As I think I’ve mentioned before, most of my mom’s assets (other than her house) were held in the form of stock and the dividends from her stock comprised a substantial part of her income. The implication of that for me is that, in order for me to pay the estate’s debts, I’ll need to sell some stock. Now for the first time in my life I’m checking the ups and downs of the values of my mom’s stock.
As I also think I’ve mentioned before my mom must have been terrified by the events of the last couple of years. Most of her stocks dropped to a fraction of their previous values early in 2009.
Fortunately, they’ve recovered quite a bit of their value since then and timing can make a substantial difference in how much is realized from the sale.
And then there’s the capital gains. I recognize that the trust will probably need to pay capital gains on the proceeds of the sale of the stock. Fortunately, there are probably enough expenses to prevent us from having to pay much in the way of taxes.
While I’m having my mom’s regular tax preparer produce her final 1040 (somewhat to my misgivings), I still may need to file returns for her estate and for her trust. Since under the terms of my mom’s will all of her property that hadn’t already been transferred to her trust was to be transferred at the time of her death, I shouldn’t need to file a return for the estate.
That leaves the trust. It’s unclear to me if the trust is actually required to file for 2009. There’s some ambiguity over whether it had enough gross income to require filing ($600). It should have had enough income but (without going into it in painful detail) there were some screw-ups (not mine) which may have resulted in its income having been less than that.
I’m not enjoying these chores but I view the organization of Mother’s estate, the prudent handling of the trust’s assets and paperwork, and the equitable distribution of the assets of the trust as my final gift to my mother and an act of kindness to my sisters. As I also think I’ve mentioned before, it’s a task for which I’ve been preparing all of my life.
You seem to be a sweet man, Mr. Schuler. Your mother did good work.
Dave,
My mother had stock when she died as well. We learned that the basis resets to the value of the stock to the date of death, not whenever it was purchased, for capital gains. So the estate will only have to pay taxes on any increase in value from the date of your Mother’s death to the date of sale. It’s been a few year now, though, so obviously check with your accountant since I think the tax code regarding estates changed recently.
The stock has gone up since my mom died four months ago. It’s the capital gains since then that I’m referring to.
Good job! what a pain though. blame too much govt?