Estate planning 101: How are stocks transferred?

An estate plan can ease the transfer of assets. This includes everything from a family home to less tangible assets, like stocks. Here are three examples for the best way to discuss the transfer of stocks:

  • Example #1: Stockowner does not include stock in the estate plan or does not have an estate plan. The stock will likely transfer either to a surviving spouse or as directed by the beneficiary designation. Probate may be required if a beneficiary designation or transfer-on-death beneficiary is not listed. Probate is best avoided, as it is a costly, time consuming and public process.
  • Example #2: Stocks as part of a retirement account. When the stock is part of the retirement account, the transfer is complete without taxation. If, however, an heir makes a withdrawal, income taxes may apply.
  • Example #3: Stocks held within a trust. This answer is more complicated. The exact impact will depend on the details of the trust. If the stockowner set up the trust as a generation-skipping trust, the heir could owe capital gains taxes upon transfer.

      How can beneficiaries expedite the transfer process?

      1. Notify the firm managing the stock account in a timely manner.
      2. Make sure you have these documents before contacting the firm, i:

      a. The decedent’s death certificate

      b. Court Letter of Appointment naming the executor of the estate

      c. The “stock power” document that transfers power of attorney of the stock to another individual.

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