Recently, my mother passed away and I have acquired Power of Attourney formy father. He is 89 and his mind is not what it use to be. My parents havedone a pretty good job of diversifying over the years (I know because Ihave been pulling my hair out doing their taxes).To simplify the management of my Dad's assets, I would prefer toconsolidate everything into one large Income fund.I estimate that he has between $200,000 and $300,000.Are there any funds that you are particularily fond of?Is the consolidation a bad idea? I would have to sell his stocks and bondsand pay capital gains.If I leave the stocks alone, will the hiers have to pay capital gains onthe stocks when he dies?Thanks in advance,Jim Moore
Is the consolidation a bad idea? I would have to sell his stocks and bondsand pay capital gains.If I leave the stocks alone, will the hiers have to pay capital gains onthe stocks when he dies?I would not do it if the capital gain tax was large. Therefore probably a bad idea.However, you mention stock. The stock can be moved to one broker with out selling.Some mutual funds can also be moved to brokers.Look at Fidelity, Schwab etc and see if they sell the funds you have. If they do you could move everything to them.All of his assets will get a step up in basis at death. If you sold the day he died you would have no capital gains tax to pay. The day before it could be up to 20% of the sale price.
It is not clear whether the assets are certificates or in a brokerage account(s). If not in a brokerage account, I would strongly suggest placing all of them in one account. With very few exceptions brokerages will accept all stocks, bonds and mutual funds. As the other reply said, the account balances can be transferred from one broker to another without being sold. Besides the tax implications, brokers charge a commission to sell. Also, if there are other heirs when your father dies, they may question your decision to sell stocks just for your convenience, since paying the taxes diminishes the estate.When you hold the securities in a brokerage account, the broker "owns" the security as far as the various companies, governments are concerned and tells you what part of what he owns is yours through the monthly statements, etc. Thus, at the end of the year he sends you one statement that covers all the dividends, interest income, purchases and sells for the year, which can be used to support the tax return. There is no need for all of the money to be in only one fund.Until 2010 the stocks and bonds will have a changed basis when your father dies and you (and other heirs) inherit them. The new tax law changes that when the estate tax goes away. At that time the basis will stay the same and the when the heirs sell the security they will need to pay the capital gains tax.
Could some one enlighten about probate too besides the estate tax?If I leave all my property to one heir what probate procedure is used.Is it better to make that heir a joint owner of our assets or leave them in our name.
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