I inherited a portfolio of mixed assets: individual stocks and bonds, an unpriced REIT, a couple of limited partnership energy companies, stock funds, bond funds, a balanced fund, and probably other stuff I forgot about, all across 4 or 5 investment institutions, including an IRA. Kind of a complex mess.
My goal is to convert this into a simple three-or-four index fund portfolio. You would think that because of the cost basis step-up with an inheritance it would be a simple matter of selling the old stuf and buying the new.
But -- because of delays in getting a death certificate (name on SSA account didn't match name on birth certificate nor on any of the financial accounts involved) and the inherently slow process of dealing with the situation (e.g mailing certified death certificates and awaiting action), transferring from all those other institutions to Vanguard -- a couple of months elapsed between the date of death (the step-up date) and my freedom to deal with things. This all coincided with the recent surge in the stock market leaving some significant capital gains thereby making the simple "sell it all" plan questionable. (Not a bad problem to have, really.)
My plan so far:
- Match assets with cap gains and cap losses and sell that batch, but there are not many cap losses to go around.
- Another possibility that may or may not help is to do gifts in-kind to the people I want to share the inheritance with. (They were not in the will.) The problem here is I don't want to burden them with a pending tax liability. Two of these people are 4 and 6 years old with no income so this may be OK for them.
- "Bite the bullet" and pay the taxes on things I can't dispose of in other ways. I will probably spit this across 2017 and 2018.