With the current estate tax exemption amount of $5.43 million per individual and $10.86 million per married couple and the portability of estate tax exclusion between spouses, many married couples with individual revocable trusts no longer have to worry about re-balancing assets in their trusts for estate tax purposes. Where the spouses hold highly appreciated assets, however, it may still be a good idea to do an occasional review and rebalancing of the assets in the separate trusts or in separate names. To the extent that highly appreciated assets are held by the surviving spouse, those assets will be subject to capital gains tax if that spouse needs to liquidate them. But, with certain exceptions, assets held by the first spouse to die would have the advantage of a step-up in basis and would not be subject to tax on any gain that occurred prior to that spouse’s death. Consequently, spouses may want to consider dividing their appreciated assets in order to minimize potential capital gains taxes.
For more information, please contact Cynthia Black Svenson in our Troy, Mich. office at 248-433-7530.