September 3, 2025 • 38 mins
Chuck Zodda and Paul Lane discuss the latest jobs data pointing to fewer and fewer available jobs for US workers. US treasury yields brush with 5% as global borrowing costs mount. Todd Lutsky joins the show for his weekly segment, Ask Todd.
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Episode Transcript
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Speaker 1 (00:00):
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(00:42):
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(01:06):
and Paul Lane.
Speaker 2 (01:10):
Chuck, Paul, and Tucker with you here today, and as
we kick things off, we got some new economic data.
Speaker 3 (01:17):
They came out at ten a m.
Speaker 2 (01:19):
Eastern time, none other than the Jolt's Job Openings Report.
And basically, if you're not familiar with this report, each
month it comes out actually in a two month delay,
so this is data for the month of July that
we're getting here, but basically details how many job openings
are there, what are we seeing in terms of movement
(01:41):
as far as quits, hires, layoffs, some different industry breakdowns.
And so this came out at ten am and what
it showed was a further decline in the number of
job openings from about seven point three five million down
to seven point one eight million. And effectively, we're continuing
(02:02):
based on this to see a labor market that is
showing signs of weakening. And now, for the first time
since twenty seventeen, we have a labor market where again
two different reports, So take this for what it is,
but the ratio of people unemployed to the number of
(02:25):
jobs available, we now have fewer jobs available than there
are people unemployed for the first time since twenty seventeen.
So it's been almost eight years since that was the case,
So I think that that's pretty notable. When we look
at this, I'm obviously excluding the pandemic just because that
was not a regular job market then, so I'm kind
(02:48):
of taking twenty twenty off the table just because, well,
for obvious reasons. But this is what we are seeing
right now is again kind of a content continued tightening
in the labor continued loosening in the labor market as
far as demand, and if you are someone who is
hunting for a job, it's not a great sign at
(03:12):
this point.
Speaker 1 (03:12):
Paul.
Speaker 4 (03:13):
Yeah, you also saw the quits rate, which is used
to track just mobility in the labor market. This really
peaked at i believe, around three percent in the heyday
of twenty one and twenty two, where the labor market
was really robust. That's now down to two percent. And
maybe listeners are saying, oh, three to two percent shift,
that's not that big of a deal. It is a
pretty sizable scale to go from the peak of three
(03:35):
percent where there was a tremendous amount of mobility in
the labor market to now sort of the continuing anecdotes
that we've heard is that it is a very low
fire environment, but a low higher environment on the labor market,
and that quits rate reflecting that data here. So more
(03:55):
of the same in terms of what we've seen from
labor reports over the last couple months. Obviously, get the
jobs report this Friday, which we'll we'll break down on
the show, but it continues to be a pretty tepid
labor market at the moment here.
Speaker 2 (04:10):
And I think, you know, getting at that the quits
rate that you mentioned there, the big thing you have
to think about on this. That's a monthly rate that
they are talking about there, So in terms of the difference,
and again this is not you know, there's some people
that quit multiple jobs in a year, so I know,
I'm you know, kind of averaging and just looking at
this in the big picture. If you've got a quits
rate of two percent a month, it generally means that
(04:32):
about one in four employees is quitting a job in
any given year. Quits rate of three percent means that
one in three is quitting in any given year. That's
a huge acceleration and a huge difference, and it gets
at you know, hey, during that twenty twenty one and
twenty two period, Hey, because labor demand was so high.
I mean again, at one point, we had two job
(04:54):
openings for every person who was unemployed, meaning that every
unemployed person could work jobs and we'd finally fill them all.
And we've just never seen anything like that because there
were so many openings and so few people out of
work at the peak. If you look at the historical
norms that we have here, the norm kind of before
(05:17):
twenty eighteen was generally, hey, you maybe had you know,
somewhere in the range of two thirds of a job
available per you know, per person who's unemployed. That was
kind of considered the norm based on looking at you know,
the two thousand and six, two thousand and seven data
and then also looking you know, kind of twenty fourteen
(05:38):
to twenty sixteen, I think those are you know, relatively
normal imbalanced labor markets. On the other hand, you look
at it, you say, Okay, back in you know, August
of nine, for every you know, seven people that were unemployed,
there was one job posted. So you know, there's clearly
a difference and things have evolved there. But I think
(05:59):
that this clearly states, hey, there's there's no material improvement
happening in the labor market and in fact, maybe a
little bit of worsening based on this data. The one
thing that I will point out this is data that
is a month old right now, it's from July, and
we do get more real time data sets that come out. Indeed,
(06:21):
the big job site they have a daily tracker for
their job postings. It operates on about a ten day delay,
so they don't you know, we don't have yesterday's data,
but through August twenty second, which is what they have published, now,
we've actually seen a little bit of an uptick in
job openings since where do we bottom July eleventh, so
(06:43):
kind of over that period. So I do think and look,
there's a really strong correlation between the Indeed data and
what we get from the jolts report. So I do
think it's it's very likely that we see the Joltz
data start to show a little bit of improvement in
the next month or so. Is it a big shift
that we've seen. No, we're talking about maybe a one
(07:03):
or two percent move up in the number of openings.
And so if you you know, say, okay, it's a
one to one ratio, which it's not, but it's it's
pretty darn close quite honestly, Hey, that means job opening
should probably bounce back up into the seven point three
million range in the next month or two. I think
that's what you would expect to see, all else being equal.
So I think what I continue to say on the
(07:26):
on the jobs data, there's clearly a worsening in terms of,
you know, the overall both supply of labor available and
demand for it, but you're just not seeing it any
real shift in terms of there's no increase in layoffs.
There's no increase or decrease in quits, right, there's no
increase or decrease in hires. Everything's just kind of treading
(07:49):
water for the last year or so. But the rate
of the demand for labor has slowed and so is
the supply, and so things are still kind of in
balance the way they've been.
Speaker 3 (08:00):
For the last year now.
Speaker 2 (08:01):
So overall labor, I don't think it's a you know,
disaster here what we're seeing in the labor market. I
don't think it's particularly robust or good. It's just very
slow the same way that it's been for the last year,
and we have not seen a material change, you know,
beyond that. I think aside from the headline hiring rates slowing,
(08:23):
and that really I think just gets at the fact
that there's not as much demand for labor and supply
has dropped off as well, combination of retirements and deportations.
I think that's what we're seeing here. Anything else on
the Jolt data that you want to touch.
Speaker 4 (08:39):
On, No, I think we hit all the major points.
We'll see what comes out on Friday for that job's report.
Speaker 2 (08:44):
All right, let's take a quick break then, and when
we return, we're gonna talk about bonds. Yeah, we're gonna
talk about bonds right after this.
Speaker 1 (08:55):
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Speaker 2 (09:52):
So if something happened yesterday in the bond market, quite honestly,
like there wasn't any one particular trigger, but worldwide, we
saw yields moving up. Whether you're looking at US treasuries,
whether you're looking at UK gilts, Japanese government bonds, you
name it. We saw yields moving up pretty much across
the board. So before anyone is like, oh, like the
(10:14):
US has too much debt, no, this was, you know,
for whatever reason, investors are saying, no, we don't like
bonds today.
Speaker 3 (10:21):
And so you.
Speaker 2 (10:22):
Had the thirty year US treasury getting pretty close to
five percent again today on that weaker than expected Jolts report.
Speaker 3 (10:32):
You've got it.
Speaker 2 (10:33):
Giving most of that back, or rather taking most of
that back. Is the thirty year yield is back down
around four point nine percent. But overall, you continue to
look at the picture for long term bonds, and it's
just tough to find a case where you're like, hey,
here's how yields are really gonna move down for any
extended period of time.
Speaker 4 (10:54):
It is hard to make the case within bonds and
interest rates. It's always I'm always tentative on making an
assertive decision one way or another, because yields can really
surprise you in terms of the directions that they go.
What about making the argument that you know, economics slow
down and some sort of recessionary pressure over the course
of the next year or two.
Speaker 1 (11:14):
I don't know.
Speaker 4 (11:15):
Maybe the debt load has gotten to a point where
it's too much to really quell that that force of
nature of rates coming down from an economic slowdown, But
to me that that still looms. But I would agree
in general, we have really shifted in terms of bond
market sentiment from a period of time from call it
(11:36):
posts Great Financial Crisis to twenty twenty one where there
wasn't much term premium that would be paid to long
term bondholders. And what I mean by that is if
you were to go out long on the curve buying
a ten year or a thirty year US treasury there
was not much in terms of additional premium that you
would be given from an interest rate perspective to buy
(11:57):
out for long term bombs. That dynamic has definitely reverse
since twenty twenty two, and all the inflationary pressure that
we have seen over the last few years or so,
it is much more now a dynamic where as reflected
by where the thirty year is trading right now, that
investors are asking to be paid a higher rate of
interest for going out over the longer term. And that
(12:19):
reflects all of the uncertainty that we talk about with
fiscal deffer deficits, debt issuance and just uncertainty be out
about inflation in general.
Speaker 2 (12:27):
Yeah, I think the you know, the the tough part
that I look at is, you know, even if you
have a recession in the US, which is by no
means guaranteed, you've already got some of that priced into
the long end of the curve simply because of all
the signals that have come out in the last month
or two about hey, the Fed's you know, likely going
(12:47):
to start a cutting cycle in things along those lines.
And so if you have that priced into a certain extent,
it's not necessarily a given that the tenure treasury falls
too much even in a recession from here where it's
you know, currently at around four point two percent, and
so I think it's one where it's kind of you know, okay,
(13:08):
maybe you have a little bit of juice there, but
then the other side is okay. In a recession, typically
what happens is you have to borrow more because you've
got less coming in in terms of tax revenue, You've
got more outlays because of UH programs like unemployment and
things along those lines. And so there's a case where hey,
(13:29):
your your annual deficit could move from six to seven
percent a year up to you know, nine to eleven
percent a year, and that means you've got to borrow
a whole lot more. And do you have enough money
out there to cover all of that supply of new issuance? Yeah,
you will, but at what what like what yield does
it end up demanding in order to do so? I
(13:51):
don't know what the answer is to that question, but
I know that these are things that you have to
ask the questions about now because you're not running two
to three percent deficits like you used to in the US,
you know, for the nineties and two thousands and even
you know, parts of actually we never got there in
the twenty tens with.
Speaker 4 (14:08):
He's referring to percentage of GDP on the deficits.
Speaker 2 (14:11):
Yeah, so I just kind of look at it, and
the math's a little bit tougher. It doesn't mean that
it doesn't end up mathing eventually, but it's just it's
a it's a tougher putt to get there, and a
question if you go into recession, Hey, if there's that
much more issuance, how do you deal with it?
Speaker 3 (14:30):
Ultimately?
Speaker 2 (14:31):
I come back to hey, for short term moves in
the bond market, you can't ascribe, you know, hey, investors
you know don't want you know, there aren't enough investors
to buy up all that debt. That that's just not
the case. And if you want the you know the
example of this. Okay, so last year actually beginning of
(14:54):
this year. Actually, no, let's go back to twenty twenty three,
late twenty three. The ten year touches five percent in
late October, and investor's scream, oh, there's too much debt,
Like this is what's happening, Like this is why no
one's gonna be able to you know, no one's gonna
be able to buy all this debt. Yields are gonna
keep moving up. Almost a year later, the tenure treasury
(15:15):
touched three point six percent on September fifteenth of twenty four,
almost a year ago. Now, Paul, did the US debt
picture get a lot better between October of twenty three
and September of twenty four.
Speaker 1 (15:30):
No, No, it's got a lot worse.
Speaker 2 (15:33):
Okay, because that's what happens every year, continues to get worse.
So the idea that the moves that you see in
yields are directly tied to hey, here's how much debt's
outstanding is pure poppycock. It's just not an actual thing. Now,
you could say, longer term trends that you see can
(15:55):
certainly be indicative of that as one part of the puzzle.
But even there, it's just one piece of the puzzle.
It's not the whole thing in terms of you know,
supply and demand for bonds of any kind, anything else
that we want to go through when it comes to
US treasuries.
Speaker 3 (16:13):
No, we've hit it.
Speaker 2 (16:14):
Actually, there is one other thing that I do want
to touch on there, which is the impact on equity
markets and potential impact on equity markets. We saw this
back in twenty twenty two where it was one of
those rare years where stock sold off and bond sold off,
and really it was stock sold off because bonds sold
off because yields had to move up because of the
(16:35):
high inflation that we were seeing. When we look at
equities today, yeah, you see some fluctuations that, you know,
maybe you could tie equity performance to what we're seeing
in bonds. But generally with moves that are this small,
it's not really a huge thing. I mean, quite honestly,
you take a look at the Tenure Treasury and just
(16:56):
where it's been for the last basically six months now,
I mean dating back to really five months from March.
Aside from the Liberation Day move under four percent, the
Tenure Treasury's been between four point one and four point
five percent for this entire time. It hasn't really moved
a whole lot, right, So these little wiggles that we
(17:18):
see in bonds, I don't think have any meaningful impact
on equities. If we do see, hey, the ten years
got to go down to you know, three five because
of recession. Usually a recession is bad enough that even
that drop in long term borrowing costs doesn't save equities
in the short term.
Speaker 3 (17:36):
Sure.
Speaker 2 (17:37):
The other piece, Hey, let's say that inflation you know,
comes back in force and or hey there's no recession
in maybe the US economy reaccelerates. Okay, Now investors say, hey,
we don't four to two isn't enough for us to
get you know, a ten year Now we want five two?
Does that hurt equities if you see you know, a
larger move up in long term yields, potentially, because that
(18:00):
affects the cost of capital for companies and affects, you know,
the overall strength of the economy. That's that's a case
where a move that's you know, that size could have
an impact on equities. But we just haven't seen that yet.
So I don't think that you can talk about anything
from you know, the last few months and say that
there's been any meaningful impact on stocks, because yields have
(18:20):
been in about.
Speaker 3 (18:21):
A half a percent range for a while now.
Speaker 4 (18:24):
Yeah, it's an interesting position that you have if you're
a bondholder of long term bonds, where usually you're buying
those in your portfolio as a means of safety to
protect your you know, fixed income assets from volatility, but
it's typically to move non correlated with the stock market
or benefit you when the stock market goes down. You
do have some factors in place here where interest rates
(18:46):
on the longer end of the code could rise and
you could see a stock market sell off. And then,
just like in twenty twenty two for many bondholders that
will remember it vividly, where stocks were down eighteen percent
and the bond market was down fifteen percent, it just
put the bond in a tougher position than they've been.
But interest rate conditions can always change, of course.
Speaker 3 (19:05):
Just take a quick break here.
Speaker 2 (19:07):
When we return, we'll do a little bit of Wall
Street Watch, and then we are going to be joined
by the one and only Todd Lutsky from Cushing and
Dolan for Ask Todd, get your estate planning questions ready
for Todd because he joins us after this.
Speaker 1 (19:36):
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 market so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (19:55):
Markets are mixed territory with text seeing a bounce back
on the heels of meat of a ajor win for alphabets.
Speaker 3 (20:02):
Google.
Speaker 5 (20:02):
Wall Street's also sifting through weaker than expected job openings
in labor turnover data. Right now, the Dow is down
by nearly three tenths of one percent, or one hundred
and twenty points lower, SMP five hundred is up four
tenths of one percent, and the Nasdaq is up just
over one percent higher two hundred and thirty points. Russell
two thousand is edging higher. Ten year Treasureel down five
(20:26):
basis points at four point two two six percent, and
Crude oiled down two and a half percent today, trading
just below sixty four dollars a barrel. Alphabet jumping over
seven percent higher after a federal judge ruled that the
tech giant is allowed to keep its Chrome browser, dodging
significant antitrust penalties. However, Google won't be able to sign
(20:47):
exclusive search deals and also has to share its data
according to the ruling. Apple stock is also gaining three
percent in reaction to the alphabet ruling, with Apple receiving
Google's payments of twenty billion dollar dollar to keep Google
as the default search engine on its devices. Meanwhile, Macy's
beat second quarter earnings expectations after the department store chain
(21:09):
saw its same store sales grow for the first time
since twenty twenty two. That stock is surging by nineteen percent,
Sticking with retail, where Dollar Tree shares are falling nine percent.
Despite the discount retailer beating second quarter earnings and revenue expectations,
Dollar Tree also upped its annual outlook. Elsewhere, cybersecurity company
(21:31):
z Scaler b quarterly Street forecasts on the top and
bottom lines and also offered an optimistic guidance for the
current quarter. That stock down by three percent and Salesforce
will report their second quarter earnings after today's closing belt.
I'm Tucker Silvan. That is Wall Street Watch.
Speaker 1 (21:50):
This is Asked Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Tod Letskey is here to answer your
questions and help you play for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts and New
England for more than thirty five years, helping families with
a state and tax planning, Medicaid planning, and probate law.
(22:11):
Visit Cushingdolan, Dot com Now here's Todd Lutsky.
Speaker 2 (22:17):
Todd Lutsky from Cushigan. Dolan joins us now for ask Todd.
We got the phone lines open for your estate planning questions.
Eight eight eight to zero five two two six three
is the number again, that is eight eight eight to
zero five two two six three. We can normally get
through two to three calls, so make sure that you
(22:39):
get calling early in offense so you can get in
line to ask Todd your estate planning questions. That phone
number is eight eight eight two zero five two two
six three. One more time it is eight eight eight
to zero five two two six three. Mister Lutsky, How
are you doing today?
Speaker 6 (22:57):
I am never better? And how about yourself?
Speaker 3 (23:00):
Doing well? Yeah? But I was looking at the news.
Speaker 2 (23:05):
Are about the twenty twenty eight Olympics in Los Angeles?
Speaker 3 (23:08):
Oh? Yeah? Are we doing those? We are?
Speaker 2 (23:10):
Did you see that Aladdin was banned from them?
Speaker 3 (23:14):
No?
Speaker 2 (23:15):
Banned from the Olympics Performance enhancing rugs Ah, I know
it's a real problem, ye, kind of sad. Let's talk
a little bit about IRA beneficiaries and kind of guidance
as it relates to you know, estate planning and those Bennies,
what's kind of been the long term conventional wisdom about
(23:37):
how you name IRA beneficiaries for you know, to coordinate
with your state plan.
Speaker 6 (23:43):
Yeah, so IRA is probably one of the more complicated
assets in a state planning. Remember a state planning, we
plan for all your assets. But with an IRA, it's
just an added level of complexity because there's an income
tax component associated with the estate tax components. So many
people think that, oh, well it's an IRA. It's not
(24:03):
you know, it's not going to be a state taxable
it's income taxbile, Well, it's both. So even roths right,
they're not income taxable, but they're still included in your
state for a state tax purposes, so you kind of
have to deal with them. And so, you know, I
think your question is what's the common sort of approach
to naming beneficiaries? And by the way, there you could
(24:23):
do like an eight hour seminar and IRA beneficiary designations.
Speaker 3 (24:26):
But let's not do that right now.
Speaker 6 (24:28):
Let's not do that now. So so you know, common
approach would be surviving spouse generally should be the primary beneficiary,
and then the contingent beneficiary can be you know, children.
It's an option if you have children, or you might
(24:50):
name your estate planning trust, whether it be your revocable
family trust or your irrevocable trust if you've done perhaps
medicaid planning, so you could name a trust a beneficiary
after you die. So, in other words, iras cannot go
into the trust while you're living without creating an adverse
(25:14):
income tax consequence. Right, let's face it. If I'm going
to take the IRA and put it in a trust,
it's an individual retirement account, which means it has to
be owned in your name. So in order to put
it into a trust, you would have to take the
assets out of it, which of course is a income
taxable event, and then put whatever's left after you pay
(25:36):
the tax into your trust. So we don't do that. However,
at death it can get there. So if you're naming
your children the beneficiaries, that's okay, after your spouse. But
if you do that, you don't have any control over it,
no ability to protect it from future creditors, divorces how
they get it when they get it. But if you
(25:58):
name the trust the contingent beneficiary after the spouse, then
you give yourself a chance to say, all right, these
assets will now be held in a trust protected from
future divorces of the kids, perhaps getting to a generation
below without a generation skipping tax applying. So there's benefits
(26:20):
to naming your trust as the beneficiary. That's the consensus generally.
Speaker 2 (26:24):
Talking with Todd Lotski from the law firm of Cushing
and Dolan, we do have room on the phone lines
for you to ask your estate planning questions to Todd.
Speaker 3 (26:32):
Right now live on air.
Speaker 2 (26:35):
Number here is eight eight eight two zero five two
two six three.
Speaker 3 (26:40):
Again.
Speaker 2 (26:40):
We can usually only get through two to three of
these in any given show, so make sure that you
get your your call place that you can chat with
Todd right now. Again, eight eight eight two zero five
two two sixty three is the number to call. We're
gonna take a quick break here, but when we return,
we are going to get to your questions for Todd.
Speaker 3 (27:00):
Again.
Speaker 2 (27:00):
That number is eight eight eight to zero five two
two six three.
Speaker 1 (27:06):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (27:32):
Still chatting with Todd Lutsky from the law firms Chris Kindlin.
We do still have room on the phone lines at
eight eight eight to zero five two two six three.
You got questions for Todd about your estate plan. This
is your chance to ask them again. That number is
eight eight eight two zero five two two six three.
(27:52):
One more time it's eight eight eight two zero five
two two six three Todd. We were talking beneficiaries for
iras previously. Is there anything that people can do as
far as beneficiary designations that may be able to help
them from a qualifying from medicaid perspective or is that
kind of off the table.
Speaker 3 (28:12):
There's nothing that you can really do there.
Speaker 6 (28:14):
I think for the longest time the answer was there
was really nothing you could really do there, you know,
because again the idea of medicaid planning is to set
up irrevocable trusts and take as many of your assets
as you can now well you're healthy, and put them
in there, and after five years of them being in there,
(28:35):
they'd be protected from the nursing home. That's kind of
the objective. But with an IRA, as we just explained,
I can't take that money and put it in there.
So you're right, for the longest time, it was like,
what do I do? Not a lot? However, now and
I say now, meaning the Secure Act, remember came out
in I want to say, Round two of the Secure
(28:57):
Act came out in twenty twenty two ish, and that
kind of changed the game. That changed the rules a little. Now,
you know, if you have attained age seventy three, which
I believe is the required beginning date, they call it
the RBD. It's the required beginning date to take money
from your IRA. So even though you might retire at
(29:20):
sixty five, you don't have to take any money at
that age, but when you reach seventy three, you must
start taking minimum distributions. So if you reach that age,
you can name the estate the beneficiary. Now that sounds
like a bad deal, but naming the estate the beneficiary
(29:42):
will force it through probate, which is only one asset,
one item, so it doesn't really matter, okay. And then
it goes into a testamentary trust, so you always have
to do this coupled with a testamentary trust. And then
by putting it in that testamentary trust, what's going to
happen is it's going to be available for your surviving spouse.
This is if you die and never go to a
nursing home, which again is our goal right when we
(30:03):
do our planning, then that money would be held for
the benefit of the surviving spouse, who if that spouse
gets sick the next day or any time thereafter, it's
immediately protected from the nursing home for the kids. So
there's no five year waiting period. So it's really a
home run to do it. But there's a lot of
(30:24):
rules to understand when you're doing this, and that's what
this new guide for this month is all about. And
so it's you know, why name your estate and IRA
a beneficiary, right, that's the guide and it explains the
benefits of doing that from an income tax perspective and
estate tax perspective. It also shelters it from future estate taxes,
(30:47):
how it protects it from a nursing home, and again
most importantly, how it doesn't create any adverse income tax
consequences to the surviving spouse.
Speaker 3 (30:57):
So that is.
Speaker 6 (30:58):
Really you know, the game chain when it comes to
doing these naming the estate the beneficiary of an IRA.
In that regard, you can also do this for life insurance,
so and couple it with a testamentary trust so those
are the things that are in there. Call and get
the guide. It's brand new for the month. It'll give
you some new ideas on estate planning for these tough
(31:20):
to plan for assets eight six six eight four eight
five six nine nine or Legal Exchange show dot com.
You can download it there again eight six six eight
four eight five six nine nine or Legal Exchange Show
dot com.
Speaker 2 (31:37):
Top I get a question from Michelle in May and Michelle,
you're on with Todd Lutsky.
Speaker 3 (31:42):
What's your question?
Speaker 7 (31:46):
My significant others for one K she's eight years older
than me upon his death? Do I have to spend
that within ten years?
Speaker 6 (31:58):
So you're you said, I think you beeped out on
this part. Just let me confirm you said you are
a significant other not married, correct, So that makes a
great difference, right, if you're not married, it changes the
game a lot. But let me ask you this. How
old is your significant other eighty eighty? How old are you?
Speaker 7 (32:21):
Seventy two?
Speaker 6 (32:22):
Seventy two? So this is why when I explain this,
the age is going to matter. Right. So in this case,
first of all, do you know he's naming you as
a beneficiary?
Speaker 7 (32:34):
Yeah?
Speaker 6 (32:34):
Okay, because that would be the first got to get
over that hurdle. So if he names you as a beneficiary,
there's rules that say, if it's going to a child,
it must come out over ten years. And that's what
you're asking me. Well, Todd, I'm not a child, I'm
a significant other. Well, there happens to be another rule.
(32:56):
That's the general rule. So most of the time, when
you're not naming a spouse, most of the time the
assets need to be paid out over ten years. So
forget your life expectancy anymore. If you were a spouse,
interestingly enough, in your situation, if he died tomorrow, you
would be able to delay taking minimum distributions until you
(33:23):
reach seventy three. Granted it's only one year, but you
could delay for that year and then you could take
it out over your life expectancy, which would be what
longer than his because he's eighty, So that's a win
and likely longer than ten years. So that's a win.
(33:43):
You know, from an income tax perspective for everybody else listening,
why that matters is the faster you take money out
of an IRA, the higher the income tax bracket you
could be in. Right, So think about a lot of
children who have to take it out over ten years.
What if there's a million dollars sitting in an IRA
and you're an only child, right, Well, you could be
(34:05):
fifty when your parent dies. You might be making a
couple hundred thousand dollars a year. Well, now I'm gonna
have to pull another one hundred thousand dollars a year
plus out, pushing me into an even higher income tax bracket.
I don't know where you are in this situation, Michelle,
but that's the idea for everybody else. Now back to you. Okay,
well I'm not married, so I don't get that bonus.
(34:28):
What do I get? There happens to be one other exception. Well,
there's about four exceptions to the ten year rule. One
of the exceptions is if you happen to be a
minor child or a disabled child, then you can take
it out or over your lifetime. You don't have to
wait ten years or the spouse. We said that was one,
(34:51):
and here's the final one that you might fit into.
If you are the designated beneficiary and you are less
than ten years or less than younger than the participant,
so you are you're within that ten year window. Okay,
so you then would have the ability to take it
(35:14):
out over your life expectancy. So that's really a home
run for you. So you could take it out because
you're within that ten year window. You can take it
out over your life expectancy. That's good, But remember you
might need to do some planning for him because you
never know. Not being married, you have no rights if
he got sick and went to the nursing home. You know,
(35:36):
there's not being a spouse, you don't get to avail
yourself of any of the spousal rights in terms of
protecting these assets from the cost of long term care.
Long winded answer, I know, but folks, when you're dealing
with an IRA, that's what happens. Iras have problems.
Speaker 2 (35:52):
Todd any final thoughts on beneficiaries and estate planning, just
that you want to mention here.
Speaker 3 (35:57):
Yeah, I know.
Speaker 6 (35:57):
We were talking about iras a lot and trying to
do last minute planning protecting assets from the nursing home.
Think about it also with a life insurance policy, Folks,
If you have a life insurance policy and you're trying
to protect it from the nursing home, likely if you're
making premium payments, you're not going to be able to
put that into an irrevocable trust while you're living, and
(36:18):
so when you die, if you're married, you can name
the estate the beneficiary, just like we were talking about
doing with an IRA, and that way it would flow
into this testamentary trust and again be sheltered from a
state taxes, be available for the surviving spouse to enjoy
(36:39):
those dollars from that life insurance policy. And again, because
it flowed through probate to get to this item, to
get to this trust, the surviving spouse can get sick
the next day and there's no five year waiting period
and those assets in there would be not only protected,
they'd be protected from the nursing home for the kids.
(36:59):
So that's a thought.
Speaker 3 (37:00):
Mister Lutsky, thank you so much for joining us today.
Speaker 6 (37:02):
Always a pleasure.
Speaker 3 (37:03):
Thank you.
Speaker 1 (37:05):
This has been asked ond on the Financial Exchange Radio Network.
Askedd with Todd Lutsky has been presented by Cushing and Dolan,
serving Massachusetts and New England for more than thirty years,
helping families with the state and tax planning, Medicaid planning
and probate law. Call eight hundred three nine three four
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(37:26):
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Speaker 2 (37:34):
Still a bunch two get to As we head towards
hour two, we'll be talking about the penalty ruling that
was made in the Google anti trust case, or at
least in one of the Google anti trust cases. Also,
we'll talk a little bit about what we're seeing in
terms of projections for holiday shopping spending. We'll talk a
little bit about what's going on with car sales as
(37:57):
well as the automotive market kind of starting to show
signs not of trouble, but just you know, losing out
on a little bit of growth that they were hoping
to see. And then also how did Hollywood miss the
mark this summer? Why the twenty twenty five box office
was a little bit disappointing. We'll cover all that and
more an hour two
The Financial Exchange is produced by Money Matters Radio and
is hosted by employees of the Armstrong Advisory Group, a
registered investment advisor. All opinions expressed are solely those of
the hosts, do not reflect the opinions of Armstrong Advisory
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donation today. This is the Financial Exchange with Chuck Zada
(01:06):
and Paul Lane.
Speaker 2 (01:10):
Chuck, Paul, and Tucker with you here today, and as
we kick things off, we got some new economic data.
Speaker 3 (01:17):
They came out at ten a m.
Speaker 2 (01:19):
Eastern time, none other than the Jolt's Job Openings Report.
And basically, if you're not familiar with this report, each
month it comes out actually in a two month delay,
so this is data for the month of July that
we're getting here, but basically details how many job openings
are there, what are we seeing in terms of movement
(01:41):
as far as quits, hires, layoffs, some different industry breakdowns.
And so this came out at ten am and what
it showed was a further decline in the number of
job openings from about seven point three five million down
to seven point one eight million. And effectively, we're continuing
(02:02):
based on this to see a labor market that is
showing signs of weakening. And now, for the first time
since twenty seventeen, we have a labor market where again
two different reports, So take this for what it is,
but the ratio of people unemployed to the number of
(02:25):
jobs available, we now have fewer jobs available than there
are people unemployed for the first time since twenty seventeen.
So it's been almost eight years since that was the case,
So I think that that's pretty notable. When we look
at this, I'm obviously excluding the pandemic just because that
was not a regular job market then, so I'm kind
(02:48):
of taking twenty twenty off the table just because, well,
for obvious reasons. But this is what we are seeing
right now is again kind of a content continued tightening
in the labor continued loosening in the labor market as
far as demand, and if you are someone who is
hunting for a job, it's not a great sign at
(03:12):
this point.
Speaker 1 (03:12):
Paul.
Speaker 4 (03:13):
Yeah, you also saw the quits rate, which is used
to track just mobility in the labor market. This really
peaked at i believe, around three percent in the heyday
of twenty one and twenty two, where the labor market
was really robust. That's now down to two percent. And
maybe listeners are saying, oh, three to two percent shift,
that's not that big of a deal. It is a
pretty sizable scale to go from the peak of three
(03:35):
percent where there was a tremendous amount of mobility in
the labor market to now sort of the continuing anecdotes
that we've heard is that it is a very low
fire environment, but a low higher environment on the labor market,
and that quits rate reflecting that data here. So more
(03:55):
of the same in terms of what we've seen from
labor reports over the last couple months. Obviously, get the
jobs report this Friday, which we'll we'll break down on
the show, but it continues to be a pretty tepid
labor market at the moment here.
Speaker 2 (04:10):
And I think, you know, getting at that the quits
rate that you mentioned there, the big thing you have
to think about on this. That's a monthly rate that
they are talking about there, So in terms of the difference,
and again this is not you know, there's some people
that quit multiple jobs in a year, so I know,
I'm you know, kind of averaging and just looking at
this in the big picture. If you've got a quits
rate of two percent a month, it generally means that
(04:32):
about one in four employees is quitting a job in
any given year. Quits rate of three percent means that
one in three is quitting in any given year. That's
a huge acceleration and a huge difference, and it gets
at you know, hey, during that twenty twenty one and
twenty two period, Hey, because labor demand was so high.
I mean again, at one point, we had two job
(04:54):
openings for every person who was unemployed, meaning that every
unemployed person could work jobs and we'd finally fill them all.
And we've just never seen anything like that because there
were so many openings and so few people out of
work at the peak. If you look at the historical
norms that we have here, the norm kind of before
(05:17):
twenty eighteen was generally, hey, you maybe had you know,
somewhere in the range of two thirds of a job
available per you know, per person who's unemployed. That was
kind of considered the norm based on looking at you know,
the two thousand and six, two thousand and seven data
and then also looking you know, kind of twenty fourteen
(05:38):
to twenty sixteen, I think those are you know, relatively
normal imbalanced labor markets. On the other hand, you look
at it, you say, Okay, back in you know, August
of nine, for every you know, seven people that were unemployed,
there was one job posted. So you know, there's clearly
a difference and things have evolved there. But I think
(05:59):
that this clearly states, hey, there's there's no material improvement
happening in the labor market and in fact, maybe a
little bit of worsening based on this data. The one
thing that I will point out this is data that
is a month old right now, it's from July, and
we do get more real time data sets that come out. Indeed,
(06:21):
the big job site they have a daily tracker for
their job postings. It operates on about a ten day delay,
so they don't you know, we don't have yesterday's data,
but through August twenty second, which is what they have published, now,
we've actually seen a little bit of an uptick in
job openings since where do we bottom July eleventh, so
(06:43):
kind of over that period. So I do think and look,
there's a really strong correlation between the Indeed data and
what we get from the jolts report. So I do
think it's it's very likely that we see the Joltz
data start to show a little bit of improvement in
the next month or so. Is it a big shift
that we've seen. No, we're talking about maybe a one
(07:03):
or two percent move up in the number of openings.
And so if you you know, say, okay, it's a
one to one ratio, which it's not, but it's it's
pretty darn close quite honestly, Hey, that means job opening
should probably bounce back up into the seven point three
million range in the next month or two. I think
that's what you would expect to see, all else being equal.
So I think what I continue to say on the
(07:26):
on the jobs data, there's clearly a worsening in terms of,
you know, the overall both supply of labor available and
demand for it, but you're just not seeing it any
real shift in terms of there's no increase in layoffs.
There's no increase or decrease in quits, right, there's no
increase or decrease in hires. Everything's just kind of treading
(07:49):
water for the last year or so. But the rate
of the demand for labor has slowed and so is
the supply, and so things are still kind of in
balance the way they've been.
Speaker 3 (08:00):
For the last year now.
Speaker 2 (08:01):
So overall labor, I don't think it's a you know,
disaster here what we're seeing in the labor market. I
don't think it's particularly robust or good. It's just very
slow the same way that it's been for the last year,
and we have not seen a material change, you know,
beyond that. I think aside from the headline hiring rates slowing,
(08:23):
and that really I think just gets at the fact
that there's not as much demand for labor and supply
has dropped off as well, combination of retirements and deportations.
I think that's what we're seeing here. Anything else on
the Jolt data that you want to touch.
Speaker 4 (08:39):
On, No, I think we hit all the major points.
We'll see what comes out on Friday for that job's report.
Speaker 2 (08:44):
All right, let's take a quick break then, and when
we return, we're gonna talk about bonds. Yeah, we're gonna
talk about bonds right after this.
Speaker 1 (08:55):
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Speaker 5 (09:15):
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Speaker 2 (09:52):
So if something happened yesterday in the bond market, quite honestly,
like there wasn't any one particular trigger, but worldwide, we
saw yields moving up. Whether you're looking at US treasuries,
whether you're looking at UK gilts, Japanese government bonds, you
name it. We saw yields moving up pretty much across
the board. So before anyone is like, oh, like the
(10:14):
US has too much debt, no, this was, you know,
for whatever reason, investors are saying, no, we don't like
bonds today.
Speaker 3 (10:21):
And so you.
Speaker 2 (10:22):
Had the thirty year US treasury getting pretty close to
five percent again today on that weaker than expected Jolts report.
Speaker 3 (10:32):
You've got it.
Speaker 2 (10:33):
Giving most of that back, or rather taking most of
that back. Is the thirty year yield is back down
around four point nine percent. But overall, you continue to
look at the picture for long term bonds, and it's
just tough to find a case where you're like, hey,
here's how yields are really gonna move down for any
extended period of time.
Speaker 4 (10:54):
It is hard to make the case within bonds and
interest rates. It's always I'm always tentative on making an
assertive decision one way or another, because yields can really
surprise you in terms of the directions that they go.
What about making the argument that you know, economics slow
down and some sort of recessionary pressure over the course
of the next year or two.
Speaker 1 (11:14):
I don't know.
Speaker 4 (11:15):
Maybe the debt load has gotten to a point where
it's too much to really quell that that force of
nature of rates coming down from an economic slowdown, But
to me that that still looms. But I would agree
in general, we have really shifted in terms of bond
market sentiment from a period of time from call it
(11:36):
posts Great Financial Crisis to twenty twenty one where there
wasn't much term premium that would be paid to long
term bondholders. And what I mean by that is if
you were to go out long on the curve buying
a ten year or a thirty year US treasury there
was not much in terms of additional premium that you
would be given from an interest rate perspective to buy
(11:57):
out for long term bombs. That dynamic has definitely reverse
since twenty twenty two, and all the inflationary pressure that
we have seen over the last few years or so,
it is much more now a dynamic where as reflected
by where the thirty year is trading right now, that
investors are asking to be paid a higher rate of
interest for going out over the longer term. And that
(12:19):
reflects all of the uncertainty that we talk about with
fiscal deffer deficits, debt issuance and just uncertainty be out
about inflation in general.
Speaker 2 (12:27):
Yeah, I think the you know, the the tough part
that I look at is, you know, even if you
have a recession in the US, which is by no
means guaranteed, you've already got some of that priced into
the long end of the curve simply because of all
the signals that have come out in the last month
or two about hey, the Fed's you know, likely going
(12:47):
to start a cutting cycle in things along those lines.
And so if you have that priced into a certain extent,
it's not necessarily a given that the tenure treasury falls
too much even in a recession from here where it's
you know, currently at around four point two percent, and
so I think it's one where it's kind of you know, okay,
(13:08):
maybe you have a little bit of juice there, but
then the other side is okay. In a recession, typically
what happens is you have to borrow more because you've
got less coming in in terms of tax revenue, You've
got more outlays because of UH programs like unemployment and
things along those lines. And so there's a case where hey,
(13:29):
your your annual deficit could move from six to seven
percent a year up to you know, nine to eleven
percent a year, and that means you've got to borrow
a whole lot more. And do you have enough money
out there to cover all of that supply of new issuance? Yeah,
you will, but at what what like what yield does
it end up demanding in order to do so? I
(13:51):
don't know what the answer is to that question, but
I know that these are things that you have to
ask the questions about now because you're not running two
to three percent deficits like you used to in the US,
you know, for the nineties and two thousands and even
you know, parts of actually we never got there in
the twenty tens with.
Speaker 4 (14:08):
He's referring to percentage of GDP on the deficits.
Speaker 2 (14:11):
Yeah, so I just kind of look at it, and
the math's a little bit tougher. It doesn't mean that
it doesn't end up mathing eventually, but it's just it's
a it's a tougher putt to get there, and a
question if you go into recession, Hey, if there's that
much more issuance, how do you deal with it?
Speaker 3 (14:30):
Ultimately?
Speaker 2 (14:31):
I come back to hey, for short term moves in
the bond market, you can't ascribe, you know, hey, investors
you know don't want you know, there aren't enough investors
to buy up all that debt. That that's just not
the case. And if you want the you know the
example of this. Okay, so last year actually beginning of
(14:54):
this year. Actually, no, let's go back to twenty twenty three,
late twenty three. The ten year touches five percent in
late October, and investor's scream, oh, there's too much debt,
Like this is what's happening, Like this is why no
one's gonna be able to you know, no one's gonna
be able to buy all this debt. Yields are gonna
keep moving up. Almost a year later, the tenure treasury
(15:15):
touched three point six percent on September fifteenth of twenty four,
almost a year ago. Now, Paul, did the US debt
picture get a lot better between October of twenty three
and September of twenty four.
Speaker 1 (15:30):
No, No, it's got a lot worse.
Speaker 2 (15:33):
Okay, because that's what happens every year, continues to get worse.
So the idea that the moves that you see in
yields are directly tied to hey, here's how much debt's
outstanding is pure poppycock. It's just not an actual thing. Now,
you could say, longer term trends that you see can
(15:55):
certainly be indicative of that as one part of the puzzle.
But even there, it's just one piece of the puzzle.
It's not the whole thing in terms of you know,
supply and demand for bonds of any kind, anything else
that we want to go through when it comes to
US treasuries.
Speaker 3 (16:13):
No, we've hit it.
Speaker 2 (16:14):
Actually, there is one other thing that I do want
to touch on there, which is the impact on equity
markets and potential impact on equity markets. We saw this
back in twenty twenty two where it was one of
those rare years where stock sold off and bond sold off,
and really it was stock sold off because bonds sold
off because yields had to move up because of the
(16:35):
high inflation that we were seeing. When we look at
equities today, yeah, you see some fluctuations that, you know,
maybe you could tie equity performance to what we're seeing
in bonds. But generally with moves that are this small,
it's not really a huge thing. I mean, quite honestly,
you take a look at the Tenure Treasury and just
(16:56):
where it's been for the last basically six months now,
I mean dating back to really five months from March.
Aside from the Liberation Day move under four percent, the
Tenure Treasury's been between four point one and four point
five percent for this entire time. It hasn't really moved
a whole lot, right, So these little wiggles that we
(17:18):
see in bonds, I don't think have any meaningful impact
on equities. If we do see, hey, the ten years
got to go down to you know, three five because
of recession. Usually a recession is bad enough that even
that drop in long term borrowing costs doesn't save equities
in the short term.
Speaker 3 (17:36):
Sure.
Speaker 2 (17:37):
The other piece, Hey, let's say that inflation you know,
comes back in force and or hey there's no recession
in maybe the US economy reaccelerates. Okay, Now investors say, hey,
we don't four to two isn't enough for us to
get you know, a ten year Now we want five two?
Does that hurt equities if you see you know, a
larger move up in long term yields, potentially, because that
(18:00):
affects the cost of capital for companies and affects, you know,
the overall strength of the economy. That's that's a case
where a move that's you know, that size could have
an impact on equities. But we just haven't seen that yet.
So I don't think that you can talk about anything
from you know, the last few months and say that
there's been any meaningful impact on stocks, because yields have
(18:20):
been in about.
Speaker 3 (18:21):
A half a percent range for a while now.
Speaker 4 (18:24):
Yeah, it's an interesting position that you have if you're
a bondholder of long term bonds, where usually you're buying
those in your portfolio as a means of safety to
protect your you know, fixed income assets from volatility, but
it's typically to move non correlated with the stock market
or benefit you when the stock market goes down. You
do have some factors in place here where interest rates
(18:46):
on the longer end of the code could rise and
you could see a stock market sell off. And then,
just like in twenty twenty two for many bondholders that
will remember it vividly, where stocks were down eighteen percent
and the bond market was down fifteen percent, it just
put the bond in a tougher position than they've been.
But interest rate conditions can always change, of course.
Speaker 3 (19:05):
Just take a quick break here.
Speaker 2 (19:07):
When we return, we'll do a little bit of Wall
Street Watch, and then we are going to be joined
by the one and only Todd Lutsky from Cushing and
Dolan for Ask Todd, get your estate planning questions ready
for Todd because he joins us after this.
Speaker 1 (19:36):
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 market so
far today right here on the Financial Exchange Radio Network.
Speaker 5 (19:55):
Markets are mixed territory with text seeing a bounce back
on the heels of meat of a ajor win for alphabets.
Speaker 3 (20:02):
Google.
Speaker 5 (20:02):
Wall Street's also sifting through weaker than expected job openings
in labor turnover data. Right now, the Dow is down
by nearly three tenths of one percent, or one hundred
and twenty points lower, SMP five hundred is up four
tenths of one percent, and the Nasdaq is up just
over one percent higher two hundred and thirty points. Russell
two thousand is edging higher. Ten year Treasureel down five
(20:26):
basis points at four point two two six percent, and
Crude oiled down two and a half percent today, trading
just below sixty four dollars a barrel. Alphabet jumping over
seven percent higher after a federal judge ruled that the
tech giant is allowed to keep its Chrome browser, dodging
significant antitrust penalties. However, Google won't be able to sign
(20:47):
exclusive search deals and also has to share its data
according to the ruling. Apple stock is also gaining three
percent in reaction to the alphabet ruling, with Apple receiving
Google's payments of twenty billion dollar dollar to keep Google
as the default search engine on its devices. Meanwhile, Macy's
beat second quarter earnings expectations after the department store chain
(21:09):
saw its same store sales grow for the first time
since twenty twenty two. That stock is surging by nineteen percent,
Sticking with retail, where Dollar Tree shares are falling nine percent.
Despite the discount retailer beating second quarter earnings and revenue expectations,
Dollar Tree also upped its annual outlook. Elsewhere, cybersecurity company
(21:31):
z Scaler b quarterly Street forecasts on the top and
bottom lines and also offered an optimistic guidance for the
current quarter. That stock down by three percent and Salesforce
will report their second quarter earnings after today's closing belt.
I'm Tucker Silvan. That is Wall Street Watch.
Speaker 1 (21:50):
This is Asked Todd on the Financial Exchange Radio Network.
If you have an existing estate plan or in the
market for one, Tod Letskey is here to answer your
questions and help you play for later life. Ask Todd
is presented by Cushing and Dolan, serving Massachusetts and New
England for more than thirty five years, helping families with
a state and tax planning, Medicaid planning, and probate law.
(22:11):
Visit Cushingdolan, Dot com Now here's Todd Lutsky.
Speaker 2 (22:17):
Todd Lutsky from Cushigan. Dolan joins us now for ask Todd.
We got the phone lines open for your estate planning questions.
Eight eight eight to zero five two two six three
is the number again, that is eight eight eight to
zero five two two six three. We can normally get
through two to three calls, so make sure that you
(22:39):
get calling early in offense so you can get in
line to ask Todd your estate planning questions. That phone
number is eight eight eight two zero five two two
six three. One more time it is eight eight eight
to zero five two two six three. Mister Lutsky, How
are you doing today?
Speaker 6 (22:57):
I am never better? And how about yourself?
Speaker 3 (23:00):
Doing well? Yeah? But I was looking at the news.
Speaker 2 (23:05):
Are about the twenty twenty eight Olympics in Los Angeles?
Speaker 3 (23:08):
Oh? Yeah? Are we doing those? We are?
Speaker 2 (23:10):
Did you see that Aladdin was banned from them?
Speaker 3 (23:14):
No?
Speaker 2 (23:15):
Banned from the Olympics Performance enhancing rugs Ah, I know
it's a real problem, ye, kind of sad. Let's talk
a little bit about IRA beneficiaries and kind of guidance
as it relates to you know, estate planning and those Bennies,
what's kind of been the long term conventional wisdom about
(23:37):
how you name IRA beneficiaries for you know, to coordinate
with your state plan.
Speaker 6 (23:43):
Yeah, so IRA is probably one of the more complicated
assets in a state planning. Remember a state planning, we
plan for all your assets. But with an IRA, it's
just an added level of complexity because there's an income
tax component associated with the estate tax components. So many
people think that, oh, well it's an IRA. It's not
(24:03):
you know, it's not going to be a state taxable
it's income taxbile, Well, it's both. So even roths right,
they're not income taxable, but they're still included in your
state for a state tax purposes, so you kind of
have to deal with them. And so, you know, I
think your question is what's the common sort of approach
to naming beneficiaries? And by the way, there you could
(24:23):
do like an eight hour seminar and IRA beneficiary designations.
Speaker 3 (24:26):
But let's not do that right now.
Speaker 6 (24:28):
Let's not do that now. So so you know, common
approach would be surviving spouse generally should be the primary beneficiary,
and then the contingent beneficiary can be you know, children.
It's an option if you have children, or you might
(24:50):
name your estate planning trust, whether it be your revocable
family trust or your irrevocable trust if you've done perhaps
medicaid planning, so you could name a trust a beneficiary
after you die. So, in other words, iras cannot go
into the trust while you're living without creating an adverse
(25:14):
income tax consequence. Right, let's face it. If I'm going
to take the IRA and put it in a trust,
it's an individual retirement account, which means it has to
be owned in your name. So in order to put
it into a trust, you would have to take the
assets out of it, which of course is a income
taxable event, and then put whatever's left after you pay
(25:36):
the tax into your trust. So we don't do that. However,
at death it can get there. So if you're naming
your children the beneficiaries, that's okay, after your spouse. But
if you do that, you don't have any control over it,
no ability to protect it from future creditors, divorces how
they get it when they get it. But if you
(25:58):
name the trust the contingent beneficiary after the spouse, then
you give yourself a chance to say, all right, these
assets will now be held in a trust protected from
future divorces of the kids, perhaps getting to a generation
below without a generation skipping tax applying. So there's benefits
(26:20):
to naming your trust as the beneficiary. That's the consensus generally.
Speaker 2 (26:24):
Talking with Todd Lotski from the law firm of Cushing
and Dolan, we do have room on the phone lines
for you to ask your estate planning questions to Todd.
Speaker 3 (26:32):
Right now live on air.
Speaker 2 (26:35):
Number here is eight eight eight two zero five two
two six three.
Speaker 3 (26:40):
Again.
Speaker 2 (26:40):
We can usually only get through two to three of
these in any given show, so make sure that you
get your your call place that you can chat with
Todd right now. Again, eight eight eight two zero five
two two sixty three is the number to call. We're
gonna take a quick break here, but when we return,
we are going to get to your questions for Todd.
Speaker 3 (27:00):
Again.
Speaker 2 (27:00):
That number is eight eight eight to zero five two
two six three.
Speaker 1 (27:06):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 2 (27:32):
Still chatting with Todd Lutsky from the law firms Chris Kindlin.
We do still have room on the phone lines at
eight eight eight to zero five two two six three.
You got questions for Todd about your estate plan. This
is your chance to ask them again. That number is
eight eight eight two zero five two two six three.
(27:52):
One more time it's eight eight eight two zero five
two two six three Todd. We were talking beneficiaries for
iras previously. Is there anything that people can do as
far as beneficiary designations that may be able to help
them from a qualifying from medicaid perspective or is that
kind of off the table.
Speaker 3 (28:12):
There's nothing that you can really do there.
Speaker 6 (28:14):
I think for the longest time the answer was there
was really nothing you could really do there, you know,
because again the idea of medicaid planning is to set
up irrevocable trusts and take as many of your assets
as you can now well you're healthy, and put them
in there, and after five years of them being in there,
(28:35):
they'd be protected from the nursing home. That's kind of
the objective. But with an IRA, as we just explained,
I can't take that money and put it in there.
So you're right, for the longest time, it was like,
what do I do? Not a lot? However, now and
I say now, meaning the Secure Act, remember came out
in I want to say, Round two of the Secure
(28:57):
Act came out in twenty twenty two ish, and that
kind of changed the game. That changed the rules a little. Now,
you know, if you have attained age seventy three, which
I believe is the required beginning date, they call it
the RBD. It's the required beginning date to take money
from your IRA. So even though you might retire at
(29:20):
sixty five, you don't have to take any money at
that age, but when you reach seventy three, you must
start taking minimum distributions. So if you reach that age,
you can name the estate the beneficiary. Now that sounds
like a bad deal, but naming the estate the beneficiary
(29:42):
will force it through probate, which is only one asset,
one item, so it doesn't really matter, okay. And then
it goes into a testamentary trust, so you always have
to do this coupled with a testamentary trust. And then
by putting it in that testamentary trust, what's going to
happen is it's going to be available for your surviving spouse.
This is if you die and never go to a
nursing home, which again is our goal right when we
(30:03):
do our planning, then that money would be held for
the benefit of the surviving spouse, who if that spouse
gets sick the next day or any time thereafter, it's
immediately protected from the nursing home for the kids. So
there's no five year waiting period. So it's really a
home run to do it. But there's a lot of
(30:24):
rules to understand when you're doing this, and that's what
this new guide for this month is all about. And
so it's you know, why name your estate and IRA
a beneficiary, right, that's the guide and it explains the
benefits of doing that from an income tax perspective and
estate tax perspective. It also shelters it from future estate taxes,
(30:47):
how it protects it from a nursing home, and again
most importantly, how it doesn't create any adverse income tax
consequences to the surviving spouse.
Speaker 3 (30:57):
So that is.
Speaker 6 (30:58):
Really you know, the game chain when it comes to
doing these naming the estate the beneficiary of an IRA.
In that regard, you can also do this for life insurance,
so and couple it with a testamentary trust so those
are the things that are in there. Call and get
the guide. It's brand new for the month. It'll give
you some new ideas on estate planning for these tough
(31:20):
to plan for assets eight six six eight four eight
five six nine nine or Legal Exchange show dot com.
You can download it there again eight six six eight
four eight five six nine nine or Legal Exchange Show
dot com.
Speaker 2 (31:37):
Top I get a question from Michelle in May and Michelle,
you're on with Todd Lutsky.
Speaker 3 (31:42):
What's your question?
Speaker 7 (31:46):
My significant others for one K she's eight years older
than me upon his death? Do I have to spend
that within ten years?
Speaker 6 (31:58):
So you're you said, I think you beeped out on
this part. Just let me confirm you said you are
a significant other not married, correct, So that makes a
great difference, right, if you're not married, it changes the
game a lot. But let me ask you this. How
old is your significant other eighty eighty? How old are you?
Speaker 7 (32:21):
Seventy two?
Speaker 6 (32:22):
Seventy two? So this is why when I explain this,
the age is going to matter. Right. So in this case,
first of all, do you know he's naming you as
a beneficiary?
Speaker 7 (32:34):
Yeah?
Speaker 6 (32:34):
Okay, because that would be the first got to get
over that hurdle. So if he names you as a beneficiary,
there's rules that say, if it's going to a child,
it must come out over ten years. And that's what
you're asking me. Well, Todd, I'm not a child, I'm
a significant other. Well, there happens to be another rule.
(32:56):
That's the general rule. So most of the time, when
you're not naming a spouse, most of the time the
assets need to be paid out over ten years. So
forget your life expectancy anymore. If you were a spouse,
interestingly enough, in your situation, if he died tomorrow, you
would be able to delay taking minimum distributions until you
(33:23):
reach seventy three. Granted it's only one year, but you
could delay for that year and then you could take
it out over your life expectancy, which would be what
longer than his because he's eighty, So that's a win
and likely longer than ten years. So that's a win.
(33:43):
You know, from an income tax perspective for everybody else listening,
why that matters is the faster you take money out
of an IRA, the higher the income tax bracket you
could be in. Right, So think about a lot of
children who have to take it out over ten years.
What if there's a million dollars sitting in an IRA
and you're an only child, right, Well, you could be
(34:05):
fifty when your parent dies. You might be making a
couple hundred thousand dollars a year. Well, now I'm gonna
have to pull another one hundred thousand dollars a year
plus out, pushing me into an even higher income tax bracket.
I don't know where you are in this situation, Michelle,
but that's the idea for everybody else. Now back to you. Okay,
well I'm not married, so I don't get that bonus.
(34:28):
What do I get? There happens to be one other exception. Well,
there's about four exceptions to the ten year rule. One
of the exceptions is if you happen to be a
minor child or a disabled child, then you can take
it out or over your lifetime. You don't have to
wait ten years or the spouse. We said that was one,
(34:51):
and here's the final one that you might fit into.
If you are the designated beneficiary and you are less
than ten years or less than younger than the participant,
so you are you're within that ten year window. Okay,
so you then would have the ability to take it
(35:14):
out over your life expectancy. So that's really a home
run for you. So you could take it out because
you're within that ten year window. You can take it
out over your life expectancy. That's good, But remember you
might need to do some planning for him because you
never know. Not being married, you have no rights if
he got sick and went to the nursing home. You know,
(35:36):
there's not being a spouse, you don't get to avail
yourself of any of the spousal rights in terms of
protecting these assets from the cost of long term care.
Long winded answer, I know, but folks, when you're dealing
with an IRA, that's what happens. Iras have problems.
Speaker 2 (35:52):
Todd any final thoughts on beneficiaries and estate planning, just
that you want to mention here.
Speaker 3 (35:57):
Yeah, I know.
Speaker 6 (35:57):
We were talking about iras a lot and trying to
do last minute planning protecting assets from the nursing home.
Think about it also with a life insurance policy, Folks,
If you have a life insurance policy and you're trying
to protect it from the nursing home, likely if you're
making premium payments, you're not going to be able to
put that into an irrevocable trust while you're living, and
(36:18):
so when you die, if you're married, you can name
the estate the beneficiary, just like we were talking about
doing with an IRA, and that way it would flow
into this testamentary trust and again be sheltered from a
state taxes, be available for the surviving spouse to enjoy
(36:39):
those dollars from that life insurance policy. And again, because
it flowed through probate to get to this item, to
get to this trust, the surviving spouse can get sick
the next day and there's no five year waiting period
and those assets in there would be not only protected,
they'd be protected from the nursing home for the kids.
(36:59):
So that's a thought.
Speaker 3 (37:00):
Mister Lutsky, thank you so much for joining us today.
Speaker 6 (37:02):
Always a pleasure.
Speaker 3 (37:03):
Thank you.
Speaker 1 (37:05):
This has been asked ond on the Financial Exchange Radio Network.
Askedd with Todd Lutsky has been presented by Cushing and Dolan,
serving Massachusetts and New England for more than thirty years,
helping families with the state and tax planning, Medicaid planning
and probate law. Call eight hundred three nine three four
thousand and one or visit Cushingdolan dot com. The views
expressed in this segment are solely those of Cushing and Dolan.
(37:26):
Armstrong Advisory does not provide any legal or tax advice.
Please consult with your illegal or tax advisor on such matters.
Cushing and Armstrong do not endorse each other and are
not affiliated.
Speaker 2 (37:34):
Still a bunch two get to As we head towards
hour two, we'll be talking about the penalty ruling that
was made in the Google anti trust case, or at
least in one of the Google anti trust cases. Also,
we'll talk a little bit about what we're seeing in
terms of projections for holiday shopping spending. We'll talk a
little bit about what's going on with car sales as
(37:57):
well as the automotive market kind of starting to show
signs not of trouble, but just you know, losing out
on a little bit of growth that they were hoping
to see. And then also how did Hollywood miss the
mark this summer? Why the twenty twenty five box office
was a little bit disappointing. We'll cover all that and
more an hour two
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