If my dad has a fund that is in a living-trust and I am the beneficiary of it. . . then if something were to happen to him how would inheritance taxes and capital gains play into it?The assets pass to you at their basis on the date of your father's death. Therefore, capital gains taxes will not be due on the appreciation of his assets at his death, and records supporting his basis are unnecessary. Your basis in the assets when you dispose of them will be their value on the date of his death. If it's just your dad's trust (no marital / A-B trust), then the trust will be subject to estate tax on it's value at his death if it's value is greater than the estate tax exemption amount for the year of his death. ... for the dividends capital gains he has been paying to offset the principle????WTR
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