POD Taxable Brokerage Acct

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Leesbro63
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POD Taxable Brokerage Acct

Post by Leesbro63 »

I have an elderly uncle who has a taxable brokerage acct at TDAmeritrade with myself and my brother as the 50/50 beneficiaries (it’s a “Payable On Death” acct). He has no spouse or children. I am also his power of attorney now, while he is still alive, and will be his executor upon his passing. The account has heavily appreciated mutual funds and ETFS. Upon uncle’s death, what will be the quickest legal way to “lock in” (sell) the gain in the equities? What happens if I sell, online, on the day after death and report the death to the brokerage after the transaction? Is that legal...I have legal online access to the account.
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Flobes
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Re: POD Taxable Brokerage Acct

Post by Flobes »

Leesbro63 wrote: Fri Aug 14, 2020 12:54 pm I am also his power of attorney now
POA dies when your uncle dies.
Leesbro63 wrote: Fri Aug 14, 2020 12:54 pm myself and my brother as the 50/50 beneficiaries (it’s a “Payable On Death”
POD comes to life when your uncle dies.
Leesbro63 wrote: Fri Aug 14, 2020 12:54 pm What happens if I sell, online, on the day after death and report the death to the brokerage after the transaction? Is that legal...
No. Exercising POA after uncle's death is not legal or in any way OK.
Last edited by Flobes on Fri Aug 14, 2020 1:55 pm, edited 1 time in total.
Alan S.
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Re: POD Taxable Brokerage Acct

Post by Alan S. »

The basis step up is locked in upon his death. It will take a few days to submit the death Cert and other papers to have the account re titled in your names and then you can sell the securities. There will obviously be some further gain or loss in the interim, but any gains upon sale will be reported as LT cap gains because the account was inherited.

Either or both of you will probably also wish to transfer the account to your preferred broker, and you will have to check that the updated DOD basis that transfers is correct, along with the basis of any new purchases you have make prior to transfer.
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CAsage
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Re: POD Taxable Brokerage Acct

Post by CAsage »

After your Uncle passes (and may it be long..) you will need to send the Brokerage a copy (probably certified) of the death Certificate, and then they will split the account in two for each beneficiary. At that point, you can sell. Yes, you will be in Limbo between those dates. Death certificate delays vary greatly by local - took ~2 months in Ca for Dear Old Mom. I would direct the brokerage to move the assets over "in kind" rather than sell them, so you can control the selling of the ETF (i.e. pick your price).
Last edited by CAsage on Fri Aug 14, 2020 1:36 pm, edited 1 time in total.
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sailaway
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Re: POD Taxable Brokerage Acct

Post by sailaway »

Since POA does with the owner, you will have to submit paperwork to the brokerage to distribute the funds. They may offer a choice between in kind and cash out. As long as your uncle doesn't die under suspicious circumstances that delay the issuing of a death certificate, it should be a fairly quick and straight forward process.
Big Dog
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Re: POD Taxable Brokerage Acct

Post by Big Dog »

Leesbro63 wrote: Fri Aug 14, 2020 12:54 pm I have an elderly uncle who has a taxable brokerage acct at TDAmeritrade with myself and my brother as the 50/50 beneficiaries (it’s a “Payable On Death” acct). He has no spouse or children. I am also his power of attorney now, while he is still alive, and will be his executor upon his passing. The account has heavily appreciated mutual funds and ETFS. Upon uncle’s death, what will be the quickest legal way to “lock in” (sell) the gain in the equities? What happens if I sell, online, on the day after death and report the death to the brokerage after the transaction? Is that legal...I have legal online access to the account.
You have to wait until you can submit the death cert* to TDA. You cannot legally act on his account once he passes.

But, once he passes, you can help speed the process by opening an TDA account under your own name. That way, once the death cert is delivered to them, they'll immediately (within a few days) transfer 50% of the stocks into your name. At that point, you can sell them all or do whatever you like. TDA should track the cost basis as the closing price on date of death.

*It will takes weeks to obtain a death cert in CA. I think LA County says to plan on 3-4 weeks. It took Alameda County 6 weeks when my mom passed away a couple of years ago. With COVID, it could be months!
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samsoes
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Re: POD Taxable Brokerage Acct

Post by samsoes »

Leesbro63 wrote: Fri Aug 14, 2020 12:54 pm I have an elderly uncle who has a taxable brokerage acct at TDAmeritrade with myself and my brother as the 50/50 beneficiaries (it’s a “Payable On Death” acct). He has no spouse or children. I am also his power of attorney now, while he is still alive, and will be his executor upon his passing. The account has heavily appreciated mutual funds and ETFS. Upon uncle’s death, what will be the quickest legal way to “lock in” (sell) the gain in the equities? What happens if I sell, online, on the day after death and report the death to the brokerage after the transaction? Is that legal...I have legal online access to the account.
Is his death imminent?
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Leesbro63
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Re: POD Taxable Brokerage Acct

Post by Leesbro63 »

samsoes wrote: Fri Aug 14, 2020 3:12 pm
Leesbro63 wrote: Fri Aug 14, 2020 12:54 pm I have an elderly uncle who has a taxable brokerage acct at TDAmeritrade with myself and my brother as the 50/50 beneficiaries (it’s a “Payable On Death” acct). He has no spouse or children. I am also his power of attorney now, while he is still alive, and will be his executor upon his passing. The account has heavily appreciated mutual funds and ETFS. Upon uncle’s death, what will be the quickest legal way to “lock in” (sell) the gain in the equities? What happens if I sell, online, on the day after death and report the death to the brokerage after the transaction? Is that legal...I have legal online access to the account.
Is his death imminent?
Probably not "imminent" but he's no candidate for an annuity.
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