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Learning, Sharing, and Teaching => Investor Alley => Topic started by: Miss Prim on June 05, 2015, 01:30:16 PM

Title: Tax questions about an inheritance.
Post by: Miss Prim on June 05, 2015, 01:30:16 PM
Hi all.  My husband just inherited quite a bit of stocks from his father's trust.  His father passed away a long time ago, but his mother just died and the stocks were in a trust with a regional national bank.  They have just been divided 3 ways with his siblings and he now has a statement of his own account.  This is not a tax-deferred account.

His mother's money is in an all tax-deferred account and that is being split us as well, but we don't have the statement yet.  I know we will have to take so much out per year of the tax-deferred based on my husband age, but my question is actually about the taxable stocks.  The statement has an asset description ( DTE, ect) number of shares, unit price, total cost and market value.  Would the total cost be the basis for selling?  We are going to take some money out of this account to have on hand to supplement our income for about 2 1/2 years because I will need the ACA health insurance and would like to get some subsidy.  I am on COBRA now from my work (I just retired at 61) and I will switch to the ACA in Jan 2016.  I would like to limit my income to $40,000 to $45,000 per year until I hit 65, so I thought we would pull more out this year and than only the amount we have to pull from the tax-deferred account. 

Hope I made sense!  I will probably have other questions too as I am taking a lump-sum pension distribution and will role it into a tax-deferred account with Fidelity. 

Thanks for any help you can give me!                                                    Miss Prim
Title: Re: Tax questions about an inheritance.
Post by: seattlecyclone on June 05, 2015, 01:58:14 PM
If the stock was held directly in your mother-in-law's name, the basis would be equal to the value of the stock on the date of her death. For assets held in a trust, I think it can depend on what type of trust it was. You may do well to ask a professional about this.
Title: Re: Tax questions about an inheritance.
Post by: Miss Prim on June 05, 2015, 06:00:40 PM
Hi seattlecyclone.  Before my FIL died, he had 1.2 mil which he divided up 600,000 in his trust and 600,000 in my MIL trust.  As far as I know, that 1/2 was in his name, but his wife could have use of it, but I don't think she ever had to.  The problem is my husband's brother was in charge of all of this and he would not give statements to his brother (my husband) or sister over the years.  He ran the trust department of the bank that the money was in before he retired.  I think he was all on the up and up, but who knows?  We talked to the manager of the trust dept now, to fill out papers and even she said she thought it was odd that he never sent us any statements! 

I think that money just sat there and the dividends were reinvested.  They are mostly blue chip stocks and some mutual funds.  It looks pretty balanced to me.  There probably was some buying and selling, but not a whole lot.  I will probably make a few changes, but all in all it seems to be invested fairly well.

I guess I will call the trust dept manager and ask if the total cost line would be the stock basis.  They do charge a 0.35% fee for providing basically a piece of paper every quarter, but this is my husbands money and he wants to leave it in there.  I have enough other money that I manage that I will not try to change his mind.

                                                                                                            Thanks, Miss Prim