When a loved one passes away and leaves you a stock portfolio, the headaches begin. Sure, it’s nice to inherit money, but how best to sell the stocks? There definitely are some hurdles to jump. First, there are some taxes you’ll need to track and should understand before pressing the “sell” button. Second, if you decide to keep some shares, you'll want some method to help you decide which stock to sell first. Knowing the basics before trying to sell inherited stocks can save you time and, possibly, money.
Open a brokerage account in your name. Shares of inherited stock should be moved from the deceased’s account to your own. This will require you to work with the executor of the estate to secure a certified copy of the court appointment of an estate representative dated within 60 days of the transfer and an Affidavit of Domicile for the deceased shareholder that has been notarized. You’ll need to complete some transfer forms with your broker that may need to be Medallion Signature Guaranteed, which is a guarantee provided by certain banks that a signature is genuine; the bank giving the guarantee also assumes financial responsibility.
Determine your goals. An investment oversight group, the Financial Industry Regulatory Authority (FINRA), recommends writing down your wishes. This will help you decide more easily which investments to sell first because some may clearly not help you meet your goal while others may be perfect for you and should be held for your long-range plans.
Verify your cost basis. Unfortunately, if you inherited shares in a non-IRA account, you may owe capital gains taxes when you sell, so it’s better to know what the pain will be ahead of time. If your name was on the account before you inherited shares, your cost basis will be the price originally paid for the stock. If your name was not on the account, your cost will be the price of the shares the day the original owner died. The Marketwatch Bigcharts website has a historical price feature that is useful for looking up past share prices.
Find the company’s ticker symbol. This is a one- to five-letter code that identifies each company when you trade. If you’re using an online broker, use your brokerage site. Look for the ticker symbol search feature and type the name of the company in the search box. If you’re trading through a broker, they may find the ticker symbol for you or you may choose to use Yahoo! Finance, ETrade Clearstation, MSNMoney or another site’s ticker symbol search.
Sell the stock. Now that you know the capital gain and have prioritized your trades, it’s time to trade. If you’re working with a broker, give the broker the name of the company, ticker symbol and number of shares you wish to trade. If working alone online, enter your brokerage account and click “sell,” type the ticker symbol and number of shares you’re selling as indicated, and confirm your trade. Your broker will send you a confirmation of the trade. Keep this for your records until your statement arrives and you’ve verified that it matches your trade correctly.
As a former financial advisor to companies and individuals for 16 years, Joe Andrews knows financial planning and marketing from start-ups to personal budgets. He also writes on motor racing, board games and travel. Andrews received his B.A. from Michigan State University in English. He is currently working on a young adult novel.