Inheritance

Q&A: Friends don’t ask friends for condos

August 11, 2025 By Liz Weston Leave a Comment

Dear Liz: I have a younger friend who has asked me to leave them a condo I own. I would prefer the condo remain in my daughter’s name, and designate that the income from the condo go to my friend after my death. Is there a way to do this?

Answer: Your friend just handed you a massive red flag. Please heed this warning that they may not be trustworthy.

Generally speaking, people shouldn’t be asking for bequests for themselves. That’s especially true when the request is unsolicited — in other words, if you didn’t open the door by requesting what they might want from your estate.

Someone who feels comfortable enough to ask for a handout after your death may have no compunction about helping themselves to your money while you’re still alive. Financial elder abuse is a huge problem, and the perpetrators are often people the victim knows such as friends, family and caregivers.

Please tell your daughter about this request, and consider going together to an estate planning attorney. The attorney can make sure your estate plan is in order and discuss ways you can protect yourself from schemers and fraudsters.

Q&A: When money disappears from a mother’s estate

April 28, 2025 By Liz Weston

Dear Liz: My mother recently passed and my sister is handling all the legalities. At one point, my sister mentioned our mother had a sizable savings account plus two retirement accounts valued at $400,000, and that I would receive something. Now she is simply saying, “I don’t know where the money has gone.” She handled all my mother’s finances for years before her death. How is this possible? I can’t hire an attorney, nor do I want to alienate my sister or seem greedy. What should I do?

Answer: If your sister handled your mother’s finances for years and she’s settling the estate, then she almost certainly knows where the money went. Why she won’t tell you is the mystery.

Your mother’s money may have been eaten up by long-term care expenses, which can be breathtakingly expensive. That’s especially true if there was a long gap between your sister’s disclosure about the accounts and your mother’s death.

If that were the case, though, your sister could just say so.

There are many other possibilities. Your mother could have been scammed, or gambled away the money, or been the victim of financial elder abuse. Abusers are often people the elders know, including relatives and caregivers.

Perhaps your sister didn’t help herself during your mother’s lifetime, but arranged to be the beneficiary of all the accounts, either with or without your mother’s consent.

You don’t have many options if you aren’t willing or able to consult an attorney, but you wouldn’t be greedy to ask for some clarity from your sister.

Inheriting stocks after a parent’s death resets the cost basis

November 27, 2024 By Liz Weston

Dear Liz: I am a beneficiary of my father’s brokerage account. Upon his death, the brokerage company closed his account and transferred all of the equities to me in a new account. How will I know the cost basis for capital gains purposes when I sell the stocks?

Answer: You will use the value of the stocks on the day of your father’s death as the new tax basis. This is known as a “step up” in basis, since typically the fair market value at death is higher than the original basis, or what your dad paid for the stocks. Any appreciation that occurred during his lifetime won’t be taxed, but you would be subject to capital gains tax on any appreciation that occurs after that date.

Q&A: He’s held stocks for decades. Should he sell before he dies?

August 12, 2024 By Liz Weston

Dear Liz: My father-in-law, age 100, has more than $1 million in stocks and bonds purchased in the 1980s and 1990s. With the stock market so high, I have suggested that he might want to sell the investments, take the tax hit and consolidate into short-term certificates of deposit or similar. This would make it easier for his family to manage (in trust) upon his death. Does this make sense or do we leave it alone?

Answer: Selling now means your father-in-law would have to pay a substantial and perhaps unnecessary tax bill on the gains he’s incurred over the years. If he instead leaves those assets to his heirs at his death, most likely no tax would be owed on the gains.

There are some exceptions, such as if the investments are held in retirement accounts or an irrevocable trust. But investments held in revocable trusts, such as living trusts, should qualify for the favorable step-up in basis that would eliminate the taxable capital gain at his death.

Yes, there’s always a risk that the markets could drop — but they would have to drop pretty far to wipe out all his gains, assuming he’s got a reasonably diversified portfolio. A fee-only, fiduciary financial planner could review the portfolio and offer recommendations about any changes that might be needed, while a tax pro could discuss potential strategies for minimizing the tax bill.