Stock Basis Inherited Fom Husband

[TonyP]

I have a client, a widow, who sold stock in 2009. The stock was acquired between 1980-1998 by her husband an held in his name. He died in 2004, all assets transferred to the spouse. No estate tax return was filed since all assets went to the spouse per his will. Does she receive a stepped-up basis for the stock, valued at the date of death, or does she used the valuation that her husband had when purchasing the securities?

[Kea]

Did they live in a community property state?

Were the stocks purchased before they were married?

[RoyDaleOne]

You should get a stepped basis of some nature 50% or 100% or something.

[michaelmars]

you get a 100% step to mkt value on date of death-not sure about community prop states but i think you still get 50% step up.

[jainen]

>>Stock Basis Inherited Fom Husband<<

It depends on what you mean by "inherited." I would guess it gets a step-up, but when marital assets are held as separate property it is not always simple.

You don't help us understand when you say, "No estate tax return was filed since all assets went to the spouse per his will." There is no spousal exemption for estate tax, so do you mean she had already received it as a gift, perhaps acknowledged by the will? Do you mean no PROBATE was filed, perhaps because the assets were actually in a trust?

[TonyP]

Florida is not a community property State. Florida is an "equitable distribution" state. Each spouse can retain their non-marital property. Married couples can hold real and some personal property as Tenants By The Entirety (TBE), meaning the property is equally owned by both. Upon death of one spouse all TBE property becomes reverts to the surviving spouse and is not subject to probate procedure.

Then, can the widow receive a stepped-up basis? the stock was purchased soley by her husband and held in his name til death in 2004 when it was transfered to her name.

[TonyP]

Florida is not a community property State. Florida is an "equitable distribution" state. Each spouse can retain their non-marital property. Married couples can hold real and some personal property as Tenants By The Entirety (TBE), meaning the property is equally owned by both. Upon death of one spouse all TBE property becomes reverts to the surviving spouse and is not subject to probate procedure.

Then, can the widow receive a stepped-up basis? the stock was purchased soley by her husband and held in his name til death in 2004 when it was transfered to her name.

OOPs, I'm sorry, the widow moved to Florida this year (2010); she and her deceased husband lived in Michigan (I believe a common-law State) until the widow moved to Florida in February of this year.

[RDennis]

The list of community property states is as follows:California, Arizona, New Mexico, Texas, Washington, Idaho, Louisiana, Nevada and Wisconsin.

Dennis

[Maribeth]

The list of community property states is as follows:California, Arizona, New Mexico, Texas, Washington, Idaho, Louisiana, Nevada and Wisconsin.

Dennis

Louis Can't Win. (+ Wisconsin)

Louisiana California Arizona Nevada Texas Washington Idaho New Mexico.

Had to add the "plus Wisconsin" because Wisconsin came late to the party and I haven't heard if anyone has figured out a new memory jogger.

Maribeth

[Lion EA]

Wow! I'm impressed, Maribeth. B)

[jainen]

>>if anyone has figured out a new memory jogger<<

I'll ask 'a. Our 49th state also has some community property laws, although it is not generally considered a community property state.

[michaelmars]

isnt' that socialism, everything is community property?

[Maribeth]

Wow! I'm impressed, Maribeth.

I would love to take the credit for it but I did not come up with it. It is something I learned when I started in public accounting, way back in the dark ages. It has always helped me keep track of the community property states. Then Wisconsin came along and muddled things up a bit!

Maribeth

[RoyDaleOne]

100% stepped basis is the answer.