Mackenzie Richards, CFP®, CPWA®’s Post

Usually when somebody inherits an investment account, the investments transfer to the inheritor “in kind," meaning the investments just show up in the new account exactly as they were in the decedent’s account, not as cash. Exactly as they were with one exception. There was what we call a “step up in cost basis.”* This eliminates any tax argument for holding onto the investments that Mom had in her account. Now, with no tax argument for holding onto these investments, why do you still have them? Your mothers financial situation, I'm guessing, was very different from your own. Would you hold onto her dentures or her walker? No? Why? That's right, because you don't need them. Just like you don’t need exactly what somebody else was invested in. So, what should you do instead? Hopefully you already have another investment account that's invested appropriately for your needs. If that’s the case, why not just add it to those existing investments? But maybe you should just pay off your mortgage. Or set up a college fund for your kids/grandkids. Maybe buy a boat! If you’re worried about making the wrong decision, consider making the relatively modest investment in having a financial plan created. Understanding the consequences of choosing any of the above options will help you move forward in confidence with your decision. *Double check that the step up in basis actually happened before you do anything! It’s not uncommon for this important step to be overlooked. It’s not “unfixable” but will save you a headache if you catch this before selling anything. #wealthmanagement #personalfinance #investing #boating