2 years later, ready to deal with inherited account

[pacergal]

Looking for some insight. Brokerage account is currently 30 individual dividend paying stocks and about 5 mutual funds. Dividends the past 2 years have been about $8-9,000. First year, FA fees took most of that back. Last year we changed to fee only and have done nothing, so no fees, and dividends are going into MM account.. Also have very small inherited IRA. Total account is mid six figures, with 80% in the stocks.

Would like a moderately conservative account that is easy to maintain on my own. Looking at Vanguard Balanced Fund (VBIAX), Wellesly (VWINX) and/or Wellington (VWELX).

FIRECALC has 100% success with our pensions and retirement accounts. Our Def comp accounts are approx 50/50 for DH and 60/40 for me, and last year they added Vanguard, so I have been moving to funds available in the program. We both retired within the last 8 months and are budgeting only pension funds for now. SS will be added in the future and would be more than enough for everything, probably would not even need much from DC then. Pensions have COLA and 100% survivor. I was a serious saver and now a bit nervous to spend, even though we have several fun trips scheduled!

I never planned on inherited account when building our assets.
We are in 25% fed and 9.9% state tax rate.

We hope the inherited account to be used for gifting and inheritance to kids/grandkids and as backup if SHTF.

So, questions: Your thoughts on those funds? Do I just transfer all at once and pay taxes and FA fees as needed or space it out? According to last months statement, only a few of the stocks are currently lower in value from original cost basis.

I have no idea of tax consequences, or how to figure that out. I guess our FA would be the best place, but each time I have approached the subject, I get "I would hate to have you sell those dividend producing stocks" This is the same FA my folks used.
I know I am opening the door wide open to opinions.......

 

[GrayHare]

IMO paying CG tax merely to simplify the account's holdings is not wise. Did the brokerage reset the cost basis of the holdings to the date of death? If not, ask them to do that so you can more easily know how much the holdings have gained and how much CG tax you'll be paying.

 

[pb4uski]

A married couple filing jointly in 2017 could have as much as $96,700 of income and pay 0% on qualified dividends and long-term capital gains (assuming the standard deduction, it wcould be more if they itemize)... so if you plan things right you may be able to reposition some of those stocks with no tax consequences at all.

I would suggest that you do a pro forma 2017 return calculation assuming no stock sales and see how much room you have for gains in the 15% tax bracket (up to $75,900 of taxable income). Also, see what your unrealized gains are on each position and in total. depending on what these numbers are, you may be able to reposition over time with no tax consequences at all depending on how much your pension and other income sources are.

You FA is not the place to go for this. If you have a CPA then that would be a good place... however the best thing wou be to learn it for yourself and do it yourself. We can help.

 

[kgtest]

A married couple filing jointly in 2017 could have as much as $96,700 of income and pay 0% on qualified dividends and long-term capital gains (assuming the standard deduction, it wcould be more if they itemize)... so if you plan things right you may be able to reposition some of those stocks with no tax consequences at all.

I would suggest that you do a pro forma 2017 return calculation assuming no stock sales and see how much room you have for gains in the 15% tax bracket (up to $75,900 of taxable income). Also, see what your unrealized gains are on each position and in total. depending on what these numbers are, you may be able to reposition over time with no tax consequences at all depending on how much your pension and other income sources are.

You FA is not the place to go for this. If you have a CPA then that would be a good place... however the best thing wou be to learn it for yourself and do it yourself. We can help.

Nailed it. Solid advice.

 

[gcgang]

I don't understand your comment about FA expenses. You said you switched to fee only, so there were no fees(?!). Do you mean you discontinued the fee arrangement and only pay commissions on trades, and as you had no trades there were no FA expenses?

If the stocks are well diversified, and produce growing income, or whatever your objective is, why would you sell, potentially paying tax on gains and then having to pay some sort of management fee on your subsequent investment?

of course, if you want simplicity, selling everything and putting into the fund(s) you mention, after becoming aware of your tax consequences, is probably worth the cost for you.

 

[pacergal]

IMO paying CG tax merely to simplify the account's holdings is not wise. Did the brokerage reset the cost basis of the holdings to the date of death? If not, ask them to do that so you can more easily know how much the holdings have gained and how much CG tax you'll be paying.

Yes, the brokerage did reset the cost basis. thank you

 

[pacergal]

A married couple filing jointly in 2017 could have as much as $96,700 of income and pay 0% on qualified dividends and long-term capital gains (assuming the standard deduction, it wcould be more if they itemize)... so if you plan things right you may be able to reposition some of those stocks with no tax consequences at all.

I would suggest that you do a pro forma 2017 return calculation assuming no stock sales and see how much room you have for gains in the 15% tax bracket (up to $75,900 of taxable income). Also, see what your unrealized gains are on each position and in total. depending on what these numbers are, you may be able to reposition over time with no tax consequences at all depending on how much your pension and other income sources are.

You FA is not the place to go for this. If you have a CPA then that would be a good place... however the best thing wou be to learn it for yourself and do it yourself. We can help.

We are in the 25% bracket. I have not done our taxes for the past several years. The FA has done it for us the past 2 years, just for ease of transition after Dad died. I can begin to gather information and give it a try. I appreciate the offers to help.
thank you

 

[pacergal]

I don't understand your comment about FA expenses. You said you switched to fee only, so there were no fees(?!). Do you mean you discontinued the fee arrangement and only pay commissions on trades, and as you had no trades there were no FA expenses?

If the stocks are well diversified, and produce growing income, or whatever your objective is, why would you sell, potentially paying tax on gains and then having to pay some sort of management fee on your subsequent investment?

of course, if you want simplicity, selling everything and putting into the fund(s) you mention, after becoming aware of your tax consequences, is probably worth the cost for you.

Yes, we changed to only pay commission on trades. Simplicity is what I am aiming for, and to separate from FA to handle the account myself. Does that make sense? But again, trying to figure out the best route and least costly.
I have learned so much here and through reading recommended books these past two years, but am still on a learning curve