H & W owned several farm parcels In IL (not a community property state) which were inherited by their 3 children. H died in 1982. W died in 2000. In 1982 per H’s will 50% interest in parcel A was transferred to his son, the other 50% went into a trust with an income only benefit to W for her life and remainder interest to each of the children as 1/3 undivided interest in the land. Trust held title to the land until W died and the children inherited. While the parcel was in the trust the children could not sell, convey, encumber or do anything with the land until M passed.
Question 1. At what time does the step-up in basis occur? In 1982 when title passed to the trust or 2000 when effective ownership was passed to the children?
Also in 1982 per H’s will 50% interest in parcel B went directly to W with the other 50% going into the same trust as above with the same provisions. On W’s death in 2000 her 50% went to the children.
Question2. At what time does the step-up in basis occur for parcel B?
For the 50% interest that went into the trust-1982 or 2000?
For the 50% interest that went to W and then to the children 2000 ?
My take for question 1 is that the step-up occurred in 1982 since title transferred at that time from H to the trust. A step-up happens at the decedent’s date of death even though the children do not have effective control of the property until W passes.
Same answer for question 2 for the 50% that went into the trust. The other 50% that was inherited from W would get a step-up in 2000.
The two daughters sold their interest in both parcels to their brother in 2009. So it would appear that they would have the following:
For parcel A basis from 1982 for their share of the 50% from via the trust
For parcel B basis from 1982 for their share of the 50% interest via the trust; from 2000 for their share of the 50% interest from W
Do you agree? Anything that I am missing here?
Question 1. At what time does the step-up in basis occur? In 1982 when title passed to the trust or 2000 when effective ownership was passed to the children?
Also in 1982 per H’s will 50% interest in parcel B went directly to W with the other 50% going into the same trust as above with the same provisions. On W’s death in 2000 her 50% went to the children.
Question2. At what time does the step-up in basis occur for parcel B?
For the 50% interest that went into the trust-1982 or 2000?
For the 50% interest that went to W and then to the children 2000 ?
My take for question 1 is that the step-up occurred in 1982 since title transferred at that time from H to the trust. A step-up happens at the decedent’s date of death even though the children do not have effective control of the property until W passes.
Same answer for question 2 for the 50% that went into the trust. The other 50% that was inherited from W would get a step-up in 2000.
The two daughters sold their interest in both parcels to their brother in 2009. So it would appear that they would have the following:
For parcel A basis from 1982 for their share of the 50% from via the trust
For parcel B basis from 1982 for their share of the 50% interest via the trust; from 2000 for their share of the 50% interest from W
Do you agree? Anything that I am missing here?