Don’t Be Sentimental with Inherited Stocks
Honor your beloved relative’s memory by diversifying as soon as possible.

Q: My aunt died in 1997 and left me a generous amount of Chevron stock. Partly because she and I were so close, I’ve never felt right about selling it. But given what’s recently happened with the price of oil, and, considering that I’m now retired and the stock makes up a majority of my retirement, what do you think about me liquidating it and moving on?
A: Obviously you could not have predicted that the price of a barrel of oil would plummet by over 50% and cause the value of your holdings to drop as much as it has. But here’s a little tip: the Chevron share price should have been irrelevant to your decision to sell (or hold) in 1997. It should have been irrelevant a year ago (when the price was still high), and it should be irrelevant today.
I’m always a little dismayed when people hold on to a particular stock simply because they inherited it. That’s because when a person receives an inheritance, it’s actually a great time to diversify (or even liquidate), and build a new portfolio.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Whether it’s stocks or real estate, most assets that are transferred upon death enjoy what is known as a “stepped-up basis,” which essentially eliminates any capital gains that would otherwise be due. This enables the person who receives the inheritance to dispose of the possessions with no tax consequences.
So why do so many people hang on to inherited securities? There are a variety of reasons, but here are a few that I regularly see. First, there is a sense of obligation that comes with an inheritance, with the asset serving as a reminder of the person who has passed away. (My own home is filled with items that once belonged to my mother-in-law. A few of these items are valuable, but most are simple, everyday things that have great sentimental worth.)
Second, we tend to believe that if an investment was good enough for a cherished relative, it should be good enough for us. Third, and, most commonly, it’s simply easier to hold on to an inherited stock than it is to make a change.
Whatever reasons you’ve had for keeping these shares (for almost two decades), you have too much of your savings tied up in just one investment. Having all of your eggs in one basket is rarely wise, particularly as we age and no longer have decades left to make up for our mistakes or oversights.
If I were in your shoes, I’d sell enough shares so that Chevron doesn’t comprise more than 5% to 10% of your overall retirement savings. Having more than 10% invested in any one company is typically too much for anyone with a limited time horizon and modest (or even moderate) savings or income.
I’m sure you don’t feel great about selling the stock while the price is down, but try and look at it this way: It’s substantially higher now than when you inherited the shares in 1997. So while it may not be as high as it was a year ago, you’re still way ahead.
If you know that reducing your exposure is the right thing to do, but you’re having trouble pulling the trigger, consider selling half of the shares now and the other portion a year from now. That way, for good or for bad, no matter what happens, you can feel clear about your decision. Simply, if the stock is lower a year from now, you can pat yourself on the back for having had enough foresight to sell only half of your shares. And if the stock is higher a year from now, you can congratulate yourself for having kept half.
Your aunt did something very nice for you. But the circumstances have changed and the value of Chevron stock is not what it once was. I suggest you honor your aunt’s memory (and her foresight) by diversifying your portfolio as soon as possible.
Scott Hanson, CFP, answers your questions on a variety of topics and also co-hosts a weekly call-in radio program. Visit MoneyMatters.com to ask a question or to hear his show. Follow him on Twitter at @scotthansoncfp.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
Scott Hanson, CFP, answers your questions on a variety of topics and also co-hosts a weekly call-in radio program. Visit HansonMcClain.com to ask a question or to hear his show. Follow him on Twitter at @scotthansoncfp.
-
IRA Conversion to Roth: Rules to Convert an IRA or 401(k) to a Roth IRA
An IRA conversion can give you a leg-up in retirement with tax-free income. But proceed with caution.
By Maurie Backman Published
-
2026 Social Security COLA Projection Dips After Inflation Slows
This October, the SSA will determine the new cost-of-living-adjustment (COLA) by comparing the CPI-W data from July, August, and September of 2025 to the same data from 2024.
By Donna LeValley Published
-
Alternative Investments Under Trump: What You Need to Know
As access to alternative markets opens up, retail investors looking to enhance their long-term financial outcomes have more opportunities to carefully consider.
By Henry Yoshida Published
-
Beware of TV/Billboard Personal Injury Law Firms: Here's Why
If you or someone you know is tempted to hire a so-called settlement mill to handle a personal injury case, here are some reasons to reconsider.
By H. Dennis Beaver, Esq. Published
-
How Small Businesses Can Clear the Economic Hurdles Ahead
Shifting rules on taxes, trade and regulation are creating uncertainty for SMBs. Owners can overcome that by focusing on efficiency, flexibility and investment.
By Mark Valentino Published
-
10 Tax Topics Every Retiree Should Know About
A little knowledge can go a long way toward saving on your tax bill. Print this out and take it to your tax planner so you can have a productive chat.
By Michael Miller Published
-
Facing a Layoff? Ask Your Employer These Questions Now
If you're being laid off or forced into early retirement, don't make any decisions without proper guidance — and that starts by asking some key questions.
By Ben Maxwell, ChFC®, AAMS® Published
-
Have $1M+ Saved? Consider a Financial Planning One-Stop Shop
A 'one-stop shop' team — including a financial planner, estate planning lawyer, CPA and more — could serve all of your tax, estate and retirement planning needs.
By Joe F. Schmitz Jr., CFP®, ChFC® Published
-
Five Ways to Safeguard Your Portfolio in Market Downturns
The stock market is nothing if not volatile these days. When it takes a dip, a well-managed, properly diversified portfolio could help you ride out the storm.
By Joel V. Russo, LUTCF Published
-
This Underused IRA Option Offers Tax Benefits and Income Security
Looking to avoid running out of money in retirement? Consider longevity protection provided by a QLAC as a component of your retirement income plan.
By Jerry Golden, Investment Adviser Representative Published