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MCCrockett,

You wrote, It is my understanding that the cost basis of the securities held in joint tenancy with her daughter (my wife) would be stepped up to the market value of the securities on 08 October 2018.

...

My mother-in-law died on 08 October 2018 without a will. It is my understanding that the cost basis of the securities held in joint tenancy with her daughter (my wife) would be stepped up to the market value of the securities on 08 October 2018.


I'm sorry for your losses.

I'm certainly not an expert here, but I think this is can be a pretty complex question, depending on where you live. My understanding is that for an account to be considered Joint Tenancy with Right of Survivorship, the assets in the account must be equally co-owned (50/50). That means your wife would only have received a stepped up cost basis on half of the account.

This may or may not be a fine point since your wife died too. If you are not living in a common property state (Nebraska doesn't seem to be), it seems likely you would receive a stepped up cost basis yourself. But if you were living in a common property state, once the property passed to your wife you may have become a co-owner - giving you a 50% ownership at your wife's cost basis. However the common property state may also exclude inheritances ... meaning this might not be a straight-forward issue.

But since Nebraska doesn't appear to be a common property state, I *think* none of that is an issue for you.

Also, What date is used to determine the stepped up cost basis of the securities?

I'm pretty certain that is based on the day the deceased died - not on the day the securities are distributed.

Finally, I assume that I will be responsible for paying the estate's income taxes on dividends received after the distribution date.

Again, not an expert... But I *think* the estate is responsible for filing returns and paying taxes on income received until all assets are distributed and the estate is closed. Of course for JTWRS accounts, I would think full ownership passed to your wife when her mother died. So at this point the account is part of your wife's estate and it's responsible for the taxes on distributions since her mother died.

Hopefully someone will correct me if I'm wrong...

Also I think I'd consider paying for a professional's advice, unless the amounts are not very significant. In particular state law heavily influences the answer to these questions and I certainly don't know Nebraska probate law.

- Joel
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