So, last remaining grandparent passed last month. Got a little inheritance. Some was in an account setup to pay on death, remainder distributed by executor. In ohio if it matters.

Questions are:
What are the tax implications here?

Best place for funds I don't currently need? My banking is through Chase, so I thought of talking to their financial guy about an Investment account. Any other suggestions? Not looking for long term (5 plus years).

Chase doesn't pay crap on any of it's savings or money markets. You didn't mention how much money we're talking about here.

Amex, Discover and PNC bank are paying a touch over 2% which isn't a whole lot but it's safe and I feel interest rates are going to rise a bit over the next 5 years, so I wouldn't lock into a long term CD or Bond (3-5 year). There are also various mutual funds that you can pull the money out of without penalties whenever you want it, I'd put some in mutual funds and some in savings. Some other members I'm sure will chime in on which funds they're using and like.

Interesting question, as I too wonder. If shares of a mutual fund are inherited, is your cost basis -zero- when you sell the shares?

quote:

Questions are:
What are the tax implications here?

Generally, you are entitled to a "stepped up basis" meaning the valuation on the date of death becomes your basis for tax purposes.

Email address is in my profile if you want any specific advice, as I can't do that on a public forum.

https://www.irs.gov/pub/irs-ut...stepped-up_basis.pdf

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Originally posted by wolfe 21:
So, last remaining grandparent passed last month. Got a little inheritance. Some was in an account setup to pay on death, remainder distributed by executor. In ohio if it matters.

Questions are:
What are the tax implications here?

Best place for funds I don't currently need? My banking is through Chase, so I thought of talking to their financial guy about an Investment account. Any other suggestions? Not looking for long term (5 plus years).

For the purposes of Federal taxes, so long as the estate is below the threshold for the "death tax", and we're not dealing with other issues like an inheritance coming after significant gifts from the decedent during his/her lifetime, the inheritance is typically not taxed, since it appears we're talking an inheritance of cash.

Chellim above aptly describes the tax treatment for other assets.

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Originally posted by Woodman:
Interesting question, as I too wonder. If shares of a mutual fund are inherited, is your cost basis -zero- when you sell the shares?

No. Absent any special circumstances, the grantee gets a "step up" in basis to the present valuation as of the date of the death of the grantor.

Decedent buys a widget at $5. Dies when the widget is valued at $10. Grantee sells at a price of $15. Grantee has $5 of reportable income from the sale.

quote:

Originally posted by wolfe 21:
So, last remaining grandparent passed last month. Got a little inheritance. Some was in an account setup to pay on death, remainder distributed by executor. In ohio if it matters.

Questions are:
What are the tax implications here?

Tax implications to whom? The estate or the beneficiary? And which tax? Estate, income or capital gains?

If grandparent's estate was under 11.4 million, including prior gifts, then the estate owes no Federal estate tax. No idea what the estate/inheritance tax is in Ohio.

Generally speaking, gifts or bequests from the estate go to the beneficiary income tax free. The exception is qualified accounts or assets where the income tax wasn't paid by the decedent--IRAs, 401Ks, etc. The beneficiary of a qualified account will have to pay income tax on distributions from the account.

Sometimes there's income earned by estate assets during the administration of an estate that is passed on to the beneficiaries. Ask the CPA.

If a beneficiary sells an inherited asset, the beneficiary's basis is likely the date of death value of the asset and there should be little to no capital gains tax. Some exceptions. Ask the lawyer about the basis.

Does "stepped up basis" apply to real estate as well? Answered via google: When you inherit property after the owner dies you automatically receive a "stepped-up basis." This means that the home's cost for tax purposes is not what the now-deceased prior owner paid for it. Instead, its basis is its fair market value at the date of the prior owner's death.

Yesterday I reported the death of a loved one to Vanguard; my agent authorization was immediately revoked but her account was protected from unauthorized actions. Email, phone, and mail (does anyone write anymore?) transactions are blocked from the time of death. The only actionable events are for the inheritors to contact Vanguard to have their claims processed.

I was very VERY impressed with the Asset Transfer department at Vanguard. Although I was not among whose on the allocation list (not an heir), my questions were answered as I assembled a "How-To" email for the patriarch of the inheritors to begin the distribution process.

A related question. For accounts that are payable on death, do account assets get distributed directly to those listed on the account to receive the assets upon death, or do they have to go through the Executor of the estate? Is there any reason an executor needs to get involved in the distribution of assets in a payable on death account? I am in Virginia.

quote:

Originally posted by btanchors:
A related question. For accounts that are payable on death, do account assets get distributed directly to those listed on the account to receive the assets upon death, or do they have to go through the Executor of the estate? Is there any reason an executor needs to get involved in the distribution of assets in a payable on death account? I am in Virginia.

It should bypass probate, just like a named beneficiary on a life insurance policy (unless trust is beneficiary).

quote:

Is there any reason an executor needs to get involved in the distribution of assets in a payable on death account? I am in Virginia.

nope.

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Originally posted by wolfe 21:
Best place for funds I don't currently need? My banking is through Chase, so I thought of talking to their financial guy about an Investment account. Any other suggestions? Not looking for long term (5 plus years).

Last guy I’d talk to. Chase’s “financial advisor” will likely put you into some lousy financial product that may or may not make money, but is sure to generate a nice fat commission for them.

If you are just looking for somewhere to park the money for a couple of years, open an account with Fidelity or Vanguard and put it in an index mutual fund.

If the amount of $$ justifies more complex treatment, hire a fee-only CFP.

Any decent mutual fund will be a simple purchase and make you will probably make a decent sum eventually. If you don’t need it, invest it and basically forget about it. Someday you will be very happy you didn’t buy something with it. Unless that something has actual value, like real estate. Not cars. Not clothes. Not vacations. You get the idea.

Vanguard or Fidelity for any cash accounts. Banks pay next to nothing.
Stay away from banks and annuity/insurance salesmen.

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Originally posted by 220-9er:
Vanguard or Fidelity for any cash accounts. Banks pay next to nothing.
Stay away from banks and annuity/insurance salesmen.

This just isn’t true.

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Originally posted by x0225095:

quote:

Originally posted by 220-9er:
Vanguard or Fidelity for any cash accounts. Banks pay next to nothing.
Stay away from banks and annuity/insurance salesmen.

This just isn’t true.

In general it is. I was in the financial services industry for five years. There are some unscrupulous mf-ers in that business.

Find a Certified Financial Planner in your area for a little free advice about your options on investing. They have fiduciary responsibility to you thus may give you some better options on investments that work for your level of risk.

As for the money you don't need right now, don't you have an IRA or 401k that you rolled over? If you're happy there, then just open a regular account and put the money there.

If you need some place to "Park" this cash until you can figure out what exactly you want to do, I'd look at Goldman Sachs "Marcus" Online Savings Account. Currently paying 2.25% and FDI insured up to 250,000 on a single owner account and 500,000 on a joint account. The interest rates adjust monthly following the Fed which has gone up every month for that last 18 months or so. Easy in and out with your money.

quote:

Originally posted by CoolRich59:

quote:

Originally posted by wolfe 21:
Best place for funds I don't currently need? My banking is through Chase, so I thought of talking to their financial guy about an Investment account. Any other suggestions? Not looking for long term (5 plus years).

Last guy I’d talk to. Chase’s “financial advisor” will likely put you into some lousy financial product that may or may not make money, but is sure to generate a nice fat commission for them.

If you are just looking for somewhere to park the money for a couple of years, open an account with Fidelity or Vanguard and put it in an index mutual fund.

If the amount of $$ justifies more complex treatment, hire a fee-only CFP.

This is exactly what i did...