How to Split Mutual Fund Accounts in a Divorce?

Unknown

My wife and I have been using Quicken for years. We are getting divorced and as part of our agreement we are dividing our mutual fund assets. These are accounts that are not retirement accounts so keeping track of the cost basis is really important.  I have accurate records concerning the cost of acquiring the shares in Quicken but there are hundreds of transactions that go back to 2004 in two different accounts.
The only way I can think of adjusting the basis in Quicken would be to "remove" half the shares for every transaction. My soon to be ex wife would have to do the same. It would be incredibly laborious and prone to errors. 
Is there an easier way to do this? Maybe something using the reverse split feature?
I am using Quicken Home and Business 2017 for Windows.

mshiggins

Just to confirm, you are splitting the holdings 50-50?



So if you have 150 shares of ABC purchased in two lots of 100 shares and 50 shares, your ex will be receiving 50 shares from the lot of 100 and 25 shares from the lot of 50?

Unknown

We are splitting the assets 50/50. We would like to divide the cost basis as you describe so that we have an equal tax burden in the future.

NotACPA

Under the assumption that she's going to continue the use of Q,
1) Take a backup, just in case
2) Create a 'Her's' brokerage account in your copy of Q
3) Use "Shares Moved between accounts" to move her portion of the holdings to the Her's account.
4) Take another backup
5) Delete the Her's account from your data file
6) Take a 3rd backup
7) Restore from that 2nd backup and the delete the Yours account from Her file
8) Take a 4th backup, and give it to her
9) Restore from that 3rd backup and you should be good to go.

In taking these backups, make sure that the TimeStamp option of the backup is turned on ... so that the backups don't over-write each other.

Also, once the shares are physically transferred, at the fund company, be sure to change your password at the fund company and then in Q.

q_lurker

I would think your first step would be to talk with the MF company, as there may be limitations on what they can do for you.  But I suspect these are uncovered shares such that it is mostly your responsibility to identify the cost basis of each share as it is sold in the future.  

There is certainly not a preset way in Quicken to accomplish this.  Trying to think outside the box, here a a path that might help.

BACK UP YOUR DATA FILE.
Create a temporary brokerage account.  
Transfer all shares of this particular holding to that account. (Shares Transferred).
In that account, enter a 1 for 2 split to halve the number of shares.  (Check to make whether that has impacted other accounts.  If so, delete the StkSplit transaction generated in those other (real) accounts.)   
In that temporary account, enter a Corporate Spinoff such that MF-real spins off MF-divorce at a 1-for-1 ratio and with the price of both security equal (real current market NAV).
From that temporary account, transfer shares of MF-real back to the original account.
Delete the temporary account and the MF-Divorce security.  

What should be happening as I play this through in my mind (have not tried it), Your 'Real world' Quicken account will end up with one Remove Shares (say 125 shares).  In the temporary account, you'll be starting with the 125 shares as various ADD Shares all with the applicable full cost basis and original acquisition dates.  The stock split will cut this to half the number of shares (62.5).  The spinoff should generate a series of RtrnCap (MF-real) and Buy shares (MF-Divorce).  The RtrnCap SHOULD reduce the cost basis of each lot of MF-Real from its original level to half that.  (CONFIRM THAT HAPPENS for each lot.)  Now that MF-real holding in the temp account should have all the correct dates, half the number of shares and half the cost basis.  That's what get transferred back into the real account.  You are done with the temp account and the MF-divorce security so out they go.  The real account shows one Remove Shares and then a series of Add Shares adding half back in.   

I am not sure this is easier than brute force entering the one Remove Shares transaction, and specifying the lots.  While it may seem daunting to enter half the share quantity for each lot as you specify lots, all the data is right there in front of you.  See a lot of 1.234 shares -- enter the remove count as 0.617.  Next line.  If you had a monthly reinvestment for 15 year, that is only 180 times you are dividing by two.   

NotACPA has outlined how you might need to work this through to create a separate file for you and for your ex.  

HTH

mshiggins

I thought about the stock split and corporate spin off approach, but I think although it may save some drudge work, it is more complication than I would want. But to each their own...

If you decide to go the brute force method - entering a Remove Shares for each security you will be halving, here is how to do it.

Use the Shares Transferred Between Accounts transaction type. Select One Security, enter the security name, the halved number of shares you will be removing, and select Lot Identification. Click the Specify Lots button.

Then in the Specify Lots dialog, type in the halved share amount for each lot of the security. You may find a calculator or Excel handy if you need help to divide the available shares by 2. Note - this dialog is labeled Specify Lots Sold in This Transaction, but it's really for specifying lots removed.

Repeat for each security. Be sure to take a back up before starting and as many back ups as you feel necessary as you proceed through all the securities.

Unknown

Sorry for taking such a long time to reply, but I wanted to wait till the end of the quarter to get my mutual fund statements in order to try to get the correct basis for my holdings. Thanks so much for the creative and thoughtful responses. In the end I decided to use Q.Lurker's approach and I am glad to report that it seems to have worked well.
A few things I learned in the process. The first that when you do a stock split for a fund in one account Quicken does split the same stock (or mutual fund) if it is in another account. Also, if you try to delete the split transaction in the second account Quicken will delete it in the primary account. I haven't worked through this yet, but it was a relatively small problem compared to my initial issue.
The other thing I learned is that each step of Q.Lurker's process should be on a different day.  Quicken does not seem to be able to let you split and transfer securities on the same day.
Thirdly, heed Q. Lurker's advice to back up and back up often. This is a complicated process and it is really easy to make a mistake.  It was great to have back ups so I did not need to go back to step one. 

mshiggins

Indysailor said:

Sorry for taking such a long time to reply, but I wanted to wait till the end of the quarter to get my mutual fund statements in order to try to get the correct basis for my holdings. Thanks so much for the creative and thoughtful responses. In the end I decided to use Q.Lurker's approach and I am glad to report that it seems to have worked well.
A few things I learned in the process. The first that when you do a stock split for a fund in one account Quicken does split the same stock (or mutual fund) if it is in another account. Also, if you try to delete the split transaction in the second account Quicken will delete it in the primary account. I haven't worked through this yet, but it was a relatively small problem compared to my initial issue.
The other thing I learned is that each step of Q.Lurker's process should be on a different day.  Quicken does not seem to be able to let you split and transfer securities on the same day.
Thirdly, heed Q. Lurker's advice to back up and back up often. This is a complicated process and it is really easy to make a mistake.  It was great to have back ups so I did not need to go back to step one. 

Thanks for reporting back with your results.