What Should I Consider When Choosing a Stock Beneficiary?

When arranging your estate planning, one of the tasks that must be addressed is the identification of a stock beneficiary. Just as with all other assets associated with the estate, make sure the stocks are handed over to the person or organization of your choice. In making this type of decision, there are several ways to manage the process and make sure the benefits of the stocks are ultimately received according to your wishes. Making the right choice involves knowing the pros and cons of each possible approach and deciding which one is in the best interests of your loved ones in the long run.

One approach is to name your estate as the stock beneficiary. This can sometimes be a good idea, especially if the plan is to have an executor settle all your end of life expenses out of the assets of the estate. With this approach, the administrator will be able to sell some of the stock assets in order to take care of all outstanding debt, ultimately making it possible to pass the remainder on to a spouse or other heir that is designated in the last will and testament to receive the residue of the estate. If the idea is to make sure the stocks are used to manage any lingering debts, naming the estates as the stock beneficiary may be worth considering.

At the same time, if the plan is to provide a spouse, partner, or a child with some sort of ongoing source of income, exploring other options for a stock beneficiary may be the best approach. A spouse or partner may be named directly as the beneficiary, allowing that individual immediate access to the stocks and any dividend payments when they come due. If a minor child is named as the beneficiary for the stock, this may require also naming a guardian for the child and establishing a trust that can function as the means of managing the stocks until the child reaches his or her majority. Since there may be tax implications involved, consulting with legal counsel well versed in estate planning can aid in arranging the transfer of the stocks to a beneficiary in a manner that helps to keep the tax obligation as low as possible while still providing the stock beneficiary with access to the dividend payments.

The idea behind naming the stock beneficiary is to make sure your ownership of the stocks is transferred in the most expeditious manner possible, and that the proceeds from those assets provide benefits in whatever manner is in line with your last wishes. Deciding whether the stocks should go to provide ongoing support to a loved one or to help settle your final expenses will often make it possible to focus on strategies that ultimately make settling your estate easier for those left behind. Always work with an estate planner who understands current laws and regulations, so the decision can be based on what you believe is the best possible solution for those who are left behind.