The Listen to Lawrence Letter: Trusts do not solve everything

March 20, 2024
March 5, 2024 • Volume 5 Issue 222
Trusts do not solve everything….read on:


I am a senior and would like to sell my home in the near future and pass the proceeds to my son and daughter. Would there be a tax advantage to placing the house in a trust at this time and having the trust sell the house and distribute the proceeds to them?

Also, what tax base would be used in calculating the capital gains, i.e., the purchase price from 1985 plus the $250,000 exemption along with improvements or the current market value?


On these limited facts, the trust does nothing for you, although it would not hurt you either. Also, whether you do a trust (any kind of trust) would involve a lengthy discussion regarding all of your goals. Nevertheless, regarding capital gains, there is no advantage to creating a trust versus selling the house yourself.

As to your second question, the capital gains will be based on the original purchase price plus capital improvements plus the $250,000 exemption. The current fair market value will have no bearing on the tax basis, and creating a trust does not change this result.

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