Sunday, January 18, 2015

Can President Obama Revive BypassTrusts?

For many a year, the most common trust used in estate tax planning has been the bypass or credit-shelter trust. The goal is to shield assets from tax at the later death of one's spouse. But there's a significant price: loss of stepped-up basis. When you shelter appreciated assets from estate tax, you expose the appreciation to capital gains tax when the assets are sold.

Now President Obama proposes to abolish stepped-up basis. Assets passed directly from parent to child would be subject to the same tax on capital gain as assets sheltered in trust. Curiously, he describes the provision as a trust fund loophole

Seems more like a trust fund plus.

Could bypass trusts make a comeback?  Possibly. Do you believe that a Republican Congress would abolish stepped-up basis?


Jim Gust said...

Not only will Republicans not pass such legislation, they are unlikely to even hold hearings on it.

This is just goofy.

JLM said...

You call it goofy, Washington calls it politics.