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Shawn P Adamo
Shawn P Adamo, Retired CPA
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My wifes family trust was activated upon her death 9/28/2000,

Customer Question

My wife's family trust was activated upon her death 9/28/2000, the only asset in same
being our home. I have recently sold same, depositing proceeds into a bank account in trust name. Beneficiaries are myself, one son, one daughter and her two grandchildren.
1) Is there any state or federal tax due because of the gain in value from her date of death and recent sale date? NH laws apply.
2) According to the trust, the trust can be dissolved by the trustees, and proceeds distributed to the beneficiaries as outlined in the trust according to a formula therein,
without judges approval, but with approval of all beneficiaries. If so, would these
proceeds to each individual be taxed by NH or the Feds??
Submitted: 2 years ago.
Category: Tax
Expert:  Shawn P Adamo replied 2 years ago.

Shawn P Adamo :

Hello. My specialty is focusing on YOUR Financial needs. Financial Planner/Business Owner for 20 years. CPA,PFS,QFP,GMMA.


That would depend on the value you sold it for and the value at the date of death.

Shawn P Adamo :

The taxes would be paid by the trust vs the beneficiaries.


 

Shawn P Adamo :

If sold for more than the value in the trust, the trust needs to complete a tax raeturn and pay on the gains.


 

Customer:
Customer:

Re your answers: 1) "that would depend upon value you sold it for and value at date of death.


a) Property sold for $700,000, which after expenses (which after expenses: prorations,

Customer:
Customer:

Re: 1) "That would depend on value sold and value at date of death"


a) Gross amount of sale $700,000, less settlement costs of $52360, leaving net receipt of $728,339. Doubt whether appraisal made at date of death, but local town assessor states: "In 2000 your property was assessed @ #25,300. 89The assessment to sale ration was

Shawn P Adamo :

???

Customer:

RE: "That would depend on value sold for and value at date of death." A) Gross amount of sale $700,000 less deductions of 52,362 = $728,340 cash to seller. (HUD-1). We had other expenses in closing the sale which do not show up on HUD-1 amounting to approximately $130,000 between date of death and sale of property. Does this further reduce the $700,000 gross sale figure for tax purposes??? B) I doubt if any appraisal of property was made at date of death, but have letter from town assessor stating that at date of death in 2000, property assessed at 325,300, assessment to sales ratio 89%, indicating market BEFORE disbursingsappraising." ."2) "That would be paid by the trust vs the beneficiaries". Are you stating that in a trust that the trust must pay a tax (federal) on difference between date of death and sale price AND that benfeciaries would have no tax upon receipt of disbursments? or must taxes be paid by both TRUST and Beneficiaries? Are tax rates long term in any case? My son and I, as trustees, feel we must determine tax liability if any, begfore makig any disbursments in order to have funds avail to pay same taxes. That about wraps up my questions. Than ks nfor your hslp.ts

Customer:
Shawn P Adamo, Retired CPA
Category: Tax
Satisfied Customers: 1281
Experience: Retired CPA
Shawn P Adamo and 6 other Tax Specialists are ready to help you
Expert:  R. Klein, EA replied 2 years ago.

Since the trust sold the real estate, the trust recognizes income or loss.

 

Since your fair estimate of the value of the property was $325K at the date of death, then that would be used as the cost basis.

 

Your total cost basis is the $325K value when the trust received the property, plus any capital improvements since that time. Your cost basis is also increased by the selling expenses of the sale,such as the realtor fees and seller paid closing costs.

 

The difference between the selling price and the cost basis is the capital gain that is taxed.

 

The income tax applies at the federal level. If the estate is based in New Hampshire, this state has no income tax, and as such, no state tax is due on the gain.

 

Once the income tax has been paid, the remaining proceeds can be distributed to the beneficiaries of the estate. There is no inheritance tax. Since the amount of the estate appears to have been less than the estate tax exemption in 2000, there is no estate tax due either.

 

 

 

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