Deceased transfer of stock - good plan for us?

[soninokla]

I am helping my 82 year old father get his affairs in order. It turns out that my mother, who passed away in 1998, has some AT&T stock in her name. My father suggested that the stock be transferred to me and my sister.

I've been on the phone with Computershare and they've told me how to fill out the paperwork. We need to go to the bank and get the Medallion Signature Guarantee. Also I think the lady at the bank who my dad always goes to can help with the supporting paperwork we need.

My question I have hoping you nice people can give me feedback on is: Is this a reasonable plan, transferring the stock from my deceased mother to me and my sister?

I don't even know of the issues we need to be thinking about. I don't know if my sister and I will have to pay taxes on the stock. It's mainly 290 shares of AT&T which is worth under $11,000 today. I think my sister wants to immediately sell hers and take the money. Any feedback on things we need to think about would be appreciated.

[GrimJack]

I believe that the value of the stock will be set to the value at the date of death. Make sure that you track the stock from date of purchase - there may be splits and so on. There will be no tax consequences on receiving the stock but there will be capitol gains on the sale if the value of the stock has increased since her death. If your mother did not will the stock, then they belong to your father and he can gift $12,000 per year per person (this may have gone up - my father started gifting us prior to his death and my mother continues this). Any amount over the yearly gift amount will be subtracted from the $1 million tax-free limit of your father's estate on his passing ( I believe that the estate limit has gone up since and may actually be up to 2 million now). The receiver of gifts have no tax liabilities

This is all off-the-cuff stuff but it should give you an idea of where/what to look for.

I am not a lawyer, estate planner, or anything else other than overly opinionated, way too liberal poster.

[soninokla]

Thank you GrimJack for the reply. My mother did not will the stock, so do you think my father can transfer the stock directly from her name to me and my sister's names? That is what he wants to do now.

The problem with transferring the stocks to his name first and then him selling them and gifting the proceeds to me and my sister,or then subsequently transferring them to me and my sister is this: it is like pulling teeth to get my father to do anything with these stocks. I've been trying since 1998 when my mother passed away.

I just pulled up historical prices and it seems the stocks are worth just a little less than when my mother passed away.

[disneysteve]

How can the stock still be in your mother's name if she died 10 years ago? I'm guessing that AT&T pays a dividend. How has that been handled all these years? Who is cashing the checks and how has that income been reported for tax purposes?

I think there is some information missing here. I know that when my father died, my mother had to have his name removed from all of the joint accounts and put in her name only. Didn't the same thing happen when your mother died?

[LuxLiving]

My father in law passed away a few years back while owning stock. As my husband is the estate representative he had to contact the company and provide a copy of the death certificate and a copy of the legal paperwork showing him as the executor of the estate. The stock was then re-titled showing it being owned by the estate. Dividend & Capital Gains checks were then issued to the estate and deposited into the estate checking account. And now some further time has passed and Hubster recently sold the stock and the proceeds had to go into the estate checking account to be distributed at the final accounting to him and his siblings.

I would think your father would have to put the stock into his own name first before it could be distributed to you and your sibling.

And yes, the cost basis is figured as the day of death. It sounds as if your father has not done all the paperwork and tax reporting that he should have been doing thru the years. I'd get you both an appointment w/a good CPA & tax consulting firm and take all the important papers you have about your mother's death, the stocks, his income tax returns etc. with you when you go. Since you say he doesn't like to get this kind of thing taken care of, I'd make sure whoever you take him to give you advice also does some kind of estate planning. Perhaps they could save you all a boatload of trouble down the road w/his estate as well.

[GrimJack]

I am going to guess that the stock was laying around the house or in a safe deposit box and was missed by the executer. The last time T split was in 1998, the stock also split in 1993 and 1987. If you actually have the stock certificates, then verify the purchase date. Selling the stock is probably not a good idea - it has consistently out performed the market for the last 2 years and its current yield is 4.3%. If nothing else, put it into an IRA.

I think your plan will work - fill out the paperwork and get the stock into your name following the plan set up by the transfer agent. Open an account with someone like TDWaterhouse and have the stock transfered directly from your mother to each of your accounts; sell $2000 worth and go wild but put the rest into a self-directed IRA. If you spend the entire thing, it won't be life-changing; it will just support whatever it is you are doing now. Of course, if you are already a saver/investor/long-term planner....

[disneysteve]

GrimJack - You can purchase stock in your IRA but I don't believe you can put existing stock into an IRA. I think only cash can be deposited into an IRA, so you would technically have to sell the stock and then use the proceeds to open the IRA and then rebuy the stock if you wanted it in your IRA.

[LuxLiving]

After he had passed away, we found out that when my mother in law passed away first that my father in law did very little about checking w/the 'powers that be' what he should be doing about reporting things. I would think if this man doesn't like taking care of business that the stocks probably weren't held in hand but've been having all the dividends, capital gains automatically reinvested.

Either that or he's just been depositing them somehow into possibly a joint account that still has her name on it.

Sounds to me as if there is much catch-up paperwork that needs to be done.

[GrimJack]

Originally Posted by disneysteve

GrimJack - You can purchase stock in your IRA but I don't believe you can put existing stock into an IRA. I think only cash can be deposited into an IRA, so you would technically have to sell the stock and then use the proceeds to open the IRA and then rebuy the stock if you wanted it in your IRA.

That was just me leaving steps out. I wanted to make sure that they got into a 'discount' house where it would cost the least per transaction (the wrong broker can cost $2-300 per transaction). Once it is in a discount brokerage account, then the rest is easy; but you are correct, except for account to account transfers, only cash can be put into IRAs

[soninokla]

Originally Posted by disneysteve

How can the stock still be in your mother's name if she died 10 years ago? I'm guessing that AT&T pays a dividend. How has that been handled all these years? Who is cashing the checks and how has that income been reported for tax purposes?

I think there is some information missing here. I know that when my father died, my mother had to have his name removed from all of the joint accounts and put in her name only. Didn't the same thing happen when your mother died?

My father has been depositing the dividend checks at his bank, amazingly enough or so he tells me. I would have to look at his tax returns to see how it's been reported.

[soninokla]

Originally Posted by LuxLiving

After he had passed away, we found out that when my mother in law passed away first that my father in law did very little about checking w/the 'powers that be' what he should be doing about reporting things. I would think if this man doesn't like taking care of business that the stocks probably weren't held in hand but've been having all the dividends, capital gains automatically reinvested.

Either that or he's just been depositing them somehow into possibly a joint account that still has her name on it.

Sounds to me as if there is much catch-up paperwork that needs to be done.

It's taken some detective work on my part to figure this all out. There are 144 shares of AT&T held in hand (found those in an old shoe box) and 144 shares on the books. Plus on the books another 2 shares of AT&T, 22 shares of Comcast, an unknown number of LSI shares. There might be some Lucent, SBC Communications, and NCR somewhere. Still working on those.

As far as I can tell my father has been depositing the dividend checks into his checking account that does not have my mother's name on it. He has an accountant do his taxes. I've got a copy of his tax returns I can look at to see how it's been reported.

[disneysteve]

Originally Posted by soninokla

As far as I can tell my father has been depositing the dividend checks into his checking account that does not have my mother's name on it. He has an accountant do his taxes. I've got a copy of his tax returns I can look at to see how it's been reported.

Let us know. Seems like the accountant should have advised him how to deal with these holdings long ago.

[soninokla]

Originally Posted by GrimJack

I am going to guess that the stock was laying around the house or in a safe deposit box and was missed by the executer.

There was nothing that went through probate when my mother passed away. These stocks were the only thing that was in her name only.

[soninokla]

Originally Posted by LuxLiving

I would think your father would have to put the stock into his own name first before it could be distributed to you and your sibling.

That is my question at the moment. Thank you LuxLiving. So we do need to get the stocks in my father's name first? He can't transfer them directly to me and my sister as he wants to do?

After my mother passed away in 1998 I started working on getting these stocks transferred to my father's name but it was something he never wanted to follow through with. So now starting over.

[LuxLiving]

I'm no expert so I wouldn't want to tell you the wrong thing. That's why I advised getting your Dad and all the paperwork to a pro.

Maybe someone else here w/more experience could chime in.

[soninokla]

I checked with my dad's tax person today. She said to go ahead and get the stocks transferred from my mom's name to me and my sister's names. So looks likes it's a go if I can get all the paperwork done. Thank you to everyone for their input.

[disneysteve]

Originally Posted by soninokla

I checked with my dad's tax person today. She said to go ahead and get the stocks transferred from my mom's name to me and my sister's names. So looks likes it's a go if I can get all the paperwork done. Thank you to everyone for their input.

Did she say what your tax basis would be?

[soninokla]

Originally Posted by disneysteve

Did she say what your tax basis would be?

Thank you disneysteve for your replies. She said it's based on the value of the stocks at the time of my mother's death in 1998. From what I can tell the AT&T stocks are worth just a little less now.

Yesterday in the old shoebox with the AT&T stock certificates that were purchased in 1962 I found some Lucent and Southwestern Bell stock certificates. I think these came from splits/spinoffs. I went to the AT&T investor site and got a complete list of splits/spinoffs so will try to figure that all out today.

I'm beginning to realize the reason my father never wanted to mess with these stocks is because he's 82 and always saw the stock market as "funny money" and not a real asset.

[soninokla]

Just replying so I can put email notification on this thread. Thank you everyone for your assistance. I tried going through the list of AT&T stock splits/spinoffs to compare to the stocks I've tracked down and it didn't match, not even close. So I'm in way over my head so going to pay my dad's accountant to figure it all out. Thanks again.

[BigRule]

Hello,

I have to say, I am totally blown away after reading your thread. I am dealing with the EXACT same situation. My grandfather passed away and my grandmother is not doing well. The crazy thing is he owns the SAME stocks you do partly from the split offs/mergers, etc.

I am curious to know how everything turned out for you. Any details you could give would be greatly appreciated. I recently found out my grandfather has approx. 1500 shares in AT&T and my grandmother was completely unaware of this as dividends have been reinvested automatically. Either that or she wasn't aware of the actual balance of the portfolio. I am meeting with a lawyer this week to try to do my best to straighten out the estate since the farm has been in our family for over 100 years.