Estate Planning 101

How to Transfer Common Stocks into a Trust

Make your financial planning more effective and secure by learning the step-by-step process of transferring your common stocks into a trust. This guide offers practical advice to help you simplify this often complex procedure.
February 4, 2024

Are you an executor or trustee?

Snug can help you get organized by providing one place to store and analyze Wills, Trusts, and other essential documents. You can inventory finances, personal property, digital assets, insurance, and more.
Get started for free

Want to get organized?

Snug can help you organize all of life's details by providing one place to store and analyze Wills, Trusts, and other essential documents. You can inventory finances, personal property, digital assets, insurance, and more.
Get started for free

Want to offer estate planning?

Snug is a complete estate planning solution built for Financial Advisors who want to save time and offer their clients more. Whether you have an UHNW client who needs their documents analyzed or a mass affluent client getting their first Trust, we can help.
Get started for free

Need a Will or Trust?

Snug makes it easy to create a Will or Trust in under 20 minutes. Powers of Attorney and Health Care Directives are included for free with any Will or Trust, as is a year of free updates.
Get started for free

Ownership of common stocks can be transferred into a trust, a strategic move that can offer several advantages, from estate planning benefits to potential tax savings. This blog post will guide you through the process of transferring common stocks into a trust.

Understanding Trusts and Common Stocks

A trust is a legal arrangement wherein a person, known as the trustor, transfers assets to a trustee for the benefit of beneficiaries. Common stocks, on the other hand, are shares that represent ownership in a corporation, giving the shareholder a claim on part of the corporation’s assets and earnings.

Reasons to Transfer Common Stocks into a Trust

Transferring common stocks into a trust can offer privacy, as the details of a trust are not public record. It also helps in bypassing probate, which can be a lengthy and costly process. Depending upon the type of trust, it can also provide protection from creditors and potential lawsuits. Finally, trusts can be a strategic part of estate tax planning.

How to Set Up a Trust for Common Stocks

  1. Choose the type of trust: Decide whether a revocable trust (which can be changed or cancelled) or an irrevocable trust (which cannot be altered without the consent of the trustee) best fits your needs.
  2. Select a trustee: This individual or entity will manage the trust assets according to the trust agreement.
  3. Create the trust document: This outlines the terms of the trust, including the beneficiaries and how the trust assets should be managed.
  4. Fund the trust: This step involves transferring assets, such as common stocks, into the trust.

Process of Transferring Common Stocks into a Trust

  1. Prepare the necessary information: Collect all necessary information about the stocks, such as the number of shares and the name of the brokerage firm.
  2. Re-title the stocks: Submit a request to the brokerage firm to re-title the stocks in the name of the trust.
  3. Confirm the transfer: Verify with the brokerage firm that the stocks have been transferred to the trust.
  4. Update trust documents: Ensure the trust documents accurately reflect the addition of the stocks.

Seeking Professional Guidance

Transferring common stocks into a trust can be complex, with potential legal and tax implications. It is highly recommended to consult with legal or financial advisors who can provide guidance based on your specific circumstances. They can guide you through the process, help set up and manage the trust, and ensure all legal and financial aspects are properly addressed.

Conclusion

While transferring common stocks into a trust may seem daunting, with the right preparation and professional advice, it can be a strategic move in managing your wealth and planning for the future.