taxing situation

[spfnj]

What is the name of your state (only U.S. law)? NJ

I've inherited a number of different types of investments - CDs, annuities, brokerage account, insurance policy, savings acoount. What is the tax obligation on these and how should I proceed?

[LdiJ]

Originally Posted by spfnj

What is the name of your state (only U.S. law)? NJ

I've inherited a number of different types of investments - CDs, annuities, brokerage account, insurance policy, savings acoount. What is the tax obligation on these and how should I proceed?

CDs and Savings accounts - you pay taxes on any interest income that you get from the CD's or savings accounts.

Annuities - You may be able to roll those over into a retirement account of your own, but if you are not eligible to do so (or choose not to do so) then you will have the same taxable income from the annuities that the person you inherited them from, would have had, if they had cashed them out. You would not however, be subject to any early distribution penalties.

Brokerage accounts - You get a stepped up basis to the fair market value as of the date of death of the person you inherited them from. You will have either capital gains, or capital losses from any sales of the stocks or bonds in the accounts.

Life insurance - there should be no tax on that.

I am assuming that the estate is not large enough to be subject to estate taxes. (2 million or less for 2008)

[spfnj]

no, it is about 1.5M.
Thank you; you've been very helpful.

[Ginny J]

Those funds, because they are under 2 million, won't be taxed on the federal level. But, there may be state taxes on those. I am talking estate level here; this is worth a call to the accountant.

[FlyingRon]

An accountant would be a good idea NOW. They will not only tell you what the tax issues are, but they will also fix the stepped up basis, which will be a lot easier now than, lets say, in ten years when you decide you want to start liquidating some of these investments.