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Be careful when gifting stocks to beneficiaries

On Behalf of | Apr 26, 2021 | Blog, Estate Planning |

When considering how to divide assets among loved ones, many Louisiana residents are unsure what to do with the stocks they own. While stocks may not seem like a glamorous item to give to your survivors, gifting them in the proper manner can provide real value for the future.

Ways to gift stock

You have a choice of several methods to gift stocks along with mutual funds and exchange-traded funds. Lifetime gifts with an annual limit of $15,000 per year are one method. Another method is putting stocks in a trust. However, if you need funds available during your lifetime, you may want to consider other methods for estate planning purposes.

An easy way to give stocks to your survivors is transferring them upon your passing. Depending on where the stocks are held, the method to accomplish this varies. The ways you can designate stock transfers include:

  • Last will and testament
  • Transfer-upon-death designation
  • Beneficiary designation
  • IRA inheritance

Before you decide on which manner to gift your stocks, you should fully consider the cost basis and similar issues for current and future income taxes. If you gift stock during your lifetime, there are no immediate tax implications for your beneficiaries if you stay within the $15,000-per-year limit.

Those who receive the shares may have potential tax implications if you gift stocks to them during your lifetime. That’s why it is important for you to consider all available options when determining how you want to leave your assets to survivors.

Approaches to gifting stocks

You may want to gift stocks to grandchildren too. This approach may take some consideration when it comes to estate planning as you can use custodial accounts or trusts for this purpose.

Whatever your decision for gifting stocks, you want to take care of your beneficiaries. A legal professional who understands your needs and situation may help you work toward creating the estate plan you want for your beneficiaries.