Ask Terry Questions Grocery store stock worth millions! Sell??

Grocery store stock worth millions! Sell??

By Terry Savage on August 14, 2017 | Wild Card

My late father in law invested heavily in Publix, a private grocery store. (It used to be open to parents and siblings of Publix employees.) The stock has grown into many millions of dollars, and that's the good news. He left his estate to his wife who is now 93 years old and in fair health. My husband and his sister are the executors of the estate and their mom is unable to make any financial decisions. There is a few million dollars in the estate in dividends, but 95% of the estate is in Publix stock. My husband wants to diversify the portfolio as it's been really rough for grocers this year. The sister, a lovely but financially clueless woman, thinks Publix is the best thing ever and refuses to diversify. The stock is down 20% over the past year and the outlook for grocers is not good. The sister in law says that a financial planner told her friend, who is also heavily invested in Publix, to keep the stock and NEVER sell it. I don't believe any financial planner would say such a thing as diversification is a simple concept. My husband doesn't want to start a family feud, but he hates to see the estate tumble during a bull market. Any advice?

Terry Says

Oh, NO NO NO!  This is not about the value of the stock -- it's about the TAX consequences!  When your mother dies, the stock will be valued at a cost basis as of the date of her death!  That means you could sell part or all the next day, paying NO capital gains taxes!!  That's the way the current estate tax law works -- assets are valued at the date of death, regardless of initial cost of the asset.  So hang on to the stock until your mother dies and it goes through probate (if the shares are not in the name of her Revocable |Living Trust).   You don't need a stock advisor here, but you should consult a good estate planning attorney before it's too late to make sure that all is in order.



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