February 18, 2026 • 37 mins
Chuck Zodda and Marc Fandetti explore a market that appears calm at the index level but is experiencing extreme volatility beneath the surface. With major tech names down sharply while energy, staples, and defensive stocks surge, the hosts examine whether this represents a healthy rotation — or a warning sign.
They also break down growing concerns over AI capital spending, what record investor anxiety around tech investment could mean for markets, and how today’s unusual market dispersion compares to past periods preceding major downturns.
They also break down growing concerns over AI capital spending, what record investor anxiety around tech investment could mean for markets, and how today’s unusual market dispersion compares to past periods preceding major downturns.
Mark as Played
Transcript
Episode Transcript
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Speaker 1 (00:00):
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(00:43):
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(01:06):
Zada and Mark Fandetti, Chuck.
Speaker 2 (01:12):
Mark and Tucker with you here today and as we
kick things off, quite honestly, not much going on today.
It's a there's nothing in the way of economic data,
there's nothing in the way of earnings, and so ideally
you shouldn't really get anything that surprises the market. But
(01:33):
quite honestly, it's not going to be a day with
a lot of intrigue and excitement out there just because
there's there's nothing that's really happening. Broadly, you do have
a little bit of a rally that is continuing from yesterday,
and this gets us into what is our top story today,
which is, look, this is a market that has for
(01:58):
the last four or five months now, I'll say four
months since late October, just has not really been able
to go anywhere. And I mean that in the nicest
possible way. It hasn't really gone up, it hasn't really
gone down. It's just sitting there. And there's been some
(02:21):
little wobbles. We had like a five and a half
percent wobble in November. We've had some smaller two to
three percent wobbles every month since then, but ultimately the
S and P five hundred right now is it's sixty
eight ninety six. On October twenty seventh, it was at
sixty nine to twenty. So in four months it's moved
a third of a percent, which is not really worth
(02:43):
the cost of the dry cleaning for that time period
to like get out and like go to work every day.
It's just not like you're not really getting your value
for that freshly pressed shirt. But ultimately, this is the
market that we have to deal with right now, and
so you've got a few things that are going on
that I do think. Here's the thing, despite the index
(03:04):
being just horrifically boring for the last four months, under
the surface, it is.
Speaker 3 (03:11):
Freaking wild right now.
Speaker 2 (03:13):
And I'm just looking at the last three months now,
just because I just have three month performance data that's
easily accessible for me. On this front, for the last
three months, Microsoft is down twenty two percent, Amazon's down
twelve percent, Oracles down thirty, Pollenteers down twenty, AMD's down
(03:35):
twenty The entire like software apparatus of the tech sector
is down anywhere from fifteen to forty two percent. So
that's like the bad that you've got. The good is, Hey,
caterpillars up thirty eight percent. You've got Verizon up eighteen,
(03:58):
Walmart's up twenty four, Mobiles up twenty four, Jay and
Jay's up twenty four. So under the surface, here's what's
really like remarkable about this market is just there's just
this torque under the surface, this dispersion that's pulling it
in all different directions. And in fact, the fine folks
at Namura put together this this chart, the statistic that's
(04:22):
been making the rounds, and it made the rounds to me.
But if you look at the last one month for
the S and P five hundred, I don't know the
exact date that this was of, it was late last week.
The SMP had not moved over the prior month, but
the average stock during that time had moved ten point
eight percent. I want you to let that sink in again,
not ten point eight percent down or up, but like
(04:44):
in either direction, so not one or the other. The
S ANDP over that the time period that this was
measured was flat, but the average stock within it had
moved ten point eight percent during that time. The spread
between how much the index has moved and how much
the average stock has moved is in the ninety ninth
percentile over the last thirty years. The only times that
(05:05):
you have seen this previously were the unwinding of the
tech bubble and the popping of the Great Financial Crisis
bubble was that really that wasn't really a bubble, that
was a housing bubble that turned into the Great Financial Crisis.
So whenever I see something like that, I do say, look,
this is something that is really unique. And unfortunately, like
(05:27):
the subsequent track record in you know, the next you know,
twelve to eighteen months is not really great in either
of those scenarios. Do we see something similar here or
has it already passed? And the case for it having
already passed is this which again is a kind of
wild stuff that we're seeing. Sorry, Mark, I'll let you
talk in just a second. I'm just I'm a building,
(05:49):
but not not a lawyer. Actually, I'm just a you know.
Speaker 3 (05:52):
A person.
Speaker 2 (05:55):
There have been one hundred and fifteen stocks through last Friday.
There were one hundred and fifteen s and p five
hundred stocks that had fallen at least seven percent in
a single day during the previous eight trading sessions. The
average draw down during periods in which this has occurred
since two thousand is thirty five percent for the S
(06:17):
and P five hundred thirty four. Sorry I rounded up briefly.
So normally when you see this many stocks that have
fallen at least seven percent in a single day. In
the last call it week and a half, the index
is thirty five percent off its high, thirty four percent
off its high. At the time of this publication, the
(06:38):
S and P five hundred was down two. So couple
things like to untangle here. The first is, hey, usually
once you've had that level of volatility and stingle single stocks,
the worst is usually pretty close to being over because
there's usually a policy response because the index has been
bludgeoned and beaten up in everything, and you say, okay,
(07:00):
like it's time for a policy response here. Given the
lack of the policy response, does that mean that the
worst is or isn't over?
Speaker 3 (07:08):
Like, I don't know.
Speaker 2 (07:09):
Again, we've never seen anything like this where this many
stocks have fallen by this much in a single day
and the index is just sitting there two percent off
it's high. Like this is kind of wild because what's
been happening is the money's been leaving those names that
have been beaten up, and it hasn't been fleeing equities.
It's been going to consumer staples or utility is or
(07:32):
energy or international. It's been moving throughout the equity markets,
not going to cash or to bonds. And so that's
kind of the remarkable thing that you have here is
all of these stocks, like so many of these have
just gotten beaten up in the last week and a half,
and yet the index is just holding steady as a rock.
And so I think the question that I have is, look,
(07:52):
what changes this to the downside, Because it's tough for
me to see things getting too much worse on like
an individual stock level. What changes to the outside that
makes this market fall apart? Like that's kind of a
tough case to make other than just market mechanics breaking it.
But also, hey, if tech isn't going to be the
leadership anymore, which year to date it's not. Microsoft's down
(08:12):
here to date, Amazon is, Tesla is, Google is, Meta is,
Broadcom is and videos up one percent. Like, that's not
market leadership. Tech's not going to lead. It's pretty clear
the index isn't gonna, you know, follow Verizon to the
promised land. So what's really interesting right here is there's
a ton of movement under the surface, but it's tough
to make a really compelling case for things to either
fall apart or surge ahead. Here you maybe can mark,
(08:38):
let's go to break anyway. Minutes later, are we doing it?
Are we doing an opening monologue?
Speaker 3 (08:44):
This is fine.
Speaker 4 (08:44):
I'm getting a lot of work done. This is this
is fine.
Speaker 3 (08:48):
My email fusion in the last eight minutes.
Speaker 4 (08:50):
Yeah, I learned German brought an opera. Look the market
was and it remains unhealthily not really abjective, but you know,
whatever make it. Yeah, yeah, concentrated. So this is the
best possible way to unwine that sort of concentrated state
(09:15):
that everybody was hammeringing about. This is I would not
if you told me this. If you would described what
you just described and then said, what markets will actually
be flat to slightly up, very very slightly up you
to date, I would have said, no, if tech crashes,
it hasn't crashed. Some stocks have crashed. You pointed that
out software house, right, If you had told me six
months ago that was going to happen, I would have
(09:36):
said that would be very bad for the market as
a whole. But as you as you said, other sectors
have stepped up, so to speak. I think it's pretty remarkable,
but also be wonderful. If this is how swollen valuations
excessive in historical terms price to earnings and price to
whatever ratios gets resolved, it would be unusually rare. It
(09:56):
would be a miraculous disvalue euation, something like that. We
had the miraculous disinflation a couple of years ago. Everybody,
because it's always happened, thought that bringing inflation down would
cost output, would raise unemployment. Didn't happen. Everybody thinks bringing
valuations down will require stock prices on average, which is
(10:18):
what an index measures stock price is on average. I'm
choosing that phrase very advisedly. Would because it's compressed. Compressing
or compression of valuations is always required stock prices to
go down on average. But so far now valuations haven't
come down a lot, if at all. But this is
(10:41):
one path to sort of an orderly correction and valuations.
Speaker 2 (10:46):
It'd be wild if we had something like this on
the back of what we saw with inflation a couple
of years ago. And again, I think this is just
a great reminder that markets are not bound by the
laws of physics. They are living breathing organisms, and they
can change and evolve over time. You might not be
able to teach an old dog new tricks, but you
(11:08):
can't teach a market new ones.
Speaker 3 (11:10):
Apparently.
Speaker 2 (11:11):
Now, we'll see how this unfolds over the next you know,
a few months or so. This may still yet be
a precursor to, you know, some negative action that we
have typically seen during similar types of under the surface movement. Sure,
but like, I don't know that that's a given necessarily.
I just think we're in it. We're in a dangerous
spot for markets, but I've yet to see anything conclusive
(11:36):
being like, yeah, like it's it's going to fall apart,
Like I can't get there definitively. Let's take a quick
break here. When we return, let's talk a little bit
about the AI space. A lot of fear that, uh,
you know, AI is spending too much money. We'll discuss
whether or not that's the case after this.
Speaker 1 (11:56):
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Speaker 2 (13:02):
Mark we got a piece in Barans here AI spending
fears may be overdone? Is the tech selloff reshapes the market. Also,
Bank of America survey shows investor roriy over Kapex race
at record high. So what I do enjoy is again
I love to toot our own horn. A lot of
people say that they don't.
Speaker 3 (13:22):
I do. I'm a tutor, you know, loud and proud.
Speaker 4 (13:26):
I've heard that.
Speaker 3 (13:27):
My kid says that there you go. So here's the thing.
Speaker 2 (13:32):
Way back in the fall, we started talking about the
idea might have even been August. We started talking about
the idea of hey, when you're talking about spending this
level of money, eventually that's going to hit your income statement,
your cash flow and all of that. And lo and behold,
as we've entered into twenty twenty six, everyone looking at
AI is starting to worry about these things. So we
(13:54):
don't always get everything right, but I do like to
believe that we're consistently anywhere from a couple weeks to
a few months early on a lot of major themes.
And this is one that we were talking about before
most people were, which makes me feel really good that we're,
you know, providing good information. I don't know that we
can actually do anything with the information, but it's there,
like we we noted that this is a potential problem.
(14:17):
So now people are saying, well, maybe it's not as
big of a problem. And I'm wondering if we've entered
like the bargaining phase of the five stages of grief
because the math still maths and looks like a problem
unless you can grow revenue really quickly in these products.
Speaker 4 (14:34):
Yeah, why would the logic that was sort of valid
and compelling a few months ago. Look, there's only a
finite amount. I keep coming back to the high level
macroso to speak, which is a synonym for like the
whole economy or the world economy, depending on the context.
Six hundred billion dollars is is that in? I keep forgetting?
(14:56):
Is that in additional investment this year?
Speaker 3 (14:58):
Yes?
Speaker 2 (14:58):
Or six hundred billion in it's actually six and sixty
billion in kemps.
Speaker 4 (15:02):
Okay, so that's new. That's on top of what they
spent last year. Ye okay, So.
Speaker 2 (15:06):
We're talking about like four trillion dollars over five years.
Speaker 4 (15:10):
Okay, So these these amounts, you have to have some
sense for what is happening in the overall economy and
what's typical. Four to five hundred billion in an an
incremental investment would be typical if you look at gross
private domestic investment, which is part of GDS.
Speaker 3 (15:23):
Not all in the US, to be clear.
Speaker 4 (15:26):
Yeah, okay, so thank you for so some of this
is overseas, but anywhere from like twenty to thirty percent
is still overseas.
Speaker 3 (15:33):
But we're talking a big chunk.
Speaker 4 (15:35):
We're talking about like nearly all of the investment that
typically takes place in every sector. So this is going
to suck up a huge amount. Now suppose it's suppose
it's the die is cast on this, this this, this
investment has to happen. Where's the capital going to come from? Now,
there's no shortage of capital slashing around out there, financial
conditions are loose, the stocks are at all time eyes
(15:56):
easy for companies to raise money. But this all l
s Equel has to put upward pressure on interest rates.
And you could tie the FED into this discussion and
talk about how it makes their job harder because this
pushes up the so called neutral rate of interest rate
that balances unemployment and inflation, which is an important concept
for the FED. It's a good problem to have, I guess,
(16:16):
assuming the technology pans out. But the demands are considerable.
Speaker 2 (16:21):
So the question that I think is worth asking at
this point, and the one that markets are trying to
sort out now finally after a few years, is who
are the actual losers going to be from AI? Because
for the first three years of the AI trade. It's
basically been hey, if you mentioned AI, you're a winner.
Speaker 3 (16:42):
You know.
Speaker 2 (16:42):
It's you get a stock price jump, and you get
a stock price jump, and you get a stock price jump.
That's what markets have been doing. As long as you
spend and say that you're gonna roll out AI, you've
been a winner. And now for the last few months,
markets are starting to look more critically at this, in
particular in the last couple of weeks, and it's trying
to sort out who, you know, the actual winners are
(17:04):
and who the losers will be and where I think
I'm landing right now, And again this can change because
I'm not always right, like occasionally, not occasionally, quite often
we're wrong about stuff. But right now where I tend
to land is the models that are being built. Whether
(17:27):
it's Claude, whether it's Chat, GPT, Gemini, Copilot, whatever these
models are, they're all converging towards basically the same thing.
They're becoming commoditized. Yes, And as that commoditization happens, one
of the other things that you see then is Okay,
we've got to drive down the cost of our model
in order to make it cheaper and I think that
(17:48):
we're probably within a year or two of a lot
of these models being able to be hosted locally rather than.
Speaker 3 (17:55):
In the cloud.
Speaker 2 (17:56):
Like I think we're getting pretty close, quite honestly, just
being able for you have like a decent computer, to
being able to run one on it with the advantages
of that privacy. You know, you build your own open
source model, run it on your computer. You don't have
to send any of your data anywhere.
Speaker 4 (18:11):
Like it's it's so, how do they learn at that
point if we're all doing our own thing.
Speaker 2 (18:16):
It's the the training is done to begin local, No,
the training can be done in terms of in that
not mainframe, but in that cloud based environment, and then
they send it. Okay, here's the training that's been done.
You load it onto your computer and you run it there.
The inference happens locally, the inference being the generation, but
the training has been done in a centralized way. Or
(18:38):
it might even be to the point where you could say, yeah,
here's you know, this open source model where I can
modify the weights and play around with it and see
how I want to do it, and you can take
that and make it how you.
Speaker 3 (18:49):
Want it to be.
Speaker 2 (18:51):
From a pre trained model with some slight modifications. Okay,
we're getting kind of in the weeds and everything.
Speaker 3 (18:56):
I know. I'm just wondering where I get to.
Speaker 2 (18:58):
The models I think are going to be commoditized, which
is not great if you're spending six hundred billion dollars
a year. The product, I think is going to be
commoditized in a few key areas. We can talk about
what those are later. I think there's a lot of
meat on that bone, and I think this is going
to end up very similar to the Internet in some
respects in that the ultimate beneficiaries are going to be
(19:18):
the end users, with the middleman and the producers of
kind of that raw infrastructure not really being in a
great spot.
Speaker 3 (19:28):
Let's take a quick break here.
Speaker 2 (19:29):
When we come back, it's Wall Street Watch and ask
ta da da da da da da da da.
Speaker 1 (19:40):
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 (20:03):
Well after yesterday's volatile swings, markets today are rallying as
AI impacted stock's clawback recent losses. Energy markets are also
garnering attention amid more tensions between the US and Iran.
Right now, the Dow is up nearly six tenths of
one percent, or two hundred and eighty five points, Hire
SMP five hundred, up about three quarters of a percent
(20:25):
or fifty points higher. NASDAC up over one percent or
two hundred and forty five points. Hier Russell two thousand
is up one point four percent, Tenure Treasure Reeled is
up two basis points at four point zero eight one percent,
and crude oil up three percent higher, trading just above
sixty four dollars a barrel. Meta ANNOUNCEAID has expanded its
(20:48):
partnership with Nvidia to use millions of the company's AI
chips for its data center buildout. In a statement, Meta
CEO Mark Zuckerberg said that the expanded partnership continues his
company's push to liver personal super intelligence to everyone in
the world. Meta shares are flat, while and Video stock
is up over two percent. Sticking with the chip sector,
(21:10):
where Analog Devices posted stronger than expected quarterly results and guidance,
where it's revenue jumped thirty percent last quarter, shares are
rising by about five percent. Meanwhile, cybersecurity firm Palo Alto
Networks posted better than expected quarterly results and lifted its
annual revenue outlook. Wherever, the company's earnings per share guidance
(21:32):
for the current quarter disappointed, sending the stock down by
seven percent. Elsewhere, Berkshire Hathaway disclosed a new position in
The New York Times, sending shares in the media company
by up over half a percent. And home builder Toll
Brothers reported stronger than expected quarterly results, boosted by a
jump in land sales revenue. Tolls stock is.
Speaker 3 (21:54):
Climbing over one percent higher.
Speaker 5 (21:58):
I'm Tucker Silva and that is Wallstree.
Speaker 3 (22:00):
Watch.
Speaker 1 (22:01):
This is Ask Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for a later life. Ask
Todd is presented by Cushing and Dolan, serving Massachusetts and
New England for more than thirty five years, helping families
with a state and tax planning, medicaid planning, and probate law.
(22:22):
Visit Cushingdolan dot com. Now Here's Todd Lutsky.
Speaker 2 (22:28):
And as promised, we're now joined by the one and
only Todd Letsky from the law firm of Cushing and Dolan.
We got the phone lines wide open for your phone calls,
so make sure you get calling. Eight eight eight two
zero five two two sixty three is the number to
ask Todd your estate planning questions live on air right now.
Speaker 3 (22:49):
Again eight eight.
Speaker 2 (22:49):
Eight two zero five two two sixty three is the
number we can usually get through two or three year calls,
So make sure you get dialing in to get your
spot in line because Todd tends to be in high demand.
Speaker 3 (23:02):
Again.
Speaker 2 (23:03):
Eight eight eight two zero five two two sixty three
is the number, mister Lutsky.
Speaker 3 (23:09):
How are you doing today? I am never better and
you I'm good.
Speaker 2 (23:13):
Did uh did you hear that the duck finally quacked?
Speaker 4 (23:17):
No?
Speaker 3 (23:17):
No, I didn't hear that. Confess to all its quimes.
Speaker 2 (23:20):
Oh yeah, that's that's funny now it was actually foul play.
Speaker 3 (23:25):
Yeah, it's not good, Todd.
Speaker 2 (23:26):
I want to talk a little bit about, uh, someone
who might not have put together in a state plan.
Speaker 6 (23:31):
Yeah.
Speaker 2 (23:33):
Does the type of assets or accounts that someone owns
impact or influence the type of planning that they do.
Speaker 6 (23:43):
Uh, it can. Yeah, the type of assets make a
big difference. How so, so let's let's put let's pick
some assets to to sort of pick on first. I
would say, when you're listing assets, and by the way,
that's the first thing you should do when you're thinking
about your state plan, list all your ass so you
know what you're dealing with. But let's say someone comes
in and they've got you know, you know, five rental properties.
Speaker 1 (24:06):
Four.
Speaker 6 (24:07):
A rental property doesn't have to be multiple sure, so
in mind they might have a home and a vacation
home in this and that. But let's just stick on
the real estate side. Once they throw in rental properties
in the mix of their planning, not only are you
going to then say, okay, well, you still need to
do your basic estate plan, your will, your trust, your
health care proxy, your power of attorney, all the basic
(24:28):
documents are still going to apply to an individual like that.
But in addition to that, I'm going to say, okay,
so the objectives are avoid probate, you know, reduce or
eliminate your estate taxes, provide a bloodline plan to your
family however you want to leave that, And then decide
(24:50):
how much control you want to keep. Okay, so those
are your basic ideas. Then I'm going to add, well,
since you happen to have a rental property or rental properties,
are you at all concerned about protecting those assets or
protecting yourself from potential creditors associated with those properties? For instance,
(25:15):
the slip and fall, the party where someone falls off
the balcony, you name it, and someone gets hurt on
the property, if you continue to own that property the
way you own it generally speaking your own name, or
even if you just say I want to do the
basic estate planning and then put that rental property into
(25:38):
the trust that you're doing, you have not changed your
credit or exposure. Example, if someone gets hurt under those
circumstances on the property, they are going to sue the
property owner, which is you, and they are going to
go after all of your assets, not just that building.
(25:58):
Whereas if instead you put that building into a limited
liability company and then you take the shares of that
limited liability company and place them into the revocable trust,
now when somebody gets hurt on that property and sues,
they will not sue the shareholder, which is you. They
will sue the entity, and the entity has a building
(26:21):
in it and guess what, most of the time, the
individual creditor doesn't want the building. They want the money, sure,
And so now they're going to settle with your homeowner's
insurance or umbrella carrier and figure out how to resolve this.
And you don't care. You're happy you got to keep
the building and the lawsuit was handled by your insurance company.
Speaker 2 (26:42):
Talking with Todd Lonski from the law firm of Cushing
and Dolan's still room at the phone on the phone
lines for your estate planning questions. Phone number is eight
eight eight two zero five two two sixty three, and
you get to ask Todd your questions live on air
right now. That number is eight eight eight to zero
five two two six three. We're gonna take a quick
(27:05):
break here, but when we come back, we'll get some
of your questions with Todd. That phone number again is
eight eight eight to zero five two two six three.
Speaker 1 (27:16):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. Todd Letsky
answers your questions about a state and elder life planning
every Wednesday at ten thirty right here on the Financial
Exchange Radio Network.
Speaker 3 (27:40):
Talking with Todd Lutsky.
Speaker 2 (27:42):
We still have room on the phone lines for your
estate planning questions at eight eight eight to zero five
two two six three. Again, that number is eight eight
eight to zero five two two six three. Let's go
to Norman in Portland. Norman, what's your question for Todd?
Speaker 7 (28:01):
Right? Well, I think you was just describing me. I
got a house that I'm renting in Massachusetts, but I
live in Maine. I was wondering, is that a special
difficulty being out of state?
Speaker 6 (28:19):
No, No, it's not any difficult, more difficult at all.
What I can tell you, though, is, and since you
do live out of state, and I think this is
a great question for everybody else who's listening right now,
I understand living out of state, there's one other issue
you might not have been thinking about, and that is
(28:39):
I'll describe it this way. I did a seminar once
for somebody called So you think you've changed your residency,
It's not always so easy. And so when you are
a non resident in Massachusetts and you own real estate
in Massachusetts in your own name, Massachusetts will tax you
when you die as a non resident on the value
(29:03):
of the property you own in mass So, for example,
if you had two million dollar property in mass and
your entire estate, all the stuff you own on your
own in Maine, wherever else, let's say adds up to
four million. So your entire estate is four million, but
two million of it is Massachusetts property. They will divide
(29:24):
that out, so that's fifty percent, right, and then they
will calculate the tax in mass on four million your
entire estate, and then hit that number with fifty percent.
So they'll take fifty percent of the tax on four million.
So you need to be mindful that you don't want
to be paying Massachusetts a state tax even though you're
(29:46):
a non resident. So one we got to do an LLC.
How do we prevent this taxation by Massachusetts on non
residents that own property in mass You take the property
and you put it into an LLC. Once it's in
an LLC, you've effectively converted the Massachusetts real estate to
(30:06):
what they call an intangible. What do I mean intangible?
It's a stock certificate, it's an intangible. You don't own
real estate in mass anymore. And so then mass cannot
tax non residents on intangibles, and so now you avoid
the Massachusetts a state tax. So that's not why you called,
(30:27):
but that's another reason you should be doing this. Now,
the creditor reason you should be doing this is if
somebody gets hurt, right, so we simply put this into
an LLC for you here in mass and the operating
agreement will be here in mass. You shouldn't have to
(30:47):
file in Maine because you don't own the property in Maine.
You just have to file in Mass. And now if
somebody gets hurt on the property, they will sue the
entity here in They will not sue you as the
shareholder or hopefully your trust as the shareholder. And again,
the reason you want to put the shares of the
(31:09):
LLC into the trust is because you want to make
sure you avoid probate when you pass on all assets,
right and in all states. So you certainly don't want
to have to go to probate in mass and basically
file in Maine and do an ancillary probate in Mass.
So seemingly simple question, but hopefully I gave you a
lot of information in folks, I hope I helped you
(31:32):
a lot of you out. If you're someone listening, who
has property out of state or has property in state,
but you've moved out of state to avoid Massachusetts estate tax. Folks.
That said, a lot of people haven't even done their
estate planning. So how do we kick off your estate
plan this year? How do we get your estate planning going?
(31:53):
The guide called back to the Basics will really help you.
That's where given away this month. It basically lays out
things that think about before you go to the lawyer.
You know, how old am I? What's the family dynamics,
as Chuck asked me earlier, what's the value of the
assets that I have?
Speaker 3 (32:09):
You know?
Speaker 6 (32:09):
And then the guide continues to basically give an estate plan.
My it's an engagement letter basically that I put together
for a four million dollar client, advising them how the
will works, how the trust works, how the living will
the healthcare proxy work. In this case, we've recommended an
irrevocable trust, so you'll learn all about how that irrevocable
(32:29):
trust works, along with the basic documents as well. Folks,
get your estate plan in order today. Get the guide
Back to the Basics eight sixty 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 and you could
(32:51):
go to our Instagram page Cushing Dolan PC for more information.
Speaker 2 (32:55):
Todd, when we talk about family dynamics influencing an estate plan,
can you give a little bit more color as to
exactly what may come into play on that front.
Speaker 3 (33:06):
Yeah.
Speaker 6 (33:06):
I think when we start asking clients about family dynamics,
where meaning, you know, do we have you know, somebody
who might be you know, drug addicted or alcohol addicted
somehow that's a lifelong thing you have to deal with.
What if you have children who are you know, you
know they're level headed, but they're horrible with money, or
they just spend money like there's no tomorrow. They don't
know how to deal with finances, Well, that's important. What
(33:29):
if you have somebody who is a disability, has a
disability as a special needs child, or or became disabled
later in life and is getting some kind of governmental benefits, Well,
we want to make sure that we don't you know,
lose those governmental benefits. So when you're setting up the trust,
you know, and another thing to think about is just
(33:50):
in general, if you don't have any of those things,
what about you know, someone who's got married, has kids,
and you're just worried about that relationship. You're word about
a future divorce from your children after you die. I mean, folks,
family dynamics come in all kinds of flavors, and you
(34:11):
with these trusts. We talk a lot about state taxes
and probate and I get all that, but remember the
family behind the estate plan is critical. And so these
trusts can live on after you die, long after you die,
and provide for your children, your grandchildren, even your great
grandchildren sometimes, and so you can really control things from
(34:33):
the grave. So you know, the way you set up
the trust might be with that disabled child, I don't
want to leave it out right. I want to leave
it in trust. I want to have it so that
the child can continue to get the governmental benefits, but
at the same time be able to enjoy what we're
leaving them. In other words, you don't have to disinherit
(34:53):
that particular child in order to provide for them. In addition,
what if I've got you know that special needs or
not that I've got a drug related child, Well again,
this person or a spendthrift. I don't want to leave
this money out right. To the child because they'll just
blow it. But I want to have it in trust
(35:13):
so that it comes out over time, you know, and
it provides for them for not only during their life,
but maybe even into retirement.
Speaker 2 (35:23):
Is it generally accurate to say then that, regardless of
the specific concern that you may have about a family
member or family members and how they may inherit certain assets, yeah,
there's typically a legal tool available to help alleviate that
concern to a certain extent.
Speaker 3 (35:43):
You just might not know what it is.
Speaker 6 (35:44):
Yeah, I think, And to be safe, you can use
a general language that we do or we I mean,
I think generally speaking, there's never any harm done if
you draft something with a lot of flexibility that actually
holds the document holds the assets in trust, rather than
gives it out right. As a general rule, even if
(36:05):
the kids are you know, great level headed, you still
worry about future creditors. And a future creditor could be
any creditor. It doesn't have to be a divorce, but
certainly divorce resonates with people. So to me, even if
you don't think that, there's a lot of other, you know,
standout reasons to provide the trust to live on sure,
(36:26):
why not just put it in a sole discretionary payout
trust so that the kids don't own it right away. Therefore,
if something comes up later after you're dead, it's protected.
Yet it's drafted in a way where you know, they're
the trustees, they're managing it, they're investing it, they're buying
and selling property. Uh, but just not owning it so
(36:48):
that if something comes up later on, then the asset
is protected from that particular creditor or more likely than not,
a divorce. So I think just giving it out rights
never a great idea.
Speaker 2 (37:02):
Mister Lutski, thank you so much for joining us today.
We really appreciate it.
Speaker 6 (37:06):
Always a pleasure. Thanks for having me.
Speaker 1 (37:08):
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
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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
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a donation today. This is the Financial Exchange with Chuck
(01:06):
Zada and Mark Fandetti, Chuck.
Speaker 2 (01:12):
Mark and Tucker with you here today and as we
kick things off, quite honestly, not much going on today.
It's a there's nothing in the way of economic data,
there's nothing in the way of earnings, and so ideally
you shouldn't really get anything that surprises the market. But
(01:33):
quite honestly, it's not going to be a day with
a lot of intrigue and excitement out there just because
there's there's nothing that's really happening. Broadly, you do have
a little bit of a rally that is continuing from yesterday,
and this gets us into what is our top story today,
which is, look, this is a market that has for
(01:58):
the last four or five months now, I'll say four
months since late October, just has not really been able
to go anywhere. And I mean that in the nicest
possible way. It hasn't really gone up, it hasn't really
gone down. It's just sitting there. And there's been some
(02:21):
little wobbles. We had like a five and a half
percent wobble in November. We've had some smaller two to
three percent wobbles every month since then, but ultimately the
S and P five hundred right now is it's sixty
eight ninety six. On October twenty seventh, it was at
sixty nine to twenty. So in four months it's moved
a third of a percent, which is not really worth
(02:43):
the cost of the dry cleaning for that time period
to like get out and like go to work every day.
It's just not like you're not really getting your value
for that freshly pressed shirt. But ultimately, this is the
market that we have to deal with right now, and
so you've got a few things that are going on
that I do think. Here's the thing, despite the index
(03:04):
being just horrifically boring for the last four months, under
the surface, it is.
Speaker 3 (03:11):
Freaking wild right now.
Speaker 2 (03:13):
And I'm just looking at the last three months now,
just because I just have three month performance data that's
easily accessible for me. On this front, for the last
three months, Microsoft is down twenty two percent, Amazon's down
twelve percent, Oracles down thirty, Pollenteers down twenty, AMD's down
(03:35):
twenty The entire like software apparatus of the tech sector
is down anywhere from fifteen to forty two percent. So
that's like the bad that you've got. The good is, Hey,
caterpillars up thirty eight percent. You've got Verizon up eighteen,
(03:58):
Walmart's up twenty four, Mobiles up twenty four, Jay and
Jay's up twenty four. So under the surface, here's what's
really like remarkable about this market is just there's just
this torque under the surface, this dispersion that's pulling it
in all different directions. And in fact, the fine folks
at Namura put together this this chart, the statistic that's
(04:22):
been making the rounds, and it made the rounds to me.
But if you look at the last one month for
the S and P five hundred, I don't know the
exact date that this was of, it was late last week.
The SMP had not moved over the prior month, but
the average stock during that time had moved ten point
eight percent. I want you to let that sink in again,
not ten point eight percent down or up, but like
(04:44):
in either direction, so not one or the other. The
S ANDP over that the time period that this was
measured was flat, but the average stock within it had
moved ten point eight percent during that time. The spread
between how much the index has moved and how much
the average stock has moved is in the ninety ninth
percentile over the last thirty years. The only times that
(05:05):
you have seen this previously were the unwinding of the
tech bubble and the popping of the Great Financial Crisis
bubble was that really that wasn't really a bubble, that
was a housing bubble that turned into the Great Financial Crisis.
So whenever I see something like that, I do say, look,
this is something that is really unique. And unfortunately, like
(05:27):
the subsequent track record in you know, the next you know,
twelve to eighteen months is not really great in either
of those scenarios. Do we see something similar here or
has it already passed? And the case for it having
already passed is this which again is a kind of
wild stuff that we're seeing. Sorry, Mark, I'll let you
talk in just a second. I'm just I'm a building,
(05:49):
but not not a lawyer. Actually, I'm just a you know.
Speaker 3 (05:52):
A person.
Speaker 2 (05:55):
There have been one hundred and fifteen stocks through last Friday.
There were one hundred and fifteen s and p five
hundred stocks that had fallen at least seven percent in
a single day during the previous eight trading sessions. The
average draw down during periods in which this has occurred
since two thousand is thirty five percent for the S
(06:17):
and P five hundred thirty four. Sorry I rounded up briefly.
So normally when you see this many stocks that have
fallen at least seven percent in a single day. In
the last call it week and a half, the index
is thirty five percent off its high, thirty four percent
off its high. At the time of this publication, the
(06:38):
S and P five hundred was down two. So couple
things like to untangle here. The first is, hey, usually
once you've had that level of volatility and stingle single stocks,
the worst is usually pretty close to being over because
there's usually a policy response because the index has been
bludgeoned and beaten up in everything, and you say, okay,
(07:00):
like it's time for a policy response here. Given the
lack of the policy response, does that mean that the
worst is or isn't over?
Speaker 3 (07:08):
Like, I don't know.
Speaker 2 (07:09):
Again, we've never seen anything like this where this many
stocks have fallen by this much in a single day
and the index is just sitting there two percent off
it's high. Like this is kind of wild because what's
been happening is the money's been leaving those names that
have been beaten up, and it hasn't been fleeing equities.
It's been going to consumer staples or utility is or
(07:32):
energy or international. It's been moving throughout the equity markets,
not going to cash or to bonds. And so that's
kind of the remarkable thing that you have here is
all of these stocks, like so many of these have
just gotten beaten up in the last week and a half,
and yet the index is just holding steady as a rock.
And so I think the question that I have is, look,
(07:52):
what changes this to the downside, Because it's tough for
me to see things getting too much worse on like
an individual stock level. What changes to the outside that
makes this market fall apart? Like that's kind of a
tough case to make other than just market mechanics breaking it.
But also, hey, if tech isn't going to be the
leadership anymore, which year to date it's not. Microsoft's down
(08:12):
here to date, Amazon is, Tesla is, Google is, Meta is,
Broadcom is and videos up one percent. Like, that's not
market leadership. Tech's not going to lead. It's pretty clear
the index isn't gonna, you know, follow Verizon to the
promised land. So what's really interesting right here is there's
a ton of movement under the surface, but it's tough
to make a really compelling case for things to either
fall apart or surge ahead. Here you maybe can mark,
(08:38):
let's go to break anyway. Minutes later, are we doing it?
Are we doing an opening monologue?
Speaker 3 (08:44):
This is fine.
Speaker 4 (08:44):
I'm getting a lot of work done. This is this
is fine.
Speaker 3 (08:48):
My email fusion in the last eight minutes.
Speaker 4 (08:50):
Yeah, I learned German brought an opera. Look the market
was and it remains unhealthily not really abjective, but you know,
whatever make it. Yeah, yeah, concentrated. So this is the
best possible way to unwine that sort of concentrated state
(09:15):
that everybody was hammeringing about. This is I would not
if you told me this. If you would described what
you just described and then said, what markets will actually
be flat to slightly up, very very slightly up you
to date, I would have said, no, if tech crashes,
it hasn't crashed. Some stocks have crashed. You pointed that
out software house, right, If you had told me six
months ago that was going to happen, I would have
(09:36):
said that would be very bad for the market as
a whole. But as you as you said, other sectors
have stepped up, so to speak. I think it's pretty remarkable,
but also be wonderful. If this is how swollen valuations
excessive in historical terms price to earnings and price to
whatever ratios gets resolved, it would be unusually rare. It
(09:56):
would be a miraculous disvalue euation, something like that. We
had the miraculous disinflation a couple of years ago. Everybody,
because it's always happened, thought that bringing inflation down would
cost output, would raise unemployment. Didn't happen. Everybody thinks bringing
valuations down will require stock prices on average, which is
(10:18):
what an index measures stock price is on average. I'm
choosing that phrase very advisedly. Would because it's compressed. Compressing
or compression of valuations is always required stock prices to
go down on average. But so far now valuations haven't
come down a lot, if at all. But this is
(10:41):
one path to sort of an orderly correction and valuations.
Speaker 2 (10:46):
It'd be wild if we had something like this on
the back of what we saw with inflation a couple
of years ago. And again, I think this is just
a great reminder that markets are not bound by the
laws of physics. They are living breathing organisms, and they
can change and evolve over time. You might not be
able to teach an old dog new tricks, but you
(11:08):
can't teach a market new ones.
Speaker 3 (11:10):
Apparently.
Speaker 2 (11:11):
Now, we'll see how this unfolds over the next you know,
a few months or so. This may still yet be
a precursor to, you know, some negative action that we
have typically seen during similar types of under the surface movement. Sure,
but like, I don't know that that's a given necessarily.
I just think we're in it. We're in a dangerous
spot for markets, but I've yet to see anything conclusive
(11:36):
being like, yeah, like it's it's going to fall apart,
Like I can't get there definitively. Let's take a quick
break here. When we return, let's talk a little bit
about the AI space. A lot of fear that, uh,
you know, AI is spending too much money. We'll discuss
whether or not that's the case after this.
Speaker 1 (11:56):
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Speaker 2 (13:02):
Mark we got a piece in Barans here AI spending
fears may be overdone? Is the tech selloff reshapes the market. Also,
Bank of America survey shows investor roriy over Kapex race
at record high. So what I do enjoy is again
I love to toot our own horn. A lot of
people say that they don't.
Speaker 3 (13:22):
I do. I'm a tutor, you know, loud and proud.
Speaker 4 (13:26):
I've heard that.
Speaker 3 (13:27):
My kid says that there you go. So here's the thing.
Speaker 2 (13:32):
Way back in the fall, we started talking about the
idea might have even been August. We started talking about
the idea of hey, when you're talking about spending this
level of money, eventually that's going to hit your income statement,
your cash flow and all of that. And lo and behold,
as we've entered into twenty twenty six, everyone looking at
AI is starting to worry about these things. So we
(13:54):
don't always get everything right, but I do like to
believe that we're consistently anywhere from a couple weeks to
a few months early on a lot of major themes.
And this is one that we were talking about before
most people were, which makes me feel really good that we're,
you know, providing good information. I don't know that we
can actually do anything with the information, but it's there,
like we we noted that this is a potential problem.
(14:17):
So now people are saying, well, maybe it's not as
big of a problem. And I'm wondering if we've entered
like the bargaining phase of the five stages of grief
because the math still maths and looks like a problem
unless you can grow revenue really quickly in these products.
Speaker 4 (14:34):
Yeah, why would the logic that was sort of valid
and compelling a few months ago. Look, there's only a
finite amount. I keep coming back to the high level
macroso to speak, which is a synonym for like the
whole economy or the world economy, depending on the context.
Six hundred billion dollars is is that in? I keep forgetting?
(14:56):
Is that in additional investment this year?
Speaker 3 (14:58):
Yes?
Speaker 2 (14:58):
Or six hundred billion in it's actually six and sixty
billion in kemps.
Speaker 4 (15:02):
Okay, so that's new. That's on top of what they
spent last year. Ye okay, So.
Speaker 2 (15:06):
We're talking about like four trillion dollars over five years.
Speaker 4 (15:10):
Okay, So these these amounts, you have to have some
sense for what is happening in the overall economy and
what's typical. Four to five hundred billion in an an
incremental investment would be typical if you look at gross
private domestic investment, which is part of GDS.
Speaker 3 (15:23):
Not all in the US, to be clear.
Speaker 4 (15:26):
Yeah, okay, so thank you for so some of this
is overseas, but anywhere from like twenty to thirty percent
is still overseas.
Speaker 3 (15:33):
But we're talking a big chunk.
Speaker 4 (15:35):
We're talking about like nearly all of the investment that
typically takes place in every sector. So this is going
to suck up a huge amount. Now suppose it's suppose
it's the die is cast on this, this this, this
investment has to happen. Where's the capital going to come from? Now,
there's no shortage of capital slashing around out there, financial
conditions are loose, the stocks are at all time eyes
(15:56):
easy for companies to raise money. But this all l
s Equel has to put upward pressure on interest rates.
And you could tie the FED into this discussion and
talk about how it makes their job harder because this
pushes up the so called neutral rate of interest rate
that balances unemployment and inflation, which is an important concept
for the FED. It's a good problem to have, I guess,
(16:16):
assuming the technology pans out. But the demands are considerable.
Speaker 2 (16:21):
So the question that I think is worth asking at
this point, and the one that markets are trying to
sort out now finally after a few years, is who
are the actual losers going to be from AI? Because
for the first three years of the AI trade. It's
basically been hey, if you mentioned AI, you're a winner.
Speaker 3 (16:42):
You know.
Speaker 2 (16:42):
It's you get a stock price jump, and you get
a stock price jump, and you get a stock price jump.
That's what markets have been doing. As long as you
spend and say that you're gonna roll out AI, you've
been a winner. And now for the last few months,
markets are starting to look more critically at this, in
particular in the last couple of weeks, and it's trying
to sort out who, you know, the actual winners are
(17:04):
and who the losers will be and where I think
I'm landing right now, And again this can change because
I'm not always right, like occasionally, not occasionally, quite often
we're wrong about stuff. But right now where I tend
to land is the models that are being built. Whether
(17:27):
it's Claude, whether it's Chat, GPT, Gemini, Copilot, whatever these
models are, they're all converging towards basically the same thing.
They're becoming commoditized. Yes, And as that commoditization happens, one
of the other things that you see then is Okay,
we've got to drive down the cost of our model
in order to make it cheaper and I think that
(17:48):
we're probably within a year or two of a lot
of these models being able to be hosted locally rather than.
Speaker 3 (17:55):
In the cloud.
Speaker 2 (17:56):
Like I think we're getting pretty close, quite honestly, just
being able for you have like a decent computer, to
being able to run one on it with the advantages
of that privacy. You know, you build your own open
source model, run it on your computer. You don't have
to send any of your data anywhere.
Speaker 4 (18:11):
Like it's it's so, how do they learn at that
point if we're all doing our own thing.
Speaker 2 (18:16):
It's the the training is done to begin local, No,
the training can be done in terms of in that
not mainframe, but in that cloud based environment, and then
they send it. Okay, here's the training that's been done.
You load it onto your computer and you run it there.
The inference happens locally, the inference being the generation, but
the training has been done in a centralized way. Or
(18:38):
it might even be to the point where you could say, yeah,
here's you know, this open source model where I can
modify the weights and play around with it and see
how I want to do it, and you can take
that and make it how you.
Speaker 3 (18:49):
Want it to be.
Speaker 2 (18:51):
From a pre trained model with some slight modifications. Okay,
we're getting kind of in the weeds and everything.
Speaker 3 (18:56):
I know. I'm just wondering where I get to.
Speaker 2 (18:58):
The models I think are going to be commoditized, which
is not great if you're spending six hundred billion dollars
a year. The product, I think is going to be
commoditized in a few key areas. We can talk about
what those are later. I think there's a lot of
meat on that bone, and I think this is going
to end up very similar to the Internet in some
respects in that the ultimate beneficiaries are going to be
(19:18):
the end users, with the middleman and the producers of
kind of that raw infrastructure not really being in a
great spot.
Speaker 3 (19:28):
Let's take a quick break here.
Speaker 2 (19:29):
When we come back, it's Wall Street Watch and ask
ta da da da da da da da da.
Speaker 1 (19:40):
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 (20:03):
Well after yesterday's volatile swings, markets today are rallying as
AI impacted stock's clawback recent losses. Energy markets are also
garnering attention amid more tensions between the US and Iran.
Right now, the Dow is up nearly six tenths of
one percent, or two hundred and eighty five points, Hire
SMP five hundred, up about three quarters of a percent
(20:25):
or fifty points higher. NASDAC up over one percent or
two hundred and forty five points. Hier Russell two thousand
is up one point four percent, Tenure Treasure Reeled is
up two basis points at four point zero eight one percent,
and crude oil up three percent higher, trading just above
sixty four dollars a barrel. Meta ANNOUNCEAID has expanded its
(20:48):
partnership with Nvidia to use millions of the company's AI
chips for its data center buildout. In a statement, Meta
CEO Mark Zuckerberg said that the expanded partnership continues his
company's push to liver personal super intelligence to everyone in
the world. Meta shares are flat, while and Video stock
is up over two percent. Sticking with the chip sector,
(21:10):
where Analog Devices posted stronger than expected quarterly results and guidance,
where it's revenue jumped thirty percent last quarter, shares are
rising by about five percent. Meanwhile, cybersecurity firm Palo Alto
Networks posted better than expected quarterly results and lifted its
annual revenue outlook. Wherever, the company's earnings per share guidance
(21:32):
for the current quarter disappointed, sending the stock down by
seven percent. Elsewhere, Berkshire Hathaway disclosed a new position in
The New York Times, sending shares in the media company
by up over half a percent. And home builder Toll
Brothers reported stronger than expected quarterly results, boosted by a
jump in land sales revenue. Tolls stock is.
Speaker 3 (21:54):
Climbing over one percent higher.
Speaker 5 (21:58):
I'm Tucker Silva and that is Wallstree.
Speaker 3 (22:00):
Watch.
Speaker 1 (22:01):
This is Ask Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for a later life. Ask
Todd is presented by Cushing and Dolan, serving Massachusetts and
New England for more than thirty five years, helping families
with a state and tax planning, medicaid planning, and probate law.
(22:22):
Visit Cushingdolan dot com. Now Here's Todd Lutsky.
Speaker 2 (22:28):
And as promised, we're now joined by the one and
only Todd Letsky from the law firm of Cushing and Dolan.
We got the phone lines wide open for your phone calls,
so make sure you get calling. Eight eight eight two
zero five two two sixty three is the number to
ask Todd your estate planning questions live on air right now.
Speaker 3 (22:49):
Again eight eight.
Speaker 2 (22:49):
Eight two zero five two two sixty three is the
number we can usually get through two or three year calls,
So make sure you get dialing in to get your
spot in line because Todd tends to be in high demand.
Speaker 3 (23:02):
Again.
Speaker 2 (23:03):
Eight eight eight two zero five two two sixty three
is the number, mister Lutsky.
Speaker 3 (23:09):
How are you doing today? I am never better and
you I'm good.
Speaker 2 (23:13):
Did uh did you hear that the duck finally quacked?
Speaker 4 (23:17):
No?
Speaker 3 (23:17):
No, I didn't hear that. Confess to all its quimes.
Speaker 2 (23:20):
Oh yeah, that's that's funny now it was actually foul play.
Speaker 3 (23:25):
Yeah, it's not good, Todd.
Speaker 2 (23:26):
I want to talk a little bit about, uh, someone
who might not have put together in a state plan.
Speaker 6 (23:31):
Yeah.
Speaker 2 (23:33):
Does the type of assets or accounts that someone owns
impact or influence the type of planning that they do.
Speaker 6 (23:43):
Uh, it can. Yeah, the type of assets make a
big difference. How so, so let's let's put let's pick
some assets to to sort of pick on first. I
would say, when you're listing assets, and by the way,
that's the first thing you should do when you're thinking
about your state plan, list all your ass so you
know what you're dealing with. But let's say someone comes
in and they've got you know, you know, five rental properties.
Speaker 1 (24:06):
Four.
Speaker 6 (24:07):
A rental property doesn't have to be multiple sure, so
in mind they might have a home and a vacation
home in this and that. But let's just stick on
the real estate side. Once they throw in rental properties
in the mix of their planning, not only are you
going to then say, okay, well, you still need to
do your basic estate plan, your will, your trust, your
health care proxy, your power of attorney, all the basic
(24:28):
documents are still going to apply to an individual like that.
But in addition to that, I'm going to say, okay,
so the objectives are avoid probate, you know, reduce or
eliminate your estate taxes, provide a bloodline plan to your
family however you want to leave that, And then decide
(24:50):
how much control you want to keep. Okay, so those
are your basic ideas. Then I'm going to add, well,
since you happen to have a rental property or rental properties,
are you at all concerned about protecting those assets or
protecting yourself from potential creditors associated with those properties? For instance,
(25:15):
the slip and fall, the party where someone falls off
the balcony, you name it, and someone gets hurt on
the property, if you continue to own that property the
way you own it generally speaking your own name, or
even if you just say I want to do the
basic estate planning and then put that rental property into
(25:38):
the trust that you're doing, you have not changed your
credit or exposure. Example, if someone gets hurt under those
circumstances on the property, they are going to sue the
property owner, which is you, and they are going to
go after all of your assets, not just that building.
(25:58):
Whereas if instead you put that building into a limited
liability company and then you take the shares of that
limited liability company and place them into the revocable trust,
now when somebody gets hurt on that property and sues,
they will not sue the shareholder, which is you. They
will sue the entity, and the entity has a building
(26:21):
in it and guess what, most of the time, the
individual creditor doesn't want the building. They want the money, sure,
And so now they're going to settle with your homeowner's
insurance or umbrella carrier and figure out how to resolve this.
And you don't care. You're happy you got to keep
the building and the lawsuit was handled by your insurance company.
Speaker 2 (26:42):
Talking with Todd Lonski from the law firm of Cushing
and Dolan's still room at the phone on the phone
lines for your estate planning questions. Phone number is eight
eight eight two zero five two two sixty three, and
you get to ask Todd your questions live on air
right now. That number is eight eight eight to zero
five two two six three. We're gonna take a quick
(27:05):
break here, but when we come back, we'll get some
of your questions with Todd. That phone number again is
eight eight eight to zero five two two six three.
Speaker 1 (27:16):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. Todd Letsky
answers your questions about a state and elder life planning
every Wednesday at ten thirty right here on the Financial
Exchange Radio Network.
Speaker 3 (27:40):
Talking with Todd Lutsky.
Speaker 2 (27:42):
We still have room on the phone lines for your
estate planning questions at eight eight eight to zero five
two two six three. Again, that number is eight eight
eight to zero five two two six three. Let's go
to Norman in Portland. Norman, what's your question for Todd?
Speaker 7 (28:01):
Right? Well, I think you was just describing me. I
got a house that I'm renting in Massachusetts, but I
live in Maine. I was wondering, is that a special
difficulty being out of state?
Speaker 6 (28:19):
No, No, it's not any difficult, more difficult at all.
What I can tell you, though, is, and since you
do live out of state, and I think this is
a great question for everybody else who's listening right now,
I understand living out of state, there's one other issue
you might not have been thinking about, and that is
(28:39):
I'll describe it this way. I did a seminar once
for somebody called So you think you've changed your residency,
It's not always so easy. And so when you are
a non resident in Massachusetts and you own real estate
in Massachusetts in your own name, Massachusetts will tax you
when you die as a non resident on the value
(29:03):
of the property you own in mass So, for example,
if you had two million dollar property in mass and
your entire estate, all the stuff you own on your
own in Maine, wherever else, let's say adds up to
four million. So your entire estate is four million, but
two million of it is Massachusetts property. They will divide
(29:24):
that out, so that's fifty percent, right, and then they
will calculate the tax in mass on four million your
entire estate, and then hit that number with fifty percent.
So they'll take fifty percent of the tax on four million.
So you need to be mindful that you don't want
to be paying Massachusetts a state tax even though you're
(29:46):
a non resident. So one we got to do an LLC.
How do we prevent this taxation by Massachusetts on non
residents that own property in mass You take the property
and you put it into an LLC. Once it's in
an LLC, you've effectively converted the Massachusetts real estate to
(30:06):
what they call an intangible. What do I mean intangible?
It's a stock certificate, it's an intangible. You don't own
real estate in mass anymore. And so then mass cannot
tax non residents on intangibles, and so now you avoid
the Massachusetts a state tax. So that's not why you called,
(30:27):
but that's another reason you should be doing this. Now,
the creditor reason you should be doing this is if
somebody gets hurt, right, so we simply put this into
an LLC for you here in mass and the operating
agreement will be here in mass. You shouldn't have to
(30:47):
file in Maine because you don't own the property in Maine.
You just have to file in Mass. And now if
somebody gets hurt on the property, they will sue the
entity here in They will not sue you as the
shareholder or hopefully your trust as the shareholder. And again,
the reason you want to put the shares of the
(31:09):
LLC into the trust is because you want to make
sure you avoid probate when you pass on all assets,
right and in all states. So you certainly don't want
to have to go to probate in mass and basically
file in Maine and do an ancillary probate in Mass.
So seemingly simple question, but hopefully I gave you a
lot of information in folks, I hope I helped you
(31:32):
a lot of you out. If you're someone listening, who
has property out of state or has property in state,
but you've moved out of state to avoid Massachusetts estate tax. Folks.
That said, a lot of people haven't even done their
estate planning. So how do we kick off your estate
plan this year? How do we get your estate planning going?
(31:53):
The guide called back to the Basics will really help you.
That's where given away this month. It basically lays out
things that think about before you go to the lawyer.
You know, how old am I? What's the family dynamics,
as Chuck asked me earlier, what's the value of the
assets that I have?
Speaker 3 (32:09):
You know?
Speaker 6 (32:09):
And then the guide continues to basically give an estate plan.
My it's an engagement letter basically that I put together
for a four million dollar client, advising them how the
will works, how the trust works, how the living will
the healthcare proxy work. In this case, we've recommended an
irrevocable trust, so you'll learn all about how that irrevocable
(32:29):
trust works, along with the basic documents as well. Folks,
get your estate plan in order today. Get the guide
Back to the Basics eight sixty 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 and you could
(32:51):
go to our Instagram page Cushing Dolan PC for more information.
Speaker 2 (32:55):
Todd, when we talk about family dynamics influencing an estate plan,
can you give a little bit more color as to
exactly what may come into play on that front.
Speaker 3 (33:06):
Yeah.
Speaker 6 (33:06):
I think when we start asking clients about family dynamics,
where meaning, you know, do we have you know, somebody
who might be you know, drug addicted or alcohol addicted
somehow that's a lifelong thing you have to deal with.
What if you have children who are you know, you
know they're level headed, but they're horrible with money, or
they just spend money like there's no tomorrow. They don't
know how to deal with finances, Well, that's important. What
(33:29):
if you have somebody who is a disability, has a
disability as a special needs child, or or became disabled
later in life and is getting some kind of governmental benefits, Well,
we want to make sure that we don't you know,
lose those governmental benefits. So when you're setting up the trust,
you know, and another thing to think about is just
(33:50):
in general, if you don't have any of those things,
what about you know, someone who's got married, has kids,
and you're just worried about that relationship. You're word about
a future divorce from your children after you die. I mean, folks,
family dynamics come in all kinds of flavors, and you
(34:11):
with these trusts. We talk a lot about state taxes
and probate and I get all that, but remember the
family behind the estate plan is critical. And so these
trusts can live on after you die, long after you die,
and provide for your children, your grandchildren, even your great
grandchildren sometimes, and so you can really control things from
(34:33):
the grave. So you know, the way you set up
the trust might be with that disabled child, I don't
want to leave it out right. I want to leave
it in trust. I want to have it so that
the child can continue to get the governmental benefits, but
at the same time be able to enjoy what we're
leaving them. In other words, you don't have to disinherit
(34:53):
that particular child in order to provide for them. In addition,
what if I've got you know that special needs or
not that I've got a drug related child, Well again,
this person or a spendthrift. I don't want to leave
this money out right. To the child because they'll just
blow it. But I want to have it in trust
(35:13):
so that it comes out over time, you know, and
it provides for them for not only during their life,
but maybe even into retirement.
Speaker 2 (35:23):
Is it generally accurate to say then that, regardless of
the specific concern that you may have about a family
member or family members and how they may inherit certain assets, yeah,
there's typically a legal tool available to help alleviate that
concern to a certain extent.
Speaker 3 (35:43):
You just might not know what it is.
Speaker 6 (35:44):
Yeah, I think, And to be safe, you can use
a general language that we do or we I mean,
I think generally speaking, there's never any harm done if
you draft something with a lot of flexibility that actually
holds the document holds the assets in trust, rather than
gives it out right. As a general rule, even if
(36:05):
the kids are you know, great level headed, you still
worry about future creditors. And a future creditor could be
any creditor. It doesn't have to be a divorce, but
certainly divorce resonates with people. So to me, even if
you don't think that, there's a lot of other, you know,
standout reasons to provide the trust to live on sure,
(36:26):
why not just put it in a sole discretionary payout
trust so that the kids don't own it right away. Therefore,
if something comes up later after you're dead, it's protected.
Yet it's drafted in a way where you know, they're
the trustees, they're managing it, they're investing it, they're buying
and selling property. Uh, but just not owning it so
(36:48):
that if something comes up later on, then the asset
is protected from that particular creditor or more likely than not,
a divorce. So I think just giving it out rights
never a great idea.
Speaker 2 (37:02):
Mister Lutski, thank you so much for joining us today.
We really appreciate it.
Speaker 6 (37:06):
Always a pleasure. Thanks for having me.
Speaker 1 (37:08):
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
(37:28):
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.
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