Expert Advice When You Need It Most

My 90 year old mother's estate is approx. 200k comprised of cash, stock & mutual funds.

Asked about 3 years ago - Atlanta, GA

She wants to gift equally to her 3 children. Her stocks were bought many years ago as shares in small banks, small pharmaceuticals, etc. Over the years these companies have been bought up or merged with larger companies. We have no records of their original purchase price and can't seem to find this info from the current holding companies. What cost basis would we use if she were to include these in her gifting? Or would it be wiser for her to keep them until she passes, as our cost basis would start on the day of her death?

Flag

Save

Share with:

Attorney answers (2)

James Whittingham Spencer

Reputation Level 8

Answered about 3 years ago. Estate Planning Attorney in Seattle, WA.

Flag

It sounds like you are pretty well-versed in gift and estate tax matters.

As you seem to know, if your mother gifts the stocks to you while she is living (inter-vivos), you get her original basis. If she gives the stocks to you in her will (testamentary), you'll get a stepped-up basis, valued at the time of her death.

If your mother's estate is worth about $200,000, then she has no federal estate tax concerns. I am not licensed to practice in Georgia, so I cannot address whether there would be any state estate tax concerns. Something else to look out for would be whether the state in which she resides has statutory fees for attorneys or personal representatives based on the value of her estate. This can be costly as well.

So, my best advice would be that if you are looking to receive the highest basis in the stocks as possible, then your mother should pass them through her estate upon her death. There may be other reasons to pass them inter-vivos, including her desire to gift to her children while she is living. If she elects to do this, your best bet is probably to sort out the orignal acquisition date of the stocks and look up their historical pricing.

As always, consule your local favorite estate and tax attorney for more details!

Mark as good answer

4 people marked this answer as good

Add comment

Barry J. Dubrow

Reputation Level 12

Answered about 3 years ago. Estate Planning Attorney in Jenkintown, PA.

Flag

The decision to gift or continue to hold assets until death is a decision that should be made with a local trusts and estates attorney who can help your family plan most effectively, considering both income taxes and death taxes (I note that there currently is no estate tax due in Georgia on a $200,000 estate). I will add that the gifting of stock in kind is not itself a tax recognition event for capital gains taxes, and her basis will carry over to the new owner. Perhaps if someone has significant capital losses built up, gifting to that person would not be a bad idea, but that mostly likely might create inequity.

You are correct that there is a step up in basis at death. Depending on the near term needs of the family, waiting just might be a better option.

In either case, you only have one mother and she should live and be well.

Mark as good answer

1 person marked this answer as good

Add comment