"trust fund loophole"

"Obama also wants to close what the administration is calling the "trust fund loophole," a change that would require estates to pay capital gains taxes on securities at the time they're inherited. Officials said the overwhelming impact of the change would be on the top 1 percent of income earners."

Does this mean ALL estates, even below the $5.x Million exemption?

Does this mean larger estates get to pay BOTH a capital gains tax AND the estate tax?

I don't get this at all.

Pico Rico wrote: : "Obama also wants to close what the administration is calling the "trust : fund loophole," a change that would require estates to pay capital gains : taxes on securities at the time they're inherited. Officials said the : overwhelming impact of the change would be on the top 1 percent of income : earners."

: Does this mean ALL estates, even below the $5.x Million exemption?

: Does this mean larger estates get to pay BOTH a capital gains tax AND the : estate tax?

: I don't get this at all.

: --

Noexpert here, but would this be applying to the generation skipping feature of leavng money to heirs , lke children, with teh proceeds going to grandchildren after the death of the trust inheriting children, thus eliminating the no Estate tax on those trusts, only beign part og the grandchild's estate, many years, (hopefully) down the road?

that is how I see it.

Wendy

An article from 2010 described the trust fund loophole then as eliminiating the generation skipping transfer tax (in addition to the regular estate tax) in 2010.

The way they have been talking about it recently, it may have something to do with stepped-up basis on capital gain property passed on when someone dies. I didn't find anything more specific.

It is eliminating the change in basis (typically a step-up) to FMV on the date of death. Those who inherit will inherit at the decedent's cost basis. The possibility of this ever becoming law within the next few years is somewhere between zero and .000000001%.

thanks. That could lead to some interesting math problems if someone paid