Stepped-Up Cost Basis Rule

Stepped-Up Cost Basis Rule

Stepped-Up Cost Basis – Very Important Tax Benefit

Practically all married couples have their home and other assets titled jointly with a right of survivorship. What that means is that when one spouse passes away, their ownership of the home or other asset passes on to the surviving spouse. This triggers a tax benefit called stepped-up cost basis.

This arrangement works very well for married couples who have a modest estate and want all of their assets to pass on to the surviving spouse. In most situations, these assets will pass to the surviving spouse without any federal or state death taxes. Plus, there is no need to get involved with lengthy and complicated estate or probate procedures.

What often happens though, the surviving spouse and/or inexperienced executors overlook a very important tax benefit that the survivor is qualified for. Perhaps because the joint ownership rules are so simple, this fact doesn’t surface.

A home, for instance, may have been purchased by the couple at very low cost many years ago. Over the years, it may have increased in value substantially, and at the date of death of the first spouse, may View full post…

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