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The Water Cooler
General Discussion
What is the best, cheapest way to make a Will?
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<blockquote data-quote="-Pjackso" data-source="post: 4052344" data-attributes="member: 8119"><p>Get a Trust.</p><p></p><p>Another benefit to Trusts is the "Trust Step Up Basis" for assets/real estate. Upon death, the property is transferred via Trust to the beneficiary. The beneficiary receives the property with cost-basis at time of transfer. (Read: Huge tax implications)</p><p></p><p>Bad situation:</p><p>-You buy real-estate in 1950, for $50K.</p><p>-You add their name on the property (now worth $400K) in 2020 directly (or co-own) to the person.</p><p>-They sell property - and they pay capital gains of $400K sale - $50K original = $350K income gains tax.</p><p></p><p>Trust step-up basis:</p><p>-You buy real-estate in 1950, for $50K.</p><p>-You pass-on, and the beneficiary receives the property via the Trust (property worth $400K). </p><p>-Due to Trust step-up basis - they receive the property at $400k basis.</p><p>-They sell property - and they pay capital gains based on step-up basis at time of receiving it. $400K sale - $400K step-up basis = $0 income gains tax.</p><p></p><p>1) YOU retain rights to property until time of death.</p><p>2) They receive property without massive tax implications. </p><p></p><p>Subtle things like this is where a estate attorney can help. Go find one, and get a consultation. </p><p>Good luck.</p></blockquote><p></p>
[QUOTE="-Pjackso, post: 4052344, member: 8119"] Get a Trust. Another benefit to Trusts is the "Trust Step Up Basis" for assets/real estate. Upon death, the property is transferred via Trust to the beneficiary. The beneficiary receives the property with cost-basis at time of transfer. (Read: Huge tax implications) Bad situation: -You buy real-estate in 1950, for $50K. -You add their name on the property (now worth $400K) in 2020 directly (or co-own) to the person. -They sell property - and they pay capital gains of $400K sale - $50K original = $350K income gains tax. Trust step-up basis: -You buy real-estate in 1950, for $50K. -You pass-on, and the beneficiary receives the property via the Trust (property worth $400K). -Due to Trust step-up basis - they receive the property at $400k basis. -They sell property - and they pay capital gains based on step-up basis at time of receiving it. $400K sale - $400K step-up basis = $0 income gains tax. 1) YOU retain rights to property until time of death. 2) They receive property without massive tax implications. Subtle things like this is where a estate attorney can help. Go find one, and get a consultation. Good luck. [/QUOTE]
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