Normally, your heirs receive a stepped up basis on most property transferred to them upon your death, regardless of whether the transfer is by will, trust, or other means. That stepped up basis is the far market value on the date of your death. The reason that estate planning attorneys use trusts as an estate planning tool is primarily to avoid the formalities of the probate process and make it easier and less costly for your heirs to take ownership of your property after your death.
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You do not have to place the stocks in the trust to receive the step up in basis. You would do so to avoid probate. In Pennsylvania, the probate process is relatively simple. If the stocks are in your name, they will receive a step up in basis upon your death. If they are placed in the living trust, they will likewise receive the step up. The reason why is because it is what is known as a grantor trust. It has the same tax treatment that you have.
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I agree with both attorneys. Property in your revocable trust is included in your taxable estate and would get a step up in basis. Placing cash and stocks in the trust would make sense if want to avoid probate of these assets and want to keep the assets private. Also, if you are sick or very old placing assets into the trust would allow easier and immediate access by your trustees at your demise.
Hope this helps.
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Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is firstname.lastname@example.org , his website for more tax, estate and business articles is www.sjfpc.com. and his blog is
Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is email@example.com , his website is www.sjfpc.com. and his blog is <http://frommtaxes.wordpress.com/>
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