Author Topic: Advice for soon to be trustee(leaving Edward Jones and when is step up in basis)  (Read 946 times)


  • 5 O'Clock Shadow
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Trust and step up in basis
Today, 08:44 AM

I am soon to become the trustee of a trust set up by my father that has sizable taxable accounts within. Trust is structured such that I (son of decedent) am the trustee of these assets and that I make sure that my mother can live off some of the income of the assets while she is alive. The trust assets are then to be "distributed" to me upon her death (Backgound: mom not listed as the trustee of trust as dad wanted a spendthrift backstop so that she could live comfortably but not compromise long term generational wealth thru overspending). My father was a great saver but always invested with a company that charged enormous fees, large AUM fees, and tried to time the market on his behalf. They also had him buy loaded mutual funds, etc. (typical gouging stuff). The portfolio is a mess...unnecessarily complex with over 75-80 individual stocks, some "unit trusts" within, etc. I am much more of an index fund person and can not stomach paying this company these AUM amounts after my father's death.

2 questions:

1)Anyone have any experience or advice when transferring trust assets held at one brokerage to a different brokerage? In this case it would go from Edward Jones to either Vanguard or Fidelity. I've read that one should try and transfer assets "in kind" to avoid fees at the existing broker and then craft the new portfolio at the new broker. I'm assuming that there might be a few assets that can not be distributed "in kind" (special investments only offered through Edward Jones) and will deal with that as the situation arises.

2)When do assets actually get a "step up" in basis? Is it at the time of death of my father or in the case of this structure that I outlined above at the time the assets are "distributed" to me after my mother's passing (hopefully a few years down the line)? Either way I'd like to escape the current broker ASAP after my father's death (to save on the AUM fees) but the timing of the "step up" would determine when I sold all these old individual stocks and invested instead in a simpler index fund balanced portfolio that I could manage myself.

Thanks for any advice you can offer.


  • Bristles
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It's mostly out of my expertise. The only comment I had was something you evidently already realized: that capital gains essentially get forgiven upon someone's passing - the "step up" you cited in your OP.

Your best move on the individual stock front is probably to sell all the losers (if any) NOW to harvest the capital losses, which can have some tax benefits, but leave the winners alone if your father is close to passing, since those gains will be eliminated by the step up. Any unrealized capital losses will evaporate if your father dies before those assets are sold, and his heirs won't derive any tax benefits from them.

Maybe consult with an estate planning lawyer on the rest?

Sorry to hear of his poor health.

Car Jack

  • Handlebar Stache
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You want to dig in a little deeper.  What does it cost to sell each position at EJ.  What does it cost where you're going.  For run of the mill funds, going to a Fidelity/Schwab/TDAmeritrade in kind works because it will cost you zero to sell.  Vanguard, not necessarily.  EJ, absolutely not.  But you mention that there are Unit Trusts, which you might have to sell at EJ.  Ask the people where you're going.  They'll tell you.  Try to do this sooner rather than later so the gains/losses since the step up at death to make things less complicated.


  • Magnum Stache
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Some trusts will never get stepped up basis. I think this might happen when they're irrevocable (the person who created them can't undo them) since that effectively removes them from the person's estate, while revocable trusts might be treated more as if their assets belong to the estate until the death creates the trust so they would get stepped up basis. I'm really not sure how it all works though, I just wanted to point out that you need to nail down the type of trust this is and make sure you understand the tax ramifications.

Note that the tax brackets for trusts are much smaller than they are for people, so it's much easier to hit high tax brackets. This might also be effected by the type of trust as I think they can sometimes "use" the bracket of the trust creator. Again, I'm really not sure exactly how it works.