The Listen to Lawrence Letter: Exclusion for a deceased spouse?

READER QUESTION:

My house is in an irrevocable trust (Family Trust) set up by you.

My wife died 10 years ago, the trust was set up 17 years ago. If the trust sells the house, does the trust get the $250,000 bump up for my wife since we have the right to live in the house for both our lives?

MY RESPONSE:

The trust will not receive your wife’s $250,000 exclusion but it did receive a 50% step up in tax basis at the time of her death (on her half).

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Listen to Lawrence Letter, just have them email me at

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