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Trusts & Estates Law/Timeliness of Transfer on Death


Prof. de Beauchamp

I hope you will not find this too long. It is NOT a homework or test question.

Joe owns a mutual fund, currently in his Vanguard account. In his Revocable Trust, he “wills” this fund, worth $250K, or it's dollar value, to daughter Mary. He has also filed with Vanguard a Transfer on Death form, bringing the fund to his Trust at that time. Joe passes, the fund is transferred,  the Trustee redeems it, and sends a check for the proceeds to Mary. Any capital gains taxes due on the Fund before redemption are the responsibility of the Trust. In spite of the fact that the Fund, as well as it's subsequent cash equivalent, was not PHYSICALLY in the Trust at the time of Joe's passing, is it still treated as if it had been and is Mary able to receive the check, tax free, as an inheritance? Mary's State does not have an inheritance tax.

The trustee of the trust will complete the taxes for the trust. Daughter Mary might pay capital gains taxes or estate taxes that are federal. She should engage a tax professional for herself, and have this person evaluate the taxes for her. We are missing too much information on herself to properly answer the question on her taxes, however, it seems that she might not have taxes since the amounts are below the usual limits. Have her see a tax professional.

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Dr. Joseph de Beauchamp


I am an MBA professor and have published in this area. I am able to help individuals and companies in the transfer process.


Past/Present Clients
2000 public companies

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