When you inherit assets from another person, be they securities or cash, you will usually wish to place a value on the asset. When you inherit stocks, you may make the mistake of believing that the value of the asset is equivalent to the price of the stocks multiplied by the number of stocks you own. In fact, you must take into account several additional variables.
When you receive an inheritance, it is equivalent to receiving a sum of income from an outside party. Once the estate has cleared probate, you will own the assets that you have inherited free and clear. It is entirely legal for a person to leave another person stocks or other securities after he dies. However, the estate will have to pay any taxes that must be applied, before the stocks are given.
As long as the stocks that you receive are still listed on an exchange and traded -- in some cases, a stock will only be traded off an exchange or the stock will need to replaced with another stock, if the company that issued the original stock has been absorbed by another company -- then you will easily be able to find a price for each of your stocks. By multiplying this number by your shares of stock, you will receive a base value for your shares.
After you have received a base value for your shares of stock, then you will need to take into account the money that you would need to spend were you to translate these shares into cash. Were you to do this, you would need to sell the stocks through a broker. The broker would likely charge a commission, issued per share of stock, as a fee for completing the transaction.
If you do inherit stocks and then sell them, you will need to pay a capital gains tax on the profit. As of the time of publication, the United States charges a capital gains tax rate of 15 percent on the profits a person gains from the sale of securities. In the case of the legatee, you would pay 15 percent on the total price you received for your sale of the stock, as the entire sale represents a profit for you.
- "Investing For Dummies"; Eric Tyson; 2008