Mission Viejo, CA asked in Estate Planning for California

Q: irrevocable trust in place and mom died last month. What docs need filed relating to cost step up basis?

Both brother and I are trustees and beneficiaries of mom's irrevocable trust. What Federal/State documents need filed so my brother and I inherit property without higher taxes?

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2 Lawyer Answers

Jeffrey Louis Gaffney

  • Estate Planning Lawyer
  • Carlsbad, CA
  • Licensed in California

A: Nothing is needed except good records.

What you want to do is find something to show what the value of the property was when she died. A good idea is to have the property appraised (cost a few hundred dollars). That will give you a reasonable and fact based idea from a trained professional. Don't wait too long or the appraiser might not be able to find historical data from that time; best to do it now.

The IRS will probably not argue with that estimate of the cost basis.

Sally Bergman

  • Estate Planning Lawyer
  • San Mateo, CA
  • Licensed in California

A: You need a qualified trust and estates attorney to review the trust documents as irrevocable trusts can be very complex. In addition, it may be that this is an old "AB" trust that prevents step up in basis, but may possibly be amended to get rid of the AB trust provisions and thus get a step up in basis. It's important that an attorney look at everything before you start trying to distribute any of the assets.

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