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"trust" in estate planning

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J

JENNIFER MASS

Guest
thank you for your time. i am in missouri. i am trying to discuss with my 75 y/o mother the value of having a trust vs. a will when she owns 300 acres farm land(value approx. 750$/acre), having $300,000 in CD's, and coowner of a $120,000 home. i have 2 sisters. currently she has our names on the deed with hers on the farm and on the CDs. she is remarried but has a pre-nup. land was bought decades ago and would have a substantial capital gains issue also. thank you:)
 


L

loku

Guest
Since the value of her property is less than $675,000, there is no estate tax issue no matter how you handle this.

If you and your sisters are on the deeds to the farm and the CDs as joint tenants with the right of survival, then there is no probate on those assets—they pass immediately to you and your sisters. There would be no reason for a trust for this property. And you and your sisters would get the property with a stepped up basis. In other words, your basis for the property if you were to sell it would be its fair market value at the date of death; therefore, there would be no capital gains issue either.

That leaves her share of the house. There is more than on way to handle the house, but if it is put into a trust, there would be no need for probate or even the small estate administration. Her share of the house would then pass under the terms of the trust.
 
J

JENNIFER MASS

Guest
"stepped up basis"

i am confused on the issue of "stepped up
basis" and capital gains tax? i was told that if my name as well as my siblings were on a deed, in missouri, that we would have a cap. gains issue in selling. is there something else i can do to make sure this is available as a stepped up basis? i greatly appreciate your time!:)
 
L

loku

Guest
If your mother had legal ownership of the farm and put your names on the deed as a gift, then you will get a stepped up basis for the entire farm upon her death. That means that your basis (tax cost) for gain or loss on the sale of the property will be its fair market value on the date of death. See IRS Publication 551, Basis of Property, which you can download for free at: http://www.irs.ustreas.gov/forms_pubs/index.html.
 

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