TOD on a mothers brokerage account
Have a client who’s mother just passed away. She had a brokerage account with a TOD on it. I told the client they have to re-title the brokerage account under an estate account and then the executor can do what they please.
a. Am I correct in stating that when the account is re-tilted to the estate account, all the stock and mutual funds will have he step-up in basis as of the date of death of the mother?
b. Her broker sent her forms just to sign and return since it has a TOD and all will be fine. But, if the account is not re-titled into an estate account and she just takes the money as the TOD, doesn’t she forfeit the step-up in basis?
Thank you,
Douglas
Permalink Submitted by Bruce Steiner on Wed, 2015-02-25 22:16
a. Since it’s TOD, it goes to the beneficiary, not the estate. The basis step-up is the same regardless of who gets it.b. The basis isn’t affected by who gets it. The beneficiary gets it, with the basis step-up. TOD designations for brokerage accounts have destroyed many an estate plan. You (or the lawyer handling the estate if it’s not you) should review the situation BEFORE your client collects the account.