Different Name for an IRA?
A new client came to me recently and her dad passed away April 2022. His parents had left him some accounts and we are trying to sort out if any are IRAs or need to be taken as inherited IRAs or if all of these would get a step-up in basis. Rick XYZ has passed away and his daughter is now inheriting the accounts. We don’t want to accidentally pull out an account that is effectively taxed like an IRA and does not get a step-up in basis.
The 3 accounts are titled:
Non-Exempt TR Under The XYZ Liv Trust
XYZ Grandchildren TR Under The XYZ Liv Trust DTD 11/05/1987 Rick XYZ Ttee
Rick XYZ GST Exempt Trust Under The XYZ Living Trust DTD 11/05/1987
Permalink Submitted by Alan - IRA critic on Mon, 2022-09-26 22:42
These are not IRAs. Client needs to check with the trustees of these trusts to determine what the trust provisions are with respect to distributions and taxes on such distributions. Assuming that the attorney who drafted these trusts in 1987 is now retired, the trust should be reviewed by an active trusts attorney. Most likely, the assets in the irrevocable trusts do not get a basis adjustment, and it may take some work to determine what the cost basis is for the assets in these trusts.