How to Notify Investment Accounts

Contact each brokerage firm, mutual fund company, and investment platform where the deceased held accounts. Call their estate or deceased account department and provide the death certificate, your letters testamentary, and your identification. If the account had a transfer-on-death (TOD) designation, it passes directly to the named beneficiary outside of probate — you will only need the death certificate and beneficiary ID.

The most critical step is obtaining a date-of-death valuation for every investment account. This establishes the stepped-up cost basis for all inherited investments. Under current tax law, when you inherit stocks, bonds, mutual funds, or other investments, your cost basis is "stepped up" to the fair market value on the date of the owner's death. This means that all gains that accumulated during the deceased's lifetime are effectively erased for tax purposes. For example, if the deceased bought stock for $10,000 that was worth $50,000 at the date of death, your cost basis is $50,000 — if you sell it for $52,000, you only owe capital gains tax on $2,000.

Do not sell any investments until you understand the tax implications and have obtained the stepped-up basis valuations. Hasty selling — especially of appreciated assets — can result in unnecessary tax liability if the stepped-up basis is not properly documented. The brokerage firm can provide a date-of-death statement showing the value of each holding. Keep this document in the estate file permanently. If the estate is large enough to require a federal estate tax return (Form 706), you may have the option to use an alternate valuation date (6 months after death) if values have declined, which can reduce the estate tax liability.