Limit to how much stepped up basis can you can claim?

Question

I understand how passing property to heirs at stepped up basis works....

My question is...is there a limit to how much property the heirs can receive at the stepped up basis?

And we’re talking $20m+ in property for reference in this case.

Lance Lvovsky · Answer

@Brandon Hicks

There is no limit.

Lance Lvovsky · Answer

You are getting incorrect advice. The estate tax laws are complex and you should be engaging a professional who fully understands the tax laws and can give you advice based on your specific facts and circumstances.

Ashish Acharya · Answer

No, that's not right.

All the asset you own will be included in Gross Estate. It can be titled as a simple fee, Joint Tenant, in a revocable trust, or interest in various entities and so forth.

Lance Lvovsky · Answer

@Brandon Hicks

There is a lot I can tell you but without a specific question I am not sure what it is you are in need of. All I can is be sure the CPA you are working with understands estate, gift, and trust tax laws. Working with a trust and estate attorney is important too, but just as important is the CPA who knows the tax implications.

The lifetime exemption per person for 2019 is 11.4M or 22.8M for a married couple. Need to consider portability and/or trust planning, GST elections, etc.

Brandon Hicks · Answer

Thanks for the confirmation @Ashish Acharya

Christopher Smith · Answer

What is the fair market value of their respective ownership interest in the entities owning the property (e.g., stock in a corporation, interest in a partnership etc.)?

Brandon Hicks · Answer

@Ashish Acharya

Correct...Market value.

So I was just told by someone else that the properties have to be held in your personal name...all of these are in various entities. That’s the first I’ve heard of the personal name thing. Is that correct?

This conversation with the guy and all the ones since pertaining to this has me wanting to pepper my own CPA with questions!

Ashish Acharya · Answer

@Brandon Hicks ,

The 22M Lifetime exemption on the estate tax is based on Market Value of the assets. So if someone owns the total portfolio of lets says exact 22M in market value(not the basis), they possibly can transfer the portfolio without any estate taxes.

I am pretty sure the stepped-up value is already taken into account as the property or portfolio is evaluated/presented at MV. When you mentioned "passing 22M", dont you mean 22M of market valued assets rather than the basis.

Although there would be no estate taxes, there might be probate and legal cost. Proper estate planning needs to be done to avoid the majority of those costs. Trust is one of the vehicles to do so.

Brandon Hicks · Answer

Thanks @Lance Lvovsky

That was helpful and made sense.

Brandon Hicks · Answer

Thanks for the reply @Lance Lvovsky

That was my assumption. What can you tell me about the rule about passing on $22m max tax free to your heirs? I think the person I’m talking to may be getting bad advice and they’re not taking the stepped up basis into consideration.

Limit to how much stepped up basis can you can claim?

Most Popular Reply