They could be distributed the day before he dies, though you may not know in advance when that will be. Or the trustees may be able to give him a general testamentary power of appointment over the trust. Or you may be able to decant the trust. Or you may be able to get a court to modify the trust based on changed circumstances.Thank you Bsteiner. I wasn't aware you could distribute assets out of an irrevocable to get the step up. My fathers will be well below the estate tax exemption so this seems like a great move closer to his end. However, I "hope" my father will be around for a long time, which I don't believe Warren Buffett has so still have a more immediate problem. Theoretically could I wait 10 years to when my Dad is "close" and distribute assets up to the exemption to get the step up? Or do they need to be distributed X years in advance to get the step up and be included in his estate?QBoy makes an excellent point.In general, I agree that putting so much in one stock is excessively risky. 'But in this case, it is worth noting that Berkshire itself is highly diversified.
Let me put some number to the issue. Since 2010, the standard deviation of Berkshire stock return is 16.3 percent, compared with 14.3 for the SP500. (For comparison, Apple is 27 percent.) So the risk of holding Berkshire is only somewhat greater than holding a diversified portfolio. I am not sure that huge tax hit is justified to get the small risk reduction.
California taxes trusts based on the residence of the trustees, and has a throwback rule. So you can defer (or possibly avoid) the California tax by not having any trustees in California.
If your father's estate will be too small to pay estate tax, you could distribute some or all of the trust assets to him or give him a general power of apopintment over some or all of the trust assets, to throw them into his estate and get a new basis. Note that this might sacrifice asset protection.
Statistics: Posted by bsteiner — Tue Aug 13, 2024 3:43 pm — Replies 11 — Views 364