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TOD Brokerage Account and selling the stock as executor while retaining step-up in basis

Posted: Sat Nov 09, 2019 2:24 pm
by Eleanor852
Hello - my mom passed and left a brokerage account with stocks and mutual fund at Fidelity. It is TOD with each of the 4 heirs as 25% beneficiary.
I haven't notified Fidelity yet because am waiting for the Surrogate certificate, but I want to be prepared when I call them.
As executor, I would like to sell the stock as soon as possible.
My question is - will Fidelity sell the stock and then issue 4 checks, or 1 check to the estate, or will they set up 4 different accounts, or will they leave it up to me?
I am concerned about retaining the step up in basis no matter what I do.
Thank you.

Re: TOD Brokerage Account and selling the stock as executor while retaining step-up in basis

Posted: Sat Nov 09, 2019 2:34 pm
by Silk McCue
Sorry for your loss.

Based on my experience with my MIL that had my wife and her sister as PODs they distributed the assets into 2 accounts for them. Since it is POD it not within the control of the estate or you as the executor. You as beneficiary can initiate the process. Step up basis should be easy to determine from values calculated as of date of death. It was a very straight forward process with USAA once they received the necessary paperwork which death certificate.

Cheers

Re: TOD Brokerage Account and selling the stock as executor while retaining step-up in basis

Posted: Sat Nov 09, 2019 3:01 pm
by Gill
You don't need to be appointed executor to distribute the account to the beneficiaries. It has nothing to do with the estate. You also have no right to sell the stocks in the account. That is up to the four beneficiaries. Fidelity will do what the four beneficiaries direct which normally would be to liquidate everything and distribute cash. Also, the basis will be stepped up to date of death regardless of what you do.
Gill

Re: TOD Brokerage Account and selling the stock as executor while retaining step-up in basis

Posted: Sat Nov 09, 2019 3:20 pm
by delamer
Gill wrote:
Sat Nov 09, 2019 3:01 pm
Eleanor852 wrote:
Sat Nov 09, 2019 2:24 pm
Hello - my mom passed and left a brokerage account with stocks and mutual fund at Fidelity. It is TOD with each of the 4 heirs as 25% beneficiary.
I haven't notified Fidelity yet because am waiting for the Surrogate certificate, but I want to be prepared when I call them.
As executor, I would like to sell the stock as soon as possible.
My question is - will Fidelity sell the stock and then issue 4 checks, or 1 check to the estate, or will they set up 4 different accounts, or will they leave it up to me?
I am concerned about retaining the step up in basis no matter what I do.
Thank you.
You don't need to be appointed executor to distribute the account to the beneficiaries. It has nothing to do with the estate. You also have no right to sell the stocks in the account. That is up to the four beneficiaries. Fidelity will do what the four beneficiaries direct which normally would be to liquidate everything and distribute cash. Also, the basis will be stepped up to date of death regardless of what you do.
Gill
So in this case, each beneficiary needs to contact Fidelity individually to provide directions?

Can just one supply a death certificate?

Re: TOD Brokerage Account and selling the stock as executor while retaining step-up in basis

Posted: Sat Nov 09, 2019 3:39 pm
by Gill
One person can do all the leg work and only one death certificate is needed, but the custodian will want written directions from each beneficiary as to their share of the distribution. The last one I handled similar to this they asked for an account for each beneficiary to which funds could be wired.
Gill

Re: TOD Brokerage Account and selling the stock as executor while retaining step-up in basis

Posted: Sat Nov 09, 2019 6:09 pm
by Eleanor852
:happy
Silk McCue wrote:
Sat Nov 09, 2019 2:34 pm
Sorry for your loss.

Based on my experience with my MIL that had my wife and her sister as PODs they distributed the assets into 2 accounts for them. Since it is POD it not within the control of the estate or you as the executor. You as beneficiary can initiate the process. Step up basis should be easy to determine from values calculated as of date of death. It was a very straight forward process with USAA once they received the necessary paperwork which death certificate.

Cheers