General Question re: stocks

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General Question re: stocks

Postby bonniecrocker » Thu Jun 27, 2013 1:55 pm

Hi everyone,

I have a general question. I will probably post my finances later on when I have more time per your protocol. I was on this board several years ago and you gave good advice.

I'm a bit clueless on finances but I am debt free so guess that is a positive.

My father recently died and left me 50,000 in Proctor and Gamble stock. I live in Germany and have a money market account and Roth IRA with Vanguard. For whatever reason, my sister who is in the states told me I have to set up an account in my name only (I am married) and she can transfer over.

I don't want to sell the stocks but what type of account should I set up with Vanguard and is this something I can do online? How should it be set up?

As you can see, I'm not well versed on all of this.

Thank you for your help Bonnie
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Re: General Question re: stocks

Postby James2 » Thu Jun 27, 2013 2:31 pm

You should be able to open a brokerage account in your name at Vanguard and then your sister should be able to help you get the stock transferred over.

https://investor.vanguard.com/what-we-o ... cds/stocks

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Re: General Question re: stocks

Postby Default User BR » Thu Jun 27, 2013 3:04 pm

I wouldn't use Vanguard. They're really picky about people with ex-US addresses opening accounts. Also, if you're planning on selling, some custodians will give you free trades for opening a substantial account, probably bonus money too.


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Re: General Question re: stocks

Postby bonniecrocker » Thu Jun 27, 2013 3:14 pm

Husband is civilian and affiliated with the military. Does that make a difference in your answer? I opened up accounts with them while here and will probably be returning to the US in the next 5 years. Thank you.
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Re: General Question re: stocks

Postby bonniecrocker » Thu Jun 27, 2013 3:18 pm

James 2,

Thank you for your answer. So do I just put the 50,000 in a brokerage account and that's it? Where can I get more information or do I just call Vanguard and discuss with them? I just wanted to make sure I know what to tell them when I call. Sorry for showing my ignorance in investing.
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Re: General Question re: stocks

Postby BigOilTexan » Thu Jun 27, 2013 3:32 pm

bonniecrocker wrote:James 2,

Thank you for your answer. So do I just put the 50,000 in a brokerage account and that's it? Where can I get more information or do I just call Vanguard and discuss with them? I just wanted to make sure I know what to tell them when I call. Sorry for showing my ignorance in investing.


If you give them a call they will be more than happy to help you set up a new account and give you instructions how to transfer the stock assets in-kind without liquidating them. You should be able to do everything online (might have to mail in or fax some signatures for a new account) but if you are unsure, dont hesitazte to call them.
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Re: General Question re: stocks

Postby James2 » Thu Jun 27, 2013 3:36 pm

Assuming Vanguard is ok with your address, you should be able to open a brokerage services account online. I would check with them on account minimums as you will be asked how you plan to fund this account during the signup. Once the account is established, your sister should be able to help you with transferring the stock from what you wrote. The actual process will depend on how it is currently held (existing brokerage account, physical certificate or direct registration DRS). There is an FAQ on the Vanguard site that explains how to do it with physical certificates.

I agree that you should call them with any questions.

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Re: General Question re: stocks

Postby MnD » Thu Jun 27, 2013 4:35 pm

I'm no lawyer or tax guy but this is what i was told.

In the US, inherited assets are not marital property unless the funds are co-mingled with your spouse by depositing them in a joint account or by adding other funds later. By setting up an account in your name only and not adding other fundsto it that are marital property, you should retain the sole ownership of the inheritance. You can buy, sell, trade, diversify or do whatever in that account and can also take funds out of the account to spend, but you should not add other funds in unless say they came from another inheritance.

Also check to make sure that the stock isn't held in a traditional Individual Retirement Account (IRA) that was owned by your father.
If it is, you will have to open a special type of IRA called a beneficiary IRA (also known as an inherited or stretch IRA) in order to avoid paying taxes now on the inheritance which would be the result in the case of an IRA distribution.
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Re: General Question re: stocks

Postby bonniecrocker » Thu Jun 27, 2013 6:04 pm

Thank you for all the helpful replies. It is bedtime in Germany so will mull this over and call Vanguard tomorrow. Appreciate it. Will probably have more specific questions later. You've all been very helpful. Bonnie
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Re: General Question re: stocks

Postby bonniecrocker » Fri Jun 28, 2013 12:53 pm

Default User BR wrote:I wouldn't use Vanguard. They're really picky about people with ex-US addresses opening accounts. Also, if you're planning on selling, some custodians will give you free trades for opening a substantial account, probably bonus money too.


Brian



You were right Brian. They won't let me open a new account as long as I am not in the US. I have no clue what to do now. I wasn't even sure what the heck I was talking about when I spoke to the guy on the phone. Any suggestions? All I want to do at this point is get the stocks from my sister and put them somewhere. I have no clue when it comes to buying and selling and I hate being a dummy. I need to get educated.

Each of my kids got $10,000 and she is going to put it in mutual funds per my request and then give it to the kids when they are 18. Maybe I could let her handle my 50,000 in stocks until I return the US. Is that possible?
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Re: General Question re: stocks

Postby The Wizard » Fri Jun 28, 2013 1:00 pm

bonniecrocker wrote:You were right Brian. They won't let me open a new account as long as I am not in the US. I have no clue what to do now...

Assuming you're an American citizen with a passport and a SS #, why don't you just use your sister's mailing address for the time being?
Your military service connection in Germany isn't going to go on forever and you do plan to return to the US afterwards, right?
So I don't see how you're being criminally fraudulent with Vanguard if you do this...
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Re: General Question re: stocks

Postby bonniecrocker » Fri Jun 28, 2013 1:09 pm

The Wizard wrote:
bonniecrocker wrote:You were right Brian. They won't let me open a new account as long as I am not in the US. I have no clue what to do now...

Assuming you're an American citizen with a passport and a SS #, why don't you just use your sister's mailing address for the time being?
Your military service connection in Germany isn't going to go on forever and you do plan to return to the US afterwards, right?
So I don't see how you're being criminally fraudulent with Vanguard if you do this...


Yes, I'm an American citizen and have all of the above so that is a possibility. I did just get told I couldn't do it so not really sure I want to go that route as it was recorded. I'm not sure I would feel good about doing that. Surely, there must be another possibility where I can park the stocks??? Thank you for your response. Bonnie
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Re: General Question re: stocks

Postby Brian2d » Fri Jun 28, 2013 1:15 pm

I believe Fidelity is better than Vanguard regarding non-US addresses.

If it's military-related USAA may also have a brokerage services office that can help you.
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Re: General Question re: stocks

Postby ourbrooks » Fri Jun 28, 2013 1:16 pm

What, exactly, do you mean that your sister "has" the stocks? If what she has are paper stock certificates, then she can get the transfer agent for that stock to issue new certificates in your name. At your leisure, you can deposit the certificates with a broker if you want to sell them.

The other possibility is that the stocks are inside some kind of brokerage account which your sister administers as executor. Your sister may be able to get the brokerage to request that the transfer agent for the stock issue paper shares in your name.

Life might get easier if you're willing to sell the stocks. The brokerage which holds the shares could then just sell them and transfer the money to your money market account. That would give you time to work out the details of investing from outside the U.S. Since you already have Vanguard accounts, they might let you buy index funds from one of those accounts.

Is there any reason for holding on to the P&G shares? Holding the stock of just one company is riskier than holding shares of an index fund which invests in many companies.
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Re: General Question re: stocks

Postby The Wizard » Fri Jun 28, 2013 1:19 pm

Vanguard actually has a German branch which you could look into.
https://www.vanguardinvestments.de/cont ... home.shtml
Fund choices are different from the US version but you should be able find something suitable.

Would be good to hear from others doing this. For instance, I wonder if ValueThinker uses their UK site?
https://www.vanguard.co.uk/uk/portal/home.jsp
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Re: General Question re: stocks

Postby bonniecrocker » Fri Jun 28, 2013 2:00 pm

ourbrooks wrote:What, exactly, do you mean that your sister "has" the stocks? If what she has are paper stock certificates, then she can get the transfer agent for that stock to issue new certificates in your name. At your leisure, you can deposit the certificates with a broker if you want to sell them.

The other possibility is that the stocks are inside some kind of brokerage account which your sister administers as executor. Your sister may be able to get the brokerage to request that the transfer agent for the stock issue paper shares in your name.

Life might get easier if you're willing to sell the stocks. The brokerage which holds the shares could then just sell them and transfer the money to your money market account. That would give you time to work out the details of investing from outside the U.S. Since you already have Vanguard accounts, they might let you buy index funds from one of those accounts.

Is there any reason for holding on to the P&G shares? Holding the stock of just one company is riskier than holding shares of an index fund which invests in many companies.


No reason to hold on them. You are right as far as the risk factor. I wasn't even thinking past just taking it off my sister's hands as she has had a lot of stressors since my father died. She wants to be done with everything. She is the executor of the estate since he lived with her. Apparently, my father had this stock for years and he divided it up between the 3 of us which is 50,000 for each kid. There is also a bit of cash coming too.

I have a traditional IRA and a Roth IRA in my name only. The money market account is in mine and my husband's name. She said it had to be in my name only.

She just emailed me. Is there anything I should ask her in order to get this expedited? I have no problem with selling. I just want to make the right decision. Thank you for taking the time to reply. Bonnie
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Re: General Question re: stocks

Postby ourbrooks » Fri Jun 28, 2013 2:42 pm

Ask your sister if she can just sell the shares for you and send you a check. Whether she can sell the shares might depend on what exactly the will says. If it says "one third of my estate to each of my three children," then, as executor, she should have no problem liquidating the shares and sending you the money.

If the will says specifically, "one third of my shares in Proctor & Gamble," then she may have to somehow transfer the shares to you. Was a lawyer involved in settling the estate? If so, it might be worth asking her/him what to do.
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Re: General Question re: stocks

Postby bonniecrocker » Fri Jun 28, 2013 4:51 pm

ourbrooks wrote:Ask your sister if she can just sell the shares for you and send you a check.



I just heard from her in email. I guess she has a financial advisor. They suggested setting up with another company like Merrill Lynch who has offices in Germany or selling it but will have to pay capital gains. I guess there is no way to avoid that? Should I then just put in money market fund until I decide what to do? Not sure what to do with it. I also have a Roth IRA and traditional IRA. Thanks again!
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Re: General Question re: stocks

Postby livesoft » Fri Jun 28, 2013 5:02 pm

My condolences on your loss.

Don't use Merrill Lyncho no matter what.

I also think it is a good idea to sell the shares. You are not your father and should not invest like he did.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby bonniecrocker » Fri Jun 28, 2013 5:19 pm

livesoft wrote:I also think it is a good idea to sell the shares. You are not your father and should not invest like he did.


Thank you. I actually thought it was a good investment. Isn't P&G stock a good stock? He didn't need it by any means as he had a very nice pension and decent savings but it was just something he got a long time ago for whatever reason and held on to. I don't know how much he paid but he had 150,000. That doesn't sound too shabby to me.

If I sell it, should I just put it in my money market account? Right now I/we have about 70,000 in there. The only other account I have is the Roth IRA and traditional IRA. What about the capital gains? Thanks for the advice about Merrill Lynch. I have no idea if one is better than the other.
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Re: General Question re: stocks

Postby WenJo » Fri Jun 28, 2013 5:24 pm

I'm no expert, but just went through a similar situation. It is my understanding that beneficiaries of inherited stock get a "stepped-up" cost basis....i.e. after you assume ownership of the stock any capital gains that may result when you sell the stock would be based on the price of the stock on the date your father died. And any capital gains would be considered long-term even if you held the stock for less than one year because the stock was inherited.
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Re: General Question re: stocks

Postby FinancialDave » Fri Jun 28, 2013 5:25 pm

Don't forget to get an official piece of paper from the executor on the cost basis of the shares that you inherited. This will be important whenever you sell.

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Re: General Question re: stocks

Postby ourbrooks » Fri Jun 28, 2013 5:31 pm

When you inherit stocks, the cost basis becomes the value on the date of death. Translation: you'll only have to pay capital gain taxes, maximum 15%, on how much the stock has gone up since your dad died. That's probably not very much. You may not need a piece of paper from the executor on the cost basis; if you know the exact number of shares and the date your dad died, you can just look up the stock price on that day.

Every stock is a good stock, until it isn't and there's no way to tell far enough in advance to do anything about it. GM used to be considered one of the best stocks in the world, until it went bankrupt. That's why you're better off owning an index fund that covers the entire market; every good stock is guarenteed to be in the index.

If you haven't already maxed out your Roth and Traditional IRAs, yes, put the money there. For the time being, though, you can put the rest in the money market fund and take your time thinking about what to do with it later.
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Re: General Question re: stocks

Postby livesoft » Fri Jun 28, 2013 5:35 pm

bonniecrocker wrote:If I sell it, should I just put it in my money market account? Right now I/we have about 70,000 in there. The only other account I have is the Roth IRA and traditional IRA. What about the capital gains? Thanks for the advice about Merrill Lynch. I have no idea if one is better than the other.

You should sell it, then develop a plan. I don't know if the stock will go up after you sell it or not, but that should not be your concern.

For some help on windfalls: Wiki article link: Managing a windfall

Develop a plan.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby curmudgeon » Fri Jun 28, 2013 6:12 pm

I would second the comment to look into USAA. I don't deal with them myself, but I've know a number of people to say that they are by far the best for dealing with the various issues associated with being in the military. I don't think you want to follow their investment advice blindly, but using them for the functional and transaction aspects of investments might be a good option for the time being.

As far as selling or not, you should have a stepped up tax basis, so selling wouldn't be near the issue it would have been for your father (he was effectively trapped by his gains). This is the logical time to start fresh with your own investment priorities. Keeping a major portion of your investment portfolio in one stock isn't something most would recommend. If you wanted a similar type of investment, but without the single-company risk, something like SPY (S&P500 ETF) would be an option. Realistically, this inheritance is a good time to stop and do some long-term investment planning.
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Re: General Question re: stocks

Postby bonniecrocker » Sat Jun 29, 2013 5:43 pm

curmudgeon wrote:I would second the comment to look into USAA.


I love your name curmudgeon and called my husband one this afternoon. The kids learned a new vocabulary word but I've always loved that word. Just had to tell you that.

I didn't even think of USAA and I have auto insurance with them. I called them today and set up a brokerage account with them. I'm in the process of getting the shares transferred over.

So now I need to decide what to do. USAA told me they can manage it if I want them to. I don't know if that is necessary but then again I don't know a thing. He asked me how I was risk wise and I said moderately aggressive. I thought that sounded good lol I'm definitely not conservative but not on the other end of the spectrum either.

My sister said it was 2200/2300 shares of PP&G stock divided by the 3 kids and that my father held it in the Stock Investment Program (SIP).

Any suggestions on how I should approach this? Thanks again for everyone's help. Bonnie
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Re: General Question re: stocks

Postby Ged » Sat Jun 29, 2013 8:16 pm

You or your sister should sell the stocks (since they get a new basis on the death of your father so there little or no tax).

The funds should go into your money market until you get a comprehensive investing plan. Really I don't see a need for new brokerage accounts and so on if your sister sells the stocks.

You don't want to hold the stocks. While P&G is a fine company having a lot of eggs in one basket is risky.
Lack of planning on your part does not constitute an emergency on my part.
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Re: General Question re: stocks

Postby bonniecrocker » Sun Jun 30, 2013 2:50 pm

Ged wrote:You or your sister should sell the stocks (since they get a new basis on the death of your father so there little or no tax).

The funds should go into your money market until you get a comprehensive investing plan. Really I don't see a need for new brokerage accounts and so on if your sister sells the stocks.

You don't want to hold the stocks. While P&G is a fine company having a lot of eggs in one basket is risky.


Thank you Ged. I can sell and put in money market account which is no problem but then what? Vanguard won't allow me to open another account so I don't just want to keep in MMF.

I'm getting ready to post my personal financial profile which isn't much so please feel free to go to that post and give feedback. I'm in desperate need of advice. Bonnie
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Re: General Question re: stocks

Postby livesoft » Sun Jun 30, 2013 2:55 pm

I am sorry to read that you feel you are in desperate need of advice. You are not desperate. You have plenty of time to get this all sorted out. There is absolutely no hurry. Relax. Take your time.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby bonniecrocker » Sun Jun 30, 2013 3:11 pm

livesoft wrote:I am sorry to read that you feel you are in desperate need of advice. You are not desperate. You have plenty of time to get this all sorted out. There is absolutely no hurry. Relax. Take your time.


Thank you for the encouragement. I probably shouldn't have used the term desperate but my sister wants me to do something with the stocks so I need to make a decision soon.

I'm just trying to make a decision and I get frustrated when I'm doing something this important and know that I don't really understand it. It's really not lack of trying I am very creative and am good at many things but I can't seem to comprehend the financial part which is probably why I should be ahead more than I am.

Anyway, getting ready to post personal portfolio on other forum. Thank you!
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Re: General Question re: stocks

Postby livesoft » Sun Jun 30, 2013 3:19 pm

I thought she was going to sell the stocks for you. Then she could just send you a check out of the estate's account.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby bonniecrocker » Sun Jun 30, 2013 3:32 pm

livesoft wrote:I thought she was going to sell the stocks for you. Then she could just send you a check out of the estate's account.


She can do this. I've got a few different pieces of advice. If I put it in Vanguard MMF that I have, what should I do with it? I want to maximize my growth.
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Re: General Question re: stocks

Postby livesoft » Sun Jun 30, 2013 4:07 pm

bonniecrocker wrote:
livesoft wrote:I thought she was going to sell the stocks for you. Then she could just send you a check out of the estate's account.


She can do this. I've got a few different pieces of advice. If I put it in Vanguard MMF that I have, what should I do with it? I want to maximize my growth.

Wait until it is in your Vg MMF. Read some books. Be patient. Relax. Take your time.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby retiredjg » Mon Jul 01, 2013 12:01 pm

Bonnie, it sounds like the stocks are getting transferred over to USAA. Is that correct? (Or did you decide to have her sell if for cash?)

Do you want to keep the stock or sell it?

If you sell it, do you want the money to stay at USAA or would you prefer it to be at Vanguard? When you decide that, a suggestion can be made about how to invest it. That should happen in your other thread since that is where your family portfolio is posted.


Before going forward with that, I think you may be confused about what an account is and what a fund is. Think of an account as a container. Common containers are:

    -a taxable account

    -a traditional IRA

    -a Roth IRA

You can put different things into an account - most often here we talk about putting a fund into an account. For example, it appears your money market fund is in a taxable account. You have target retirement funds in your IRA and Roth IRA accounts. And so on. See the difference?

I believe that Vanguard will not allow you to open new accounts without a US address. However, I think you can probably exchange money from one fund to another fund inside an already open account even while living abroad. Does this sound consistent with what the Vanguard representative told you? If so, one way to handle this is to:

    -transfer the stocks to a taxable brokerage account at USAA

    -sell the stocks for cash

    -transfer the cash to your taxable account at Vanguard, first putting it into a money market fund

    -purchase a mutual fund with that money that is appropriate for a taxable account and which blends into the rest of your portfolio
This would be the procedure if you want this inheritance to mix in with your other family money and be part of your retirement assets.

If you want the money kept separate (as inheritances are frequently held), you need to leave it at USAA (or another location that does not care about your Germany address) until you return to the US. At that time, you can open an individual account at Vanguard and invest however you like. While at USAA or wherever, we can help you pick an investment that will suit your needs in the meantime.

Your post does sound a little on the desperate side. I'm sure your sister is going nuts with all this and it appears you are feeling it as well. It's a tough time, but as already mentioned, don't be in a hurry. This is not an emergency. Just do one step at a time. Stocks first, then portfolio (which should be handled in the other thread).
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Re: General Question re: stocks

Postby retiredjg » Mon Jul 01, 2013 1:36 pm

Here's one other idea if you want to maintain this inheritance as yours, separate from family money and if you would prefer it to be at Vanguard.

You two could take your husband's name off the taxable account that holds the money market fund. Then it would be yours alone. Then the money could go there directly instead of making a stop at USAA.
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Re: General Question re: stocks

Postby bonniecrocker » Tue Jul 02, 2013 12:29 pm

Wait until it is in your Vg MMF. Read some books. Be patient. Relax. Take your time.


Cripes! She just emailed again. Said waiting to hear from you. Subtle but underlying tone is hurry up and make a decision. I'm in no hurry to decide what to do with it but only in a hurry to get it from her so she doesn't feel burdened anymore.

Actually, I have my Roth IRA, traditional IRA and money market fund at Vanguard so wouldn't mind keeping the 50,000 in stock there too but the USAA account isn't so bad either as I have my auto insurance with them.

So I would need for her to sell stock and then have the cash sent to the Vanguard MMF?

I've actually been trying to read since posting these questions and don't have a problem with it, but I guess I'm confused as to where the money would go after the MMF. If I can't open up an account here, then where to I put the money? Is this where USAA would come in? Then it seems to make sense just to transfer to that account. I just don't want it sitting in a MMF for a lengthy period of time and I could see me moving it there and forgetting it.

Thanks for your response. I'm going through these one by one.
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Re: General Question re: stocks

Postby bonniecrocker » Tue Jul 02, 2013 12:54 pm

That's why you're better off owning an index fund that covers the entire market; every good stock is guaranteed to be in the index.


Someone else mentioned an index fund and I'm reading up on them. How would I go about doing that exactly?

If you haven't already maxed out your Roth and Traditional IRAs, yes, put the money there. For the time being, though, you can put the rest in the money market fund and take your time thinking about what to do with it later.



My Roth IRA is funded to the max and my traditional IRA just has a small amount of money in it which I've just left there but not contributing anything to it. I opened up the Roth IRA so I don't understand any point in contributing to the traditional IRA. Husband's Roth IRA is also funded to max.

Thank you for the input.
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Re: General Question re: stocks

Postby The Wizard » Tue Jul 02, 2013 1:13 pm

bonniecrocker wrote:
Wait until it is in your Vg MMF. Read some books. Be patient. Relax. Take your time.


Cripes! She just emailed again. Said waiting to hear from you. Subtle but underlying tone is hurry up and make a decision. I'm in no hurry to decide what to do with it but only in a hurry to get it from her so she doesn't feel burdened anymore.

Actually, I have my Roth IRA, traditional IRA and money market fund at Vanguard so wouldn't mind keeping the 50,000 in stock there too but the USAA account isn't so bad either as I have my auto insurance with them.

So I would need for her to sell stock and then have the cash sent to the Vanguard MMF?

I've actually been trying to read since posting these questions and don't have a problem with it, but I guess I'm confused as to where the money would go after the MMF. If I can't open up an account here, then where to I put the money? Is this where USAA would come in? Then it seems to make sense just to transfer to that account. I just don't want it sitting in a MMF for a lengthy period of time and I could see me moving it there and forgetting it.

Thanks for your response. I'm going through these one by one.

Can you log onto your existing Vanguard account on the internet like I do with mine, even though you're in Germany?
If so, then you can see all of your assets in your various accounts: your two IRAs and your taxable account.
This makes it extremely simple to transfer money from the MMF to some other fund/account once you refine your strategy.
Am I missing something here?

Furthermore, most folks have a bank account connected with their Vanguard account which allows them to transfer money in either direction. So have your sister write you a check for your share and get it deposited either in your bank account or directly at Vanguard, whichever works easier from your location...
Last edited by The Wizard on Tue Jul 02, 2013 1:18 pm, edited 1 time in total.
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Re: General Question re: stocks

Postby livesoft » Tue Jul 02, 2013 1:15 pm

bonniecrocker wrote:
Wait until it is in your Vg MMF. Read some books. Be patient. Relax. Take your time.


Cripes! She just emailed again. Said waiting to hear from you. Subtle but underlying tone is hurry up and make a decision. I'm in no hurry to decide what to do with it but only in a hurry to get it from her so she doesn't feel burdened anymore.

Tell her to sell the stock for you. You might as well do this now. The stock market will be open for another few hours, so this can be done easily and right away.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby bonniecrocker » Tue Jul 02, 2013 1:17 pm

retiredjg wrote:Bonnie, it sounds like the stocks are getting transferred over to USAA. Is that correct? (Or did you decide to have her sell if for cash?)

Do you want to keep the stock or sell it?


I'm thinking at this point to sell it would be easier all around.

If you sell it, do you want the money to stay at USAA or would you prefer it to be at Vanguarh?


I would prefer Vanguard as that is where my other accounts are but I also have auto insurance with USAA so familiar with them too. It wouldn't be a problem to have an account there too.

When you decide that, a suggestion can be made about how to invest it. That should happen in your other thread since that is where your family portfolio is posted.


o.k. thanks!


Before going forward with that, I think you may be confused about what an account is and what a fund is. Think of an account as a container
.

Thank you for the clarification. It was very helpful and so much better of an explanation then the confusing things I read.


See the difference?


Yes I do.

I believe that Vanguard will not allow you to open new accounts without a US address. However, I think you can probably exchange money from one fund to another fund inside an already open account


Yes, I believe I can transfer one fund to another.

    -transfer the stocks to a taxable brokerage account at USAA


At the risk of sounding really dumb, I opened up a brokerage account at USAA but is this only if I transfer the stocks to it or can I have the stocks sold and then put in this account to be invested? I'm a bit confused on the term brokerage and if I should have opened something else if I want to put cash in there.


-
purchase a mutual fund with that money that is appropriate for a taxable account and which blends into the rest of your portfolio


This is what I am leaning toward.


It's a tough time, but as already mentioned, don't be in a hurry.


I'm not in a hurry as far as what to do with the money, just in a hurry to get it from my sister as I feel her breathing down my neck.

Thank you for taking the time to reply to me. Much appreciated.
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Re: General Question re: stocks

Postby bonniecrocker » Tue Jul 02, 2013 1:32 pm

You two could take your husband's name off the taxable account that holds the money market fund. Then it would be yours alone. Then the money could go there directly instead of making a stop at USAA


If the stocks are sold, then I would think I don't have to have an account in my name only. It's can be family money. That's okay with me. We don't have a home and even though I'm perfectly content renting forever (had a house before) I'm thinking this money should go somewhere to be invested to possibly buy a home in 10 years or so or when we need a car or something like that.
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Re: General Question re: stocks

Postby retiredjg » Tue Jul 02, 2013 2:10 pm

bonniecrocker wrote:
[-transfer the stocks to a taxable brokerage account at USAA

At the risk of sounding really dumb, I opened up a brokerage account at USAA but is this only if I transfer the stocks to it or can I have the stocks sold and then put in this account to be invested? I'm a bit confused on the term brokerage and if I should have opened something else if I want to put cash in there.

The term "brokerage account" can mean different things at different places, so it's not surprising that you might be confused. What I was saying is that you/your sister could transfer the stocks as they are to an account at USAA. You would then be holding the stocks in your name at USAA. Usually stocks are held in a "brokerage account" so that is what I meant.

It seems to me the first thing you need to know is whether to have the stocks transferred to you or whether to have your sister sell your share and transfer that cash to you. It won't make any difference to you, but one path may be significantly easier for her than the other. For example, capturing the capital gains in the name of the right sibling may be easier doing it one way over the other. I have no knowledge about this stuff, but surely she has an idea by now which (if either) is easier.

Then find out whether the account has to be in your name alone or whether it can be a joint account. Or if the stocks must go into an individual account but the cash could go into a joint account. This seems to be what you have implied, but find out for sure.

Once you find these things out, you can decide how to proceed. Then we can help you figure out what to do with the money in light of your goals and the rest of the portfolio.

Even if the stocks do get transferred to you "in kind" (meaning as stocks), you should probably sell your portion as soon as you can to minimize the gains as much as possible so you will pay as little tax as possible. If the gains happen to be large by the time you can sell them, you might want to hold them a year from the date of death so that your gains will be long term (taxed at a lower rate) rather than short term. I've also heard something about the basis can be set at 6 months after the death of the original owner. I don't know who makes that decision (might be the executor).

Keep in mind that if she handles the stocks the same way for each of the siblings, things might be easier for her as executor.
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Re: General Question re: stocks

Postby tractorguy » Tue Jul 02, 2013 4:32 pm

I found out when I lived in the UK that Vanguard U.S. is VERY picky about dealing with people who are not living in the U.S. Fifteen years ago, the trigger seemed to be the address of the account. I opened accounts with Vanguard with a U.S. address before I went overseas. I filled in a change of address (on line) after I arrived in the UK and everything went fine for several months until I tried to buy a new fund. That's when I was told that I couldn't buy any new funds as long as I had an out of country address. I took care of this by changing my address on all of my investment accounts at Vanguard to my father in law's home in New Jersey. After that, I had no problems. I'm not sure if that was fully legal but it worked for the 10 years I was out of the U.S. I did all of my trades over the internet from my home overseas and the paper statements went to my father in law's house (this was before you could go paperless).

I'm gathering from the discussion string that you are probably going to sell the P&G stock anyway. If you are planning to do this, the easiest for you is to have your sister do it and send you a check. The down side (for her) is that the estate will have to pay short term capital gains tax on any increases since your father's death (or long term if it happened more than a year ago). That means she will have to keep back some money and file a federal and maybe a state tax return for the estate for the year.

If you set up a brokerage account (maybe with USAA) she can transfer the stock "in kind" to the brokerage account and won't have to deal with taxes. You will when you sell it. It won't be a big deal for you however. You just have to tell your tax program or whoever does your taxes that you acquired it on the day of your father's death, the value/share on that day and what you sold it for. The program or helper will figure out if its long or short term and put any profits on the right form for you. I expect any taxes will be small.

As to what to do with the money after you get it converted into cash, deposit it into a money market account and do nothing right away. There are several people on this board who suggest you don't do anything for a year so that you have time to work through the emotions associated with a death and the emotions associated with a financial windfall. In this investment environment, having it in a 1 year CD or a Money Market account is not a bad decision.

I saw one poster suggested that you not commingle the money with your current joint accounts. He suggested that because an inheritance is considered yours alone as long as it is in an account with only your name on it. This is only important if you get divorced or if you or your spouse dies. There are community property rules and/or inheritance tax rules that treat property held in common differently than property held jointly. If your marriage is in good shape and you're both healthy, I wouldn't worry about it and I'd go ahead and commingle. However, my spouse and I have had joint accounts all of our lives and no individual accounts. I understand that some marriages don't work that way.

During the year while you are waiting, you should read the wiki on a windfall http://www.bogleheads.org/wiki/Managing_a_windfall , start learning about investing, and have a lot of discussions with your partner. When you finally pull the trigger to move it out of the money market account, you both need to be in agreement on what to do with it or you could create a festering issue that will never go away. Also, be aware that you'll have many people who will be more than willing to find ways to spend or invest this money. Frequently it will be in things that make them richer and you poorer. The rule of thumb is that the harder a salesman is trying to talk you into something and the more confusing it is, the worse deal it is for you.

The year wait is an arbitrary time. If you get comfortable with investing before then, and know what you want to do, then go ahead. Or wait a while. Investing is a 40 year journey. What you do in each year has a small impact on the how things turn out. When you are ready to do something with the money, feel free to ask this board if it is a smart thing to do. I've found the contributors to be very good. I've been following it for a couple of years and have never seen any really bad advice.
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Re: General Question re: stocks

Postby livesoft » Tue Jul 02, 2013 4:54 pm

tractorguy wrote:)...
I'm gathering from the discussion string that you are probably going to sell the P&G stock anyway. If you are planning to do this, the easiest for you is to have your sister do it and send you a check. The down side (for her) is that the estate will have to pay short term capital gains tax on any increases since your father's death (or long term if it happened more than a year ago). That means she will have to keep back some money and file a federal and maybe a state tax return for the estate for the year.

A quick note: No one will have to pay short term capital gains taxes. What tractorguy wrote is not quite true. The basis of the shares is long-term, for you and for the estate. Any taxes on gains will be long-term cap gains taxes. Stocks not only get a stepped up basis, they are get a long-term holding period even if they were not long-term to the deceased.

The estate will have a final tax return regardless of whether the stocks are sold or not. One will get a K-1 from the estate as well for income the estate received and wants to pass on to the recipients. So selling the shares by the executor and paying out cash is really no big deal.

Anyways, there is no need to wait to dispose of these stock shares. Perhaps they were even sold earlier today.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: General Question re: stocks

Postby retiredjg » Tue Jul 02, 2013 6:27 pm

tractorguy wrote:I found out when I lived in the UK that Vanguard U.S. is VERY picky about dealing with people who are not living in the U.S. Fifteen years ago, the trigger seemed to be the address of the account. I opened accounts with Vanguard with a U.S. address before I went overseas. I filled in a change of address (on line) after I arrived in the UK and everything went fine for several months until I tried to buy a new fund. That's when I was told that I couldn't buy any new funds as long as I had an out of country address.

Well, this is somewhat concerning. I was hoping buying a different fund would not be a problem as long as the account was opened before moving abroad. If things are still that way, it will have to be worked around. Or the poster could use a US address for the Vanguard mail.
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Re: General Question re: stocks

Postby retiredjg » Tue Jul 02, 2013 6:28 pm

livesoft wrote: Stocks not only get a stepped up basis, they are get a long-term holding period even if they were not long-term to the deceased.

This is good news.
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