A widow friend has as part of her deceased husband's estate a number of stocks from different companies. Current values are nearly $700,000 as we calculate it. He bought these from the companies themselves as he did not want to pay a brokers fees. Microsoft, Exxon, utilities, phamaceuticals, etc. (Is this called buying 'over the counter'?). She has boxes full of certificates and also gets a lot of dividend checks.
A financial advisor at her bank told her "not to worry about the stock flucuations as the stocks will remain at the value they were on the day he passed away". I thought this sounded crazy. Could this be true? Please explain either way.
I advised her to sell them and put the money in more stable accounts, but she cannot without succession.
She has three adult sons and they were reluctant to open succession as they think that inheritance taxes will take affect and take a large portion. I think they want to wait until she passes, thinking that will save tax.
2007-09-17 11:51:12 · 8 answers · asked by Anonymous in Business & Finance ➔ Investing
All the stocks were in the husbands name, he left a will leaving everything to her.
2007-09-17 12:34:14 · update #1
Total estate is around 2.2 million based on estimates on the real estate. It's in Louisiana.
2007-09-17 12:36:02 · update #2
For ESTATE Tax purposes, yes, the broker is correct. The market value for assessing a potential estate tax liability, if any, is fixed as of the date of death. BUT, yes, the actual assets continue to fluctuate on the market. So I think the broker's advice is incomplete.
If the husband died in 2006, he doesn't owe estate taxes unless he has over $2,000,000 in assets AFTER a marital deduction for whatever he left her (i.e., this $700K of stocks plus any other assets, like a home, cars, other financial assets, etc.). If he dies in 2007, the amount is $2.5 million. However, I suggest she engage a CPA anyway to assist her with both (a) a decision as to whether to file a 706 (or not) and (b) how to handle the taxable income questions that are inevitable with a portfolio of stocks of that size.
2007-09-17 11:59:21 · answer #1 · answered by lmnop 6 · 3⤊ 1⤋
First, she should deposit the certificates with a broker. Then she doesn't have to worry about lost certificates and checks. The dividend will just appear in her account because the broker will collect them. She can take cash out anytime.
This is not buying over the counter.
They do not retain the value as of the day he passed away. The cost basis is established on that day.
What is "succession"? Is this a British tax question?
2007-09-17 11:59:29 · answer #2 · answered by Ted 7 · 0⤊ 1⤋
This widow needs to talk to an estate planner and also get a CPA and attorney that specializes in estate planning. As a financial professional, I had a case similar to this that started in Feb. and are still working on completion. They can be very complex and need to be put together carefully to avoid most if not all federal estate taxes. You can go to www.concordfinsvcs.com for issues like this and answers to more questions. Bottom line is there are probably more issues that just the stocks. I appreciate people like you that care about others lives. Good Job!!
2007-09-17 12:37:03 · answer #3 · answered by Scot C 1 · 0⤊ 1⤋
First, were the stocks in joint name or his name? If they were in his name she could likely get the stocks at the value of his death rather than what he paid for them. Transfer to her name goes without estate tax. Estate tax to the children starts if the value of the estate is over $3 million this year. I suggest you go on line to www.fpanet.org and find a CFP in her area and works on an hourly basis. We're talking about a good deal of money and paying for advice is well worth it.
PS The bank person is totally wrong. The stock fluctuates minute by minute.
2007-09-17 12:04:20 · answer #4 · answered by HH@20 2 · 1⤊ 1⤋
I'm not certain about the laws in LA but in NV and CA if he stocks are in an estate and protected from probate, then she doesn't have to worry about them but I've never heard that they will stay at the same price as when the person passed away. I think you need to talk to a tax attorney about that. Good luck to you.
sondra.hill@sbcglobal.net
2007-09-17 12:45:30 · answer #5 · answered by sondra.hill@sbcglobal.net 2 · 1⤊ 0⤋
"When you inherit stock, your cost basis is generally the stock's value when the previous owner died. This is called the 'step-up in basis', which means that nobody ends up paying taxes on the gains the stock had while the original owner was alive."
But you'll owe taxes on any gains after the date you inherited that stock. And, yes, the price continues to fluctuate.
2007-09-17 12:06:49 · answer #6 · answered by Tumana 2 · 1⤊ 1⤋
a capability of lawyer isn't adequate. He desires a quick certificates exhibiting he's the executor. He additionally needs to renowned the EIN of the sources. Then he works with the circulate agent or his broking provider to promote the inventory. A 1099-B would be issued on the top of the year and he will record the sale on the sources's 1041 tax return.
2017-01-02 07:53:26 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Her cost basis in the stocks is zero as of the date of her husbands death. That means she only has to pay taxes on the appreciation from that date on. So, if she wants to avoid taxes she should sell them relatively soon.
2007-09-17 11:59:35 · answer #8 · answered by jeff410 7 · 0⤊ 2⤋