Page 18 THE MALDEN ADVOCATE–Friday, September 20, 2024 OBITUARIES Barbara J. (Burnett) Daugherty A longtime resident of Malden. Passed away on Saturday, September 14, 2024, at the Woburn Nursing Center. Barbara was born in Stoneham in 1943, the daughter of Eugene and Georgina Burnett. She was raised and educated in Malden, graduating from Malden High School with the Class of 1961. After her marriage to Kenneth Daugherty, the two settled down to raise their family. A dedicated wife and mother, Barabara was also a genealogy buff . She is survived by her husband CAPITAL GAINS TAX AND IRREVOCABLE TRUST M any people question if they place real estate into a Medicaid qualifying trust what will happen upon the death of the Donor/Settlor/Grantor some years down the road. If the irrevocable trust is drafted properly, the real estate will receive a full step-up in cost basis equal to the fair market value at the time of the Settlor’s death. Therefore, going forward, the original purchase price and improvements over the years become irrelevant. The benefi ciaries of the Trust are treated as if they paid fair market value for the real estate at the time of the Settlor’s death. Why is this important? If the children/beneficiaries were to sell the appreciated property shortly after the Settlor’s death, there would be little or no capital gains tax to pay. The capital gains tax to be paid would be based upon any further appreciation between the time of death and the subsequent sale. As an example, let’s assume the Settlor purchased his home for $500,000 with approximately $100,000 in improvements during the Settlor’s lifetime. The cost basis in the hands of the Settlor in this case would be $600,000. If the Settlor had subsequently transferred his home to an irrevocable trust, and died 10 years later when the value of the home was $1,000,000, the cost basis in the hands of the benefi ciaries would be $1,000,000. If the property were sold by the benefi ciaries for $1,000,000, there would be no capital gain, and hence, no capital gains tax to be paid. If, however, the Settlor had simply given the property to his children without first transferring to such an irrevocable trust or without reserving a life estate within the deed of conveyance itself, a future sale by the children for $1,000,000 would result in a capital gain of $400,000 with a corresponding federal (15%) and Massachusetts (5%) capital gains tax to be paid of $80,000. Depending on the other income of the children, the federal capital gains tax rate could be as high as 20%. Furthermore, you might also get hit with the federal “net investment income tax” of 3.8%. Instead of the total rate being 20%, the children could be looking at a total rate of 28.8%, or $115,200. When you simply gift an appreciated asset outright to the children, there is what we call a “carry-over” basis in the hands of the children. That is to say, the cost basis in the hands of the Settlor becomes the cost basis in the hands of the children. No stepup in cost basis occurs. This concept of a step-up in cost basis would also apply to appreciated securities such as a brokerage account, common stock, preferred stock, etc. Reserving the right to use, occupy and possess the real estate during the Settlor’s lifetime will result in a step-up in cost basis upon the Settlor’s death. Reserving the right to receive the income generated by the assets housed in the Trust would also result in a step-up in cost basis upon the Settlor’s death. In order to obtain the benefi t of Internal Revenue Code Section 121, which allows for the $500,000 capital gains tax exclusion for a married couple when the principal residence is sold, a provision allowing for a lifetime limited power to appoint Trust principal to charities will accomplish that objective. Joseph D. Cataldo is an estate planning/elder law attorney, Certifi ed Public Accountant, Certifi ed Financial Planner, AICPA Personal Financial Specialist and holds a master’s degree in taxation. Kenneth, her son Kevin Daugherty of Jamaica Plain, her daughter Kelly Daugherty of Woburn, her brother Bruce Burnett of NH, and her grandson Kevin Daugherty Jr, of Malden. Funeral services were held at the Weir – MacCuish Golden Rule Funeral Home, Malden on Wed, September 18th. Interment followed in Forest Dale Cemetery, Malden. Thomas C. McInerney Of Reading/Malden. Passed away on Wednesday, September 11, 2024, at his home, surrounded by his loving family at the age of 92. He is predeceased by his beloved wife, Donna L. (Krzesinski) McInerney and Ana (Loria). Born on August 23, 1932, he was a son of the late James P. And Helen H. (Dolan) McInerney. Tom was raised in Somerville and was a longtime resident of Malden. He was a hardworking man. Tom was a longtime active member of the Sheet Metal Workers Local 17 Union and enjoyed spending time with his huge family at their annual family day at Canobie Lake Park. In addition to the Union, Tom was a very active member of the Sacred Hearts Parish community in Malden. From taking care of teachers, students, and staff at Cheverus School, to helping the CYO and CCD, hosting a coff ee social after the 9am Mass on Sundays, helping to run a food pantry, and being the Head Sexton at Sacred Hearts Parish, if anyone were looking for Tom, you would fi nd him smiling in the Church. His faith was very important to him and his life was a testament to that. He was also a Past Faithful Navigator of the Knights of Columbus, having received the Fourth Degree and serving under Santa Maria Council #105 of Malden and Council #104 of Wakefi eld. In addition to all of this, Tom enjoyed spending time with his family and friends. He was gifted with the Irish gift for gab and even kissed the Blarney stone (though he didn't need its help for his talent of storytelling). You could often fi nd Tom sharing stories, usually with a life lesson included. Many of his children, grandchildren, and great grandchildren were lucky enough to get to go on guided tours of his various job sites and stomping grounds throughout the years. He was a kind, generous, and open-minded man, who treated all as equals and thoroughly enjoyed making people laugh and spending quality time with others. He enjoyed his bowling league and was proud to carry the team with his handicap. He will be remembered for his smile that was everlasting. Tom was so proud of his family and enjoyed being amazed by the sheer number of them all. He was the father of Diane Greenleaf, Thomas McInerney, Jr., James McInerney, Robert McInerney, Jennifer McInerney, Mary-Helena Salch, and the late Mark McInerney and Charlie McInerney. He was also so thankful to have been part of the lives of his 25 grandchildren and 22 great grandchildren throughOBITS | SEE PAGE 19
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