step up in basis

Submitted by Douglas Bauerband on Tue, 2015-12-08 20:29

client had a Non-IRA mutual fund account and passed away.

a. do I have to change the non-ira account to an estate account before the executer can move the money to get the stepup in basis?

or…

b. Can the executer just send in a Letter of instructions with a self executing waiver for NJ and have them send a check payable to the estate and still get the stepup in basis?

Thankyou,
Dougals



Submitted by Alan - IRA critic on Tue, 2015-12-08 23:16

  • a) The basis adjustment is useless until the asset is sold. It cannot be sold until the executor files papers and is appointed executor by the court system and provides such evidence to change the title to the estate. The executor does not have authority if the fund account had been titled as a POD or joint tenant account,
  • b) There would still be a basis adjustment if the fund company could process this way. The 1099B must be issued to the estate, so the fund company might require the asset to pass through an estate account, even if just momentarily.
  • It is possible that NJ has special requirements that I am unaware of.

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