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demitx475
Level 3
August 23, 2023
Question

Irrevocable trust

  • August 23, 2023
  • 2 replies
  • 0 views

Does an irrevocable trust receive a step up in basis when real estate is placed in the trust?

2 replies

N
NCperson
Level 15
August 23, 2023

what is occuring first? 

 

the individual owner passes

 

or 

 

the real estate is placed into the irrevocable trust? 

 

https://kahnlitwin.com/blogs/tax-blog/irs-clarifies-step-up-in-basis-rules-for-grantor-trusts

    D
    demitx475Author
    Level 3
    August 23, 2023

    Placed in the trust came first.  

    M
    Level 15
    Mike9241Level 15
    Level 15
    August 23, 2023

    property contributed to the trust by a grantor does not get stepped up.  but are you sure it's really an irrevocable trust. many have "irrevocable" in their title but under the tax laws, because the grantor still retains certain powers, it's a grantor trust. still no step-up. however, in this case should the grantor die, the trust would become irrevocable and get a step up in the assets. 

      D
      demitx475Author
      Level 3
      August 23, 2023

      My mother gave up all control of the assets that were placed in the trust.  It is "irrevocable".  

      N
      NCperson
      Level 15
      August 23, 2023

      @demitx475 - then no 'step up' - read the link I posted above, 

       

      suggest reviewing with a lawyer to be sure it is irrevocable. 

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