Personal Investment & Financial Planning Q`s/Timeliness of Transfer on Death re Taxes


Mr. Julien

I hope you will not find this too long. It is NOT a homework or test question.

Joe owns a mutual fund, currently in his Vanguard account. His entire estate is under $2,000K, hence exempt from (current) Federal Estate taxes. In his Revocable Trust, he “wills” this fund, worth $250K, or it's dollar value, to daughter Mary. He has also filed with Vanguard a Transfer on Death form, bringing the fund to his Trust at that time. Joe passes, the fund is transferred,  the Trustee redeems it, and sends a check for the proceeds to Mary. Any capital gains taxes due on the Fund before redemption are the responsibility of the Trust. In spite of the fact that the Fund, as well as it's subsequent cash equivalent, was not PHYSICALLY in the Trust at the time of Joe's passing, is it still treated as if it had been and is Mary able to receive the check, tax free, as an inheritance? Mary's State does not have an inheritance tax.


It sure seems like a homework or exam question but in any event, the story is a little messy. Some of your terminology and phraseology lead me to suggest you see a local estate planning attorney in the jurisdiction the decedent is from.

I am sorry to be of such little help but good luck to you


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Bruce Julien


I can answer questions on and raise issues clients overlook in the areas of Estate Planning as far as taxes and distribution flow problems, Asset Management as far as appropriateness of assets and allocations for a desired goal and the value a consumer gets for their costs, Tax Planning related to Income and Estates, and Insurance/Annuity questions particularly in light of suitability to the consumer.


I became a CPA in 1991 and began offering financial advice in 1992. I am a Registered Investment Advisor which means I sign off on putting clients' interests first in a fiduciary role.

BA in Accounting, University of Maryland 1990

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