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Step-up income tax Basis

Second Death Step-up-r1
           
OPPORTUNITY FOR SECOND INCOME TAX STEP-UP IN COST  
           
Under current tax law a decedents assets are given a new tax cost of fair market value on date of death. With community property both spouses halves are revalued on first death. In most estate plans only the survivor's assets are revalued on the second death.  
           
       
  Approx Estate value on first death:    
  Number of years to second death:    
  Annual rate of growth:    
  Income Tax Rate on Gain:    
Available Estate Tax Exemption-1st death:    
Available Estate Tax Exemption-2nd death:    
Unused Exemption from 1st death:    
  Maximum Step-up:  
   
  Present Plan:  
  Family Trust  
   
 
Survivor's Trust   By-Pass (Decedent's) Trust Current  
Value at First Death:   Value at First Death:  
Second Death:   Second Death:  
Gain on sale:  -0-    Gain on sale:  
Income Tax:  -0-    Taxable Gain:  
Value After Tax:   Income Tax:  
    Value After Tax:  
 
Where the Surviving Spouse does not use their full estate tax exemption (Currently $5.45 million) plus the unused estate tax exemption of the first spouse to die, those unused exemption amounts can be effectively used to increase the income tax cost of assets held in the By-Pass Trust.  
           
In order to carry over the unused estate tax exemption of the first spouse to die, it is necessary to file an estate tax return to establish the amount.  If the Surviving Spouse remarries and  the new spouse predeceases them, the carry over exemption from the first spouse will be lost.  It may be possible to acquire a carry over exemption from the new spouse.  
           
If the Surviving Spouse has creditor problems, this plan should not be used.  If there is concern that there may be creditor problems it is possible to 'turn off' this feature.  
 
    Proposed Plan:      
  Family Trust  
   
 
 
Survivor's Trust   By-Pass (Decedent's) Trust Revised  
Value at First Death:   Value at First Death:  
Second Death:   Second Death:  
Gain on sale:  -0-    Gain on sale:  
Income Tax:  -0-    Max Stepup:  
Value After Tax:   Recalculated Cost:  
    Taxable Gain:  
  Income Tax:  
  Value After Tax:  
Our amendment to the trust is intended to make the income tax on  the sale of By-Pass Trust assets be reduced or go away.   
  Income Tax Savings:  

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