Leaving stock to a family member?

Question

Do you put this in your will? I own 18,000 shares of Northfolk Southern and want to leave half to one person and half to another. Does the stock get liquidated and they just split the money or do they each get 9,000 shares and they can sell it if they want?

Answer 1

Yes, put this in your will. They will get the stock and can sell or hold.

Answer 2

Be CAREFUL.  It depends on a number of conditions. Are you married? Is your total estate over $2,000,000 and subject to estate taxes? (with an A-B trust a couple can double the exemption to $4 million).

When you die, assets get "stepped up cost basis". This mean there are NO capital gains taxes due on the gains of the stock since they are now subject to estate taxes over the exemption.

So you need to make sure that you do NOT sidestep around those shares from being settled as part of your estate or they will owe taxes on your gains.

This is assuming that you have enough other assets to cover your debts or those shares will be used to pay debts first.  

You could just state in your will that you want half of that asset to be split between those people. Since there are no taxes whether it is cash or shares is a wash and it is up to the executor in what form they distribute it. It does not have to be liquidated.

Since they can sell the shares if they want at any time once they own them it matters not if shares or cash. You can't control what people do from the grave. ;-)

There are some complications since the Bush tax cuts eliminated the estate tax money that went to the states, individual states have since added their own estate taxes.

And in community property states if you are married you need to be sure it is not a "marital" asset that passes to your wife.

Answer 3

You should be using an attorney to set up your will/estate plan.  Ask the attorney for the best way.  If you have the stocks in a brokerage account, there may be a separate beneficiary designation form.

Answer 4

If your estate spells out the distribution of the stock, the administrator of your estate must distribute according to your directions.

Instructions are given to the brokerage firm, and/or bank holding your stock along with the proper documentation, the firm will register either register the stock in the appropriate names and deliver to the administrator OR if the beneficiaries have brokerage accounts with the firm the shares will be deposited into the appropriate accounts.

The only time there is a liquidation of assets is when the will defines such liquidations.

If the stock is held by you, your Administrator can deliver the total amount of shares, along with the supporting documentation to the Transfer agent for the company and will cancel your certificates and send new ones to the Administrator according to their directions.

Answer 5

depends if its in a will or a gift and proabaly will 1/2 the shares no matter the price of the stock