I have a slight tweak to my life estate situation. A married couple established a life estate (2006), with the intention of passing the property to their 3 grown children on the death of both husband and wife. Husband passed away in 2016, and wife continued to dwell in the home. In 2021, the wife moved to assisted living and signed off on selling the home and passing the proceeds to the children equally. Do the children get any step up in basis? If so, is it only on the deceased father's half or does the step up go to the FMV of the entire home in 2016? If the step up in basis was only on the husband's half, is there any allowable way to limit the amount of the capital gain realized by the children?
