S&P 500 falls as global chipmakers get hit

Chuck Zodda and Paul Lane discuss why the S&P 500 dropped over 1% and why global chipmakers are to blame. The US floats tougher trade curbs in chip crackdown on China. Fresh tariffs could see interest rates stay higher for longer. Todd Lutsky joins the show to share his expertise on Medicaid planning.

Episode Transcript

(00:00):
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(00:20):
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(01:06):
Financial Exchange with Chuck Zutta and PaulLane. Chuck, Paul and Tucker with
you here. We're about halfway throughthe week, and the rotation in markets
that started yesterday continuing today with againjust this this violent rotation that you are

(01:30):
seeing under the surface today, it'seven filtering into you know, just broader
moves where look, as an example, the S and P five hundred is
down one percent. If you lookat the S and P five hundred equal
weight, meaning hey, instead ofbeing a market cap weighted index where the
biggest, you know, companies,the most valuable companies take up larger chunks,

(01:52):
you wait, all five hundred companiesequally point two percent for each one.
SP five hundred equal weight is actuallyup today, which you might not
realize if you're just looking at thebroad market. You say, gee,
the S and P five hundreds downone point one percent, the nasdac's down
two percent. You know, everythingmust be getting hammered. No, it's

(02:12):
it's actually just your the stuff that'sdone well for the last eighteen months is
getting hammered. And videos down fourand a half percent, Apples down two
and three quarter, Amazon's down twometa is down. Three that stuff's getting
hit and all the other stuff that'sbeen struggling for the last year and a
half, you know, kind oftreading water maybe doing okay is up.

(02:34):
You got energy companies up, yougot utilities up, consumer staples are up.
Healthcare is up. Aside from EliLilly, which again Eli Lilly has
been one of these companies that's alsokind of gets left out of the mag
seven, but it's been on aroll with John It's weight loss drug that
has just been knocking it out ofthe park. And so you've got this
rotation that's happening under the surface herethat is kind of cool. If you

(02:57):
were someone who said, hey,I don't just want to own you know,
in video, or I don't justwant to own Meta. I'm gonna
buy a diversified basket of stocks.The last week and a half, it's
been kind of music to your ears. Pall, it has been. I
mean to be clear, this doesn'treally come close to chipping away. And
the huge disparity that we see betweenthe equal weight versus the S and P

(03:20):
five hundred year to day, asyou pointed out, they've been these larger
companies on a tear. The lasteighteen months, so much so that these
five days doesn't negate just the strongperformance that we've seen over the last twelve
months or year date of the Sand P versus the more equal weighted index
out there. But it has beena fascinating rotation. We've also seen small
caps perform significantly well or significally outperformsome of those benchmark indices like the Nasdaq

(03:46):
and the S and P five hundredover this short period in time, and
it seems like just a short termtrend. Obviously, there's nothing that I
can really point to from a financialyou know, global macro macroeconomics scenario that
points to a reason behind this,but certainly is interesting to follow. Well.
I think there's there are a couplethings that are at play here.
The first is a lot of thesebig names have just gotten really stretched,

(04:10):
right, and so they were justripe for you know, any kind of
pullback. There's also only so muchcapital out there, and hey, if
the market decides, and by marketI mean market participants decide, Hey,
you know rate cuts me and Iwant to own small caps? Well,
gee, if you start you know, looking at you say, okay,
where am I gonna pull the moneyfrom odds are it's the stuff that's done

(04:30):
well because that makes up, youknow, the bulk of a lot of
portfolios, and so you know,you just kind of have to pull from
somewhere. It's it's rare that youhave the person who says, gee,
you know what, I've been sittingon a lot of cash. Poll what
I'm gonna do now that it's rumoredthat the Fed might cut interest rates by
the end of the year, I'mgonna take that cash and put it into
small caps like that. That's notreally how it works, that money might

(04:55):
move to equities. But it's rarethat someone says, hey, I've been
really nervous and just sitting in cash, and I'm gonna go right to small
caps now at just the right time. It's not really how it works.
So you end up with a case. And a lot of this gets exacerbated
by hedge funds and things like that, where if you're a hedge fund that's
running a long short book, meaningthe long side of your book is yes,

(05:17):
I want to own in video asan example, the short side of
your book is, hey, theRussell two thousand has been bad for the
last you know, years, soI'm short the Russell two thousand. Hey,
if this starts getting unwound and movingthe other way. You also have
cases where your risk manager at ahedge fund might come up to you,
tap you on the shoulder and say, Jimmy, it's not working anymore.

(05:41):
You gotta unwind it. And thatexacerbates the move in that direction because you
have these forced unwinds that happen.And quite honestly, when you see moves
that are you know of this scale. Not for one day, but if
this goes on for a few days, you're gonna see a couple hedge funds
get carted off because they were offsides on this, and they were leveraged
while they were off, and theyblow up because they're no longer you know,

(06:02):
solvent. Like this stuff does happenoccasionally with big moves. We're not
at a big move now, butit's one day at least for you know
what we're seeing. You know thisscale of move in the s and P
five hundred. But to put itin perspective, the divergence between the Russell
two thousand and the NASDAC now overthe last week is more than twelve percent

(06:24):
in favor of the Russell two thousand. It's the largest one week divergence on
record between those two indices in thatdirection. Hasn't happened before because normally the
same stuff that lifts small caps liftstech. Hasn't been the case for the
last year, which lifted tech hasnot lifted small caps. And now that's
you know, reversing kind of violentlyhere. And so you're seeing just this

(06:46):
this huge shift under the surface.And again, I don't know how long
it necessarily lasts, but it's somethingthat we haven't seen in the last eighteen
months. And I don't know.Difference always fun in markets if if all
you do is come in every dayand you're like, well and videos up
again, honestly, we kind ofrun out of stuff to talk about too,

(07:08):
Like so just from that perspective,it's it's kind of boring, but
you know, markets that are changingand evolving. A, that's where the
meat is as far as how youcan actually make money, and and B
it's it's interesting to see, Okay, what does this mean about what comes
next? You know, that's that'sthat's the that's the whole ballgame right there.

(07:29):
So overnight, a couple different piecesof information coming out first uh the
Biden administration saying hey, you knowwhat, we're thinking about enacting more significant
restrictions on semiconductor exports to China.That's kind of causing this, and that's
exacerbating this today as well, becauseif you look at what's getting hit hardest,

(07:50):
it's a lot of semiconductor companies,and so this would be an escalation
of geopolitical tensions between the United Statesand China in area of commerce. It's
just a really difficult situation, Chuck. We've talked about it a lot on
the show, but back in Octoberof twenty twenty two, there were restrictions
inputed on the sale of advanced chipsand manufacturing gear to China by the United

(08:13):
States. That's been enacted for along period of time here. It has
really made it challenging for companies likeApplied Materials, LAMB Research, and KLA
Corp, which are United States companieswhich manufacture semiconductor equipment. Similarly, you
have companies out there that are notin the US, but ASML and Tokyo
Electron Electron here that are mentioned aswell, that find themselves in a very

(08:37):
precarious position. And what has beenmentioned here by the Biden administration in terms
of what type of additional legislation orrestrictions that they utilize. Here is what's
called a foreign direct Producer rule,and it is a imposition on foreign made
products that have any kind of Americantechnology in it. So basically it is

(09:01):
broadening the reach of these restrictions outsideof just US companies to having them impact
countries like as companies like ASML,which is based in the Netherlands, and
this would cause if they were togo through with it again, this is
just rumored a significant amount of blowbacklikely from these international companies that would say,

(09:22):
hey, Chuck and Paul, youguys in the United State, this
is your guys problem to deal with. We don't want to be intertwined with
this controversy in these trade wars.We just want to generate as much revenue
as possible from a company standpoint,And that's why it's such a difficult position
because a lot of Chinese companies havefound ways to circumvent the system, and
that's what you have when you havea global economy. Yes, the US

(09:45):
can impose restrictions on its exports,but we can't dictate what Japan or what
the Netherlands does. And so Ithink that when you look at this ultimately
it's going to be a question ofas kind of who else ends up getting
on board fully on all of thisand how do these companies then manage it,
Because look, you can understand theconcern. We've talked about it a

(10:09):
lot. You don't really want tobe selling the most advanced chips to China
given the Chinese government's stated intentions aboutlots of stuff bolstering their military is one
very obvious concern that you'd have beyondjust you know, even some of the

(10:30):
other things as it relates to,you know, their general ambitions around the
world in a non military sense.Right, So I get that part.
It's completely understandable. The question thatyou always have to ask is, Okay,
what's the retaliation going to be andare we willing to pay that price?
The Chinese government, when faced withit in a lot of cases,

(10:50):
says, yeah, we're willing topay that price because our citizens don't really
have a say in what we're doinganyway, So even if they don't like
it, they got to go alongwith it. The tougher thing in a
democracy like ours is Hey, wehave elections on a regular basis every two,
three, four or six years,depending on the position in the state,
and you know the role that you'retalking about. I believe there's some

(11:13):
governorships that are up every three years. So if things aren't going well and
people don't like it, even ifit's the right thing to do, they
can vote you out and the policycan be changed. So the question that
I've always asked when dealing with Chinais, Hey, how much pain are
we willing to stomach to actually dowhat's right and what's needed there? And

(11:37):
I don't know the answer, becausewe don't like being uncomfortable if we can
avoid it, and the ambiguousness ofthe threat of the Chinese military at this
point, to most people, it'snot the Chinese military has ever bothered anyone
directly here in the United States.Not been a thing. So you know,
you say, oh, we're concernedabout this, Hey, it hasn't

(12:00):
really been a thing for most people. Are they willing to stomach potential economic
pain as a result of doing what'sneeded to restrict the Chinese military from getting
these kinds of chips. I don'tknow. We'll see how it plays out,
but Let's take a quick break here, and when we'll return, let's
talk a little bit about tariffs andtheir potential impact on the US and world

(12:24):
economy in the event that we seePresident Trump elected to a second term in
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dot com. So a couple piecesdiscussing tariffs, one in the Wall Street

(13:33):
Journal, the other in the theNew York Times. I think it's the
New York Times, Yes, yeah, the other in the New York Times.
Let's talk about the Wall Street Journalone first. The headline is fresh
tariffs could see interest rates stay higherfor even longer, IMF warns, And
the premise of this is rather simple. Donald Trump has proposed a ten percent

(13:54):
tariff on all US goods that areimported in a sixty percent tariff on all
imports from China as part of hispresidential campaign. And if you look at
how tariffs actually work, the mechanismis really simple. The tariff gets paid
on the good as it enters port, and then companies who have already paid
that tariff say, okay, westill need to be profitable, and they

(14:16):
basically end up passing it on toand buyers when it's all said and done.
So the thought on this is,hey, if actually implemented, you
would end up with a ten percentacross the board price hike on basically any
goods imported not from China, anda sixty percent price hike on goods imported

(14:37):
from China because those companies obviously can'tcut prices at the manufacturing level, otherwise
they would not be profitable manufacturers becausethe margins are just not that wide on
manufacturing. To me, it's justa baffling policy decision when we're coming off
the heels of inflation that we hadn'tseen in forty plus years. We've had
this tremendous battle that we've talked abouton the show for two years plus to

(15:01):
get inflation down from peaking at ninepercent back in whatever that was the summer
of twenty twenty two to where wesit today at three percent on CPI year
over year inflation. All of asudden, you're going to institute tariffs that
to the point that you just made, Chuck, are just going to be
more inflationary in terms of their impactto the American consumer. That's exactly what's

(15:24):
going to happen. In lockstep isokay, if there's going to be a
tariff on the product, companies aregoing to need to maintain margins. As
a result, it will get passeddown to the American consumer. And I
just really don't see the strategic reasoningbehind it, and it would be punitive
to the American consumer in my view. And let's look at a few different
scenarios here. Okay, let's saythat you are someone. Let's say that

(15:46):
you're importing, just as an example, tomatoes from Guatemala. I don't even
know if they'd grow tomatoes in Guatemala, but at some point in the year
they probably do. So you're importingtomatoes from Guatemala. Why would you want
to slap a ten percent tariff onthose? Is there some huge, you
know, domestic tomato business that isjust itching to, you know, get

(16:08):
get started. The itchwer is No, not really. Most Americans don't want
to be farmers, right, theyjust don't. The other thing that you
run into is, hey, inthe winter, you can't really grow tomatoes
in most of the America, inmost of North America, so you have
to import him from somewhere else anyway. So an example like that, you
say, why another one, Paul, you ever buy socks? Yes?

(16:32):
You ever look at where your socksare made? No, it's mostly like
China, Vietnam, Pakistan. Isthere any way for us to manufacture socks
domestically at those prices? No?I mean that's that's the other piece.
Is there anyone who wants to workin a sock factory in the United States?
Not many, Like, there's somepeople, but it's it's not like
there's just this you know, groupof people who's like itching to go do

(16:53):
that, quite honestly, And soyou're gonna say, Okay, I'm gonna
raise prices on socks. Well,I don't need to make all of my
socks here. There's no reason.Now, this is what we're talking broad
tariffs. If we talk about targetedareas where you say, hey, China's
producing a whole bunch of steel andjust dumping it on the open market,

(17:15):
and we don't want our steel manufacturersto go out of business because we want
that industry to exist in the USfor national security reasons and this and that.
Great like and I'm someone who wasnot really in favor of any tariffs
before the first Trump term, Like, if I'm being honest, but I
did begin to see the value ofHey, in certain areas you say,

(17:36):
yeah, like, we don't wantto have products dumped into our country in
areas that are vital for national securityconcerns and things like that. But if
someone wants to sell US cheap tshirts. Why do I need to make
those here? Right? Why?Why is it? Why is it important
for tickle me elmos to be madein the United States? I don't really

(18:00):
care about that. And if allthat happens is stuff gets more expensive because
it's made here, well that's notreally good enough reason to do it,
especially because the US workforce, bythe way, not growing that quickly.
Where are you gonna find all thepeople to make this stuff? Yeah,
it's promised to add more manufacturing positions. We have a labor market that's been
extremely tight, and I guess youcan make the argument it's loosening a bit,

(18:22):
but still it's not at to apoint where you would just have so
many jobs added that it's not necessaryto have so many jobs add in the
manufacturing space because it's a heck ofa lot more expensive to pay a US
worker to manufacture any of those itemsyou mentioned. We can extrapolate it out
to electronics and TVs. That's aone big area that we benefit to on
the consumer side. So I justdon't see it from an economics standpoint.

(18:45):
And we've talked about this a lot. Where Look, semiconductors, yep,
make them here, medical equipment,drugs, things like make them here because
if something does happen in China becomesvery unfriendly. You need those things made
here because because they are vital tonational security, healthcare, and all these
other things. Do I care ifyou know we're importing again a T shirt

(19:11):
from Mexico. No, I,guys, I can live with a T
shirt with holes in it. Ican't live without penicillin. I can't live
without semid I mean I could havelived without semi conductors. It would just
be a very different life. Butthe targeted nature of tariffs I think can
make sense. Broad ones. Youask a little bit, Hey, what

(19:33):
what are we trying to do here? Quick break? When we come back,
it's Wall Street Watch and ask Todd. 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

(19:56):
look at what's moving markets so fartoday right here on the Financial Exchange Radio
Network. Markets are mixed territory wherewe are seeing a continued rotation out of
the tech sector, while small capsare looking to extend their gains. Right
now, the Dow is up bya third of a percent, or one
hundred and forty five points, SMPfive hundred down over one percent, and

(20:19):
the tech heavy NASDAC down by overtwo percent. Russell two thousand dipping three
points lower, ten year Treasure reeledup by two basis points at four point
one eight percent, and crude oilup nearly two percent, trading just above
eighty two dollars a barrel. BloombergNews reported that the Biden administration is considering

(20:41):
tougher trade restrictions if chip makers likeASML continue to give China access to semiconductor
technology. So several chip makers onthat news are seeing losses. AMD and
Taiwan Semiconductor down by over seven percent, ASML down by ten percent, in
Nvidia down by five percent, Meoil, Johnson and Johnson reported second quarter earnings

(21:03):
ahead of the open, posting strongerthan expected results driven by sales of cancer
drugs. However, the company loweredits annual earnings guidance that stock up by
three percent. Elsewhere, Discount retailerfive below replaced its longtime CEO, Joel
Anderson, and also cut its outlookfor the second quarter as the retailer continues
to struggle with slower consumer spending thatstock down by twenty one percent. JB.

(21:29):
Hunt Transport Services missed second quarter earningsand revenue expectations, sending that stock
down by six percent and shares inSpirit Airlines down by eight percent after it
warned its quarterly loss will be biggerthan expected. I'm Tucker Silva and that's
Wall Street Watch. This is AskedTodd on the Financial Exchange Radio Network.

(21:51):
If you have an existing estate planor in the market for one, Todd
Letskey is here to answer your questionsand help you plan for a later life.
Ask Todd is presented by Kush Dolan, serving Massachusetts and New England for
more than thirty five years, helpingfamilies with a state and tax planning,
Medicaid planning, and probate law.Visit Cushingdolan dot com. Now here's Todd

(22:11):
Lutsky and we are joined now bymister Todd Lutsky from the law firm of
Cushing and Dolan Segment. Here it'sAsk Todd. This is your opportunity to
ask Todd your questions about your estateplan. Usually only have time for a
couple of questions, so get onthe phones early if you want to make

(22:33):
sure we get to you. Thestudio line here is eight eight eight to
zero five two two six three.I know plenty of you are listening right
now, trying to beat the heatbecause well it's a little bit roasty out
there, so you might as well, you know, get to chat with
Todd about it too. Again.Eight eight eight to zero five two two
sixty three is the studio line toask Todd your questions about your estate plan

(22:56):
one more time. That is eighteight eight two zero five two two six
three. Mister Lutsky, how areyou? I'm never better. How are
you in a little pain? Youknow it's always something with you. Well,
I walked into a lamp post yesterday. Yeah, I'm okay, though
only light injuries. Well that's that'snot bad, So nothing too bad,
Todd. I want to talk alittle bit about medicaid planning, and you

(23:19):
know there's all different kinds of estateplanning that you can do it at different
points in your life. When isthe right age or the age range when
medicaid planning should start being incorporated intomost people's estate plans. So as as
a general rule, there isn't one, right, So I've made up a
rule. Oh yeah, yeah,I just yeah, there's really no no

(23:44):
rule. It's my own rule ofthumb. And and so when I ask
when clients come in, we askquestions, right, we ask a lot
of questions. And the first fourquestions that we ask are you know,
do you want to avoid probate?Yes? Uh. Do we like to
reduce your estate tax liability federal andstate? Yes, we want to provide

(24:07):
a nice bloodline plan to the family, and not only efficiently from a tax
perspective, but maybe protect them futurecreditors and divorces. Yes. And then
depending on your age, So thisgets to the question, Chuck, how
old. I usually look at ageand size of the estate when I answer

(24:29):
that question. So if I'm goingthrough this checklist of questions and I look
over at their age and they aresixty or sixty five and up somewhere in
that range, I'm going to askthe question number four, do you want
to protect assets from the nursing home? Not advocating, just educating, And

(24:52):
depending on the answer to that questionwill depend on whether or not I go
to the whiteboard and explain a revocable trust or an irrevocable trusty irrevocable to
protect from the nursing home. Andlastly, size of the estate. If
you're ten million dollars, you don'tneed Medicaid planning because you can pay for
your ears health insure. Yeah,the interest and dividends you're earning from your

(25:15):
investment portfolio more than we'll cover youryour stay, so you know you don't
need my help. But size ofthe estate also, No, I think
Jeff Bezos tries to qualify for Medicareprobably not. No, I think he's
probably would be tough. Anyways,I think it'd be impossible a little bit
that I know I was being,you know, leaving the possibility open.
Talking with Todd Lotski from the lawfirm of Cushing and Dolan. If you've
got a question for Todd, studioline here is eight eight eight to zero

(25:40):
five two two sixty three. Thatis the number to call to ask Todd
your estate planning questions again, eighteight eight to zero five two two sixty
three. Todd, you said,generally that's sixty five sixty to sixty five
ranges where you start asking people,Yeah, they're interested in it. Are
there any downsides to doing medicare?Had related planning in your forties or fifties.

(26:03):
Well, I think there probably isyou one, you know, and
usually the kid is serving as trustee. Your children are generally minors at that
age, and you can't really dealwith it. You don't want a seven
year old being trusted. Yeah,not really happening there. And and you
know the other thing is, youknow, while you do have a ton
of control over these irrevocable trusts,you know, borrowing money isn't the easiest

(26:23):
thing when they're in there, andyou might be moving in and out of
borrowing money and refinancing and buying newhomes and wanting to borrow against those houses.
So I'd say probably when you're tooyoung. It's too young, don't
do it. Talking with Todd Lutskyfrom the law firm of Christian Dolan again,
the studio line here to ask Toddyour estate planning questions is eight eight

(26:44):
eight to zero five two two sixthree. We're going to take a quick
break here, but when we comeback it's going to be right to your
questions with Todd Lutsky. So thatphone number again is eight eight eight two
zero five two. Quick break yourquestions with Todd. Next ask Todd with

(27:04):
Todd Lutsky every Wednesday at ten thirtyonly here on the Financial Exchange Radio Network.
You're listening to Ask Todd with ToddLutsky on the Financial Exchange Radio Network.
All right, we've got Todd Lutskyhere from Cushing and Dole and still

(27:27):
a little bit more room on thephone line. So if you do have
a question related to your estate plan, call eight eight eight to zero five
two two sixty three to speak withTodd. Now that number again is eight
eight eight two zero five two twosixty three. Todd, let's go to
a caller for you that we've gotGeorge in Woburn. All queued up.

(27:48):
George, what's your question for ToddLtsky? Good morning. My wife and
I have a new revocable trust withyou, but we do have IRA four
one K stock bank account. Isthere any way to protect that? So
break this down just a little bit. We're gonna say, uh, let's

(28:11):
just see if I can and andsort of separate the two because they're very
different in terms of assets. Right, So the stocks and the bank accounts
that are non qualified, okay,meaning not in your IRA A, not
in your four oh one K.I assume those those can be retitled to

(28:32):
the trusts Okay, I don't know. Do you have one trust or two
one for husband, one for wife, or do you have just one joint
trust one trust. So, andit's irrevocable, So you can take some
of those stock and investment accounts andretitle them to the trust. If so,
you're gonna need a tax ID numberfor the trust, which we would
have recommended at the time when whenyou did your planning. So if you

(28:55):
if you have your trust, takea look at the top right hand corner
of the document, and in thetop right hand corner of the first page
of the trust would be a IDnumber. It would be like either four
dash something something something. So ifyou have that ID number, then you
use that ID number in the nameof the trust to title the fidelity account,

(29:17):
the Schwab account, the bank accountthat you want to change into that
trust. So yes to that fouroh one ks and iras no right,
we cannot put those into the trusttoday because in order to put those into
the trust, and unlike the stockaccount that I just talked about, you

(29:40):
cannot change the name on that accountto the name of the trust like you
can with an investment or or bankaccount that is non qualified. Here,
if you tried to do that,you'd have to first take the assets out
of the IRA, out of thefour to oh one K into your name,
and of course that means into incomeand so now you're going to have

(30:04):
an income tax liability when that moneyhits your personal bank account before you transfer
it from your personal bank account intothe trust. So I don't want that
big income tax hit today, butI do like the idea of putting some
of your other accounts into the irrevocabletrust to get those protected. Now,

(30:26):
when you add those to the trusttoday, you will start a new five
year waiting period, but only forthose new assets, not for what we
put in the trust when we setup your account so or your trust initially.
So hopefully that helps. But thoseare the excellent kinds of questions that
a lot of people have when they'redealing with these irrevocable trusts. And for

(30:48):
George, after five years, thesethings will be protected. But for many
who haven't done any planning and arefaced with nursing home care, they might
find that assets are at risk,or even for people like George who have
done their planning, but some stuffalways remains outside the trust. If you
find yourself in that position faced withlong term care, don't go it alone.

(31:11):
Ask for help, get a lawyerto help you with the application.
Not only because you could make mistakes, but lots of people don't realize you
don't have to write to check.So I tell people get this guide Last
Minute Medicaid Eligibility Guide, so evenbefore you're faced with nursing home care,
you'll understand how to make countable assetsnon countable and you can do it last

(31:33):
minute. The guide explains that notonly from houses to rental properties to vacation
homes, each property is treated differently. Each type of asset is treated differently
and differently for a married versus asingle person. So this guide is really
for everybody who is faced with longterm care situations. Call and get it

(31:55):
eight six six eight four eight fivesix nine, or you can go to
our website Legal Exchange Show dot comand download it there. One last time
eight six six eight four eight fivesix nine to nine, or you can
go to our website Legal Exchange Showdot com and download it there. Todd,

(32:16):
I've got another caller already for you. Let's go to Phil on the
Cape phil what's your question for TomLutsky? Yes, good morning, Todd.
You had done an irrevocable trust forme more than five years ago.
Good and this is on properties thereare multiple properties, Okay, I'm now
in a situation where some of thoseproperties need to be refurbished, you know,

(32:42):
repaired, Yeah, and using thetrust money. We don't want to
run out of the trust money.So now I'm digging in my pocket to
pay for repairs on properties that Idon't recoup any money back because it's in
a trust. When you say youdon't recoop, what do you mean you

(33:02):
recoup? I mean you recoup iteither with a higher basis. If it's
a capital improvement, you get tostill depreciate it. If it's rented,
I don't know you mean recoup it. If it sells, you'll get the
money, you know, the moneyyou'll go into the trust. But it's
still yours, right, But it'sin the trust, so I don't hint.
I don't receive any money from thetrust. Everything that rents go into

(33:24):
the trust. They get I've nevergotten a dime. Well, but you
but you know you are absolutely entitledto it through that trust, so you
must be doing something. In otherwords, my trust says income shall be
paid to the donor, So thatrent goes in, that rent comes out
to you. Doesn't have to know. But if you if you want it,

(33:45):
it's yours at what percent, notat what percent. You get one
hundred percent of the rent. Soif you generate twenty thousand dollars a year
in rent, you get twenty thousanddollars a year put in your personal checking
account. But I've got to havethe trust to have enough money to operate
for expenses. That the trust absolutelyright, and you can use the money

(34:07):
to pay all those bills. That'syour money to use any way you want.
If you want to use it tomaintain and operate the building perfectly,
okay. You want to use itto go out to dinner, use it
to go out to dinner, okay, absolutely, your absolutely your money.
So I just want to make sureyou remember how that trust works. All
right, Thank you, Todd hYou're welcome. Good Now. Those are

(34:29):
the kind of questions that people reallyneed to understand because that's an operational question
of the trust, and it showshow much control and flexibility he does have.
Toda on the topic of preparing foryou know, medicaid situations. Have
there been any real changes in thetools available for medicaid planning over the last

(34:50):
you know, decade or two?Or is it pretty much the same stuff
that was available before is what's availablenow? Yeah? And that's really Uh.
There have been there have been someattacks on these tools. And I
guess when I say it changes,it hasn't that. It isn't that the
law changed. In other words,the big law change was two thousand and

(35:12):
six. So we got to goall the way back there to the what
they called the Deficit Reduction Act.I love how they broke the backs of
the elderly, the disabled, inthe poor to balance the budget. But
that was the change that occurred backin two thousand and six. Since then,
your main tool to protect assets inadvance from a nursing home remains these

(35:37):
irrevocable trusts. Okay, and sothey still work. But when you ask
about changes, I'm going to tellyou that there have been some how do
I say it, not changes butimprovements? What do I mean these?
And you know, Chuck, we'vetalked about how I used to have to
go to fair hearings and fight andbattle these things. We now have a

(35:58):
superior a Supreme Court case in massthat says these trusts work if they're drafted
correctly. So that's a really bigchange that says the same tool that exists
works even better. Todd, thanksfor joining us today. Always a pleasure.
This has been asked Odd on theFinancial Exchange Radio network Aske Todd with

(36:20):
Todd Ludsky has been presented by Cushingand Dolan, serving Massachusetts and New England
for more than thirty years, helpingfamilies with the state and tax planning,
Medicaid planning and probate law. Calleight hundred three nine three four thousand and
one or visit Cushingdolan dot com.The views expressed in this segment are solely
those of Cushing and Dolan. ArmstrongAdvisory does not provide any legal or tax
advice. Please consult with your legalor tax advisor on such matters. Cushing

(36:42):
and Armstrong do not endorse each otherand are not affiliated. Changes to Medicaid
occur almost every year, and ifyou're not informed, your assets could be
at risk, especially if you oryour spouse need nursing home care. Cushing
and Dolan are experts and held yourlaw and their new guide is called Last
Minute Medicaid Eligibility. It'll help youunderstand the Medicaid process, which is critically
important if you're retired or getting closeto retiring. The guide has important information

(37:05):
regarding numerous strategies that can protect yourassets from the nursing home. It could
be your primary home, a vacationhome, or any rental property you may
own. You've worked hard to achievewealth, so don't take chances when it
comes to protecting it. Get yourcopy of Cushing and Dolan's brand new guide
called Last Minute Medicaid Eligibility call ratenow eight six six eight four eight five
six nine nine. That's eight sixsix eight four eight five six nine nine.

(37:28):
Or you can request it online byvisiting legal exchainshow dot com. That's
legal exchangshow dot com. The proceedingspay for in the views express are sole
lea those of Cushing and Dolan.Cushing and Dolan ind or Armstrong Advisory may
contact you are offering legal or investmentservices. Cushing and Dolan in Armstrong Advisory
do not endorse each other. Inare not affiliated