Q. My husband passed away a few years ago, and now I need to sell some of the stock we held. Do I use the purchase price as my cost basis? That was so long ago, how on earth would I ever find the paperwork, assuming it still exists?
A. In the case of jointly held stock, if you live in a community property state, the stock is revalued as of the date of death. You use the average trading price of the stock on the date of death or closest date the stock was traded to the date of death. For example, if your husband died on a Saturday, if the market was open the previous day, you would choose that day. If you live in a non-community property state, then you will have to ascertain how title was held to the stock. In jointly held property, you may need to use your cost basis for your half of the shares, and the stepped-up-basis for your husband's half. Many families have grantor trusts which also impacts how title is held. If in doubt, it is also wise to seek counsel from an attorney familiar with such matters.