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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121095  
Subject: Re: inheriting stock Date: 2/28/2014 4:44 PM
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My father is in the final stages of life. He has a portfolio of about $2m. There are 4 children, six grandchildren. Each grandchild gets a straight bequest of $30k, the remainder is split among the four children. Almost all of the portfolio is in (highly) appreciated stock.

Three of the four children have brokerage accounts, the fourth does not, and asks [insists] that the inheritance be sent "in money" rather than stock when the time comes. I understand that inheriting "stock" will preclude taxes on appreciated gains. If I sweep the stock into the various brokerage accounts, no tax. What happens if I sell the fourth share and convert it "to money"? Will it then be taxed and will she receive less?


My condolences, Goofy. It's a difficult time.

The estate gets the same stepped-up basis as heirs do, so no income tax would be due just because the estate sold some of the stock.

That said, and assuming you're the executor, I strongly recommend that you deal with all distributions the same way--stock or cash. The easiest method would be to sell everything. Cash is much easier to split x number of ways.

Talk it over with the estate's attorney.

Phil
Rule Your Retirement Home Fool
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