The process of transferring stocks to a trust depends on whether you're transferring accounts within the same financial institution or between two different brokerages, and whether you hold stock certificates or you want the trust to hold stock certificates. In all cases, you should confirm the process with the sending and receiving financial institutions, or with the transfer agent if you're reissuing stock certificates. The process and documentation needed to complete the transfer can vary based on each financial institution's rules. Also, some institutions charge fees for handling stock certificates.
Transferring Within a Brokerage
If you currently hold the stocks in an account at a brokerage firm, it's usually easier to transfer them to an account for the trust at the same firm. If it's a matter of changing the name on the account to the trust, some brokerage firms will simply re-title the account. Other firms require you to open a new account in the name of the trust and to initiate a transfer from your personal account to the trust account. Your account representative at the brokerage can provide you with instructions and the paperwork you need to sign, and will usually handle the transfer for you.
Transferring Between Brokerages
To transfer stocks from your current account at a brokerage (called the delivering firm) to an account at a different brokerage (called the receiving firm), you must first open a new account at the receiving firm in the name of the trust. Once the account is open, the receiving firm can provide you with a Transfer Initiation Form, or TIF. The receiving firm enters the TIF data into the Automated Customer Account Transfer Service to make an electronic transfer through the National Securities Clearing Corporation. The information on the TIF must exactly match your account information at the delivering firm or it will be rejected. The entire process takes about a week, although the transfer itself should be completed within three days.
Transferring Certificates to Street Name Account
If you hold stock certificates, it's easiest to transfer them into an account at a brokerage and hold them in street name, where the brokerage holds the stocks in its name but keeps records to show that the trust is the beneficial owner. Open an account for the trust at the institution that will hold the stocks. Sign the back of the certificates exactly as your name appears, write the trust account number in the top right corner of the certificate, and enter the name of the institution. Deliver the certificates in person, or send them by certified or registered mail. Some brokerages recommend insuring the mail for 2 percent of the certificate value.
The most complex transfer is when you currently hold stock certificates and you want the trust to hold stock certificates. You must obtain a stock power of attorney form that includes your name, the company name, the number of shares and the new owner's name. You must then obtain a signature guarantee from a bank, credit union or broker that participates in the Medallion signature guarantee program. Prepare a letter of instruction to the transfer agent and mail the certificates via registered or certified mail with IRS Form W-9 and a copy of the trust document. Under separate cover, mail the stock powers to the transfer agent. Mailing both together in the same envelope would be similar to sending cash. Contact the transfer agent to confirm its requirements before you proceed with reissuing the certificates.
- Living Trust Network: Transferring Intangible Property to a Living Trust
- Financial Industry Regulatory Authority: Understanding the Brokerage Account Transfer Process
- Fidelity: Send in Stock Certificates
- U.S. Securities and Exchange Commission: Signature Guarantees -- Preventing the Unauthorized Transfer of Securities
- U.S. Securities and Exchange Commission: Holding Your Securities -- Get the Facts
Steve McDonnell's experience running businesses and launching companies complements his technical expertise in information, technology and human resources. He earned a degree in computer science from Dartmouth College, served on the WorldatWork editorial board, blogged for the Spotfire Business Intelligence blog and has published books and book chapters for International Human Resource Information Management and Westlaw.