When you inherit stocks, bonds, or mutual funds, you will not owe taxes on these assets, unless the value of the asset is over $5.45 million. Even if it is above this amount, the estate will pay the tax bill, not the heirs. There is the chance, however, that you might have to pay capital gains taxes if the asset’s value increases by selling time. You can combat some of this tax burden by strategically selling. One way is to sell the appreciated assets over time, reducing the substantial one-time capital gains tax bill. Additionally, you can plan to sell in a year where your income is not as high, further lowering your tax bracket and tax hit.
See Alexandra Mondalek, I Inherited Stocks. How Can I Reduce the Taxes I Owe?, Money Magazine, October 4, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.
