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Mountain_Business1
Level 1

irrevocable trust asset received and then willed to children

I received stocks from an irrevocable trust.  If I sell the stocks now I have been advised that they would not have a stepped up stock basis.  If I never sell the  stocks received from the trust, then will the stocks that are now in my revocable trust to my children, when I pass and my children inherit the stocks, will they be taxed on a stepped up basis?  The stock was transferred from the trust to my brokerage account.

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Accepted Solutions
tagteam
Level 15

irrevocable trust asset received and then willed to children


@Mountain_Business1 wrote:

If I never sell the  stocks received from the trust, then will the stocks that are now in my revocable trust to my children, when I pass and my children inherit the stocks, will they be taxed on a stepped up basis?  


Yes, if the stocks were distributed to you in-kind from the trust (i.e., you received the shares), then the shares will receive a stepped-up basis (per Section 1014) provided they are included in your estate when you pass.

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1 Reply
tagteam
Level 15

irrevocable trust asset received and then willed to children


@Mountain_Business1 wrote:

If I never sell the  stocks received from the trust, then will the stocks that are now in my revocable trust to my children, when I pass and my children inherit the stocks, will they be taxed on a stepped up basis?  


Yes, if the stocks were distributed to you in-kind from the trust (i.e., you received the shares), then the shares will receive a stepped-up basis (per Section 1014) provided they are included in your estate when you pass.

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