Level 3

Sale of home from irrevocable trust

Forum|Forum|2 months ago
April 12, 2026
2 replies
10 views

If an infirm elderly person transfers her home into an irrevocable trust to protect it from Medicare, does the home get a stepped up basis? When the person dies and her home is sold, does the irrevocable trust get the $250,000 exclusion for the sale of her principle residence?

sjrcpa

Level 15

No at the time of transfer, maybe upon death, and No

The more I know the more I don’t know.

BobKamman

Level 15

Certainly with Dr Oz now running Medicare, we need all the protection from him we can get. Next thing you know he and Elon will insist that people pay for their own long-term care. Lots of greedy kids are going to be unhappy about that. Meanwhile, if you want the taxpayers to pay through Medicaid, and have enough money to hire the best lawyers, you can set up an Intentionally Defective Irrevocable Trust (IDIT) or Intentionally Defective Grantor Trust (IDGT), planning tools designed to make assets ineligible for Medicaid while treating them as owned by the grantor for income tax purposes. So "irrevocable" doesn't mean much these days. Also, if you die, you don't need Section 121 because the kids before they leave on the cruise will get stepped-up basis anyway.

R

RayYanks15Author

Level 3

House was sold by Trust before being transferred to child. Would Trust get the main home sale exclusion since she was living in the house for 71 years until she died?

BobKamman

Level 15

If the house was sold after she died, no.

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