How to assess real estate values within a trust

Q: In figuring the cost basis of real estate for the purpose of capital gains, you use the value at the time of death. If the real estate is in a revocable living trust, is the cost basis the value at the date of death, or the date the real estate was put into the trust?
L.A., Rome, Maine

A: Since the trust is revocable, the gift giver can get out of the trust. Therefore, "the cost basis would be the time of death," says Gary Schatsky, an attorney and fee-only financial planner in New York.

If the trust was irrevocable, the giver could not get the gift back out of the trust. In this case, Mr. Schatsky says, "there would be no step-up in value – the cost basis would be that at the time the gift was turned over to the trust."

Q: My general-purpose bond fund is performing badly. Should I stay in bonds, or get out of the bond market now that interest rates may be rising in the future and the value of bonds might be coming down?
L.T., New York

A: "Everybody needs some bonds," says Jonathan Pond, a personal-finance expert in Boston. "Pay particular attention to yields."

Mr. Pond likes short- and intermediate-term municipal-bond funds, such as the Strong Short-Term Municipal Bond Fund, as well as certain junk-bond funds, such as the Columbia High-Yield Fund. He also likes inflation-protected US Treasury bonds. Look for bond funds with expense ratios of 0.6 percent or less.

Q: In a recent column (June 17), a writer needed to deposit checks in a timely manner, but her bank was located out of state. She asked about check-cashing services. But how about this approach: Shift the account to a credit union that allows for the deposit of checks at other credit unions that are members of the same network. My checking account is with Meriwest Credit Union. Its closest ATM is an hour and a half from me. That's not a problem since I can deposit my checks at another credit union'sATM less than 10 minutes away. And there are no extra fees.
P.G., via e-mail

A : Excellent suggestion. To find a credit union, contact the Credit Union National Organization (800-358-5710,

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