An effective way of transferring wealth to family members through an estate plan is by leaving those family members stocks. Though restricted shares and stock options might be severely limited when it comes to transferability, you can award an heir with most stocks.

Optimizing asset distribution

There are many tax requirements related to an estate. In Florida, there is no death tax, but some estates may need to pay federal estate taxes as well as potential inheritance taxes for heirs. Those concerns aside, stock options may be subject to a capital gains tax or some payroll taxes as well. Here are three practical ways that you might transfer stocks to heirs:

  1. Transfer stocks through a will: You have to be very explicit about which individual stocks are going to which heirs so that they can be distributed with as little ambiguity as possible by the probate court.
  2. Place the stocks in a trust: By placing stocks in a trust to be maintained until you pass away, you could potentially avoid the probate process. The stocks must be named explicitly, with all identifying criteria, and placed in the name of a specific heir. 
  3. Gift the stocks: If you gift the stocks before your death, your heirs will have more options for keeping or selling those shares depending on the state of the markets. There may be significant tax incentives if you qualify for a stepped-up cost basis tax designation.  

Making sure your family is taken care of

These stock gifts can require a complicated knowledge of the laws surrounding the transference of stocks, as well as restricted shares, and the complications that might arise from these assets. If you’re getting ready to draft a will, contact an estate planning attorney with experience in high-asset and complex estates.