How do I manage the money from cashed out stocks that I inherited?

 

My mother passed away and I am sole beneficiary and executor. She owned stocks which I have put in my name with her name listed as deceased. I cashed out some that I needed to pay bills. Do I need to deposit the check into her estate account to avoid taxes?

 Co-Published on Investopedia

Co-Published on Investopedia

I'm sorry to hear about your mother. For the stocks, you fortunately shouldn't have any taxes due. The stocks were already 'taxed' when estate taxes were assessed on the value of the stock when you filed the estate tax return following her death, even if no estate tax was due. As a result, there should be no taxes due on the value of the property unless the stocks have appreciated in value between when she died and when you sold the stock.

And even if taxes are due, the amount is likely minimal. Say the stocks were worth $50,000 on the date of her death, and you sold them for $53,000. You would only owe capital gains taxes on $3,000 ($53k - $50k). This is true regardless of where you deposit the check.

The one caveat is if your mother's estate hasn't completed probate, then you must deposit the check into her estate account as you technically don't legally own the money yet.  Similarly, if your mother's assets were in a trust, the trust document would determine if you had to deposit the check in the estate account. If you have an attorney for the estate, ask them for advice before doing any other moves. Even though you are the only beneficiary and the executor, there still might be some legal red tape you have to go through.


Joshua Escalante Troesh is the President of Purposeful Strategic Partners and a tenured professor of Business at El Camino College. To explore working with him on your personal financial planning and investment advising needs, simply schedule a free Discover Meeting.


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