October 29, 2025 • 37 mins
Chuck Zodda and Marc Fandetti discuss Nvidia becoming the first $5T company. Trump set to cut Fentanyl tariff and discuss Nvidia with Xi. Is the Fed's inflation target still 2%? Todd Lutsky joins the show for his weekly segment, Ask Todd.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
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(00:43):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Chuck, Mark and Tucker with you and gotta tell you
pretty excited for today. We got an awful lot going
on in terms of we've got earnings, we've got a
FED meeting, we've got in video becoming the first five
(01:30):
trillion dollar company ever.
Speaker 3 (01:33):
Mark.
Speaker 2 (01:33):
If you can't get excited about a day like today
in financial markets, then financial markets aren't for you. They're
just not.
Speaker 4 (01:41):
This is even a fun one here, even if it
makes you a little nervous, it should nevertheless have you
very engaged.
Speaker 2 (01:46):
Well, it's look, I'm a I'm a big hockey fan,
right and the Boston Bruins this year, the Bruins are
my team, and they're not a good team, like making
no bones about it, but they're engaging, Like, no matter
what you feel something watching these games this year, it's
either the first period of yesterday where they're down to
nothing in the first four minutes and you're like, my goodness,
(02:08):
I just I don't know if we're gonna make it
through October on this one, or the subsequent you know,
two periods after where they score five unanswered goals and
you're like, wow, I look at this, It's the best
thing ever to Goo. No, it's the same thing with
with markets today, Like you don't know what you're gonna get.
I mean, the general trend for the last six months
has been up into the right, but ultimately what you're
(02:30):
gonna get today is going to be pretty interesting and
pretty exciting. Like you're not gonna leave today feeling like
you didn't get your money's worth.
Speaker 4 (02:40):
As long as it keeps going up obviously.
Speaker 2 (02:42):
No, Like I'm saying, even if it goes down, I.
Speaker 4 (02:45):
Don't think a lot of people would feel the same.
You don't feel the same emotion. It's you're engaged, but
it's it's it's appara.
Speaker 2 (02:51):
But that's what I'm saying. I'm saying, like, if you
are a follower of markets, you're gonna come away from
today feeling something, and if you don't, you're doing it wrong.
I'm not saying you have to act on that feeling,
but what I am saying is like, you're gonna feel
something after today. I mean, look in Vidio, it's five
trillion dollars for the first time ever. And by the way,
(03:13):
happens on no News. It's not you know, new contracts
they signed, It's not this, It's not that.
Speaker 3 (03:18):
It's just yeah, that's a good sign.
Speaker 2 (03:20):
It's just happening. I mean again, you've got a company
that's this big, adding ten percent in two days doesn't
fill you with you know, the signs that this is
the most stable rally.
Speaker 3 (03:29):
But whatever.
Speaker 2 (03:29):
Like either way, Like, here's the thing, I have all
these different feelings attached to this. I'm sitting there and
I'm going, Okay, the stock just added fifteen percent over
the last week on nothing. Okay. Part of me goes, man,
that that that's that's not great. That's not what you
want to see.
Speaker 5 (03:49):
Another part of me goes, wow, like this is amazing,
Like you're you just added seven hundred and fifty billion
dollars in market cap in a span of you know,
five trading days.
Speaker 2 (04:00):
Holy cow, Like this is amazing. And I think it's
okay to feel all of those things simultaneously. I'm not
saying that you have to act on any of them,
but ultimately you got to admit, like what we're seeing
now is pretty spectacular. Like we've never seen stuff like
this before.
Speaker 3 (04:17):
None of this.
Speaker 4 (04:17):
If in video were a country, it would be like
the third biggest behind the US and China. Well, Japan
is a little over six and a half trillion, So
I'm exaggerating a bit. India might be a little bit bigger,
but it would be in the top several. If if
in Vidio were a country, in terms of market capital,
comparing market cap to you know, now I'm prepared actual,
(04:38):
I'm using market cap World Bank data for those countries. Sorry,
so I'm using market cap oh, in terms of yea
size of their stock markets. Yes, I'm sorry, yes, the
size of their stock market if in video, if Vida,
I didn't say that very deftly. If in Video were
a country, its stock market is the way I should
have said, it would be among the top several depending
on when you take the snapshot.
Speaker 2 (05:00):
Another fascinating statistically.
Speaker 4 (05:02):
Like, that's fascinating.
Speaker 2 (05:04):
No, no, this one is in video right now. Its market
cap is greater than the entire S and P five
hundred industrial sector's market cap.
Speaker 4 (05:12):
Yeah, that's mind blowing too.
Speaker 2 (05:14):
I mean, like you you look at it, and by
the way, the S and P five hundred industrial sector, Like,
we're not talking companies that are, you know, anything to
sneeze at. You go through the list of companies in there,
you're talking ge Boeing, Raytheon Caterpillar, Deer Carrier. Who else
(05:35):
do we have in here? Eaton Corporation, Parker Hanafin, Union Pacific,
Norfolk Southern. I mean you're talking about like the country
does not work without these companies existing and doing what
they're doing. Like I I know that, you know, we
might be like, well, you know, ultimately, like you know,
(05:56):
you know what, what's the big deal? I mean, you
know Boeing has an add their act together in a while,
blah blah blah. Okay, well, if you're not producing new
seven thirty sevens, there still are problems in the United States,
and Video is greater than the market cap of all
those companies I just listed, and then another like fifty
or so that are still in that category. I mean,
(06:17):
it's it's just kind of wild when you when you look.
Speaker 4 (06:21):
At it and you know it's expensive, but relative to
other semiconductor stocks, just looking at the Philly Semiconductor Index, Yeah,
for example, it doesn't look that outrageously. They could all
obviously be quite overvalued. God, the whole sectors just over
probably I should qualify that by saying probably.
Speaker 2 (06:38):
But it's one of those things we say quite often,
like valuation people all the old school value investors come
in and they're like, well, you know, like look at this.
I don't know why they sound like this.
Speaker 4 (06:51):
They're getting a crap kicked out of them every day.
Speaker 3 (06:53):
That's why there are no news.
Speaker 2 (06:54):
Everybodying no, No, one's twenty three years old is like, hey,
I'm going to be a value investor. Like that doesn't
happen today because you haven't had the pain and growth
to back then. But all of the all the people
who grew up, you know, with with Peter Lynch and
this and that, it's well, I'm not saying he was bad.
I'm saying like he was a great manager anyway. But ultimately,
(07:17):
like all the value investors are like, well, this is
too pricey, Like I'm gonna find something that's cheaper. And
quite honestly, valuation is a horrible way in this market
for the last fifteen years to make.
Speaker 4 (07:29):
Yeah, we're talking about you two different uses. As always,
ask somebody when they throw a concept out there, what
are you using it for? Valuation is very useful if
you're putting together a portfolio of securities and looking for
things that might be overlooked by other investors. It's a
useful starting point, it's quite us it's quite unhelpful if
you're using it as a market timing tool, which is
what you were saying. So they're two different at least
(07:49):
two different ways to use it well.
Speaker 2 (07:51):
And also it's not something that reflects it's not something
that reflects the likelihood that that valuates changes in the
future either. Case in point, emerging market stocks. They have
been cheap for twenty years now.
Speaker 4 (08:07):
Well, you gotta be careful there because I don't know
that you can compare. There are some investors Rob are
not was running money. I once asked him, the question
is this. He runs a from called research field. It's
pretty well known researcher. He's adamant that you can compare
these things across markets. Others and I took up their
cause equally adamant you cannot. I'm not convinced you can compare,
but yeah, will do. The point that I make, I
(08:29):
think they're wrong chief to do. That is what I'm saying.
Speaker 2 (08:32):
I don't think you should still do.
Speaker 4 (08:33):
I know.
Speaker 2 (08:33):
I'm not saying that like you should or shouldn't, but
I'm saying, well, they're wrong.
Speaker 3 (08:36):
I see.
Speaker 2 (08:37):
Or you want another example, look at energy stocks, they've
been cheap for a decade. They also haven't gone anywhere
for a decade. Yeah, you know, outside of you know
what they did in twenty twenty two. It's been something
where it's been basically a lost decade for energy investors.
Speaker 3 (08:55):
Yeah.
Speaker 4 (08:56):
Yeah, you have to ask why they're relative, why they
appear to be and qualify and relatively cheap totally.
Speaker 2 (09:02):
Yeah, And so I think ultimately, you know, when you
look at this, it's something where I don't know what
is going to happen with Nvidia and the rest of
the semistocks over the next five ten years. No one does.
But what you can say right now is, hey, you've
got an awful lot of concentration in this area of
(09:26):
the market, and if things start to falter there, it
does mean you've got real problems with the broader market,
simply because with stocks so concentrated there, Even if the
rest of the market starts to lift itself, which you
kind of look at it and you're like, well, how
would it if those things are falling, it's just not
(09:46):
enough to overcome it. And we've seen that at several
points this year where when the big megacap companies start
to falter. You can't make it up through you know,
insurance companies rallying. You can't make it up through you know,
utilities rallying. There's just not enough meat on that bone.
Let's take a quick break. When we return, let's talk
(10:08):
a little bit about the US China meeting now tentatively
scheduled for ten pm Eastern time today. We'll discuss expectations
after this.
Speaker 1 (10:19):
There's only one show that follows Wall Street's continued volatility.
Keep it here all morning long on the Financial Exchange
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Speaker 6 (10:48):
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Speaker 2 (11:24):
So we received notice earlier this morning that the specific
time for the President Trump President g talk is going
to be at ten pm Eastern tonight. So if you're
like me and you go to bed at eight thirty five,
you're not going to be staying awake for this one,
(11:45):
but you'll wake up to, you know, whatever futures do
as a response to it. Big things that are expected,
and this is reporting from Bloomberg here. The fentanyl tariff
expected to be discussed, and President Trump has indicated that
there may be a reduction in that tariff that happens. Currently,
(12:06):
that fentanyl related tariff stands at twenty percent. Wall Street
Journal reporting that President Trump may consider cutting that to
ten percent, and also some chatter that the President may
allow China access to Nvidia's flagship line of semiconductors known
as their Blackwell processors. And obviously this is something that
(12:31):
you know, would be a pretty swift reversal based on
you know, previous national security concerns related to this also
some chatter about soybeans. Reportedly this morning there was an
order placed by a Chinese company for about one hundred
and eighty thousand tons of soybeans. That is still a
drop in the bucket and obviously not you know, something
(12:55):
that indicates any long term follow through, but it does
appear that, you know, the wheels are being greased in
advance of this, and so I would be shocked if
we come away from this meeting tonight with any kind
of negative headlines. The question, as it's been all year,
is going to be, Okay, what's the follow through, because
you know, kind of this is the fourth time we've
(13:15):
been through this, and okay, like we've reached an agreement
on rare earths, and then a month and a half
later it's like, hey, there's a new problem with rare earths,
and you know, you kind of want to see what's
the actual follow through because the headlines have been impressive,
but it seems like we keep getting back to the
same spot every couple months.
Speaker 1 (13:34):
Here.
Speaker 4 (13:35):
To me, this is all theater. The trade deficit, if
that's what you're interested in, is not a function of tariffs.
There are countries with high tariffs that run a trade
deficit where imports exceed exports. There are countries with low
tariffs that have a large trade deficit. They import more
than they export. Economists don't get worked up about this
because the trade deficit is neutral. The trade deficit is
(13:57):
a function of investment opportunity. Here the flip side of it,
it is of the so called current account, which we
call the trade deficit. Casually, is that.
Speaker 2 (14:06):
The capital account.
Speaker 4 (14:07):
We import a lot of capital people, foreigners by treasuries,
foreigners by real estate. Foreigners own about twenty five percent
of US equities, thirty three percent of US treasuries, for example.
The capital they get to make those purchases comes from
the imports that we buy. We send dollars abroad. Those
dollars come back in the form of investment. If you
want to eliminate the trade deficit, you'd have to eliminate
(14:29):
that foreign investment. That would push down stocks because they're
a quarter of all stock investors. That would push up
interest rates because they own a third of the US
treasury market. The US economy would grow more slowly as
a result. So when the president who he doesn't he
fundamentally does not understand trade, he talks about all this
investment coming in and at the same time shrinking the
trade deficit. You can't do those two things. If you
(14:52):
get a trillion dollars in new investment, as Asian countries
are allegedly committing to, that will expand the trade deficit
by the same amount.
Speaker 3 (15:02):
It has to dollar.
Speaker 4 (15:04):
Those dollars have to be recycled. It's called the balance
of payments, and one of the cardinal rules of balance
of payments balance of payments accounting is that the balance
of payments has to balance. You send a dollar abroad,
it comes back in the form of investment or to
buy a US export abroad. But as we know, we
import more than we export. The difference comes back. So
you cannot both have these massive foreign investments that the
(15:26):
President keeps touting. He says fifteen trillion, then twenty trillion,
then twenty five trillion. If that were to happen, the
trade deficit would expand by the same amount. So it's
a little frustrated.
Speaker 2 (15:36):
Unless we curtailed our own spending domestically.
Speaker 4 (15:40):
We'd have to increased increase savings. That could either be
done by US as people increasing savings, reducing the federal
budget deficit that is increasing national savings.
Speaker 2 (15:49):
There are some.
Speaker 4 (15:52):
Accounting adjustments on the margin interest from abroad factor payments
from abroad that I'm leaving out of this discussion, but
broadly speaking, it is ideally true. It must be true
that the trade deficit is offset by the financial account
or capital account surplush can't have both.
Speaker 2 (16:07):
Piece from Bloomberg opinion is the Fed's inflation target still
two percent?
Speaker 4 (16:12):
No doesn't appear to be now because we haven't hit it,
and they're easy.
Speaker 2 (16:17):
No, it doesn't seem like it. And I'm not saying
that that's good or bad. I'm just saying that it is.
And ultimately the proof is going to be in the
pudding over the next two to three years in terms
of whether this turns out to be the right decision
or not.
Speaker 4 (16:32):
Look, most economists think the target should be at two,
somewhere between two and five. There are more rubbish people
who say make it five. You don't want to hit
the zero lower bound like we did in O eight.
Speaker 2 (16:41):
There are people that are saying five percent should be
an approval for a long time.
Speaker 4 (16:44):
There are plenty of respected researchers who say anywhere in
the low single digits is just fine.
Speaker 2 (16:49):
Interesting.
Speaker 4 (16:49):
Oh yeah, yeah, yeah, yeah, it's not like a radical,
wild eyed view because you don't want to hit the
so called zero lower bound where the Fed can't lower
interest rates be below the nominal rate kinkle below zero.
So if you start it, you get a lot more
room to ease. That's one argument. The other argument is
you can keep real wages, you.
Speaker 2 (17:05):
Can learn we're talking five for inflation, yeah, funds rates.
Speaker 4 (17:09):
Yeah, five for CPI inflation.
Speaker 3 (17:10):
Oh sure.
Speaker 4 (17:11):
There are plenty of respective researchers. They're more of a
more liberal bent. I'm because I'm a free market nut job.
I would prefer very low inflation. Somewhere in one to
two sounds right to make sure. But there are people
who are a lot obviously smarter and more studied in
this area that think five is fine too. Look, any
rate of inflation, once the economy adjusts to it, is
consistent with full employment hitting potential GDP. None of those
(17:33):
things are rule you don't want as erratic inflation, inflation
that keeps people guessing and in flat would be bad.
Speaker 2 (17:39):
Fires. Large adjustments to policy on a regular basis, Yeah.
Speaker 4 (17:43):
That's disruptive as long as it's steady. It's anything in
the low single digits, even I'd have to admit is
probably fine. There's there's nothing inherently bad about four percent
versus two. But when the FED is committed to do
and they say, well, we can't hit it, or we
don't feel like hitting it, let's let it drift up,
it leaves everybody guessing they should explicitly say where they
within a range, maybe where they wanted to fall.
Speaker 2 (18:04):
And we've said before, look, there you've had. Even in
recent history, the nineteen nineties saw a pretty darn close
to three percent inflation over the course of them. Most
people look back at the nineteen nineties and say, yeah,
there's a pretty darn good economy. So it's not to
say that you need to inherently get to two percent.
But I think what we've become accustomed to, at the
(18:25):
very least over the last forty years is in place
inflation that generally has run in the low to mid twos.
You know that the nineties were kind of the outlier,
and most of that was concentrated in the first half
of the decade, largely due to energy prices as a
result of the Gulf War. But ultimately you can still
(18:47):
look at the nineteen ninees and say, yeah, inflation was
pretty close to three percent for that decade, and it
was not a huge problem because there was still so
much real economic growth that was occurring to productivity increases
and population growth. Today you don't have the population growth
piece that's going on, and so you're more reliant on
(19:08):
productivity increases to generate real growth, you know, in the
absence of that. And so I think ultimately I don't
have you know, the right answer on this, because I
don't think there is a right answer for like, oh,
what's what should the rate of inflation?
Speaker 4 (19:23):
People low and stable?
Speaker 2 (19:26):
There's no heart and fast number. Let's take a quick break.
When we come back, it's Wall Street Watch and ask Todd.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving markets so
far today right here on the Financial Exchange Radio at work.
Speaker 6 (20:01):
Well, it's FED meeting day and markets are extending gains
from their fresh record highs. FED Chairman Jerome Powell will
hold a press conference at two thirty this afternoon after
the expected quarter point rate cut. However, the big news
on the day surrounds Nvidia, where the chip and ai
giant has officially crossed five trillion dollars in market cap,
the first company to do so, and video shares of
(20:23):
climbing nearly five percent on the day. Right now, the
Dow is up by half a percent, or two hundred
and fifty points. SMP five hundred is up a third
of a percent or twenty one points, NASDAC up seven
cents of one percent or one hundred and sixty eight
points higher. Rust of two thousand is edging higher mostly
flat tenure, treasury yield is right around four percent, and
(20:47):
crude oil is up over half a percent higher training
sixty dollars in fifty cents a barrel. Boeing posted mixed
quarterly results. While its revenue beat estimates, the aerospace company
logged a steeper loss than anticipated. Boeing also said it
at increased seven thirty seven production to thirty eight airplanes
a month. Shares are in Boeing are down over two percent. Meanwhile,
(21:11):
shares in Caterpillar surging thirteen percent after the maker of
construction machinery beat third quarter forecasts. Elsewhere, five Serve shares
are tanking forty three percent after the financial services tech
company reported as substantial third quarter earnings and revenue. Miss
Mandoalese cut its twenty twenty five guidance with a snack
(21:32):
maker site at high cocoa prices and transportation costs, and
also noted Americans were buying fewer snacks. That stock is
retreating by three percent. Booking Holdings b quarterly forecasts as
travel demand stabilized. The online travel agency also hiked its
annual revenue growth. Outlook shares are down by one percent.
In after today's closing bell, the kickoff two big tech
(21:55):
earnings begins. We're Alphabet, Meta and Microsoft. We'll all report
Howard their third quarter results on Tucker Silvan. That is
Wall Street Watch.
Speaker 1 (22:06):
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
(22:27):
law visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:33):
As promised, Todd Lunsky now joins us from the law
firm of Cushing and Dolan. We got phone lines open
because the segment is ask Todd. It's your chance to
ask Todd your estate planning questions and he'll actually answer them. Yeah,
it's not just you asking, it's him answering as well.
Phone lines are wide open right now at eight eight
(22:54):
eight two zero five two two six three. That is
the number to call to ask Todd your estate planning
questions again. It's eight eight eight two zero five two
two six three. We can normally get through two to
three questions, So get calling early, get calling often to
make sure we get to your question for Todd again.
(23:15):
That number is eight eight eight to zero five two
two six three. Mister Lutsky, How are you doing today?
Speaker 3 (23:23):
I am doing just fine. How you been? Uh good?
Speaker 2 (23:26):
I had a busy day yesterday.
Speaker 3 (23:28):
Yeah, what are you doing?
Speaker 2 (23:29):
I was shopping for cherries and a new microphone stand.
Speaker 3 (23:32):
I don't know how cherry's and a microphone stand go together.
Bought it being bought a boom, Oh there you go.
Speaker 2 (23:37):
Yeah, it was good Todd want to talk to you
a little bit about gifting strategies. When is it appropriate
to incorporate annual gifting into an estate plan? What role
can that fill? And when do you start to see
that talked about. Is something that makes sense for someone?
Speaker 3 (23:54):
Yeah, I think that's fair question, because this gifting guide
really explains that. But I mean, just because we have
this ability to gift away thirteen point nine million dollars, which,
by the way, that is our federal estate tax exemption.
You've heard us talk about that many times. It is
(24:14):
also our gift tax exemption. Right. You get to use
up that exemption either by dying, which is not usually
on the to do list, or by gifting before you
lose it. That's when tax laws change, right. So, but
just because you can gift away thirteen point nine million
and pay no federal gift tax. And remember, there's no
state gift tax in any state except our neighbor, Connecticut
(24:38):
is the only one that I'm aware of that has that.
So otherwise you don't worry about state gift tax. But
I don't want to just gift because there's capital gains
taxes that you have to worry about, not just death taxes. Right,
So if I'm going to gift away an asset, I
first want to make sure that I'm getting a federal
(24:59):
state tax benefit, meaning if I'm under thirteen point nine
million or married and double that exemption. Right, was that
like twenty eight million in change? Almost, so it's called
twenty seven and change. I probably don't need to gift
to save federal estate taxes. And remember the federal estate
(25:23):
tax rate is forty percent of the amount over the exemption.
All right, Well, if I'm not saving that and I'm
only saving the state estate tax, and I'll just use
Massachusetts as an example, I'm only saving say ten to
twelve percent, and I end up giving away assets that
have capital gain built into them. I bought a house
(25:45):
a long time ago, you know the drill. I got
a rental property that I appreciated to zero and now
it's worth a million dollars. Well, I get a million
dollars of gain built into this property if I give
it away and I'm not saving the forty percent and
I'm only saving the twelve twelve percent, but I trapped
almost thirty percent long term capital gain in that item,
(26:05):
so that my children will pay that when they sell it.
I'm not sure that's helpful, right. Twenty eight thirty percent
versus ten percent not a good math situation. So think
about what you gift and why you're gifting. If it's
just to save a state taxes, might want to double
think it.
Speaker 2 (26:24):
Talking with Todd Lotsky from Cushing and Dolan, still have
room on the phone lines at eight eight eight to
zero five two two sixty three. That is the number
to call it ask Todd your estate planning questions. We
are going to take a quick break right now, but
when we come back, it's going to be right to
your questions with Todd. Eight eight eight to zero five
(26:46):
two two sixty three is the number again, it is
eight eight eight to zero five two two sixty three.
Quick break, Then your questions with Todd.
Speaker 1 (26:56):
Ask Todd with Todd Letsky every Wednesday at tenth 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 (27:17):
All right, let's get right to your questions with Todd Lutsky.
First in the queue, we got Marty in Framingham. Marty,
what is your question for Todd? Marty?
Speaker 3 (27:29):
Are you there.
Speaker 7 (27:30):
Yes, yes, I am, thank you for taking my call.
My home in Midfield had of fire. It was totaled
although it was fully insured. It's going to cost me
about another two hundred thousand dollars to put build a
house back the way we want it. I've got the
money set aside that the insurance company is giving me,
(27:52):
but it's going to cost me another two hundred thousand
dollars of revocable money or other money to get the
house the way we want. The question is, I don't
want to interrupt the integrity of the irrevocable trust which
has been in been in for like seven to ten years.
(28:12):
So how do I fund it without interrupting that irrevocable trust.
Speaker 3 (28:17):
So it seems to me that since the insurance company
paid you, that means that when you set up the trust,
you told the insurance company to add the trust as
an additional insured. Correct, Yes, so, because so, because you
(28:38):
told the trust to add the or since you told
the insurance company to add the trust as an additional insured,
you should go back to the insurance company and tell
them to issue the check pay to the order of
the trust, not you, And that way it goes directly
into the trust, and there's no resetting the five year clock.
(28:58):
In other words, it should be no different than when
you sell a house. Right, if the trust owned the
property and you decided to sell and buy another house,
which we all know you can do, out would go
the house to the buyer, and in would come a
check made payable to the trust, because the trust then
would receive the money, and then that money would not
(29:21):
receiving that money would not reset the clock. In other words,
if the house went in seven years ago, to take
your example, and now that house is one hundred percent
protected from the nursing home, and you sell the house
and get money in the trust, that money is one
hundred percent protected from the nursing home, and the buying
(29:42):
and selling does not reset the clock. Okay, that's crystal clear. However,
in this case, if you've lost the house, which is
kind of like a sale, it's gone, and in exchange
for that being gone, the trust is going to get
paid what it's going to get paid the insurance. So
now in comes the money directly into the trust. Well, well,
(30:02):
there may be no house there anymore like a sale,
but there's money there. Well, that money should not reset
the clock. And then you can use that money to
start paying the contractor to build the new property. Now
as to the additional two hundred thousand dollars that you need, well,
if that's not already in the trust like you have
(30:22):
maybe you put a portfolio in or an investment account
in or something like that. If that money is not
already in the trust, well then yeah, you're you're going
to have to contribute that money to the trust to
build the finished building the house. So worst case scenario here,
I see that there might be a new five year
look back period waiting, but only for the new addition,
(30:44):
only for the new two hundred thousand that you put
in the trust. So does that help a little?
Speaker 7 (30:49):
Yes, sir, it does.
Speaker 3 (30:51):
So get that changed with the go get that check
reissued by the insurance company. That's what I would do,
So hopefully that helps in folks. You know, I'm so
glad to hear that he did his planning and have
the house you know, where it belongs. And but for
other folks that haven't done all their planning yet and
are thinking about just oh, I'll just do a quick fix,
(31:12):
I'll give away my assets, well you can, that's what
the law says might not be the right thing to do.
So there's a guide called making the most of gifting assets.
Sometimes you want to give things to irrevocable trusts rather
than children. Outright, you got to think about what kind
of asset I give A high basis asset versus a
low basis asset. Maybe for higher net worth people we
(31:34):
want to give away a lot of assets. Well, I
don't want to give them away and not enjoy it.
I work my whole life for it. Well, spousal lifetime
access trust might be the way to give away assets
and retain some ability to control and enjoy what you
gave away. Right, think about pool trusts, think about special
needs trust. So there's all kinds of ideas and ways
(31:55):
to gift or maybe not gift at all, and that
might be the right answer for a lot of people.
Call and get the guide. Folks, we're getting near the
end of the month. It's gonna go back in the
vault 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
(32:17):
Exchange Show dot Com.
Speaker 2 (32:19):
Got another one for you here. Let's go to Dan
in Florida. Dan, what is your question for Todd Lutsky?
Speaker 8 (32:26):
Todd, First of all, I'm a Massachusetts resident, okay, and
I'm trying to shell to my holdings from the mass tax.
Does an irrevocable trust do that?
Speaker 3 (32:41):
So it depends on the kind of irrevocable trust. So
let me explain. First of all, are you married?
Speaker 8 (32:50):
No, I was married, she passed away.
Speaker 3 (32:53):
Okay, So how much are you worth in total? Round number?
Speaker 8 (32:59):
Uh boy? Four million?
Speaker 3 (33:00):
All right, and I'm assuming there was no planning done
when your wife passed?
Speaker 1 (33:07):
No?
Speaker 3 (33:08):
Trust?
Speaker 8 (33:08):
We both had. We both had revocable trusts.
Speaker 3 (33:12):
Wonderful. How much of the four million dollars was in
your wife's revocable trust when she died?
Speaker 8 (33:20):
None?
Speaker 3 (33:21):
Oh, So this is exactly what we talk about all
the time. Right on the radio. We tell people funding
a trust is so darn important. Right. If you don't
fund a trust, it really is just a waste. It's
a bunch of paper doing nothing for you, which is
why we stress funding it. And I'm going to say,
(33:41):
obviously it's it's you know, water under the dam. I
get it, But at this point I just want to
help other people learn. So because nothing was in that trust.
My hope for you Dan on this one was you
were going to tell me, oh, yeah, we managed to
put about two million dollars worth of assets in my
wife's trust. Well, if you had done that, I would
(34:02):
imagine that that trust is designed to hold a remainder
share in a marital share, and then that two million
dollars would be tucked away in your wife's trust subject
to tax when she died. She has a two million
dollar estate tax exemption, so there's no tax to and
then when you die, you would only be taxed on
(34:23):
what you own in your trust, which would be the
other two million. And now, like magic, if you died,
you're under the two million because the assets tucked away
in your wife's trust would be sheltered from a state
taxes and not included in your estate when you die,
even though you would be controlling and enjoying perhaps what's
(34:47):
in that wife's trust bucket. And then when you die,
you're under two million and lo and behold, you pay
Massachusetts zero estate taxes. So, folks, that's for everybody who
hasn't done their planning yet, or have done their pl
planning and didn't fund one trust. Please learn from this
call what we can do in the future. Now. I
(35:07):
turned to you, Dan, and I say, well, I mean
you got four million dollars worth of stuff. At least
you got to step up in basis. How long ago
did your mom died? Here? I'm sorry, your wife died
two years ago, so it's not horrible. So two years ago,
you know you got if you own things jointly when
(35:29):
she died, and I'm assuming you did, right, we didn't.
Speaker 8 (35:34):
You didn't own the second marriage. It was a second marriage,
and she had her russ, I had mine, I see.
Speaker 3 (35:41):
But nothing was in her trust. So how are the
assets owned? Did you we own? Everything was in her
name alone?
Speaker 8 (35:49):
Yes, she owned her own house. I owned a couple
of houses that they were bolt in my name and
her hers was in her name.
Speaker 3 (35:56):
And did her stuff go to her side of the
family or did she take you with any of it.
Speaker 8 (36:02):
And went to her side of the family.
Speaker 3 (36:04):
Oh okay, So the four million you have is just
your assets?
Speaker 8 (36:08):
Yes?
Speaker 3 (36:09):
Oh okay. So again the explanation is still very helpful
for people. But in your case, you're worth four million.
You know again, we're thinking about do we need to
make a gift. Well, I don't know. You have to
really analyze your assets. We just did that example that
maybe giving away assets now just to save ten percent
on the amount over two million or twelve percent on
the amount over two million might not be the most
(36:30):
tax effiicient thing to do. But if you have cash CDs,
you know, kicking around, and you want to set up
a gifting trust for your children, and you don't mind
giving it away, that would be an easy fix because
there's no loss of a step up in basis with cash,
and that money can be tucked aside outside your estate
for a state tax purposes, thereby reducing your state tax liability.
(36:53):
But just sticking them in an irrevocable medicaid trust to
protect them from the nursing home would not reduce your
estate taxes, but night might not be bad planning for
you to protect your assets for your children. Sorry, out
of time, but I hope that gives you a little
something to think.
Speaker 2 (37:07):
About, mister Lutsky. Thank you so much for the time today.
Speaker 3 (37:09):
Always a pleasure.
Speaker 1 (37:11):
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(01:06):
and Mark Fandetti.
Speaker 2 (01:10):
Chuck, Mark and Tucker with you and gotta tell you
pretty excited for today. We got an awful lot going
on in terms of we've got earnings, we've got a
FED meeting, we've got in video becoming the first five
(01:30):
trillion dollar company ever.
Speaker 3 (01:33):
Mark.
Speaker 2 (01:33):
If you can't get excited about a day like today
in financial markets, then financial markets aren't for you. They're
just not.
Speaker 4 (01:41):
This is even a fun one here, even if it
makes you a little nervous, it should nevertheless have you
very engaged.
Speaker 2 (01:46):
Well, it's look, I'm a I'm a big hockey fan,
right and the Boston Bruins this year, the Bruins are
my team, and they're not a good team, like making
no bones about it, but they're engaging, Like, no matter
what you feel something watching these games this year, it's
either the first period of yesterday where they're down to
nothing in the first four minutes and you're like, my goodness,
(02:08):
I just I don't know if we're gonna make it
through October on this one, or the subsequent you know,
two periods after where they score five unanswered goals and
you're like, wow, I look at this, It's the best
thing ever to Goo. No, it's the same thing with
with markets today, Like you don't know what you're gonna get.
I mean, the general trend for the last six months
has been up into the right, but ultimately what you're
(02:30):
gonna get today is going to be pretty interesting and
pretty exciting. Like you're not gonna leave today feeling like
you didn't get your money's worth.
Speaker 4 (02:40):
As long as it keeps going up obviously.
Speaker 2 (02:42):
No, Like I'm saying, even if it goes down, I.
Speaker 4 (02:45):
Don't think a lot of people would feel the same.
You don't feel the same emotion. It's you're engaged, but
it's it's it's appara.
Speaker 2 (02:51):
But that's what I'm saying. I'm saying, like, if you
are a follower of markets, you're gonna come away from
today feeling something, and if you don't, you're doing it wrong.
I'm not saying you have to act on that feeling,
but what I am saying is like, you're gonna feel
something after today. I mean, look in Vidio, it's five
trillion dollars for the first time ever. And by the way,
(03:13):
happens on no News. It's not you know, new contracts
they signed, It's not this, It's not that.
Speaker 3 (03:18):
It's just yeah, that's a good sign.
Speaker 2 (03:20):
It's just happening. I mean again, you've got a company
that's this big, adding ten percent in two days doesn't
fill you with you know, the signs that this is
the most stable rally.
Speaker 3 (03:29):
But whatever.
Speaker 2 (03:29):
Like either way, Like, here's the thing, I have all
these different feelings attached to this. I'm sitting there and
I'm going, Okay, the stock just added fifteen percent over
the last week on nothing. Okay. Part of me goes, man,
that that that's that's not great. That's not what you
want to see.
Speaker 5 (03:49):
Another part of me goes, wow, like this is amazing,
Like you're you just added seven hundred and fifty billion
dollars in market cap in a span of you know,
five trading days.
Speaker 2 (04:00):
Holy cow, Like this is amazing. And I think it's
okay to feel all of those things simultaneously. I'm not
saying that you have to act on any of them,
but ultimately you got to admit, like what we're seeing
now is pretty spectacular. Like we've never seen stuff like
this before.
Speaker 3 (04:17):
None of this.
Speaker 4 (04:17):
If in video were a country, it would be like
the third biggest behind the US and China. Well, Japan
is a little over six and a half trillion, So
I'm exaggerating a bit. India might be a little bit bigger,
but it would be in the top several. If if
in Vidio were a country, in terms of market capital,
comparing market cap to you know, now I'm prepared actual,
(04:38):
I'm using market cap World Bank data for those countries. Sorry,
so I'm using market cap oh, in terms of yea
size of their stock markets. Yes, I'm sorry, yes, the
size of their stock market if in video, if Vida,
I didn't say that very deftly. If in Video were
a country, its stock market is the way I should
have said, it would be among the top several depending
on when you take the snapshot.
Speaker 2 (05:00):
Another fascinating statistically.
Speaker 4 (05:02):
Like, that's fascinating.
Speaker 2 (05:04):
No, no, this one is in video right now. Its market
cap is greater than the entire S and P five
hundred industrial sector's market cap.
Speaker 4 (05:12):
Yeah, that's mind blowing too.
Speaker 2 (05:14):
I mean, like you you look at it, and by
the way, the S and P five hundred industrial sector, Like,
we're not talking companies that are, you know, anything to
sneeze at. You go through the list of companies in there,
you're talking ge Boeing, Raytheon Caterpillar, Deer Carrier. Who else
(05:35):
do we have in here? Eaton Corporation, Parker Hanafin, Union Pacific,
Norfolk Southern. I mean you're talking about like the country
does not work without these companies existing and doing what
they're doing. Like I I know that, you know, we
might be like, well, you know, ultimately, like you know,
(05:56):
you know what, what's the big deal? I mean, you
know Boeing has an add their act together in a while,
blah blah blah. Okay, well, if you're not producing new
seven thirty sevens, there still are problems in the United States,
and Video is greater than the market cap of all
those companies I just listed, and then another like fifty
or so that are still in that category. I mean,
(06:17):
it's it's just kind of wild when you when you look.
Speaker 4 (06:21):
At it and you know it's expensive, but relative to
other semiconductor stocks, just looking at the Philly Semiconductor Index, Yeah,
for example, it doesn't look that outrageously. They could all
obviously be quite overvalued. God, the whole sectors just over
probably I should qualify that by saying probably.
Speaker 2 (06:38):
But it's one of those things we say quite often,
like valuation people all the old school value investors come
in and they're like, well, you know, like look at this.
I don't know why they sound like this.
Speaker 4 (06:51):
They're getting a crap kicked out of them every day.
Speaker 3 (06:53):
That's why there are no news.
Speaker 2 (06:54):
Everybodying no, No, one's twenty three years old is like, hey,
I'm going to be a value investor. Like that doesn't
happen today because you haven't had the pain and growth
to back then. But all of the all the people
who grew up, you know, with with Peter Lynch and
this and that, it's well, I'm not saying he was bad.
I'm saying like he was a great manager anyway. But ultimately,
(07:17):
like all the value investors are like, well, this is
too pricey, Like I'm gonna find something that's cheaper. And
quite honestly, valuation is a horrible way in this market
for the last fifteen years to make.
Speaker 4 (07:29):
Yeah, we're talking about you two different uses. As always,
ask somebody when they throw a concept out there, what
are you using it for? Valuation is very useful if
you're putting together a portfolio of securities and looking for
things that might be overlooked by other investors. It's a
useful starting point, it's quite us it's quite unhelpful if
you're using it as a market timing tool, which is
what you were saying. So they're two different at least
(07:49):
two different ways to use it well.
Speaker 2 (07:51):
And also it's not something that reflects it's not something
that reflects the likelihood that that valuates changes in the
future either. Case in point, emerging market stocks. They have
been cheap for twenty years now.
Speaker 4 (08:07):
Well, you gotta be careful there because I don't know
that you can compare. There are some investors Rob are
not was running money. I once asked him, the question
is this. He runs a from called research field. It's
pretty well known researcher. He's adamant that you can compare
these things across markets. Others and I took up their
cause equally adamant you cannot. I'm not convinced you can compare,
but yeah, will do. The point that I make, I
(08:29):
think they're wrong chief to do. That is what I'm saying.
Speaker 2 (08:32):
I don't think you should still do.
Speaker 4 (08:33):
I know.
Speaker 2 (08:33):
I'm not saying that like you should or shouldn't, but
I'm saying, well, they're wrong.
Speaker 3 (08:36):
I see.
Speaker 2 (08:37):
Or you want another example, look at energy stocks, they've
been cheap for a decade. They also haven't gone anywhere
for a decade. Yeah, you know, outside of you know
what they did in twenty twenty two. It's been something
where it's been basically a lost decade for energy investors.
Speaker 3 (08:55):
Yeah.
Speaker 4 (08:56):
Yeah, you have to ask why they're relative, why they
appear to be and qualify and relatively cheap totally.
Speaker 2 (09:02):
Yeah, And so I think ultimately, you know, when you
look at this, it's something where I don't know what
is going to happen with Nvidia and the rest of
the semistocks over the next five ten years. No one does.
But what you can say right now is, hey, you've
got an awful lot of concentration in this area of
(09:26):
the market, and if things start to falter there, it
does mean you've got real problems with the broader market,
simply because with stocks so concentrated there, Even if the
rest of the market starts to lift itself, which you
kind of look at it and you're like, well, how
would it if those things are falling, it's just not
(09:46):
enough to overcome it. And we've seen that at several
points this year where when the big megacap companies start
to falter. You can't make it up through you know,
insurance companies rallying. You can't make it up through you know,
utilities rallying. There's just not enough meat on that bone.
Let's take a quick break. When we return, let's talk
(10:08):
a little bit about the US China meeting now tentatively
scheduled for ten pm Eastern time today. We'll discuss expectations
after this.
Speaker 1 (10:19):
There's only one show that follows Wall Street's continued volatility.
Keep it here all morning long on the Financial Exchange
Radio Network. Thankst us six one, seven, three, six two
thirteen eighty five with your comments and questions about today's show,
and let us know what you think about the stories
we are covering. This is the Financial Exchange Radio Network.
Speaker 6 (10:48):
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The race is sold out, but you can still take
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Speaker 2 (11:24):
So we received notice earlier this morning that the specific
time for the President Trump President g talk is going
to be at ten pm Eastern tonight. So if you're
like me and you go to bed at eight thirty five,
you're not going to be staying awake for this one,
(11:45):
but you'll wake up to, you know, whatever futures do
as a response to it. Big things that are expected,
and this is reporting from Bloomberg here. The fentanyl tariff
expected to be discussed, and President Trump has indicated that
there may be a reduction in that tariff that happens. Currently,
(12:06):
that fentanyl related tariff stands at twenty percent. Wall Street
Journal reporting that President Trump may consider cutting that to
ten percent, and also some chatter that the President may
allow China access to Nvidia's flagship line of semiconductors known
as their Blackwell processors. And obviously this is something that
(12:31):
you know, would be a pretty swift reversal based on
you know, previous national security concerns related to this also
some chatter about soybeans. Reportedly this morning there was an
order placed by a Chinese company for about one hundred
and eighty thousand tons of soybeans. That is still a
drop in the bucket and obviously not you know, something
(12:55):
that indicates any long term follow through, but it does
appear that, you know, the wheels are being greased in
advance of this, and so I would be shocked if
we come away from this meeting tonight with any kind
of negative headlines. The question, as it's been all year,
is going to be, Okay, what's the follow through, because
you know, kind of this is the fourth time we've
(13:15):
been through this, and okay, like we've reached an agreement
on rare earths, and then a month and a half
later it's like, hey, there's a new problem with rare earths,
and you know, you kind of want to see what's
the actual follow through because the headlines have been impressive,
but it seems like we keep getting back to the
same spot every couple months.
Speaker 1 (13:34):
Here.
Speaker 4 (13:35):
To me, this is all theater. The trade deficit, if
that's what you're interested in, is not a function of tariffs.
There are countries with high tariffs that run a trade
deficit where imports exceed exports. There are countries with low
tariffs that have a large trade deficit. They import more
than they export. Economists don't get worked up about this
because the trade deficit is neutral. The trade deficit is
(13:57):
a function of investment opportunity. Here the flip side of it,
it is of the so called current account, which we
call the trade deficit. Casually, is that.
Speaker 2 (14:06):
The capital account.
Speaker 4 (14:07):
We import a lot of capital people, foreigners by treasuries,
foreigners by real estate. Foreigners own about twenty five percent
of US equities, thirty three percent of US treasuries, for example.
The capital they get to make those purchases comes from
the imports that we buy. We send dollars abroad. Those
dollars come back in the form of investment. If you
want to eliminate the trade deficit, you'd have to eliminate
(14:29):
that foreign investment. That would push down stocks because they're
a quarter of all stock investors. That would push up
interest rates because they own a third of the US
treasury market. The US economy would grow more slowly as
a result. So when the president who he doesn't he
fundamentally does not understand trade, he talks about all this
investment coming in and at the same time shrinking the
trade deficit. You can't do those two things. If you
(14:52):
get a trillion dollars in new investment, as Asian countries
are allegedly committing to, that will expand the trade deficit
by the same amount.
Speaker 3 (15:02):
It has to dollar.
Speaker 4 (15:04):
Those dollars have to be recycled. It's called the balance
of payments, and one of the cardinal rules of balance
of payments balance of payments accounting is that the balance
of payments has to balance. You send a dollar abroad,
it comes back in the form of investment or to
buy a US export abroad. But as we know, we
import more than we export. The difference comes back. So
you cannot both have these massive foreign investments that the
(15:26):
President keeps touting. He says fifteen trillion, then twenty trillion,
then twenty five trillion. If that were to happen, the
trade deficit would expand by the same amount. So it's
a little frustrated.
Speaker 2 (15:36):
Unless we curtailed our own spending domestically.
Speaker 4 (15:40):
We'd have to increased increase savings. That could either be
done by US as people increasing savings, reducing the federal
budget deficit that is increasing national savings.
Speaker 2 (15:49):
There are some.
Speaker 4 (15:52):
Accounting adjustments on the margin interest from abroad factor payments
from abroad that I'm leaving out of this discussion, but
broadly speaking, it is ideally true. It must be true
that the trade deficit is offset by the financial account
or capital account surplush can't have both.
Speaker 2 (16:07):
Piece from Bloomberg opinion is the Fed's inflation target still
two percent?
Speaker 4 (16:12):
No doesn't appear to be now because we haven't hit it,
and they're easy.
Speaker 2 (16:17):
No, it doesn't seem like it. And I'm not saying
that that's good or bad. I'm just saying that it is.
And ultimately the proof is going to be in the
pudding over the next two to three years in terms
of whether this turns out to be the right decision
or not.
Speaker 4 (16:32):
Look, most economists think the target should be at two,
somewhere between two and five. There are more rubbish people
who say make it five. You don't want to hit
the zero lower bound like we did in O eight.
Speaker 2 (16:41):
There are people that are saying five percent should be
an approval for a long time.
Speaker 4 (16:44):
There are plenty of respected researchers who say anywhere in
the low single digits is just fine.
Speaker 2 (16:49):
Interesting.
Speaker 4 (16:49):
Oh yeah, yeah, yeah, yeah, it's not like a radical,
wild eyed view because you don't want to hit the
so called zero lower bound where the Fed can't lower
interest rates be below the nominal rate kinkle below zero.
So if you start it, you get a lot more
room to ease. That's one argument. The other argument is
you can keep real wages, you.
Speaker 2 (17:05):
Can learn we're talking five for inflation, yeah, funds rates.
Speaker 4 (17:09):
Yeah, five for CPI inflation.
Speaker 3 (17:10):
Oh sure.
Speaker 4 (17:11):
There are plenty of respective researchers. They're more of a
more liberal bent. I'm because I'm a free market nut job.
I would prefer very low inflation. Somewhere in one to
two sounds right to make sure. But there are people
who are a lot obviously smarter and more studied in
this area that think five is fine too. Look, any
rate of inflation, once the economy adjusts to it, is
consistent with full employment hitting potential GDP. None of those
(17:33):
things are rule you don't want as erratic inflation, inflation
that keeps people guessing and in flat would be bad.
Speaker 2 (17:39):
Fires. Large adjustments to policy on a regular basis, Yeah.
Speaker 4 (17:43):
That's disruptive as long as it's steady. It's anything in
the low single digits, even I'd have to admit is
probably fine. There's there's nothing inherently bad about four percent
versus two. But when the FED is committed to do
and they say, well, we can't hit it, or we
don't feel like hitting it, let's let it drift up,
it leaves everybody guessing they should explicitly say where they
within a range, maybe where they wanted to fall.
Speaker 2 (18:04):
And we've said before, look, there you've had. Even in
recent history, the nineteen nineties saw a pretty darn close
to three percent inflation over the course of them. Most
people look back at the nineteen nineties and say, yeah,
there's a pretty darn good economy. So it's not to
say that you need to inherently get to two percent.
But I think what we've become accustomed to, at the
(18:25):
very least over the last forty years is in place
inflation that generally has run in the low to mid twos.
You know that the nineties were kind of the outlier,
and most of that was concentrated in the first half
of the decade, largely due to energy prices as a
result of the Gulf War. But ultimately you can still
(18:47):
look at the nineteen ninees and say, yeah, inflation was
pretty close to three percent for that decade, and it
was not a huge problem because there was still so
much real economic growth that was occurring to productivity increases
and population growth. Today you don't have the population growth
piece that's going on, and so you're more reliant on
(19:08):
productivity increases to generate real growth, you know, in the
absence of that. And so I think ultimately I don't
have you know, the right answer on this, because I
don't think there is a right answer for like, oh,
what's what should the rate of inflation?
Speaker 4 (19:23):
People low and stable?
Speaker 2 (19:26):
There's no heart and fast number. Let's take a quick break.
When we come back, it's Wall Street Watch and ask Todd.
Speaker 1 (19:41):
Like us on Facebook and follow us on Twitter at
TFE show. Breaking business news is always first right here
on the Financial Exchange Radio Network. Time now for Wall
Street Watch. A complete look at what's moving markets so
far today right here on the Financial Exchange Radio at work.
Speaker 6 (20:01):
Well, it's FED meeting day and markets are extending gains
from their fresh record highs. FED Chairman Jerome Powell will
hold a press conference at two thirty this afternoon after
the expected quarter point rate cut. However, the big news
on the day surrounds Nvidia, where the chip and ai
giant has officially crossed five trillion dollars in market cap,
the first company to do so, and video shares of
(20:23):
climbing nearly five percent on the day. Right now, the
Dow is up by half a percent, or two hundred
and fifty points. SMP five hundred is up a third
of a percent or twenty one points, NASDAC up seven
cents of one percent or one hundred and sixty eight
points higher. Rust of two thousand is edging higher mostly
flat tenure, treasury yield is right around four percent, and
(20:47):
crude oil is up over half a percent higher training
sixty dollars in fifty cents a barrel. Boeing posted mixed
quarterly results. While its revenue beat estimates, the aerospace company
logged a steeper loss than anticipated. Boeing also said it
at increased seven thirty seven production to thirty eight airplanes
a month. Shares are in Boeing are down over two percent. Meanwhile,
(21:11):
shares in Caterpillar surging thirteen percent after the maker of
construction machinery beat third quarter forecasts. Elsewhere, five Serve shares
are tanking forty three percent after the financial services tech
company reported as substantial third quarter earnings and revenue. Miss
Mandoalese cut its twenty twenty five guidance with a snack
(21:32):
maker site at high cocoa prices and transportation costs, and
also noted Americans were buying fewer snacks. That stock is
retreating by three percent. Booking Holdings b quarterly forecasts as
travel demand stabilized. The online travel agency also hiked its
annual revenue growth. Outlook shares are down by one percent.
In after today's closing bell, the kickoff two big tech
(21:55):
earnings begins. We're Alphabet, Meta and Microsoft. We'll all report
Howard their third quarter results on Tucker Silvan. That is
Wall Street Watch.
Speaker 1 (22:06):
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
(22:27):
law visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (22:33):
As promised, Todd Lunsky now joins us from the law
firm of Cushing and Dolan. We got phone lines open
because the segment is ask Todd. It's your chance to
ask Todd your estate planning questions and he'll actually answer them. Yeah,
it's not just you asking, it's him answering as well.
Phone lines are wide open right now at eight eight
(22:54):
eight two zero five two two six three. That is
the number to call to ask Todd your estate planning
questions again. It's eight eight eight two zero five two
two six three. We can normally get through two to
three questions, So get calling early, get calling often to
make sure we get to your question for Todd again.
(23:15):
That number is eight eight eight to zero five two
two six three. Mister Lutsky, How are you doing today?
Speaker 3 (23:23):
I am doing just fine. How you been? Uh good?
Speaker 2 (23:26):
I had a busy day yesterday.
Speaker 3 (23:28):
Yeah, what are you doing?
Speaker 2 (23:29):
I was shopping for cherries and a new microphone stand.
Speaker 3 (23:32):
I don't know how cherry's and a microphone stand go together.
Bought it being bought a boom, Oh there you go.
Speaker 2 (23:37):
Yeah, it was good Todd want to talk to you
a little bit about gifting strategies. When is it appropriate
to incorporate annual gifting into an estate plan? What role
can that fill? And when do you start to see
that talked about. Is something that makes sense for someone?
Speaker 3 (23:54):
Yeah, I think that's fair question, because this gifting guide
really explains that. But I mean, just because we have
this ability to gift away thirteen point nine million dollars, which,
by the way, that is our federal estate tax exemption.
You've heard us talk about that many times. It is
(24:14):
also our gift tax exemption. Right. You get to use
up that exemption either by dying, which is not usually
on the to do list, or by gifting before you
lose it. That's when tax laws change, right. So, but
just because you can gift away thirteen point nine million
and pay no federal gift tax. And remember, there's no
state gift tax in any state except our neighbor, Connecticut
(24:38):
is the only one that I'm aware of that has that.
So otherwise you don't worry about state gift tax. But
I don't want to just gift because there's capital gains
taxes that you have to worry about, not just death taxes. Right,
So if I'm going to gift away an asset, I
first want to make sure that I'm getting a federal
(24:59):
state tax benefit, meaning if I'm under thirteen point nine
million or married and double that exemption. Right, was that
like twenty eight million in change? Almost, so it's called
twenty seven and change. I probably don't need to gift
to save federal estate taxes. And remember the federal estate
(25:23):
tax rate is forty percent of the amount over the exemption.
All right, Well, if I'm not saving that and I'm
only saving the state estate tax, and I'll just use
Massachusetts as an example, I'm only saving say ten to
twelve percent, and I end up giving away assets that
have capital gain built into them. I bought a house
(25:45):
a long time ago, you know the drill. I got
a rental property that I appreciated to zero and now
it's worth a million dollars. Well, I get a million
dollars of gain built into this property if I give
it away and I'm not saving the forty percent and
I'm only saving the twelve twelve percent, but I trapped
almost thirty percent long term capital gain in that item,
(26:05):
so that my children will pay that when they sell it.
I'm not sure that's helpful, right. Twenty eight thirty percent
versus ten percent not a good math situation. So think
about what you gift and why you're gifting. If it's
just to save a state taxes, might want to double
think it.
Speaker 2 (26:24):
Talking with Todd Lotsky from Cushing and Dolan, still have
room on the phone lines at eight eight eight to
zero five two two sixty three. That is the number
to call it ask Todd your estate planning questions. We
are going to take a quick break right now, but
when we come back, it's going to be right to
your questions with Todd. Eight eight eight to zero five
(26:46):
two two sixty three is the number again, it is
eight eight eight to zero five two two sixty three.
Quick break, Then your questions with Todd.
Speaker 1 (26:56):
Ask Todd with Todd Letsky every Wednesday at tenth 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 (27:17):
All right, let's get right to your questions with Todd Lutsky.
First in the queue, we got Marty in Framingham. Marty,
what is your question for Todd? Marty?
Speaker 3 (27:29):
Are you there.
Speaker 7 (27:30):
Yes, yes, I am, thank you for taking my call.
My home in Midfield had of fire. It was totaled
although it was fully insured. It's going to cost me
about another two hundred thousand dollars to put build a
house back the way we want it. I've got the
money set aside that the insurance company is giving me,
(27:52):
but it's going to cost me another two hundred thousand
dollars of revocable money or other money to get the
house the way we want. The question is, I don't
want to interrupt the integrity of the irrevocable trust which
has been in been in for like seven to ten years.
(28:12):
So how do I fund it without interrupting that irrevocable trust.
Speaker 3 (28:17):
So it seems to me that since the insurance company
paid you, that means that when you set up the trust,
you told the insurance company to add the trust as
an additional insured. Correct, Yes, so, because so, because you
(28:38):
told the trust to add the or since you told
the insurance company to add the trust as an additional insured,
you should go back to the insurance company and tell
them to issue the check pay to the order of
the trust, not you, And that way it goes directly
into the trust, and there's no resetting the five year clock.
(28:58):
In other words, it should be no different than when
you sell a house. Right, if the trust owned the
property and you decided to sell and buy another house,
which we all know you can do, out would go
the house to the buyer, and in would come a
check made payable to the trust, because the trust then
would receive the money, and then that money would not
(29:21):
receiving that money would not reset the clock. In other words,
if the house went in seven years ago, to take
your example, and now that house is one hundred percent
protected from the nursing home, and you sell the house
and get money in the trust, that money is one
hundred percent protected from the nursing home, and the buying
(29:42):
and selling does not reset the clock. Okay, that's crystal clear. However,
in this case, if you've lost the house, which is
kind of like a sale, it's gone, and in exchange
for that being gone, the trust is going to get
paid what it's going to get paid the insurance. So
now in comes the money directly into the trust. Well, well,
(30:02):
there may be no house there anymore like a sale,
but there's money there. Well, that money should not reset
the clock. And then you can use that money to
start paying the contractor to build the new property. Now
as to the additional two hundred thousand dollars that you need, well,
if that's not already in the trust like you have
(30:22):
maybe you put a portfolio in or an investment account
in or something like that. If that money is not
already in the trust, well then yeah, you're you're going
to have to contribute that money to the trust to
build the finished building the house. So worst case scenario here,
I see that there might be a new five year
look back period waiting, but only for the new addition,
(30:44):
only for the new two hundred thousand that you put
in the trust. So does that help a little?
Speaker 7 (30:49):
Yes, sir, it does.
Speaker 3 (30:51):
So get that changed with the go get that check
reissued by the insurance company. That's what I would do,
So hopefully that helps in folks. You know, I'm so
glad to hear that he did his planning and have
the house you know, where it belongs. And but for
other folks that haven't done all their planning yet and
are thinking about just oh, I'll just do a quick fix,
(31:12):
I'll give away my assets, well you can, that's what
the law says might not be the right thing to do.
So there's a guide called making the most of gifting assets.
Sometimes you want to give things to irrevocable trusts rather
than children. Outright, you got to think about what kind
of asset I give A high basis asset versus a
low basis asset. Maybe for higher net worth people we
(31:34):
want to give away a lot of assets. Well, I
don't want to give them away and not enjoy it.
I work my whole life for it. Well, spousal lifetime
access trust might be the way to give away assets
and retain some ability to control and enjoy what you
gave away. Right, think about pool trusts, think about special
needs trust. So there's all kinds of ideas and ways
(31:55):
to gift or maybe not gift at all, and that
might be the right answer for a lot of people.
Call and get the guide. Folks, we're getting near the
end of the month. It's gonna go back in the
vault 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
(32:17):
Exchange Show dot Com.
Speaker 2 (32:19):
Got another one for you here. Let's go to Dan
in Florida. Dan, what is your question for Todd Lutsky?
Speaker 8 (32:26):
Todd, First of all, I'm a Massachusetts resident, okay, and
I'm trying to shell to my holdings from the mass tax.
Does an irrevocable trust do that?
Speaker 3 (32:41):
So it depends on the kind of irrevocable trust. So
let me explain. First of all, are you married?
Speaker 8 (32:50):
No, I was married, she passed away.
Speaker 3 (32:53):
Okay, So how much are you worth in total? Round number?
Speaker 8 (32:59):
Uh boy? Four million?
Speaker 3 (33:00):
All right, and I'm assuming there was no planning done
when your wife passed?
Speaker 1 (33:07):
No?
Speaker 3 (33:08):
Trust?
Speaker 8 (33:08):
We both had. We both had revocable trusts.
Speaker 3 (33:12):
Wonderful. How much of the four million dollars was in
your wife's revocable trust when she died?
Speaker 8 (33:20):
None?
Speaker 3 (33:21):
Oh, So this is exactly what we talk about all
the time. Right on the radio. We tell people funding
a trust is so darn important. Right. If you don't
fund a trust, it really is just a waste. It's
a bunch of paper doing nothing for you, which is
why we stress funding it. And I'm going to say,
(33:41):
obviously it's it's you know, water under the dam. I
get it, But at this point I just want to
help other people learn. So because nothing was in that trust.
My hope for you Dan on this one was you
were going to tell me, oh, yeah, we managed to
put about two million dollars worth of assets in my
wife's trust. Well, if you had done that, I would
(34:02):
imagine that that trust is designed to hold a remainder
share in a marital share, and then that two million
dollars would be tucked away in your wife's trust subject
to tax when she died. She has a two million
dollar estate tax exemption, so there's no tax to and
then when you die, you would only be taxed on
(34:23):
what you own in your trust, which would be the
other two million. And now, like magic, if you died,
you're under the two million because the assets tucked away
in your wife's trust would be sheltered from a state
taxes and not included in your estate when you die,
even though you would be controlling and enjoying perhaps what's
(34:47):
in that wife's trust bucket. And then when you die,
you're under two million and lo and behold, you pay
Massachusetts zero estate taxes. So, folks, that's for everybody who
hasn't done their planning yet, or have done their pl
planning and didn't fund one trust. Please learn from this
call what we can do in the future. Now. I
(35:07):
turned to you, Dan, and I say, well, I mean
you got four million dollars worth of stuff. At least
you got to step up in basis. How long ago
did your mom died? Here? I'm sorry, your wife died
two years ago, so it's not horrible. So two years ago,
you know you got if you own things jointly when
(35:29):
she died, and I'm assuming you did, right, we didn't.
Speaker 8 (35:34):
You didn't own the second marriage. It was a second marriage,
and she had her russ, I had mine, I see.
Speaker 3 (35:41):
But nothing was in her trust. So how are the
assets owned? Did you we own? Everything was in her
name alone?
Speaker 8 (35:49):
Yes, she owned her own house. I owned a couple
of houses that they were bolt in my name and
her hers was in her name.
Speaker 3 (35:56):
And did her stuff go to her side of the
family or did she take you with any of it.
Speaker 8 (36:02):
And went to her side of the family.
Speaker 3 (36:04):
Oh okay, So the four million you have is just
your assets?
Speaker 8 (36:08):
Yes?
Speaker 3 (36:09):
Oh okay. So again the explanation is still very helpful
for people. But in your case, you're worth four million.
You know again, we're thinking about do we need to
make a gift. Well, I don't know. You have to
really analyze your assets. We just did that example that
maybe giving away assets now just to save ten percent
on the amount over two million or twelve percent on
the amount over two million might not be the most
(36:30):
tax effiicient thing to do. But if you have cash CDs,
you know, kicking around, and you want to set up
a gifting trust for your children, and you don't mind
giving it away, that would be an easy fix because
there's no loss of a step up in basis with cash,
and that money can be tucked aside outside your estate
for a state tax purposes, thereby reducing your state tax liability.
(36:53):
But just sticking them in an irrevocable medicaid trust to
protect them from the nursing home would not reduce your
estate taxes, but night might not be bad planning for
you to protect your assets for your children. Sorry, out
of time, but I hope that gives you a little
something to think.
Speaker 2 (37:07):
About, mister Lutsky. Thank you so much for the time today.
Speaker 3 (37:09):
Always a pleasure.
Speaker 1 (37:11):
This has been asked Odd on the Financial Exchange Radio
network Ask Todd with Todd. Lutsky has been presented by
Cushing and Dolan, serving Massachusetts and New England for more
than thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred three ninety
three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(37:32):
Cushing and Dolan. Armstrong Advisory does not provide any legal
or tax advice. Please consult with your legal or tax
advisor on such matters. Cushing and Armstrong do not endorse
each other and are not affiliated
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