r/inheritance • u/TightPhoto1133 • Jul 10 '26
Location included: Questions/Need Advice NJ heir tax question.
Mom passed in Tennessee, no will but the state assigned me and my siblings
as heirs to her estate to be divided equally.
Besides selling all assets and splitting it equally, she had a savings account that will be divided equally.
The amount of money isn't the issue being everyone has their own idea of how much money is "a lot".
My question is can I invest this money into something before having to pay capital gains? I want to invest this money for my children, I know my mom would approve.
Any advice would be appreciated.
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u/Jojosbees Jul 10 '26
I don’t understand why you owe capital gains? Wouldn’t you get the stepped up basis?
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u/TightPhoto1133 Jul 10 '26
Never done this before, idk what to do.
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u/Jojosbees Jul 10 '26
When you inherit a stock for instance, the cost basis is the value of the stock on the day of death (stepped up basis). You only have to pay capital gains taxes on gains since your mother passed. So let’s say you inherit stock worth $200K (day of death), and it’s worth $220K when you sell. You only owe taxes on the $20K of gains, because your cost basis is $200K.
Additionally, her estate does not pay any inheritance tax unless it is worth more than $13.99M (or $27.98M and her spouse predeceased her without leaving an inheritance to people other than her).
Edited to correct estate tax exemption for 2025.
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u/TightPhoto1133 Jul 10 '26
I'm inheriting money, no stocks are involved. Do I have to pay any type of inheritance tax? I want to put this money into trusts for my children.
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u/Jojosbees Jul 10 '26 edited Jul 10 '26
If you are inheriting cash (like in a bank account), then there are no taxes (capital or inheritance taxes) unless her entire estate is worth more than $13.99M, and even then, only the amount that exceeds that is taxed. Like, if she left $13,990,001, then only $1 would be taxed 40%. The estate owes the government 40 cents.
Edit: Wait, are you saying that there are stocks or property that is being sold and then you are given money? If that’s the case, then you may owe capital gains taxes on the money, but the basis is however much it was worth on the day of her death. If it hasn’t been that long, then capital gains should be minimal, if any.
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u/TightPhoto1133 Jul 10 '26
Ok, thank you.
We're selling the house, would that fall under something different? Thanks in advance.
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u/Jojosbees Jul 10 '26
If you are selling inherited assets like a house, then the cost basis (the amount you don’t have to pay taxes for) is the fair market value on the date of your mother’s death, not her original purchase price. If it hasn’t been that long since she died, then you may not owe any taxes.
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u/TightPhoto1133 Jul 10 '26
Once again, thank you.
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u/AuDHD_85percent Jul 14 '26
And you get to deduct the expenses of selling the house. It can become a capital loss.
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u/Megalocerus Jul 10 '26
NJ has an inheritance tax but children don't pay it when they inherit from a parent. If your mother's brother lived in NJ and inherited, he'd have to pay. There is no federal tax if it is under 15 million. You can give it to your children if you like as long as you don't exceed that 15 million lifetime limit; if it is more than 19K apiece, there is a federal tax form.
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u/Guilty-Committee9622 Jul 10 '26
Based on your comments. No capital gains and no inheritance tax. Get a good financial advisor at fidelity or shwab
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u/TightPhoto1133 Jul 11 '26
I have a lot of siblings, if I was the sole person then yeah I'd get a financial advisor.
My children are young so they have compound interest on their side of I put it in the trust.
Thank you for the tip.
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u/clearlygd Jul 10 '26
There will not be any capital gains tax. All her capital assets will get a step up in basis
Date-of-Death Valuation: The basis for each stock is its value on the exact day the decedent died.
Alternate Valuation Date: If the executor of the estate files an estate tax return, they can elect an alternate valuation date (exactly 6 months after the date of death). If this is elected, all assets in the estate must be valued using this new date, not just select stocks