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Old 07-21-2019, 07:43 AM
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Exclamation Inheriting parents EXXON STOCK

I will try give as much detail as I can based upon what I know now.

My father was given 300k when his mother died in 2000. He dumped it in Exxon stock shortly thereafter I believe. The price per share appears to be around $40/share at that time in 2000 from what I can see on the history.

Over the years they have sold bits of the stock. Today the price per share is around $77/per share valued at 67k. My father has passed so the stock was transferred to my mother who is not doing well. Since I am the executor of estate, have durable power of attorney, joint account holder on her checking account, I am supposed to divide the remaining value of stock amongst my 3 other brothers and sisters. Her attorney said since I am all of the above her estate value will forego Florida probate. Ok fine. The rest of her estate may value an additional 50k (jewelry, car, furniture) approximately. Maybe 100k or so in total.

My accountant here in Md. said I might be facing taxes on the CASH BASIS. Based upon them selling shares over the years, currently have 876 shares at $77/share , valued at approx. 67k. , what are my (our) tax consequences??

Last week I sent Computer Share a copy of the Durable power of attorney documents, a letter to sell ALL shares and put in her (our) checking account so when the times comes I can distribute accordingly. I think the best move is to hold off on that execution of selling all the stock and sit tight.

Also, there is NO TRUST set up which leads me to should I put this stock on a Trust? I am not sure what to do at this point.

Anyone who has remotely gone through this or is a professional regarding this situation any and all advice would be helpful so I don't get screwed on TAXES, etc.

Thank you in advance!!
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Old 07-21-2019, 04:11 PM
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your best bet is to find an attorney who specializes in the area estate planning (wills, trusts, etc) who can guide you through the process. Granted it'll cost something but you will be much better off following the advice of someone who does it for a full time job in your state rather than us clowns here
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Old 07-21-2019, 08:03 PM
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Whatever stock you inherit will have a cost basis as of that date. Executor gives you certain discretionary privileges to protect the assets of the estate. FWIW - I set some money aside in my will for an attorney to advise my executor if needed.
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Old 07-21-2019, 10:17 PM
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Instead of FREAKING out and being FEARFUL of TAXES....



Take a breath and dont let people scare you into pissing away money.

How much can be gifted each year? I seem to recall 15k. So mom could gift you 15k, your wife 15k, you brother 15k, his wfie 15k....and so on.

$120k to 8 people, immediately. Not saying you should do this, just pointing out this may be simple.


You should talk to someone, but this should be a FAST conversation. Not a 'plan'. Not settling anything up. There isnt enough money for an estate plan; nor for a trust.

Don't panic
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Old 07-22-2019, 04:21 AM
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+1

A trustee may be an attorney in fact, but that does not preclude advice from a professional, an attorney in law of taxes.
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Old 07-22-2019, 07:07 AM
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If you've had the stock over a year, the capital gains from selling it would be taxed at the long term capital gains rate. I'm not sure about 2019, but before the changes in the tax laws the capital gains rate for those with a low adjusted gross income was 0%. For the rest, it was 15%.

If your mother is still alive, the sale of the stock would be her tax event, not her heirs. If she's in a nursing home (and can't feed, bathe, or dress herself without assistance), the nursing home costs are a deductible medical expense. So, she might have zero adjustable income this year.

If she dies before the stock is sold, the heirs technically own the stock and their cost basis is the value of the stock on the day she died. If that's the case, it might make sense to hang onto the stock for another year so that the capital gains from the sale are taxed at the long term rate.

I wouldn't distribute any of your mother's assets until after she dies. If she has to go on Medicaid (medical welfare), the state could come after you.
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Old 07-22-2019, 07:59 AM
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As of this morning she is alive. I called ComputerShare to put a hold on the sale of the stock for now. Again we are joint account holders at our bank, I have durable power of attorney, etc.

I read yesterday since my father passed 1.5yrs ago, the Cash Basis is reset. ?? I'm not sure how this is calculated based upon the aforementioned information when he first purchased the stock at the assumed $40/share give or take and since then he has sold shares accordingly. It appears if it were $40/share this would calculate to 7,500 share if he dumped 300k originally back in 2000. It appears there are 870 shares left.

I'm reaching out to an estate tax attorney who can clarify all the moving parts on this one so I don't end up getting screwed.

Thanks for all your insight so far who replied back. Keep ya posted... ugh!
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Old 07-31-2019, 12:43 PM
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From the fact pattern you provided: If the stock was held in your father's name at the time of his death, it received a "step up" in cost basis when he died. You do not make it clear whether or not his estate filed an Estate Tax return (form 706)at the time of his death. If it did, the per share value is shown on the return. If no 706 was filed, you can Google the price of XOM on his date of death. The average of the daily hi and the daily low are his adjusted cost basis.

If you sell the stock while your mother is alive, the gain over the adjusted cost basis will be taxable to her. If you hold onto the stock till Mom passes, it will get another step up in basis. You, as her executor, will distribute the shares under the terms of her will (or if she is intestate, under the intestacy laws of whichever state she resided in when she died). And the recipient heirs can sell the stock the next day without paying a penny in tax.

Note that you are a FIDUCIARY to her estate, and can be sued by her creditors if you dispose of assets prematurely. My big concern with gifting the stock away willy-nilly: If your mother has final expenses (legal fees, accounting fees, nursing home, home health care, hospice, medical bills, funeral expenses, etc.) and you dispose of estate assets before the creditors can present their claims against the assets, you may be sued for fraudulent conveyance by the estate creditors.

Does the power of attorney specifically authorize gifting? If so, you need to consult with your own attorney to see what your potential liability is if you transfer stock while she is still living (knowing that doing so will forego the step up in cost basis for you and your siblings). I think you are far better off leaving the stock where it is, letting things play out, and spending the next weeks or months focusing on your mother, instead of worrying about a stupid $65,000.

My 2 cents.
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Old 08-02-2019, 05:59 AM
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Quote:
Originally Posted by quackbury View Post
From the fact pattern you provided: If the stock was held in your father's name at the time of his death, it received a "step up" in cost basis when he died. You do not make it clear whether or not his estate filed an Estate Tax return (form 706)at the time of his death. If it did, the per share value is shown on the return. If no 706 was filed, you can Google the price of XOM on his date of death. The average of the daily hi and the daily low are his adjusted cost basis.

If you sell the stock while your mother is alive, the gain over the adjusted cost basis will be taxable to her. If you hold onto the stock till Mom passes, it will get another step up in basis. You, as her executor, will distribute the shares under the terms of her will (or if she is intestate, under the intestacy laws of whichever state she resided in when she died). And the recipient heirs can sell the stock the next day without paying a penny in tax.

Note that you are a FIDUCIARY to her estate, and can be sued by her creditors if you dispose of assets prematurely. My big concern with gifting the stock away willy-nilly: If your mother has final expenses (legal fees, accounting fees, nursing home, home health care, hospice, medical bills, funeral expenses, etc.) and you dispose of estate assets before the creditors can present their claims against the assets, you may be sued for fraudulent conveyance by the estate creditors.

Does the power of attorney specifically authorize gifting? If so, you need to consult with your own attorney to see what your potential liability is if you transfer stock while she is still living (knowing that doing so will forego the step up in cost basis for you and your siblings). I think you are far better off leaving the stock where it is, letting things play out, and spending the next weeks or months focusing on your mother, instead of worrying about a stupid $65,000.

My 2 cents.
The problem with the above comments are that I have no idea if my father filed taxes on the stock. Knowing him he did not since his belief if he was not working anymore what's the point. WRONG of course! I don't plan on selling the stock any time soon. Yesterday I spoke to my moms attorney in Fla and she said to get tot a Transfer of Death form from Computer Share (handles the stock) and to get it signed asap before her death if possible. Otherwise based on her very small estate value (less than 100k) , there will be a short probate situation which will encompass creditors, etc. to get their piece of the pie before any distributions are distributed on what's left. Also, she mentioned since I am the executor and durable power of attorney she suggested to name my spouse as beneficiary of the stock to avoid tax issues.

BTW I am in Maryland and she is in Fla. My brother and sisters live near her to assist with what they can however they are not trusted by my parents hence why I am the executor, etc.

Obviously my father did not plan at all for these circumstances so know I have to figure out all the BS. I'll keep getting advise from her attorney, my accountant etc. to continue. Also, I don't care about the 65k. Don't need the money. I'm just trying to protect the remaining assets from taxes, creditors ,etc. so this doesn't come back to bite us on the ass hence the point of this thread. My 2 cents.
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Old 08-03-2019, 12:42 AM
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Whether your father paid taxes on the stock he sold should not matter unless the IRS is auditing his tax returns and seeking an adjustment.

My grandmother in-law passed away several years ago and it so happened (unfortunately) that her children were also deceased at the time so my wife and her sister inherited her estate. As part of that inheritance, we receive a relatively substantial amount of Wellpoint stock (now Anthem) at time.

Whether or not my grandmother in-law paid taxes on any additional shares sold prior to her death was moot the way the attorney's handled it. In the end we received half the stock (the other portion going to her sister) along with an adjusted cost basis reflecting the price of the stock on the date of death. We have not sold it yet, but at the time we do it will be taxed as an ordinary capital gain.

If you really wanted to minimize your taxes on that, you'd take a distribution during a year in which you had less than $80k in reported income as the capital gain tax rate in that income bracket is a whopping 0%. Otherwise its 15% up until around an income of $500k at which point it becomes 20%.

Unless the estate is well into the millions you should not have to concern yourself with any estate tax.
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Old 08-03-2019, 09:33 AM
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Originally Posted by MWatty550 View Post
I'm just trying to protect the remaining assets from taxes, creditors ,etc. so this doesn't come back to bite us on the ass hence the point of this thread. My 2 cents.
So you are trying to stiff your mother's creditors? People and companies that provided goods and services to her before she died? Doctors, hospitals, ambulance companies, the funeral home, etc.?

Classy.

When my time comes, I hope my kids are focused on my emotional and spiritual well being, instead of this sort of thing. I guess I am old school.
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Old 08-03-2019, 02:31 PM
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Originally Posted by quackbury View Post
So you are trying to stiff your mother's creditors? People and companies that provided goods and services to her before she died? Doctors, hospitals, ambulance companies, the funeral home, etc.?

Classy.

When my time comes, I hope my kids are focused on my emotional and spiritual well being, instead of this sort of thing. I guess I am old school.
Sorry but you have this all wrong! It seems you have misinterpreted my intentions and mainly my direct question: How to handle the stock and her affairs. I handle all her bills, make sure my brothers and sisters are seeing to her daily needs. Taking her to the doctors, picking up her groceries, prescriptions, etc. I'm actually the on directing traffic up here in Maryland while they are all in Fla with her since they are complete **** ups and had to move back in with them from time to time as their past habits have cost them dearly in many aspects...financially, divorces, jail time ,etc. Since I am the youngest of 4 and most responsible it appears in many aspects I suppose.... 3 kids of my own, guided them properly through life to do the right thing, be respectful of others, well educated, always there for them no matter what problems they had even if they screwed which we all do on life from time to time... ya know the ol Unconditional love thing which is what I was taught.

And forget about the business I run with 12 employees, heavily involved on our community, volunteer efforts with habitat for humanity but all this doesn't matter does it?

So to answer your question about "stiffing" her creditors, hospital bills, funeral home... those are all taken care of with her life insurance, medicare, carefirst medi-gap supplement.

BTW, I call her every day especially now even though she takes some time to figure out who I am. But that's ok. I can still make her laugh through our many memories of when she took care of me when I was young and even to this day. This is what life is all about right?

As for your comments, since I am a gentleman, I will give you a pass and refrain. Hope this clears it up for you.
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Old 08-03-2019, 05:03 PM
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It occurs to me, that you were previously warned about the legal peril concerning creditors and then introduced that peril. Yes, you should properly protect your mothers assets. There could be many simple, reasonable and prudent things you can do to achieve that. Each state is different. Some lawyers are good and some not so good.

Last edited by zod; 08-03-2019 at 05:07 PM.
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Old 08-03-2019, 06:46 PM
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Sounds like I hit a nerve. YOU are the one who mentioned protecting the stock from her creditors - that is a direct quote from you I included in my response. Your comment seems pretty unambiguous to me.

You've already gotten input from people on this board who do this for a living (and have more than 12 employees, as if that matters). Whether or not you choose to accept that advice is up to you. But when you come on the internet and ask a bunch of strangers for input, you shouldn't get your knickers in a knot if you don't get the answer you want.

Good luck with your mother. I hope her final days are filled with peace and happy memories..
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