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  1. #1

    Default Are Multiple Accounts Needed for an Estate

    My question involves estate proceedings in the state of: PA

    Just need some clarification. My attorney and I went to open an estate account at a local bank, which is also a national bank. There are assets (stocks and bonds) which are in a different account through an investment brokerage firm. Even though we already have an estate account established at the local bank, the broker is saying we need to establish a 2nd estate account through the brokerage. I told my lawyer this and he said that was nonsense and no need to do that. The broker claims that the stocks are stuck in limbo in a deceased person's account, and the stocks cannot be liquidated until they are first moved into an estate account at the brokerage.

    What say all of you?

  2. #2
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    Default Re: Multiple Estate Accounts Needed

    do you plan on leaving the investments in place for any time?

  3. #3

    Default Re: Multiple Estate Accounts Needed

    Quote Quoting jk
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    do you plan on leaving the investments in place for any time?
    I plan on liquidating enough stock to cover expenses and the establishment of a trust (about half). The rest I plan to keep invested with the same broker. In the same account or a new account doesn't matter. My lawyer is implying the best option is to liquidate completely and whatever cash I'm left with (what would have remained as stocks) I simply reinvest it with him.

  4. #4
    Join Date
    Nov 2013
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    Default Re: Are Multiple Accounts Needed for an Estate

    I agree with the broker. A bank account is not a brokerage account. There are going to be taxes on sales of securities and they are not something that a bank account will reflect.

    If any of the of the securities and bonds are being held in a retirement account, that is something else that has to be dealt with on a brokerage level.

    Your attorney is giving you bad advice. There are plenty of consequences to liquidating everything back into cash and repurchasing. Just my opinion. Especially if he want you to invest through him.

  5. #5

    Default Re: Are Multiple Accounts Needed for an Estate

    Quote Quoting budwad
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    I agree with the broker. A bank account is not a brokerage account. There are going to be taxes on sales of securities and they are not something that a bank account will reflect.
    Understood, but wont we get transaction statements that will reflect the cost basis, etc for tax purposes and just transfer the money to the estate account? Or, is it possible to close an already opened estate account and just have the single estate account with the broker?

    If any of the of the securities and bonds are being held in a retirement account, that is something else that has to be dealt with on a brokerage level.
    No qualified retirement accounts. Just a vanilla brokerage account and money market with some cash.

    Your attorney is giving you bad advice. There are plenty of consequences to liquidating everything back into cash and repurchasing. Just my opinion. Especially if he want you to invest through him.
    Can you clarify - when we start selling off the stock, what cost basis is used for determining capital gains taxes and who pays those taxes? The estate? If I inherit (transfer ownership) of remaining stock, what does my cost basis become?

  6. #6
    Join Date
    Oct 2016
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    Default Re: Are Multiple Accounts Needed for an Estate

    Every single brokerage account we encountered in a somewhat similar situation required that the securities had to be transferred to a second account with the firm before liquidating anything. If you were named as a beneficiary on the account, you can transfer them directly to a new account there and liquidate all or part, or leave invested there. If they are part of probate, they have to first be transferred to an account owned by the estate prior to liquidating or transferring to yet another account. Apparently, this is part of fairly recent legislation. Your broker can make this smooth or rough. But anyone wanting to establish an account into which securities are transferred must declare personal financials to the original broker. That includes the beneficiaries, and the executor, in the case of an estate. This was our experience; yours may vary. Remember, your broker eats sleeps and dreams this stuff.

  7. #7
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    Default Re: Are Multiple Accounts Needed for an Estate

    Quote Quoting Jeeper99
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    Understood, but wont we get transaction statements that will reflect the cost basis, etc for tax purposes and just transfer the money to the estate account? Or, is it possible to close an already opened estate account and just have the single estate account with the broker??
    The stocks are being held is someone's name. That is not the estate-of or your name. In order to sell them, you first need to transfer them into an estate brokerage account. To make the transfer, you first need letters testamentary as the executor. You instruct the brokerage to open an estate account and instruct the brokerage to transfer , in kind, all the holdings and to close the account in the individuals name. Then, as the executor, you can sell, hold or whatever and have the money transferred into an estate bank account (to pay bills) or into the accounts of the beneficiaries.. Then you will get statements from the brokerage in the name of the estate for tax purposes. You will also need to get an EIN from the IRS website to open the estate account (if you don't already have one).


    Quote Quoting Jeeper99
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    Can you clarify - when we start selling off the stock, what cost basis is used for determining capital gains taxes and who pays those taxes? The estate? If I inherit (transfer ownership) of remaining stock, what does my cost basis become?
    The estate pays the taxes in the final return if it takes less than a year to liquidate. Or when stocks are sold over a period of more than a calendar year you file each year in the name of the estate. When you transfer in kind, all the purchase information goes with the stock so you should have all the capital gains info to file.

    If you want to retain stocks (not sell them) you as the executor, instruct the brokerage to transfer them into a brokerage account in your name or that of any beneficiary who has opened an account with the brokerage . After that, they can do what they want because it is out of the estate. Their cost basis may be the step-up basis but I'm not sure of that.

  8. #8
    Join Date
    Oct 2006
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    16,185

    Default Re: Are Multiple Accounts Needed for an Estate

    Quote Quoting Jeeper99
    View Post
    Understood, but wont we get transaction statements that will reflect the cost basis, etc for tax purposes and just transfer the money to the estate account? Or, is it possible to close an already opened estate account and just have the single estate account with the broker?


    No qualified retirement accounts. Just a vanilla brokerage account and money market with some cash.



    Can you clarify - when we start selling off the stock, what cost basis is used for determining capital gains taxes and who pays those taxes? The estate? If I inherit (transfer ownership) of remaining stock, what does my cost basis become?
    You will get a stepped up basis to fair market value as of the date that your father passed away. The estate will receive the same.

  9. #9

    Default Re: Are Multiple Accounts Needed for an Estate

    Quote Quoting llworking
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    You will get a stepped up basis to fair market value as of the date that your father passed away. The estate will receive the same.
    SO stock that is liquidated specifically to fund the estate account will also have the cost basis adjusted to date of death? Or the historical cost at which he purchased the stock would be used for determining any gains taxes the estate would need to be paid? Would his carry-over loss that had not been fully written off yet come in to play anywhere?

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