Investments — Cost of ATT stock
I currently have some ATT, Verizon, & Warner stocks which originated in shares of ATT from 1978, before the breakup. I’m debating whether to bring them into my Fidelity brokerage account to make them easier for my children to sell when I die. I’m trying to minimize the number of companies my children will have to deal with at that time. Do you think that’s a good idea? I’m not sure I will have to pay an AUM to Fidelity. Or should I leave them as they are?
Many thanks for your help!
Terry Says
OK, before giving specific advice, I need to make sure you understand a key point.
If you sell the shares before you die, then you will have to pay capital gains taxes based on your current tax rate and your cost basis.
It is easy to figure that out — just go to the Shareholder section of the ATT website that explains the process. Click on this link: https://investors.att.com/stockholder-services/cost-basis-guide/calculate
BUT, if you die owning the shares, then under current law there is NO capital gains tax. Your heirs get the “step-up basis” — the value of the shares at the time of your death. So you should leave instructions along with the specific name and amount of the shares, and they will easily be able to find the current price. If they, for some reason, keep the shares then when they eventually sell their cost basis will be the value on the date of your death.
Now, to the specifics of your question. I’m assuming you have paper certificates. I would advise just keeping the certificates — and making sure you have written instructions about where they are stored safely. Yes, it will be a bit more complicated for your heirs to deal with — but you won’t run into any issues about cost basis, if you decide to sell before your death.
Oh, and remember that if you have a substantial capital gain when you sell (assuming you sell when you are alive) it will be added to your taxable income that year — and could result in higher Medicare Part B and D premiums (the IRMAA adjustment). That’s another reason to hang on to them until your passing — unless you really need the money.
