Inherited stocks, what would you do?

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mxs
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Inherited stocks, what would you do?

Post by mxs » Sat Feb 24, 2018 12:49 am

I inherited 4 individual stocks and I am trying to decide what I should do with them. I am currently trying to sell my home and buy a new more expensive home. Money is a little tight to make the sale and buy happen for what I want to buy and hope to sell the current home for. Also, baby #3 is on the way, expected in 7 months from now. Those are the immediate needs in my future, which depending on how things go this money may be needed for. The stocks are the following (rounded to simplify and for relative anonymity)...
MGE Energy ( MGEE ) $4730 total value, down $130 from basis
Procter and Gamble ( PG ) $2270 total value, down $140 from basis
General Electric ( GE ) $460 total value, down $500 from basis
Pfizer Inc. ( PFE ) $1270 total value, up $200 from basis
Combined total = $8730 ($9300 basis)

I have no other stocks, and I don't intend on buying individual stocks in the future. I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that. MGEE and PFE are held with Computershare as a brokerage. I am not thrilled with their fees for sales, which are $15 (batch) or $25 (market) + $0.12 per share. If I were to sell these, I would rather transfer them to Vanguard (or another brokerage, I currently only have investments with Vanguard) first just on the principle of fees charged by Computershare.

I have not received the paperwork for the PG and GE stocks yet, but I am guessing they will be in a similar circumstance.

I am an 80/20 stock/bond investor. I would like the funds available and relatively liquid should I need them in the next 7 months, and be able to get them invested in as few steps as possible. I am thinking of transferring the shares to Vanguard, selling them, not sure where I would keep them for the time being at Vanguard, and withdrawal them when needed. If my short term investment gives a small gain, I guess that will be offset by the current loss on the stock shares now.

What would you do?

mortfree
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Re: Inherited stocks, what would you do?

Post by mortfree » Sat Feb 24, 2018 1:16 am

mxs wrote:
Sat Feb 24, 2018 12:49 am

What would you do?
If it were my account, and factoring in some of what you said. I would transfer “in kind” to Vanguard.

Sell the stocks

Transfer the money to my Capital One account.

mxs
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Re: Inherited stocks, what would you do?

Post by mxs » Sat Feb 24, 2018 1:34 am

Vanguard Prime Money Market Fund VMMXX with a 1.49 SEC yield and 0.16 Expense Ratio looks like a decent place to park the money for the time being. Very low risk and low gain, but at least it is something and beats my local credit union's 0.2% yield.

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celia
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Re: Inherited stocks, what would you do?

Post by celia » Sat Feb 24, 2018 2:23 am

I would liquidate them since I would likely need the cash later this year.

Before you transfer the shares in-kind, find out if there are any fees to leave the current custodian(s). That might even be more than the ComputerShare fees.

student
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Re: Inherited stocks, what would you do?

Post by student » Sat Feb 24, 2018 4:40 am

I agree with others that transfer and sell but make sure the cost basis is done correctly.

Grt2bOutdoors
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Re: Inherited stocks, what would you do?

Post by Grt2bOutdoors » Sat Feb 24, 2018 7:43 am

    Sell all of the individual stocks.Transfer in kind to low cost brokerage house, no reason to pay those extortion type fees.
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    James2
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    Re: Inherited stocks, what would you do?

    Post by James2 » Sat Feb 24, 2018 7:57 am

    Computer share is not a brokerage, just a custodian.

    I’d get the paperwork from vanguard to deposit these shares in your account, then sell. You’d want to record the loss with your tax paperwork so it doesn’t get forgotten.

    [edit I’ve never paid fees for transferring from computershare and their website states there are none.]

    James

    retiredjg
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    Re: Inherited stocks, what would you do?

    Post by retiredjg » Sat Feb 24, 2018 8:07 am

    If you need the money for a short term goal, it should not be in stocks. Whether you transfer in kind and then sell or just sell where they are depends on the total fees for the transactions. And the hassle factor.

    harmony
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    Re: Inherited stocks, what would you do?

    Post by harmony » Sat Feb 24, 2018 11:04 am

    I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that. . .
    If my short term investment gives a small gain, I guess that will be offset by the current loss on the stock shares now.
    Net capital losses can be used to offset ordinary income. You don’t have to wait for enough capital gains to use up the losses on your taxes. When the 1099-B form arrives next January, enter the amount of gains/losses in your tax software and the net will appear on Line 10 of the 1040. If it's a net loss, this figure will be in parentheses, so it gets subtracted from your total income. Since you are selling a home that you are living in, there won’t be capital gains tax on that, but you have other taxable income.

    Since these are inherited stocks, the cost basis will require additional attention. Is the basis listed in your post the stepped-up basis since the date of death of the previous owner? If so, then the basis was adjusted properly. You may have to ask the custodian and the executor if this was already done. This might be easier to do while the stocks are with the current custodian because this action can be more easily traced within the originating firm. When you transfer, make sure the cost basis figures transfer accurately.

    When you sell inherited stock for a net gain (could happen) it will be counted as long-term gains, even if you have held them under a year. When tax software asks what date you acquired the stock, enter “Inherited” and it will calculate it all as long-term gains. If these stocks are volatile this year, you may be able to do some tax maneuvering with sale dates, depending on your circumstances.

    Grt2bOutdoors
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    Re: Inherited stocks, what would you do?

    Post by Grt2bOutdoors » Sat Feb 24, 2018 2:45 pm

    James2 wrote:
    Sat Feb 24, 2018 7:57 am
    Computer share is not a brokerage, just a custodian.

    I’d get the paperwork from vanguard to deposit these shares in your account, then sell. You’d want to record the loss with your tax paperwork so it doesn’t get forgotten.

    [edit I’ve never paid fees for transferring from computershare and their website states there are none.]

    James
    Actually, Computershare is a transfer agent and registrar of securities. They maintain the books and records of equity shareholdings for those companies which have issued stock and assigned Computershare to be the transfer agent and registrar. A typical custodian would be a bank - some one like Northern Trust or State Street.
    "One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

    truenorth418
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    Re: Inherited stocks, what would you do?

    Post by truenorth418 » Sat Feb 24, 2018 4:24 pm

    If you had inherited the value of those stocks in CASH, would you have used that cash to buy those stocks?

    No?

    Well I guess you have your answer. Liquidate and do with it what you would have done if you had inherited cash in the first place.

    jackholloway
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    Re: Inherited stocks, what would you do?

    Post by jackholloway » Sat Feb 24, 2018 7:40 pm

    I cannot say what you should do, just what I did do. I transferred all the stocks in traditional brokerages to vanguard, then sold. All stocks at compushare, I retitled, then sold for cash that I used to buy mutual funds.

    tomd37
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    Re: Inherited stocks, what would you do?

    Post by tomd37 » Sat Feb 24, 2018 7:51 pm

    mxs,
    Although not mentioned, I assume your profit/loss calculations are based on your basis at date of inheritance :?:
    Tom D.

    livesoft
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    Re: Inherited stocks, what would you do?

    Post by livesoft » Sat Feb 24, 2018 7:57 pm

    I would have sold the stocks as soon as I could.

    I've told my children that my asset allocation is probably not their asset allocation and they should feel no compunction about selling any of the assets that they inherit from me even if they are all passively-managed low-expense-ratio index funds.
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    straws46
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    Re: Inherited stocks, what would you do?

    Post by straws46 » Sat Feb 24, 2018 8:15 pm

    I have an account at Computershare for company stock. I sold some shares through their website and the fees were higher than the discount brokerages, plus there was a $25 fee for the wire transfer to my bank account. Next time I transferred to my Schwab account. The transfer to Schwab was not the typical ACAT but had to go through DTC. Still it was painless and without charges on either end. Computershares is a great custodian but if you want to sell, first transfer to a broker like Schwab, TD, Vanguard, Fidelity et al.

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    Re: Inherited stocks, what would you do?

    Post by cherijoh » Sat Feb 24, 2018 8:37 pm

    mxs wrote:
    Sat Feb 24, 2018 12:49 am
    I have no other stocks, and I don't intend on buying individual stocks in the future. I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that. MGEE and PFE are held with Computershare as a brokerage. I am not thrilled with their fees for sales, which are $15 (batch) or $25 (market) + $0.12 per share. If I were to sell these, I would rather transfer them to Vanguard (or another brokerage, I currently only have investments with Vanguard) first just on the principle of fees charged by Computershare.
    Check the brokerage fees at Vanguard first! Unless you have a lot of assets at VG the brokerage fees will likely be higher than some low cost brokerage. VG has super low expense ratios on its funds but there are much better options for trading stocks. I'd check Schwab, TD Ameritrade, and the like.

    mxs
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    Re: Inherited stocks, what would you do?

    Post by mxs » Sat Feb 24, 2018 10:24 pm

    cherijoh wrote:
    Sat Feb 24, 2018 8:37 pm
    mxs wrote:
    Sat Feb 24, 2018 12:49 am
    I have no other stocks, and I don't intend on buying individual stocks in the future. I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that. MGEE and PFE are held with Computershare as a brokerage. I am not thrilled with their fees for sales, which are $15 (batch) or $25 (market) + $0.12 per share. If I were to sell these, I would rather transfer them to Vanguard (or another brokerage, I currently only have investments with Vanguard) first just on the principle of fees charged by Computershare.
    Check the brokerage fees at Vanguard first! Unless you have a lot of assets at VG the brokerage fees will likely be higher than some low cost brokerage. VG has super low expense ratios on its funds but there are much better options for trading stocks. I'd check Schwab, TD Ameritrade, and the like.
    It looks like Vanguard is $7 a trade for me, and I would likely make 4 trades total, selling the four different stocks. Schwab appears to be $5 a trade, and TD Ameritrade $6.95. I think working with one company is worth the $8 total difference to me. If I am missing something please let me know.

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    Re: Inherited stocks, what would you do?

    Post by itstoomuch » Sat Feb 24, 2018 10:36 pm

    ^TDAmeritrade trading fee is higher for non round lots of <100 shares. Not a lot of difference in fees but it is more expensive.
    IMO, sell.
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    Dale_G
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    Re: Inherited stocks, what would you do?

    Post by Dale_G » Sat Feb 24, 2018 11:47 pm

    mxs wrote:
    Sat Feb 24, 2018 12:49 am
    I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that.
    Do know that a tax loss of up to $3,000 per year can be deducted from income each year? If you pay taxes, you only have to remember until tax time in 2019. And your broker will send you a 1099-B as a reminder.

    Dale
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    mxs
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    Re: Inherited stocks, what would you do?

    Post by mxs » Sun Feb 25, 2018 12:00 am

    Dale_G wrote:
    Sat Feb 24, 2018 11:47 pm
    mxs wrote:
    Sat Feb 24, 2018 12:49 am
    I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that.
    Do know that a tax loss of up to $3,000 per year can be deducted from income each year? If you pay taxes, you only have to remember until tax time in 2019. And your broker will send you a 1099-B as a reminder.

    Dale
    I didn't think of the deduction from regular income. I was thinking of only cancelling cap gains. My oversight, thank you.

    cherijoh
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    Re: Inherited stocks, what would you do?

    Post by cherijoh » Sun Feb 25, 2018 4:07 pm

    mxs wrote:
    Sat Feb 24, 2018 10:24 pm
    cherijoh wrote:
    Sat Feb 24, 2018 8:37 pm
    mxs wrote:
    Sat Feb 24, 2018 12:49 am
    I have no other stocks, and I don't intend on buying individual stocks in the future. I probably would long forget the capital loss for tax purposes before I would be able to take advantage of that. MGEE and PFE are held with Computershare as a brokerage. I am not thrilled with their fees for sales, which are $15 (batch) or $25 (market) + $0.12 per share. If I were to sell these, I would rather transfer them to Vanguard (or another brokerage, I currently only have investments with Vanguard) first just on the principle of fees charged by Computershare.
    Check the brokerage fees at Vanguard first! Unless you have a lot of assets at VG the brokerage fees will likely be higher than some low cost brokerage. VG has super low expense ratios on its funds but there are much better options for trading stocks. I'd check Schwab, TD Ameritrade, and the like.
    It looks like Vanguard is $7 a trade for me, and I would likely make 4 trades total, selling the four different stocks. Schwab appears to be $5 a trade, and TD Ameritrade $6.95. I think working with one company is worth the $8 total difference to me. If I am missing something please let me know.
    There have been previous posters without a prior relationship with VG who just assumed since VG was a low cost fund provider that it was also a low cost brokerage in terms of $$ per trade. They transferred a bunch of assets in kind and then were shocked to get nicked with $35/trade on a dozen or more funds or stocks. I think in the interim VG has reduced its fees - for $7/trade, I agree.

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