If you want to leave shares of stock to an individual, sample will language is:
I give and devise all IBM stock I own at my death to my son, Frank Anderson.
If you only want to leave a portion of your stock to a particular beneficiary, sample will language is:
I give and devise 100 shares of IBM stock to my son, Frank Anderson.
If you want to leave your entire stock portfolio to a particular beneficiary, sample will language is:
I give and devise all stock I own at my death to my son, Frank Anderson.
Note: If you also own ETF's, bonds, and other securities, your will should use descriptive language to indicate how you want such assets distributed. Also, the will language above only addresses the bequest of stock to a particular beneficiary. When drafting estate planning documents such as a will, it is important to ensure all assets that may be in your estate are addressed. Have your will drafted by an attorney. Poor will drafting is one of the most common reasons estates end up in litigation. A will dispute could prevent your intended beneficiaries from receiving an inheritance.
Leaving Stock to Charity
If you plan to make a bequest of stock to an educational institution or non-profit, consult an estate planning attorney about how to incorporate this into your estate plan. Some of the best estate planning methods are often overlooked. Because tax laws change from year to year, the most advantageous method of making a charitable gift during one year may not be the best in another.
Sample will language for making a gift of stock to charity is:
I give and devise all shares of stock I own at my death to The Humane Society of the United States, tax identification number 53-0225390, a charitable corporation organized under Delaware law in 1954, now maintaining its headquarters in the District of Columbia at 2100 L Street NW, Washington, D.C. 20037.
If you are planning this type of bequest, contact the planned giving department of the charity or institution. They can send you a packet of information and provide other valuable advice about how to make sure your gift has the most beneficial impact.
An alternative to making a gift of stock while you are alive, known as an inter vivos gift, is leaving stock to a beneficiary of your will, referred to as a testamentary gift or bequest. There are several options for bequeathing stock in your will. For example, you may leave it to an individual, a charitable organization or a trust. There are advantages and disadvantages of leaving stock in your will.
Advantages of Gifting Stock in Your Will
1. One of the primary advantages of gifting stock in your will is you retain all rights to the stock while you are alive. If you change your mind about leaving it to a particular beneficiary, you can change your will and leave the stock to a different person or organization. You also retain all rights to stock dividends and appreciation during your lifetime. You can sell the stock at any time.
2. Making a charitable bequest of stock in your will to a non-profit organization may reduce your estate taxes to the extent it qualifies for a charitable deduction.
Disadvantages of Gifting Stock in Your Will
1. By making a testamentary gift of stock, you may miss out on tax savings that can be achieved by gifting during your lifetime. Making an inter vivos gift of stock is one way to use your annual gift tax exemption. If you want to support a charitable organization as part of your legacy, gifting stock may provide the opportunity for income benefits as well. See charitable gift annuities.
2. If you leave stock or other assets by will, your estate will have to go through probate before your beneficiaries can receive their inheritance. A living trust is an estate planning method that offers several advantages over a will. Another way to transfer your stocks without probate is by using a transfer on death registration. Contact the brokerage firm that holds your securities for forms and instructions.
3. If you leave specific shares of stock to a named beneficiary in your will but do not own them when you die, the beneficiary will not receive the stock or an amount of cash equal to its value. If the stock referred to in your will is not part of your estate, the bequest will fail under the concept of ademption.
Making specific bequests of property, such as stock, can cause problems in settling your estate. For example, it can lead to unintentional disinheritance of an heir if your will does not provide for the beneficiary to receive something else if you no longer own the stock. An alternative is to leave your estate in shares, such as one third of your estate to each of your three children, rather than bequeathing specific items of property. Also, if your will is drafted to refer to specific shares of stock, it can increase your estate planning costs because you may have to revise your will at a later date to reflect changes in the stocks you own.
Tax Treatment of Inherited Stock
Federal tax laws regarding inherited property are subject to change. An important consideration when making a gift or bequest of stock, especially highly appreciated stock, is the basis the donee or beneficiary will have to use when he or she sells the stock. If your estate includes stocks or other securities, consult a tax professional regarding the best way to transfer such assets to your intended beneficiaries in light of applicable tax laws and your estate planning objectives.
