My family is liquidating my father's trust and distributing to his children. I have to choose between an in-kind transfer to my brokerage vs. liquidate and get the cash. Glad because this has been mis-managed for years in poor but "safe" investments.

About 90% would be long-term capital gains but this market is nuts right now. Any insight or thoughts would be appreciated.

Edit: I'm getting my financial dude's opinion, and my sisters have a separate dude as well, but it's good to get multiple opinions. Interesting q. and I'll post the consensus. (I am not a financial dude).

My dad died in 1990. But Wells Fargo and its predecessors have been making moves all through the years with the oldest trades being about 2017. Not sure how that affects cost basis.

Seems probably then that there are some unrealized gains on the portfolio. Assuming they've grown the money over the years.

You would just simply need to ask them what the cost basis is or what the unrealized gains are on the portfolio.

Transfer in kind and the heirs pay no tax on
Capital gains until they sell it with the transfer value being the basis for future capital gains. Sell it before the estate is distributed and the estate is liable for capital gains . Seems like a no brainer.am I missing something?

halfastros81 said:

---

Transfer in kind and the heirs pay no tax on
Capital gains until they sell it with the transfer value being the basis for future capital gains. Sell it before the estate is distributed and the estate is liable for capital gains . Seems like a no brainer.am I missing something?

---

Unless you elected to recognize the gains when transferred, the basis is not the transfer value but the assets would have a carryover basis. At least that is my recollection, and I could be wrong!

Why is the basis of the assets not set at the date of death? What am I missing here?

If it's an irrevocable trust it wouldn't get the step up. Not clear to me from the OP if it's revocable or irrevocable.

Edit - if they are liquidating - probably revocable.

I believe it's based on the date of transfer and the estate is responsible for paying taxes on dividends prior to transfer . Unless of course the estate is above the threshold for paying inheritance taxes nothing is taxable for the heirs except dividends and capital gains for sales made after the transfer date . Another twist I believe is if an heir sells within a yr of the transfer they are subject to short term capital gains taxes and if you wait a year then it's long term capital gains tax rate . This is from memory of closing out my Mom's estate a few yrs ago so would suggest checking with a tax expert to verify.