Hi Fools!My Mother had her assets managed by a full-service broker, Raymond James. Somewhere along the line, I believe she was given some bad advice. She held only one stock, a bank stock, which had provided her with a decent income for many years. In 1994, she listed herself and her 4 children as Joint Tenants WROS on her stock (bad idea). RJ divided up her stock and other holdings after her death, and continue to send me a lovely statement every month telling me how things are going. I've been wondering what the expense of this service plus preparing a 1099 every yr was costing me, and couldn't find it on any statement. However, they've just sent me a note saying that as I don't generate enough commissions for them by buying and selling, that they're going to start assessing a yearly $25 inactivity fee.My questions:1. Can I transfer the whole kit-and-kaboodle held at RJ to a discount brokerage? Besides the one stock, I also inherited a Money Mkt fund, a Mutual Fund (a dog), and a bunch of tax-free Munis. The entire portfolio is worth around $100K. It's been comfortable having it there, truth be told, and the idea of transfering it to some group in California or wherever scares me.2. If I sell that stock, is my cost basis the same as my Mother's was, since I didn't strictly inherit it (JT-WROS)? Is her one-fifth portion cost basis stepped up to the date of her death? We can't figure out when the stock was purchased, and it wasn't all at once anyway. RJ doesn't seem to have that info. Would the bank? Probably bought it in the 50's.3. Is the $25 fee reasonable? I notice some of the Discount brokers also charge such fees (B&H charges 6.99/month every month). I can't expect them to do this stuff for free, but their commission rate is too high.
<Can I transfer the whole kit-and-kaboodle held at RJ to a discount brokerage? Besides the one stock, I also inherited a Money Mkt fund, a Mutual Fund (a dog), and a bunch of tax-free Munis. The entire portfolio is worth around $100K.>I do not know RJ through experience, but since they are a full service brokerage that automatically makes them one of the bad guys in my book. You can easily transfer your holdings to a discount brokerage, however I would take the time to understand exactly what you want out of the new brokerage. Some that offer the deepest discounts do not provide very much in the way of service or variety of products. I have found Schwab to be convenient for my needs. They may or may not meet your needs. Their web site is easy to use. They also have a good amount of local offices if you want or need a face to face meeting. If the MF is a James in house fund, you may have to sell it before doing the transfer. The stock, MM funds and munis should be readily transferrable.<<If I sell that stock, is my cost basis the same as my Mother's was, since I didn't strictly inherit it (JT-WROS)? Is her one-fifth portion cost basis stepped up to the date of her death? We can't figure out when the stock was purchased, and it wasn't all at once anyway. RJ doesn't seem to have that info. Would the bank? Probably bought it in the 50's.>>You are correct to admit that putting the stock in a JT status was a very big mistake for your mom. If it was not done, your basis would have been stepped up to the value on the date of death. This will end up costing each of you a lot in taxes. You are correct that ONLY her 1/5 shares get the stepped up value. Each of you have to use 25% of HER original cost basis. Good luck at trying to find this information from the 1950's. Expect to hear some hearty laughter on the other end of the phone if you ask the bank to provide the information for you. There has been so much merger activity over the years (my local bank has changed names 3 times in the last 3 years). FWIW, it is not the brokerages responsibility to provide the information. The fact that they did not even bring up the subject to your mother tells me that they failed the litmus test for a broker. If anyone is ever going to advise you on investments (no a good idea for true FOOLS), they should ALWAYS insist on working with you to determine those numbers. How can they possibly provide any transaction advice without knowing the tax implications of any sales? You could end up spending an incredible amount of time researching the original cost basis only to find that it is a very small amount of the current value. IE: if your share of the stock is worth 25k, you may find that the original basis may only be 1k or 2k (you need to factor in all splits, mergers, spinoffs, prior sales, etc into your calculations). From what you have said you have some 45 years of history to sort through. You may decide that it is easier for you to use a zero cost basis. If you did that, your federal tax bill would be 5k on 25k of proceeds (20% LTCG rate). If you spend many hours of your time to come up with a 1k original cost basis your federal tax bill would be 4.8k on 23k of net gains. It is up to you to figure out at what point all of your calls, letters, trips to the library, etc, will be costing you much more than your tax savings. BTW, if any other items in the portfolio were titled the same way, you will have to go through the same scenario. It may be easier if they were purchased while your mother had the James account. They should have provided you with that information already if that is the case.I hope I have not written too much here. If there are more details that can clarify things, please feel free to provide them. There are many others who contribute to this board and they may agree or disagree with any of my points. Consider all points of view before you take any action. BRG
Who says that you need a broker to hold your assets? We don't use one for that purpose. Just tell them to forward your certificates to you and close the account. First, however, ask them the cost basis on each item in the account; they should have all that info for you, particularly if they claimto be a "full-service" broker. If nothing else, that should get them to start talking and waive the fee.Geezer
BRG, and Geezr,Thanks for the info and the time it took for your responses. Much appreciated!Kathy