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YOU CANT TAKE IT WITH YOU

331

Now, the new step-up in basis rules say that those rules are lim- ited to transfers of $1.3 million for each taxpayer. Plus, an additional transfer of $3 million will be allowed for the surviving spouse. Any inheritance in excess of those limits will not have any step-up in basis. So if you inherit stock worth $2 million, with an original basis of $500,000, and you sold the stock for $2 million, you would be taxed on a gain of $200,000. The original basis does matter once the inheritance is in excess of $1.3 million, unlike under the previous rules, where the original basis didn’t matter at all.

Inheritance worth

$2 million

Original basis

$500,000

Total basis

$1.8 million

Sell stock

$2 million

Gain

$200,000

ESTATE PLANNING FOR UNMARRIED AND GAY AND LESBIAN COUPLES

Up to this point, we’ve discussed estate planning from the point of view of a married couple. But that doesn’t mean that unmarried or gay and lesbian couples aren’t privy to the same kind of estate plan- ning. In fact, the opposite is true. Estate planning becomes even more important if you aren’t married, but share your life with some- one. Both unmarried straight and gay couples don’t benefit from the same protection under the law that married couples do.

First, when you die, your property will pass to others in one of four ways:

  • automatically through joint ownership (bank accounts, house, etc.)

  • by designation of a beneficiary (IRAs, life insurance)

  • under the terms of a trust

  • under the probate laws

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