| Capital Gain Confusion…
READER QUESTION:
Could Lawrence address any new laws that were passed in 2023 that relate to capital gains taxes and the step-up in basis that makes it not advantageous to put a home in an irrevocable trust. And, if that is the case what suggestions are there, and how does having long-term care insurance factor in, if at all? I was recently speaking with a long-term care salesman who claimed that the irrevocable trust was not a good tool because of the tax changes in 2023 and that it is not often spoken about.
MY RESPONSE:
This is complete bulls*&#! 😊 Don’t get your tax advice from a long-term care insurance salesman or your barber. There was no such new law or interpretation of an old law. The law is clear that if you put your house in an irrevocable Medicaid trust where you retain the right to live in the house, and/or retain the right to change the trust beneficiaries, and/or retain the right to any income generated on your house, then you ABSOLUTELY receive a step-up in basis at the time of your death.
There was a ruling from the IRS that you would not get a step-up if you did not retain any of the above rights. Some clever Harvard lawyers were trying to get away with something but were shot down and then confusion ensued.
The bottom line is that every one of our Medicaid trusts allows for a step-up in tax basis on ALL assets within the trust at the time of death. Let’s spread the word and stop the rumor mill.
For more information, see my LISTEN TO LAWRENCE LETTER, Volume 4, Issue 158 from July 25, 2023, where I originally discussed this issue. You can CLICK RIGHT HERE to go straight to it. |
