• 19
  • May
    2011

If you are holding some inherited assets, or if you are making an estate plan for your heirs and you want to give them some advice about handling assets they are likely to inherit, it is a good time to examine those assets and decide if there are advantages to selling them in the near future.

Many people who inherit assets hang onto them longer than they should, because of emotional attachment to the asset, to the person it was inherited from, or because they are unfamiliar with the type of asset and are unsure what to do with it.

One of the first questions you should ask yourself is whether the stocks and funds inherited are ones that you would buy now at market prices? That will give you an idea of whether these assets are a good fit with the rest of your financial portfolio.

This is one of the rare times when an heir can rebalance their financial portfolio without paying taxes. Normally, when you sell an asset at a gain you owe capital gains taxes on the profit. But with inherited assets, you can take what is called a "step-up in basis." This means the value of the asset for tax purposes is reset on the day you received it. So if you sell, you only owe capital gains that have accrued since you inherited the asset, not the gains that grew over the years before you acquired it.

Florida estate planning attorneys advise many people, based on their individual situation, to sell assets that they are inheriting. There is currently an opportunity to liquidate inherited assets virtually tax free and rebuild a new portfolio that matches your own goals.

Capital gains tax rates may go up in the future. Many people believe that this is a good time to sell inherited assets.

Source: Fox Business "Inheritance, Taxes and Portfolio Rebalancing: How to Get it Right" 5/18/2011