What to do about a revocable trust was created after one spouse died?

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What to do about a revocable trust was created after one spouse died?

The trust became a grantor trust once the second spouse died. Residential home lived in more than 2 years by the grantor was sold 3 years after her death. Therefore, the trust owned the home for 3 years before it was sold. Using the FMV (appraisal at time of death) as the basis in the home, there will be a gain. Does this gain need to be reported on Schedule D, Form 1041 or since this is a grantor trust and the trust held onto the house more than 2 years before the sale, would it qualify under the home-sale exclusion rule and therefore, not have to be reported at all on the Form 1041?

Asked on September 11, 2013 under Estate Planning, Kansas

Answers:

FreeAdvice Contributing Attorney / FreeAdvice Contributing Attorney

Answered 8 years ago | Contributor

Based upon what you have written about if the grantor and beneficiary under the revocable trust lived in the home that was an asset of it, the home would qualify under the home-sale exclusion rule and therefore, not have to be reported at all on the Form 1041 if lived in for two plus years.


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