Make sure you’re getting a potential step up in basis on the taxable account
You're probably only going to have ten years to withdraw everything from the IRA, so you need to think about tax implications of that. If you don't expect any major career shakeups for you and your wife, you probably want to take those in something approaching equal distributions over the next ten years. Need to pay attention to what happens with the Big Beautiful Bill. If they aren't going to get something passed that extends tax rates, may want to go ahead and take a substantial distribution this year.
How much we talking? Is your wife single?
This boggled my mind when I was reading about it last week, but on a standard brokerage account, am I understanding correctly that the cost basis resets to current value when she inherits it?
Consider a good tax attorney for advice if the amount is substantial.
Yes. As long as the person that died, owned the brokerage account -in other words it wasn’t in a trust or some other sort of vehicle.
You mutha17er. You’d recommend wasting money on a professional when you have the wisdom of the six pack for free? Why do you want Seinfeld to waste his money?
Anyone know a great accountant in the Jackson area? My assumptions have always been that my finances aren’t that complicated and my tax prep has never been something TurboTax couldn’t handle. Maybe I’m missing something.
Yes. Her basis in any assets. Real estate, investments, etc. is the fair value on the date of death. You get that automatically so nothing she needs to do other than bd aware that’s the rule. This is also a reason it’s better for older parents to let the kids inherit any appreciated property rather than give it to them during their lifetime.
Good advice. Not sure but I think they came out with guidance you’re supposed to take it equally over the 10 years. But even if you can wait, you don’t want to get into a situation where you’re paying a lot of tax at the 39% bracket.
This is correct. If a stock was bought for $1,000 40 years ago & is worth $1,000,000 on date of death, your wife’s basis is $1,000,000.
In some trusts you would still get step up in basis. In others you’d be stuck with the decedents original basis.
Yes. If they got the marital deduction or there’s a power of appointment, you would get a step up basis. And yes, it’s automatic however custodians and investment managers Don’t know that so typically need to notify them so they actually changed the system for 1099s
If you work a normal 8-5 with no property or investments/side hustles then you don't need one. I've done real estate flipping, investments, farms etc. and hiring an accountant was the best thing I ever did. Self-employed it's a must IMO!
I’m a CPA. You do have 10 years to take the IRA money out. So depending on how much it is, with the time value of money, it’s best to let it grow tax free as long as you can.
They came out and said if the decedent was already taking RMDs then you have to take at least an RMD each year and also fully exhaust the account at the end of year 10 if left to a non-spouse
Don’t have to take it out equally just has to be withdrawn within 10 years. Also it’s 37% max now
Time value of money! Takes me back to Dr. King's classes! I blame him for getting me into the business investments & the bourbon. Good times!
bulldoginitiative.com
MS sucks again! We're way past this but it's like the ABC. Wills are pretty worthless here unless there's a conflict amongst those in the inheritance.
Nothing normal about my always on call work schedule but I am a W2 employee these days with pretty normal investments that have limited international exposure.
It's to protect creditors and potential beneficiaries under a will or heirs if there is no will. If you let people dispose of deceased assets without the courts, any assets would likely be gone before any unsecured creditor knew there was a death. You'd also have tons of situations where somebody with close control abused their access to dispose of stuff without an accounting.
That is correct. If the decedent owned the account, then the beneficiary inherits the after-tax account with a stepped up basis (rationale is that taxes were paid before $ going in, so tax free growth is the attraction). The retirement accounts are the opposite, they are taxed as ordinary income to the beneficiary generally. However, in limited cases, if the decedent was not required to take a RMD (died before age 73), that may change the way you choose to receive it.
I’m sorry about your mom’s death. Probate is the process by which a Will is given legal effect. It is just a piece of paper until it is “proven” by the chancery court.
Is this because of a parent passing away or is it a gift? Totally different implications for each.
