Do assets owned by a revocable trust get a step-up basis at death?
Do assets owned in a trust receive a step-up in basis? Yes and no. If the asset was held in a revocable (or living) trust before the owner died, it will likely be eligible for a step-up in cost basis. Financial accounts aren’t the only assets that can be held in trust.
What happens when the maker of a revocable trust dies?
When the maker of a revocable trust, also known as the grantor or settlor, dies, the assets become property of the trust.
What happens to trust assets after the death of a parent?
The double step-up means any remaining trust assets will have a second cost-basis step-up upon my mother’s death. Fortunately, we were within the IRS’ three-year tax refiling window and could recoup our overpayments. But not all such errors are correctable.
What happens to my father’s property after he dies?
Best to find out what your state requires. Your father’s Will probably leaves his tangible personal property (such as clothes, books, etc) to your mother, and then pours whatever else he owned at death into the family trust. So that’s the document that matters in determining what your mother can, and can’t, do now.
When to reset cost basis after parent’s death?
The shares my mother inherited had been placed in a joint living revocable trust. In such a trust, the death of one of the owners (my dad) triggers a reset of cost basis. Translation: Instead of paying gains on the 1974 stock price, we should have been paying gains on the January 2, 2002 price, the date of my father’s death.
When the maker of a revocable trust, also known as the grantor or settlor, dies, the assets become property of the trust.
The double step-up means any remaining trust assets will have a second cost-basis step-up upon my mother’s death. Fortunately, we were within the IRS’ three-year tax refiling window and could recoup our overpayments. But not all such errors are correctable.
Best to find out what your state requires. Your father’s Will probably leaves his tangible personal property (such as clothes, books, etc) to your mother, and then pours whatever else he owned at death into the family trust. So that’s the document that matters in determining what your mother can, and can’t, do now.
What did my dad do when he died?
When my dad died from complications of heart valve surgery in 2002, most of his assets, and my mother’s, were neatly bundled into IRAs and revocable trusts. Every year since then, I’ve helped Mom gather her tax documents, compile the deductible medical bills and pass everything to her accountant who does her magic handling the complex trust taxes.