Terminal Illness and Liquidating assets, Tax breaks?

[Account Closed]

Hi everyone,

This is sort of an odd topic (and I’m not even sure this is even a possibility) but I have been conversing with an older gentleman who is terminally ill and believes he has 5-10 years left. He has 6 duplexes and wants to sell one each year for tax purposes. The money will go into a trust for his children to split once he has passed.

My understanding is that if he receives one lump sum he will pay taxes unless he uses a 1031 exchange which he doesn’t intend to do since he is liquidating. What do you think would be in his best interest if he isn’t in a rush to get all the money at once as it’s for his children? Seller financing?

I guess I’m wondering if there was to be a doctors note that states he is terminally ill, can the proceeds from a normal sale (cash, conventional loan) go into a trust without being pulverized by the irs? Going off the basis that his children are best friends and he wants to see that it stays that way after he is gone? Probably wishful thinking but I’m looking for a loophole to help him and his children save as much as possible. Thanks in advance!

[Steve Morris]

Why doesn't he just set up a trust now and move all the properties into it.  Make sure the kids are in WROS and then if he passes (unless Biden messes it up) they get a step-up in basis.

No probate issues and no tax consequences solely due to death.