23 Nov What happens to a rental property held in a trust?

Q. Do rental properties held in a revocable trust get a step-up in value at the time of death? And does the beneficiary pay taxes on the properties they inherit?
— Beneficiary

A. We’re glad you’re asking.

A lot depends on the specifics of the trust, so you should meet with someone, such as your tax preparer or an attorney, who can review it.

But assets in a revocable living trust, including rental properties, generally get a step-up in basis upon death, said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

“The beneficiary would have to pay an inheritance transfer tax if the beneficiary is a not a surviving spouse, civil union or domestic partner, parent, grandparent, child, stepchild or grandchild and the property has a total value of $500 or more, unless the trust provides that the taxes will be paid from the trust or the deceased person’s estate,” she said.

Email your questions to .

This story was originally published on Nov. 23, 2023.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.