Can I sell real estate owned by my irrevocable trust?
This edition of the Koldin Report E-Newsletter is part of a series on questions we received from our “contact us” form on our website about Elder Law, Estate Planning and Medicaid.
All prior newsletters are saved on our website. You can read them by clicking here.
I am a Trustee of a Trust your office set up for my parents. They want to sell some of the real estate owned by their Trust. What do I do with the funds received from the sale and are any taxes owed?
There are many ways to prepare an Irrevocable Trust and the terms of the Trust can be different depending on your circumstances and how your attorney writes his/her Trusts. Therefore, the answers provided below are applicable to a typical Irrevocable Trust prepared by the Koldin Law Center, P.C.
You should always have your accountant review your specific Trust to answer your tax questions.
The Trustee has the authority to sell real property on behalf of the Trust. The buyer would write a check payable to the Trust and the funds could then be deposited into a bank or brokerage account titled in the name of the Trust.
The funds from the sale can then be invested in the name of the Trust or new real property can be purchased by the Trustee in the name of the Trust.
When property is sold in the name of the Trust, capital gains would have to be declared and taxes paid just as if the Grantor sold the property himself/herself. If the property was the Grantor’s primary residence, then the Trust would receive the same tax exclusions that the Grantor would have received had he/she sold the property himself/herself.
If the property is sold after the Grantor’s death, then the beneficiaries would receive a stepped-up basis for calculating the amount of capital gains.
These answers are intended to be general and not to provide specific legal or tax advice. Your Trust should be reviewed by your accountant.
For more information about Irrevocable Trusts, please see our website by clicking here.
At the Koldin Law Center, P.C., located in East Syracuse, New York, we have over 50 years of experience helping individuals plan for immediate crisis and long term care. When the Koldin Law Center, P.C. handles a Medicaid case, we not only handle the entire application process, but we also review asset protection options with our clients. We review with our clients who are already in a Nursing Home options to protect some or all of their assets beyond merely establishing Medicaid eligibility. We do not charge a fee for the initial consultation. We welcome your children, family attorney, accountant, and/or financial planner to be present at the initial consultation.
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