George Smith wrote:

- quote -

Thanks for all the responses.

--
George

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George Smith wrote:

- quote -

I think you are likely asking the right questions, the
lawyer may have been in too great a hurry to give you a
detailed reply.

You really need to read the terms of the trust. It should
spell out what should happen upon your dad's passing. (i.e.
the trust might end completely, and distribute the assets to
you) Your description sound like a revocable living trust.
Simply put, Dad was the owner and in control of the trust at
all times. Of course you have to be worried about the
stepped up basis. Well, not worry, but you need to know
that's what to do. This is from pub 550, which you can get
from www.IRS.gov ; (since she's 'not worried' about this
issue, I'd step up the basis to value on date of passing.
It's the cleanest way to do it). Good luck. JOE

quote from pub 550 ---------------------- below

Property Received as Inheritance

If you inherited property, your basis in that property
generally is its fair market value (its appraised value on
the federal estate tax return) on:

1. The date of the decedent's death, or
2. The later alternate valuation date if the estate
qualifies for, and elects to use, alternate valuation.

If no federal estate tax return was filed, use the appraised
value on the date of death for state inheritance or
transmission taxes.

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George Smith wrote:

- quote -

If your father created the trust AFTER his wife died, all
the assets get a step-up in basis to the FMV at his DOD.
Otherwise, it coud be more complicated than that.

ed

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George Smith <gsmith[at]alum.rpi.edu> wrote:

- quote -

The trust should now get its own tax ID number.

- quote -

Sounds like your lawyer doesn't know the difference between
income tax and estate tax.

For income tax purposes property in the trust, if it would
be included in your father's estate for estate tax purposes,
does get revalued for income tax purposes, just like
property out of the trust, yes.

- quote -

For tax purposes, up to the date of your father's death all
property in the trust and outside the trust are treated the
same. When a trust becomes irrevocable it becomes a
separate income tax paying entity. I believe that income in
respect of a decedent (income earned while he was alive but
paid after death) is not considered trust income.

If you have a choice you might want to get income generating
property out of the trust quickly (or at least distribute
the income) since bracket creep for trusts can be deadly.

Stu

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"George Smith" <gsmith[at]alum.rpi.edu> wrote:

- quote -

Yes.

- quote -

Even assuming she was having a bad day, if you asked the
question of her the way you asked it here, she should have
known you weren't talking about estate tax. Be wary of
her.

--
Phil Marti
Clarksburg, MD

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Please ignore if this is duplicated. My first attempt
hasn't shown up after 4 days.

My father recently died and I became a successor trustee to
his trust. I don't yet have all the trust details, but it
was the type where he used his own social security number as
the tax id and was the sole trustee for his own benefit
before he died.

I'm trying to understand the tax implications of selling
some of the assets to invest in income producing assets. Do
the assets in the trust get a new value as of the date he
died like the assets outside the trust? When I asked our
lawyer, she said not to worry about it, the estate was too
small for tax.

Am I even asking the right questions? Is more information
needed to even get the right questions asked?

Thanks for any advice you may offer.

--
George

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