Jim Lynch wrote:
- quote -

Couple footnotes...

In certain circumstances it pays to elect to use the "alternate
valuation date" of six months after the date of death for both
estate-tax and basis step-up purposes. You can Google that term for
general info, and if it's a sizable estate it's a good question to pose
to your attorney or accountant.

On the EEs...this topic is covered well here:
http://www.publicdebt.treas.gov/sav/savdies.htm
as well as the IRS publications referred to on that page.

-Tad

The author of the trust is long dead. Thanks for the info. It's a
simple trust. 2 brokerage/mutual fund accounts and the bonds. Trustee
and beneficiary are one an the same. No other relatives or interested
parties to complain. A few assets that will have to be probated so
that'll cover the creditor problem. As soon as I get the death cert.
I'll transfer the assets to the beneficiary. There was a sale of a
security after death, but the capital gain/loss was trivial if the basis
is the value at death rather than at purchase.



Jim.

"Gene E. Utterback, EA" wrote:

"Jim Lynch" <jwl[at]sgi.com> wrote in message news:3F436BA9.68ED2195[at]sgi.com...
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The tax basis for securities held in a revocable living trust gets adjusted
to the Fair Market Value at the date of death of every settlor to the trust.
Each time a settlor dies, the remaining basis should be recalculated.
However, when the last settlor dies the basis gets adjusted one last time
and this is what passes over to the trust and eventually to the beneficiary
if the securities are transferred "in-kind".

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It depends on what exactly has happened since death, what the trust document
says, and local law. A tax return for the trust is not required unless the
trust has more than $600 in income. And depending on what the trust
document said, it could be possible to transfer the assets out of the trust
and into the beneficiaries names prior to having $600 in earnings. However,
if the trust continues to hold income producing assets in accordance with
the trust's instructions you have to see what the document says about
distributions, distributable net income, and taxes. It is possible that the
trust could have income that it passes through to a beneficiary, causing the
beneficiary to pay tax, and not pass through any cash. It doesn't happen
often, but it can.

- quote -

I'd have to check on the bond issue, I am not sure.

- quote -

The most important thing for you, as trustee, is to make sure you understand
your obligations under the document. I would recommend you consult with the
attorney who drafted the trust, or if he is not available, with an attorney
well versed in trust work.

Good luck,
Gene E. Utterback, EA

I am the trustee of my parents living trust. Both are now deceased. A
couple of questions have come up.

Is the tax basis for securities the value of the securities when the
last settlor died or the value at the time the ownership of the trust is
transferred?

Are capital gains/losses incurred after the death of the last settlor
taxable to the estate of the settlor or to the beneficiary?

There are EE bonds in the trust. I belive that since the interest has
been deferred the beneficiary will pay taxes on the bonds as if he/she
purchased them. That is, there is no upgrades basis for bonds. Is that
right?

Thanks,
Jim.