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When property, like the family home or other appreciated assets, passes at your death, do you want to saddle your beneficiaries with capital gains tax? You may do just that if you pass your home through an irrevocable trust.
Recently, though, the IRS has questioned this treatment for property passed to beneficiaries through an irrevocable trust. The IRS’s grounds are that once property is placed in an irrevocable trust, the person who placed it there no longer owns it. Nor does ownership shift to the trust beneficiaries. And in most cases, the property isn’t included in a person’s estate for estate tax purposes.
Estate and capital-gains taxation and planning with trusts are complex processes, so work with your legal, tax and financial professionals to ensure the documents are drafted properly.
*IRS Revenue Ruling 2023-2
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