Did the IRS change the rules to take away a basis step up for assets held in an irrevocable trust?

There's a misconception floating around – that the IRS has made changes concerning the basis step-up for assets held in an irrevocable trust. To clear the air, the IRS has not made such changes. These rules have remained consistent for a significant amount of time. The IRS just clarified the rule that has always been in place--for assets to get a step-up in basis on death, they must be included in the gross estate for estate tax purposes.

Are there cases where assets held in irrevocable trusts get a basis step up? Yes, and those assets are generally subject to estate tax.

Bottom line: if the assets aren't subject to estate tax, then there's no step-up in basis. Don't fall for the fearmongering.

I'll explain a number of things about basis and what changes have actually been implemented.

Understanding Basis Step-Up
The Benefit of Basis Step-Up
The Evolution of Estate Tax Exemption
Irrevocable Trusts: Why we Use Them
Clarifying the Misconception on The IRS Ruling: 2023-2

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Strohmeyer Law is a law firm based in Houston, Texas, specializing in tax law, estate planning, and probate law.

Nothing in this video is specific legal advice for you. Watching or commenting on this video doesn't create an attorney-client relationship.

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