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Can you leave stocks to your children? 

On Behalf of | Aug 28, 2021 | Estate Planning

If you have many of your assets tied up in stocks, your goal is to maximize your earnings. You may be taking a long-term approach, so you worry that pulling the money out early is quite literally going to cost you. 

At the same time, you’re doing your estate planning. You want to leave the value of those accounts to your children. Do you have to cash them out before doing so or can you leave the stock portfolios directly to your heirs? Can they just take over and pick up where you left off, increasing the value of the portfolio as the individual stock values climb?

You can leave shares in your estate plan

The short answer is that you can leave your shares as part of your estate plan, directly passing them to your heirs. The value, for tax purposes, will be “stepped up” to the new value. In other words, your heir’s tax liabilities are calculated based on the value of the stock when they get it, not the value that it had when you bought it. 

If you would prefer, you can certainly sell the shares and leave the money to your heirs in that fashion, but your estate will have to cover the applicable taxes incurred by doing so. If your heir then wants to reinvest the money anyway — they don’t need immediate cash assets — then they’ll have to pay the fees associated with it and buy stocks at their new, higher values anyway. 

What is best for you depends on the specifics of your situation, but rest assured that transferring these types of assets is possible if you know what options you have for your estate plans and how to best meet your goals.