Trust & Transfer in-kind vs cash?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
snowcrazy
Posts: 17
Joined: Sun Feb 09, 2014 11:44 am

Trust & Transfer in-kind vs cash?

Post by snowcrazy »

Hi All, a question on trasnfers in kind. Long story short on inheritance & trusts...I have received an inheritance from my late mother, there is one asset which was never transferred originally to her and therefore to me in form of a single stock SWN, it was not transferred with rational from my uncle that the stock lost a lot of value and doesnt make sense to transfer at loss but rather wait for it to go up...if it ever does to a similar level as before. Stock price was $47 and now down at $5 (lesson one, never invest in individual stocks, unfortunately my granny and uncle had different investment beliefs than I :happy ).

Now I am being made trustee of my siblings/my trust from my mother as my uncle passed, he was trustee before...and I am trying to get things in shape. My aunt is trustee of my moms trust which still has un-distributed SWN stock.

To clean things up, to me it would make sense to just get the SWN transferred through to us to complete all distributions through 2 generations. I was originally of the opinion it would also make sense to recover and leave as part of my mothers trust before distribution, but now I am reading about transfer in-kind, wouldnt it make sense if I understand correctly to distribute in-kind to my level of trust and keep as SWN that at least I have control in the future what should be done with it and when it makes sense to sell...if in my lifetime? If a transfer-in kind occurs, is it then done with stepped-up basis value at time of my grandmothers passing or at my moms? If I receive a transfer in-kind, where is the documentation of date of stepped-up basis, is this the trust certification that shows date of passing?

Second, what would you do with the SWN? Considering I get it in-kind, then it seems it would make sense just to hold onto it long term to see if it ever picks back up as I dont need it right now, at least part way until it is worth something again...its so de-valued that it would seem pointless to cash out with the "hope" it comes back at least partly unless I am able to use it for tax loss harvesting for future capital gains or something

Thoughts?

Many thanks
User avatar
Earl Lemongrab
Posts: 7270
Joined: Tue Jun 10, 2014 1:14 am

Re: Trust & Transfer in-kind vs cash?

Post by Earl Lemongrab »

I'll just point out that holding on to a loser hoping that it will get back to even is a fallacy. If you thought that the stock was likely to do better than the alternatives that you could buy with the money, then you should keep it forever. Remember that the stock could go down more. Maybe to 0.
Topic Author
snowcrazy
Posts: 17
Joined: Sun Feb 09, 2014 11:44 am

Re: Trust & Transfer in-kind vs cash?

Post by snowcrazy »

Thanks lemon, yes was also contemplating this. 2 questions really...

1) does transfer in-kind work like this as I mentioned across 2 generations of trusts?
2) SWN loser is current value at 10k, previously 100k at time of death...rest of my portfolio is well distributed buy/hold, what would a boglehead do, cash in 10k and get a proper fund per my portfolio allocation...or considering its a small part of my overall portfolio to "speculate/gamble" (which is not bogleheady) and take risk if it comes back somewhat, risk being yes it could go to 0?
Skierajs
Posts: 26
Joined: Wed Apr 04, 2018 9:05 am

Re: Trust & Transfer in-kind vs cash?

Post by Skierajs »

If you were inheriting $10k cash would you use it to buy SWN? If not, sell it.

Separately, if the basis was stepped up to $100k at time of death can you take a $90k capital loss when you sell it? That would be a big win.
Post Reply