What to do with inherited stocks
I AM TO OBTAIN AN INHERITANCE FROM MY FATHER THAT RECENTLY PASSED. SOME WILL BE CASH AND MOST OF IT WILL BE STOCKS. WHICH I CAN EITHER JUST CASH OUT OR KEEP WHERE ITS AT, CURRENTLY ITS IN A MORGAN STANLEY ACCOUNT. I WOULD SAY THERES MAYBE CLOSE TO 200K OR LESS. I AM A MOTHER OF 5 KIDS AND I WANT TO MAKE THE RIGHT MOVE HERE. MY OTHER TWO SIBLINGS ARENT MUCH HELP WITH GUIDING ME IN THE RIGHT DIRECTION FOR THEY WILL HAVE TO MAKE THE SAME DECISION AS ME. SHOULD I JUST CASH OUT? INVEST ? I AM NOT GOOD WITH MONEY I TEND TO SPEND ABOVE MY MEANS , BUT I KNOW I WANT TO USE THIS INHERITANCE AS AN OPPORTUNITY TO MAKE MORE MONEY AND OR TO USE IT FOR THE FUTURE OR EVEN FOR MY RETIREMENT. I AM ONLY 28 , LIVE WITH MY FIANCE, WE OWN A HOME , AND HAVE 5 KIDS. I AM NOT WORKING I AM A STAY AT HOME MOM BUT I WILL NOT BE FOREVER I DO PLAN TO GO BACK TO SCHOOL AND WORK TO FURTHER MY CAREER . I JUST NEED TO MAKE A SMART MOVE AND DONT KNOW WHERE TO BEGIN HERE. PLEASE HELP IN ANYWAY YOU CAN. THANKS SO MUCH.
Terry Says
OK, this is a once-in-a-lifetime opportunity -- and you want to make the most of your father's diligent saving. That's a great way to honor his memory. I don't know whether each of you will inherit $200,000 -- or whether you are splitting it three ways, but here are a few legal things to keep in mind. First, I'm assuming this money is NOT inside an IRA -- because that advice would be completely different. (If it were in an IRA, then you should have the "inherited IRA" divided into three accounts, one for each of you. Keep the money growing inside the IRA tax-deferred for many years. DO NOT take it out for any reason! ) But assuming it is NOT in an IRA, you have a great tax benefit: No matter what your father paid for the stocks, the new "cost basis" for tax purposes is the value of the stocks on the date of his death. Your broker at Morgan Stanley should immediately give you that valuation. If you sell in the future, you will only pay taxes (capital gains taxes) on any gains above that value at date of death. I am going to guess that it would be easiest to sell the stocks and divide the money into three parts and distribute it -- again assuming it is not in an IRA. You sound like an amazing young woman to have five children at age 28 and still be considering a career. Be aware that you should keep this inheritance separate from your joint accounts with your fiancé. An inheritance is always separate property-- as long as you do not "commingle" the funds. And every woman should have her own money. Also, let me say that there is nothing wrong with taking your share of the money and just putting it in a separate bank account -- out of reach of temptation to spend it. The ONLY exception I would make in terms of putting this money aside is to pay down any credit card debt that is in YOUR NAME. You are likely paying 18% or more in interest, so it makes sense to get out from under -- and put the card away for true emergencies! This advice should get your off to a good start. Please write back when you get the money and I'll point you in a more specific direction.
