Alert
Close

Watch the NASCAR race on Saturday at the Bristol Motor Speedway. Join the Drive to End Hunger!

Highlights

Open

Think You Know AARP Caribbean Cruise Sweepstakes

Money & Work

Contests and
Sweeps

Safe Driving in 2014 Sweepstakes

Learn how AARP Driver Safety can help you stay safe—and enter for a chance to win $1,000. See official rules. 

Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

AARP Books

Visit the Money Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular
articles

Viewed

Investing, Estate Planning and Your Heirs

The money you plan to pass on as an inheritance needs to be invested differently

Separate account? If this description fits your situation, you may want to set up an entirely different investment account to separate the money you expect to need from the money that's likely to be passed down. This may simplify your investing, but it's not essential. Instead, you can simply change your overall investment diversification to increase the percentage you allocate to investments with strong long-term growth potential. 

Tax matters. The tax rules favor buying and holding individual stock investments, since taxes aren't due until the stocks are sold. Those who inherit stocks receive the so-called stepped-up basis, which is usually the cost basis as of the benefactor's date of death. For example, someone inherits stock that had a cost basis of $4,000. But the date-of-death value of the shares is $10,000, which becomes the cost basis for the heir. Thus, passing on low-cost-basis stock can be very advantageous to your heirs.

Preferred investments. If you inherited low-basis stocks from your parents or other family members, chances are they were shares of well-known blue chip companies. That was wise investment and estate planning. Using individual stocks for the portion of your investments that will be earmarked for inheritance is still a good thing to do, but you might also consider exchange-traded funds (ETFs) that invest in blue chip and other stock sectors like small-company and foreign stocks. Many ETFs are designed to pass on little if any capital gains. So as long as they're held (and they have gains), you receive the same tax benefits as holding individual stocks.

All the information presented on AARP.org is for educational and resource purposes only. We suggest that you consult with your financial or tax adviser regarding your individual situation. Use of the information contained in this website is at the sole choice and risk of the reader.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Life insurance: you are covered rain or shine

Exclusive annuities for members from AARP Lifetime Income Program from New York Life.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Homeowners Insurance
Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.