fee for you. There
you go, Todd, Let's do one more here. We've got
(35:14):
Dave on the cape. Dave, you only got a couple
of minutes here, so you've got to be quick. But
what's your question for Todd?
Speaker 9 (35:20):
Okay, my father in lost houses in an irrevocable trust. Okay,
if he sells the house and moves into an assisted
living facility, can he use that to pay rent there?
The money could pay the rent at the assistant living
So one.
Speaker 7 (35:34):
You're gonna I'm gonna have to know more about the trust.
But let me give you my thoughts. So, if it's
a medicaid irrevocable trust and was designed ultimately to protect
assets from the cost of nursing home care, I understand
he's going into assisted living and not a nursing home
at the moment. That doesn't mean that he might not
end up there, but at this point he's not there.
(35:54):
And so what will happen is you sell the house,
the money will go into the trust, remained protected. If
it was designed to be protected, there should be no
adverse capital gains tax. In the event that it's a
grant or trust, taxes will be paid. Money will sit there.
There might be language in the trust that says he's
entitled to the income from the trust. So if there's
a million dollars in the trust because he sold a
(36:16):
house and it's generating fifty thousand a year in income, yeah,
he's entitled to that income and he can certainly use
that money to pay the assisted living facility. So I
just don't know how much income is going to be
generated by the trust, and then you would really have
to read the document pretty closely to find out what
(36:37):
his access to principle is in the trust.
Speaker 3 (36:41):
So, in my example, if it was a.
Speaker 7 (36:43):
Million dollar home, that million dollars less taxes is principal
and not sure what his access to principle is, so
you have to read it to see if there's any
way for him to access to principle to pay for
the assisted living. But at least I hope that was
a little helpful and best I could do with that
reading the document.
Speaker 2 (37:01):
Mister Lutsky, thank you so much for joining us today.
We appreciate the time. Always pleasure.
Speaker 5 (37:06):
This has been Aske 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
(37:27):
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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