Transferring stock is a relatively simple transaction to complete. It is important to understand the circumstances of the transfer. A gift, a trust, an investment, even a loan can be accomplished by transferring stock, but each circumstance may have tax consequences. Consult a knowledgeable party before completing the transfer.
Consult a lawyer to create a trust. Deposit the stock you intend to transfer into the trust by listing it in the trust and notifying the brokerage firm or other agency holding the stock. Make the beneficiary of the trust the person to whom you are giving the stock.
Contact your broker and instruct them to transfer the stock that is held in your name to the account of the other party. Create a letter, date and sign it so there is written confirmation of your instructions. Do not assume the transaction is complete until you have received written confirmation of the transfer from your broker.
Invest in a company held by another person. Rather than depositing cash to fund your investment, transfer shares of the investment to the company. The other party therefore receives payment for your investment via the shares and can keep or sell them as they wish.
Transfer shares to another person by signing the stock certificate over to them. On the back of the stock certificate, at the bottom of the page, is a line for stock transfer. Sign and date the transfer. It is useful to have another separate document acknowledging the transfer in the form of a bill of sale or receipt.
Gift stock to another person. Notify the broker to make the transfer or follow the instructions in step 4 if you have the physical certificate. Understand that while you will not be subject to taxes, the cost basis of the transaction for the other party will be the price at which the gift was priced at on the day of sale. This price, particularly in a stock that is not publicly traded should be noted in any document acknowledging the gift.
Always have some separate document acknowledging the stock transfer for your own records.
Consult a lawyer, particularly in the case of gifts, when transferring stock.
Tips and warnings
- Always have some separate document acknowledging the stock transfer for your own records.
- Consult a lawyer, particularly in the case of gifts, when transferring stock.