February 5, 2025 • 15 mins
This week, Todd Lutsky explains how to begin your estate planning journey and why you need to understand the basics. Todd also takes questions about inheritance money in a trust and when cost basis comes into the equation.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
This is Ask Todd on the Financial Exchange Radio network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for a later life. Ask
Todd is presented by Cushing and Dolan, serving Massachusetts and
New England for more than thirty five years, helping families
with a state and tax planning, Medicaid planning, and probate law.
(00:22):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (00:27):
As promised, We're now joined by Todd Lutsky from the
law firm of Cushing and Dolan. The segment is Asked Todd,
and it is your opportunity to ask Todd your estate
planning questions. Phone lines wide open right now at eight
eight eight to zero five two two six three. We
can normally get through about two to three calls, so
if you got a call, make sure you get in
(00:49):
early so that we can get to you. Eight eight
eight to zero five two two sixty three. Again, this
is your opportunity to ask Todd Lutsky your state planning questions,
live on air eight eight eight two zero five two
two six three.
Speaker 3 (01:03):
One more time.
Speaker 2 (01:04):
That number is eight eight eight two zero five two
two six three. Mister Lutsky, how are you doing today?
Speaker 3 (01:13):
Never better? How are you? Uh pretty good?
Speaker 1 (01:16):
Uh?
Speaker 2 (01:16):
Oh, I got a question for you. Yeah, what do
you call a monk who walks everywhere in bare feet?
Has poor bone density and really bad breath.
Speaker 3 (01:27):
That's a lot of things. I can't even think of
all those. I can't even follow this, So I'm just
gonna say, I don't know a super callous, fragile mystic
hex by halitosis. Wow, I know, it's it's wild, that wild.
I can't even remember that.
Speaker 2 (01:41):
Let's talk a little bit about estate planning. When we
talk about someone who's maybe at the beginning of the
estate planning process, yeah, probably a little bit intimidated. How
do they decide which estate planning tools are actually the
right ones for their specific situation.
Speaker 3 (01:58):
So a couple of things when we talk about it,
I always like to this is why we call it
the guide is back to the basics, right, it's thinking
about how do we get started? I would say the
very first thing you should do is take a look
at your assets and value them. Figure out what it
is you own and what you roughly think it's worth.
(02:20):
Because it's the value of the estate that really drives
the type of a state plan that you're going to do. Okay,
so let me try to expand on that a little.
You know, when I say how you own it? Right,
If you own it, it's it's an asset. It doesn't
mean it's a probate asset. It just means that it's
(02:41):
a gross of state asset. Very different. You could have
zero probate assets, but all are still part of your
gross estate. I think the bigger question is when I
say value it intuitively, what am I valuing? Right? What
is included? Not everybody thinks about this, right, but obviously
your your bank accounts and your brokerage accounts. That comes
(03:03):
to mind, right, because it's money, and you say, yeah,
I feel it, I see it. You know what they
don't think about real estate. They say, oh, yeah, I
got a million dollar home. Oh, but I don't feel
like I'm worth a million dollars because it's it's real estate.
You know, I don't. I don't count that, Oh, but
the government does. So you got to count that as
an asset of the estate. Another thing people don't think
(03:24):
about roth iras they say, oh, you know, roths are
income tax free. Well, yeah they are, but they're estate
taxable when you die, so please count them, you know,
even regular iras. They are you know es state taxable
when you die, so please count them as part of
your estate. And you know one of the other things
that that almost everybody forgets life insurance, right, Oh, life insurance.
(03:51):
Isn't that income tax free? Well it is, yeah, when
when you die, if your spouse gets it, it's income
tax free. Never mind a spouse whoever gets it, it's
income tax free to the person who gets it. But
the government values everything right when you die. The moment
you die, that's when they value it. Because you might say, well,
(04:12):
you know, I got this term insurance policy and it
has zero cash surrender value today because I'm living. The
next day I die, well, it's worth a million dollars
if that's the face value. That's when the government values it.
So now one item, right, you could be sitting here saying, well, jeez,
I'm not worth a million dollars. Oh wait to have
a million dollar life insurance policy. You're all of a
(04:34):
sudden worth a million dollars and you haven't talked about
any other assets yet. That one asset could put you
at a million dollars.
Speaker 2 (04:44):
Talking with Todd Lutski from the law firm of Cushing
and Dolan again. The segment is called Ask Todd because
it's your opportunity to ask Todd your estate planning questions.
We do have space on the phone line still at
eight eight eight two zero five two two six th
That is the number to call to ask Todd your
estate planning question live on air again. That number is
(05:06):
eight eight eight to zero five two two six three.
We're gonna take a quick break right now, but when
we come back, it's gonna be right to your calls
with Todd. That phone number is eight eight eight to
zero five two two six three One. Last time, eight
eight eight to zero five two two sixty three your
(05:27):
calls with Todd when we return.
Speaker 1 (05:29):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 3 (05:49):
All right, all right, all.
Speaker 2 (05:50):
Right, let's get right to your calls with Todd Lutsky.
First in the queue, we've got Mike from Drake at
Mike what's your question for Todd?
Speaker 4 (06:01):
My I have a grandfather who passed away. He left
everything in his will. Basically, come is coming to me
and my wife. Okay, there's only one thing. One thing.
There was a bank account that was left in a
trust to my father in law. My father in law
has now had had passed before my my grandfather had
(06:23):
passed away. My grandfather had dementia. My question is where
will that money go now that was in that trust
from the Bank of America. Will that go back into
my grandfather's estate or does that go to my my
father in law who remarried another woman.
Speaker 3 (06:38):
Okay, so you just added a third factor that really
that really threw me off. So let's let me just
try to recap and please please try to help me
when I ask you these questions. So the first the
first one is there's you're the grandchild of the grandfather
who died and left a will leaving assets to you
and your wife. So that that piece is clear, right,
(06:59):
we understand that that to you, right, Yeah, Okay, that's
not an issue. In addition to that, you said that
your stepfather or no, your your father in law, my
father in law, your father in law had a trust
in place a bank account in a trust or was
or did the account say in trust.
Speaker 4 (07:20):
For in trust for?
Speaker 3 (07:23):
So there was no actual establishment of a of an
actual trust. It just simply is more of a designated
beneficiary on the account, correct, I believe?
Speaker 1 (07:35):
So?
Speaker 3 (07:35):
Okay. So it said in trust for.
Speaker 4 (07:38):
Who, it would be his name Harry.
Speaker 3 (07:42):
No, no, no, So who's Who's Harry is not the
father in law? Right?
Speaker 4 (07:47):
Yes he is.
Speaker 3 (07:47):
So the father in law had an account and the
account said when I die, when father in law dies,
the assets in the tru goes to who.
Speaker 4 (07:59):
No, when Graham father passed away, it would go too.
It was the trust was in the grandfathers and when
he passed away it went to my father in law,
which my father in law had passed away before my grandfather.
Speaker 3 (08:12):
Okay. So let's now, I'm just trying to get to
the bottom of this, right, this is this is what's
complicated about a lot of these questions. So grandfather again
had one bank account that had in trust for father
in law correct, correct?
Speaker 4 (08:28):
Correct?
Speaker 3 (08:29):
And father in law died before grandfather correct. Okay, And
that account still existed when grandfather died.
Speaker 4 (08:40):
Correct.
Speaker 3 (08:41):
And so if it said in trust for someone who's
deceased and there was no alternate beneficiary listed, then what
happens is that would been end up in the probate
estate of the father in law. So I'm sorry, not
of the father in law. It would lapse as to
the father and law. It would end up in the
probated state of the grandfather. So then the grandfather would
(09:05):
die owning an asset with no beneficiary but in his name.
So his will should direct where that goes. So then
that would end up going to you, because his will
said everything that's a probate asset goes to you. Remember
that item initially would not have been a probate asset
because of the designated beneficiary listed. That's what keeps it
(09:30):
out of probate. But if that beneficiary does not exist,
then it's as if there is no designated beneficiary, So
then it would end up a probate asset. Now his
will says where it goes, so I think it goes
to you if his you and your wife. If his
will says, I leave all my probate assets to my
(09:54):
grandson and his wife, so there you go. That's my answer,
and I think I think that's where it's going to go,
but you might have to do some probate work for
your grandfather's estate. Folks, lots of stuff going on in
a question like that, and again I think it's partly
because of the lack of planning that was done right.
If you don't do your planning, you run into these
(10:16):
kinds of problems. Learn how to do your planning. Get
the guide back to the basics. It's basically a recommendation.
It's my engagement letter to a made up family with
a bunch of assets, and it talks about the will,
the healthcare, the power of attorney. The hippa really explains
documents that we always cursory, give a cursory example of
(10:36):
what they are. And it also you can put your
fact pattern with this and learn it. In this one,
it recommends an irrevocable trust or two for this family.
See if this recommendation works for you. If not, learn
by getting the guide it will at least teach you
how to begin thinking about getting your estate plan in order.
(10:57):
One of my favorite guides Folks eight sixty six eight
four eight five six nine nine or Legal Exchange show
dot Com. Back to the Basics eight sixty six eight
four eight five six nine nine or Legal Exchange Show
dot Com. Todd, I've got another caller for you here.
Speaker 2 (11:15):
We've got Steve in Bridgewater. Steve, you are.
Speaker 3 (11:18):
On with Todd Lutsky.
Speaker 5 (11:22):
Hi, guys, how are you doing great?
Speaker 3 (11:23):
You all right?
Speaker 5 (11:26):
Doing good? A life of state? My mother had a
life of state. I was the remain demn Okay, she
passed away in twenty twenty four. For for a cost basis?
Would I do a cost basis? When the life of
state was first created or when she passed away?
Speaker 3 (11:48):
Do you still own the house or did you sell it?
Speaker 5 (11:53):
Sold it already?
Speaker 3 (11:54):
So you sold it? When? Did you sell it.
Speaker 5 (11:59):
In December of twenty twenty four? She passed away in
April of twenty twenty four.
Speaker 3 (12:04):
Okay, So that's why I needed to know those specifics.
So here's here's the answer. One the house. I'm going
to expand, so people understand, first of all, what is
a life estate.
Speaker 5 (12:16):
Right.
Speaker 3 (12:16):
A life estate is when you give something away like
a house your primary residents. Please don't do it with
any asset, and retain the right to live there. Right.
So by doing that, retaining the right to live there,
you avoid probate when she dies and you've protected it
from the cost of long term care. I don't love
the arrangement because there's a lot of negatives that go
(12:37):
with it. But in this case, we don't need to
go down that road because Mom has passed already, so
none of the negatives happened. So we now though, by
keeping that retained interest, that right to live there, that
causes that asset to be included in Mom's estate on
the date of death. So in April of twenty twenty four,
(12:59):
the full value, not just the value of the life estate,
but the full value of the property needs to be
included in her gross estate, not her probate estate. So
it's not a probate issue to determine whether or not
an estate tax return is due. So on the date
of death April, what do you think that house was worth?
Speaker 5 (13:21):
Steveh four fifty.
Speaker 3 (13:25):
Okay, So if we've got a four hundred and fifty
thousand dollars value on the house, that means that the
cost basis to Steve is four hundred and fifty thousand dollars. Now,
between April and December, this may have increased in value.
How much should you sell it for? AH four forty
(13:47):
oh even better? So in this case, you cannot generate
a loss. I know, as much as you might be
thinking that's great, No, you can't generate a loss. But
in this case you will have zero game to report
on your income tax return, right because when you report it,
you'll show the sale four forty or for four to forty,
(14:10):
you'll show the cost basis of four forty. And by
the way, when you say you thought it was worth
four point fifty, if you sell it within nine months
of the date of death roughly where you are, even
within a year of date of death, it's the sale
price that is the cost basis. So in this case
you've got to step up in basis. Your cost is
four forty, your proceeds are four to forty, your gain
(14:32):
you report as zero, and you keep all the money.
No federal, no state death tax. So that's how you
calculate cost basis in a situation like this, And that's
a great thing to have, folks. Whenever you're dealing with
real estate, you always want to think about not giving
away an asset like that and keeping it so that
when the beneficiaries get it, in fact, if they don't
(14:54):
want it, they can sell it and not have the
capital gains tax to pay. And if it happens to
be a mental property and you get a step up
in basis and you keep the property, then you have
the ability to offset the rent through depreciation over the
next twenty seven and a half years. So wonderful things
step up in basis folks learn learn about step up
(15:16):
in basis also in the guide, mister Lutsky, thank you
for joining us today. Always a pleasure.
Speaker 1 (15:23):
This has been asked Odd on the Financial Exchange Radio network.
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:43):
Cushing and Dolan Armstrong Advisor. He does not provide any
legal or tax advice. Please consult with your legal or
tax advisor on such matters. Cushing and Armstrong do not
endorse each other and are not affiliated
This is Ask Todd on the Financial Exchange Radio network.
If you have an existing estate plan or in the
market for one, Todd Lutsky is here to answer your
questions and help you plan for a later life. Ask
Todd is presented by Cushing and Dolan, serving Massachusetts and
New England for more than thirty five years, helping families
with a state and tax planning, Medicaid planning, and probate law.
(00:22):
Visit Cushingdolan dot com. Now here's Todd Lutsky.
Speaker 2 (00:27):
As promised, We're now joined by Todd Lutsky from the
law firm of Cushing and Dolan. The segment is Asked Todd,
and it is your opportunity to ask Todd your estate
planning questions. Phone lines wide open right now at eight
eight eight to zero five two two six three. We
can normally get through about two to three calls, so
if you got a call, make sure you get in
(00:49):
early so that we can get to you. Eight eight
eight to zero five two two sixty three. Again, this
is your opportunity to ask Todd Lutsky your state planning questions,
live on air eight eight eight two zero five two
two six three.
Speaker 3 (01:03):
One more time.
Speaker 2 (01:04):
That number is eight eight eight two zero five two
two six three. Mister Lutsky, how are you doing today?
Speaker 3 (01:13):
Never better? How are you? Uh pretty good?
Speaker 1 (01:16):
Uh?
Speaker 2 (01:16):
Oh, I got a question for you. Yeah, what do
you call a monk who walks everywhere in bare feet?
Has poor bone density and really bad breath.
Speaker 3 (01:27):
That's a lot of things. I can't even think of
all those. I can't even follow this, So I'm just
gonna say, I don't know a super callous, fragile mystic
hex by halitosis. Wow, I know, it's it's wild, that wild.
I can't even remember that.
Speaker 2 (01:41):
Let's talk a little bit about estate planning. When we
talk about someone who's maybe at the beginning of the
estate planning process, yeah, probably a little bit intimidated. How
do they decide which estate planning tools are actually the
right ones for their specific situation.
Speaker 3 (01:58):
So a couple of things when we talk about it,
I always like to this is why we call it
the guide is back to the basics, right, it's thinking
about how do we get started? I would say the
very first thing you should do is take a look
at your assets and value them. Figure out what it
is you own and what you roughly think it's worth.
(02:20):
Because it's the value of the estate that really drives
the type of a state plan that you're going to do. Okay,
so let me try to expand on that a little.
You know, when I say how you own it? Right,
If you own it, it's it's an asset. It doesn't
mean it's a probate asset. It just means that it's
(02:41):
a gross of state asset. Very different. You could have
zero probate assets, but all are still part of your
gross estate. I think the bigger question is when I
say value it intuitively, what am I valuing? Right? What
is included? Not everybody thinks about this, right, but obviously
your your bank accounts and your brokerage accounts. That comes
(03:03):
to mind, right, because it's money, and you say, yeah,
I feel it, I see it. You know what they
don't think about real estate. They say, oh, yeah, I
got a million dollar home. Oh, but I don't feel
like I'm worth a million dollars because it's it's real estate.
You know, I don't. I don't count that, Oh, but
the government does. So you got to count that as
an asset of the estate. Another thing people don't think
(03:24):
about roth iras they say, oh, you know, roths are
income tax free. Well, yeah they are, but they're estate
taxable when you die, so please count them, you know,
even regular iras. They are you know es state taxable
when you die, so please count them as part of
your estate. And you know one of the other things
that that almost everybody forgets life insurance, right, Oh, life insurance.
(03:51):
Isn't that income tax free? Well it is, yeah, when
when you die, if your spouse gets it, it's income
tax free. Never mind a spouse whoever gets it, it's
income tax free to the person who gets it. But
the government values everything right when you die. The moment
you die, that's when they value it. Because you might say, well,
(04:12):
you know, I got this term insurance policy and it
has zero cash surrender value today because I'm living. The
next day I die, well, it's worth a million dollars
if that's the face value. That's when the government values it.
So now one item, right, you could be sitting here saying, well, jeez,
I'm not worth a million dollars. Oh wait to have
a million dollar life insurance policy. You're all of a
(04:34):
sudden worth a million dollars and you haven't talked about
any other assets yet. That one asset could put you
at a million dollars.
Speaker 2 (04:44):
Talking with Todd Lutski from the law firm of Cushing
and Dolan again. The segment is called Ask Todd because
it's your opportunity to ask Todd your estate planning questions.
We do have space on the phone line still at
eight eight eight two zero five two two six th
That is the number to call to ask Todd your
estate planning question live on air again. That number is
(05:06):
eight eight eight to zero five two two six three.
We're gonna take a quick break right now, but when
we come back, it's gonna be right to your calls
with Todd. That phone number is eight eight eight to
zero five two two six three One. Last time, eight
eight eight to zero five two two sixty three your
(05:27):
calls with Todd when we return.
Speaker 1 (05:29):
Ask Todd with Todd Lutsky every Wednesday at ten thirty
only here on the Financial Exchange Radio Network. You're listening
to Ask Todd with Todd Lutsky on the Financial Exchange
Radio Network.
Speaker 3 (05:49):
All right, all right, all.
Speaker 2 (05:50):
Right, let's get right to your calls with Todd Lutsky.
First in the queue, we've got Mike from Drake at
Mike what's your question for Todd?
Speaker 4 (06:01):
My I have a grandfather who passed away. He left
everything in his will. Basically, come is coming to me
and my wife. Okay, there's only one thing. One thing.
There was a bank account that was left in a
trust to my father in law. My father in law
has now had had passed before my my grandfather had
(06:23):
passed away. My grandfather had dementia. My question is where
will that money go now that was in that trust
from the Bank of America. Will that go back into
my grandfather's estate or does that go to my my
father in law who remarried another woman.
Speaker 3 (06:38):
Okay, so you just added a third factor that really
that really threw me off. So let's let me just
try to recap and please please try to help me
when I ask you these questions. So the first the
first one is there's you're the grandchild of the grandfather
who died and left a will leaving assets to you
and your wife. So that that piece is clear, right,
(06:59):
we understand that that to you, right, Yeah, Okay, that's
not an issue. In addition to that, you said that
your stepfather or no, your your father in law, my
father in law, your father in law had a trust
in place a bank account in a trust or was
or did the account say in trust.
Speaker 4 (07:20):
For in trust for?
Speaker 3 (07:23):
So there was no actual establishment of a of an
actual trust. It just simply is more of a designated
beneficiary on the account, correct, I believe?
Speaker 1 (07:35):
So?
Speaker 3 (07:35):
Okay. So it said in trust for.
Speaker 4 (07:38):
Who, it would be his name Harry.
Speaker 3 (07:42):
No, no, no, So who's Who's Harry is not the
father in law? Right?
Speaker 4 (07:47):
Yes he is.
Speaker 3 (07:47):
So the father in law had an account and the
account said when I die, when father in law dies,
the assets in the tru goes to who.
Speaker 4 (07:59):
No, when Graham father passed away, it would go too.
It was the trust was in the grandfathers and when
he passed away it went to my father in law,
which my father in law had passed away before my grandfather.
Speaker 3 (08:12):
Okay. So let's now, I'm just trying to get to
the bottom of this, right, this is this is what's
complicated about a lot of these questions. So grandfather again
had one bank account that had in trust for father
in law correct, correct?
Speaker 4 (08:28):
Correct?
Speaker 3 (08:29):
And father in law died before grandfather correct. Okay, And
that account still existed when grandfather died.
Speaker 4 (08:40):
Correct.
Speaker 3 (08:41):
And so if it said in trust for someone who's
deceased and there was no alternate beneficiary listed, then what
happens is that would been end up in the probate
estate of the father in law. So I'm sorry, not
of the father in law. It would lapse as to
the father and law. It would end up in the
probated state of the grandfather. So then the grandfather would
(09:05):
die owning an asset with no beneficiary but in his name.
So his will should direct where that goes. So then
that would end up going to you, because his will
said everything that's a probate asset goes to you. Remember
that item initially would not have been a probate asset
because of the designated beneficiary listed. That's what keeps it
(09:30):
out of probate. But if that beneficiary does not exist,
then it's as if there is no designated beneficiary, So
then it would end up a probate asset. Now his
will says where it goes, so I think it goes
to you if his you and your wife. If his
will says, I leave all my probate assets to my
(09:54):
grandson and his wife, so there you go. That's my answer,
and I think I think that's where it's going to go,
but you might have to do some probate work for
your grandfather's estate. Folks, lots of stuff going on in
a question like that, and again I think it's partly
because of the lack of planning that was done right.
If you don't do your planning, you run into these
(10:16):
kinds of problems. Learn how to do your planning. Get
the guide back to the basics. It's basically a recommendation.
It's my engagement letter to a made up family with
a bunch of assets, and it talks about the will,
the healthcare, the power of attorney. The hippa really explains
documents that we always cursory, give a cursory example of
(10:36):
what they are. And it also you can put your
fact pattern with this and learn it. In this one,
it recommends an irrevocable trust or two for this family.
See if this recommendation works for you. If not, learn
by getting the guide it will at least teach you
how to begin thinking about getting your estate plan in order.
(10:57):
One of my favorite guides Folks eight sixty six eight
four eight five six nine nine or Legal Exchange show
dot Com. Back to the Basics eight sixty six eight
four eight five six nine nine or Legal Exchange Show
dot Com. Todd, I've got another caller for you here.
Speaker 2 (11:15):
We've got Steve in Bridgewater. Steve, you are.
Speaker 3 (11:18):
On with Todd Lutsky.
Speaker 5 (11:22):
Hi, guys, how are you doing great?
Speaker 3 (11:23):
You all right?
Speaker 5 (11:26):
Doing good? A life of state? My mother had a
life of state. I was the remain demn Okay, she
passed away in twenty twenty four. For for a cost basis?
Would I do a cost basis? When the life of
state was first created or when she passed away?
Speaker 3 (11:48):
Do you still own the house or did you sell it?
Speaker 5 (11:53):
Sold it already?
Speaker 3 (11:54):
So you sold it? When? Did you sell it.
Speaker 5 (11:59):
In December of twenty twenty four? She passed away in
April of twenty twenty four.
Speaker 3 (12:04):
Okay, So that's why I needed to know those specifics.
So here's here's the answer. One the house. I'm going
to expand, so people understand, first of all, what is
a life estate.
Speaker 5 (12:16):
Right.
Speaker 3 (12:16):
A life estate is when you give something away like
a house your primary residents. Please don't do it with
any asset, and retain the right to live there. Right.
So by doing that, retaining the right to live there,
you avoid probate when she dies and you've protected it
from the cost of long term care. I don't love
the arrangement because there's a lot of negatives that go
(12:37):
with it. But in this case, we don't need to
go down that road because Mom has passed already, so
none of the negatives happened. So we now though, by
keeping that retained interest, that right to live there, that
causes that asset to be included in Mom's estate on
the date of death. So in April of twenty twenty four,
(12:59):
the full value, not just the value of the life estate,
but the full value of the property needs to be
included in her gross estate, not her probate estate. So
it's not a probate issue to determine whether or not
an estate tax return is due. So on the date
of death April, what do you think that house was worth?
Speaker 5 (13:21):
Steveh four fifty.
Speaker 3 (13:25):
Okay, So if we've got a four hundred and fifty
thousand dollars value on the house, that means that the
cost basis to Steve is four hundred and fifty thousand dollars. Now,
between April and December, this may have increased in value.
How much should you sell it for? AH four forty
(13:47):
oh even better? So in this case, you cannot generate
a loss. I know, as much as you might be
thinking that's great, No, you can't generate a loss. But
in this case you will have zero game to report
on your income tax return, right because when you report it,
you'll show the sale four forty or for four to forty,
(14:10):
you'll show the cost basis of four forty. And by
the way, when you say you thought it was worth
four point fifty, if you sell it within nine months
of the date of death roughly where you are, even
within a year of date of death, it's the sale
price that is the cost basis. So in this case
you've got to step up in basis. Your cost is
four forty, your proceeds are four to forty, your gain
(14:32):
you report as zero, and you keep all the money.
No federal, no state death tax. So that's how you
calculate cost basis in a situation like this, And that's
a great thing to have, folks. Whenever you're dealing with
real estate, you always want to think about not giving
away an asset like that and keeping it so that
when the beneficiaries get it, in fact, if they don't
(14:54):
want it, they can sell it and not have the
capital gains tax to pay. And if it happens to
be a mental property and you get a step up
in basis and you keep the property, then you have
the ability to offset the rent through depreciation over the
next twenty seven and a half years. So wonderful things
step up in basis folks learn learn about step up
(15:16):
in basis also in the guide, mister Lutsky, thank you
for joining us today. Always a pleasure.
Speaker 1 (15:23):
This has been asked Odd on the Financial Exchange Radio network.
Ask Todd with Todd. Lutsky has been presented by Cushing
and Dolan, serving Massachusetts and New England for more than
thirty years, helping families with the state and tax planning,
Medicaid planning, and probate law. Call eight hundred and three
nine three four thousand and one or visit Cushingdolan dot com.
The views expressed in this segment are solely those of
(15:43):
Cushing and Dolan Armstrong Advisor. He does not provide any
legal or tax advice. Please consult with your legal or
tax advisor on such matters. Cushing and Armstrong do not
endorse each other and are not affiliated
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