Dividing an estate doesn’t need to trigger taxes. Don’t try to be the financial advisor of each beneficiary when you divvy the estate. Afterward, each beneficiary can decide on financial and tax moves based on individual circumstances.
For example, let‘s say, Jim, Susan, and David become heirs of a taxable account of stocks, bonds, and mutual funds. The account includes:
• 351.362 shares of XYZ mutual fund at $36.34 per share, worth about $12,768.49
• 2,000 shares of ABC stock at $100 a share, worth about $200,000 (this holding comprises two trade lots of 1,000 shares each and each trade lot has a different cost basis or original price)
• $85,000 face value of CorpCorp bond at $97 par value, about $82,450 (traded in $5,000 face value units)
• $100,000 face value of MuniMuni bond at $102 par value, about $102,000 (also traded in $5,000 face value units) • $5,236.45 in cash
The total account value is $402,454.94, making each heir’s share $134,151.64 with two pennies left over.