Should married couple change stock ownership?

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Q. My stock portfolio is joint tenants with right of survivorship (JTWROS). It has significant capital gains. My wife’s health is starting to fail. Can I transfer appreciated stock to an account in her name and at her passing, get a step up in basis?
— Husband

A. We’re sorry to hear about your wife’s health.

Any transfer of property between spouses is a non-taxable event, said Jody D’Agostini, a certified financial planner with AXA Advisors/The Falcon Financial Group in Morristown.

“If you transfer the account solely into her name, and your wife passes away before you do, you will get the full step up in basis for all the appreciated stock,” she said. “You would assume the fair market value of the securities at the date of death.”

If you still held the assets in the joint account, you would only be able to step up the value of one half of the account value, she said.

There is one thing to consider before transferring the account solely into your name, she said.

Right now, the federal estate tax exemption is $11.4 million and the current New Jersey estate tax exemption is unlimited.

If you had an estate that exceeds this threshold, you would want to use part of your wife’s exemption to avoid any future estate taxes, she said. If all the assets are in your name, then you would squander her exemption.

“We do not know what the future is for estate taxes, but if either exemption is lowered, this might have been a lost opportunity,” D’Agostini said. “We do have major deficits both federally and in New Jersey, and the New Jersey exemption was only $675,000 a couple of years ago, so this is always a possibility.”

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This story was originally published on April 15, 2019.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.