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Irrevocable Trusts Can Cost Heirs the Tax-Free Step-Up, IRS Ruled

Original: Put Grandma's House in an Irrevocable Trust to Protect It From the Nursing Home and the Kids Will Lose Their Tax-Free Step-Up. The IRS Ruled on It in 2023

A personal finance debate is resurfacing over a common Medicaid planning move: putting a parent's home into an irrevocable trust to shield it from nursing home costs. The trade-off, highlighted in an IRS ruling from 2023, is that heirs may lose the capital gains step-up at death, meaning children could owe significant taxes when they eventually sell the inherited house.

Why now: Families weighing Medicaid protection against inheritance taxes are revisiting the IRS's 2023 guidance on the step-up issue.

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• Put Grandma's House in an Irrevocable Trust to Protect It From the Nursing Home and the Kids Will Lose Their Tax-Free Step-Up. The IRS Ruled on It in 2023 · 24/7 Wall St.

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