Trust issues

[RightOn]

Mrs. Smith had a living trust in place when she passed away in 2012. Her rental property was transferred to the trust. Does the trust get a step up basis as of the market value of the property on the date she deceased?

When the property was finally distributed to her son, Peter, as the beneficiary, does Peter get the same basis as the trust?

For example:

Mrs. Smith's original basis of the property: $200,000
Fair Market Value of the property on the date of Mrs. Smith's death: $500,000
The property was transferred to the trust. Trust gets the step up basis of the property: $500,000.
A few years later, the property was transferred to Peter (beneficiary). Peter's basis of the property: $500,000.

Is anything incorrect?

[JON]

Living Trust

does that mean "revocable" trust that goes to "irrevocable" when she dies then the answer to your question is probably yes to the above. If nothing was previously gifted and a few other "ifs" and "buts" could be involved.

[Y2KEA]

does that mean "revocable" trust that goes to "irrevocable" when she dies then the answer to your question is probably yes to the above. If nothing was previously gifted and a few other "ifs" and "buts" could be involved.

Assuming the above is correct, and the property continues to be rented, depreciation starts all over. When it is distributed to Peter, he gets it at adjusted basis: FMV DOD + capital improvements - A/D.