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Consider the case of a married couple, living in the USA, with appreciated stocks and bonds in a living revocable trust worth between 1 and 5 million dollars. The husband then dies leaving everything to his spouse. There will be no estate due because the estate is too small and the unlimited martial deduction.

Can the executor of the will use an alternative date (that is, a date after the death of the spouse) to value the assets and for the purpose of getting a larger cost basis for the remaining spouse?

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    In a comment to an answer that has been deleted you say "I know you can pick a different date if it reduces the estate tax burden" have you checked the source, which is probably an IRS document. – mhoran_psprep Jul 18 at 19:16
  • I'm voting to close this question as off-topic because it is essentially unanswerable without detailed information about what the revocable trust says and even if this information were to be provided, it will be more a matter of trust law that could be asked over on law.SE but would better be asked of a lawyer. Revocable trusts generally become irrevocable upon the death of the grantor and whatever property is held in the trust passes outside the estate to whomsoever the beneficiaries are. So,.. – Dilip Sarwate Jul 18 at 19:26
  • .... the executor of the estate has nothing to do with choosing alternative dates for the valuation so as to maximize the remaining estate tax exemption etc. – Dilip Sarwate Jul 18 at 19:28
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    A quick Google search turned up IRS Code Section 2032 which allows for estates to elect an alternate valuation date if the value of the assets held by the estate decrease in value after the date of death. Perhaps there are other exceptions as well. Consult a tax lawyer. – Bob Baerker Jul 19 at 11:09
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I don't know how you presented the question to your attorney, but there is a step up in basis when one spouse dies.

From WHEN ASSETS GET A ½ STEP-UP IN COST BASIS

However, what happens to assets that are owned jointly with a right of survivorship when one spouse passes away? Did you know in this scenario, it is possible for assets to receive a ½ step-up in basis? The formula looks like this:

(Date-of-death fair market value + Old basis) / 2 = New Basis

When I filed taxes for my mother in law after the sale of her house, even though the 'gain' was well over $250K, no tax was due, as I stepped up the basis by half based on the recent passing of my father in law.

All due respect to lawyers, their field is so vast, that, like doctors, they cannot be an expert in everything, thus the areas of specialization. There's a serious problem when a lawyer gives advice outside his expertise.

I strongly suggest you continue to search the topic until you gather enough results confirming my answer. I posted the one that offered a clear example, but this is a common issue.

Note - it's the first death that offers the basis step-up, perhaps the way you asked the question with "alternative date" was confusing the issue.

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I spoke to my attorney about the issue and he says you cannot use an alternate date unless estate tax is due using the date of death value of the estate.

  • There are two taxes to address. For state and federal, my answer applies. Estate tax is different, as the surviving spouse gets the benefit of the (husband's) $11.4M exemption when she passes, i.e. $22.8M total. It's not lost on the first death. – JoeTaxpayer Jul 21 at 13:31
  • @JoeTaxpayer I thought the individual lifetime combined gift and estate tax exemption was $5M+? Also, that the unused part of the lifetime exemption is available to tie surviving spouse is a fairly recent change in tax law; it used to be that the unused part was lost lost forever... – Dilip Sarwate Jul 21 at 14:28
  • @DilipSarwate - see This - New tax code effective 2018. Many changes effective with this scam #TaxReform (Yes, the portability was added. They capped my SALT deduction, but gave the top .1% a few extra million when they die. – JoeTaxpayer Jul 21 at 14:31

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