How to Stop Your Loved Ones From Selling Their Inherited Stocks Right Away

If you want to prevent your beneficiaries from selling your stocks as soon as they inherit them, consider using a trust. A trustee can control your investments on behalf of your beneficiaries, helping to avoid unintended consequences. Contact an experienced estate planning lawyer in Tampa for further guidance.

A Trust Prevents Your Loved Ones From Selling Your Stocks

A trust is the most obvious way to prevent your family members from liquidating your stock portfolio after your passing. When you move your stocks into a trust, you ensure that a trustee will protect the portfolio after you pass away. During your life, you may provide various instructions on how you would like to handle the portfolio, depending on the type of trust. After your passing, your trustee will continue to manage the trust on behalf of your beneficiaries.

If you do not want your trustee to sell the stocks and transfer the resulting cash to your beneficiaries, you can instruct them never to do this. You might also tell them to only liquidate the stocks under specific circumstances, such as in a financial or medical emergency.

Why Protecting Your Stocks Makes Sense After Death

Your beneficiaries may have relatively little financial experience, and they may be tempted to “cash in” on their inheritance after your passing. An experienced investor understands that a “buy and hold” strategy often provides incredible financial rewards over the long term, especially when one factors in dividends. A younger beneficiary, such as a son or daughter, may not understand the importance of time in the market. As a result, they may sell your entire portfolio, potentially spending the cash on frivolous personal items.

Why Instructing Your Trustee to “Never Sell” Could Backfire

While a buy and hold strategy is usually quite effective, instructing your trustee to “never sell” could backfire. There is no telling what might happen after you pass away, and economic conditions could change drastically. Sometimes, it makes sense to dump assets that are underperforming. Without explicit permission to sell when necessary, your trustee could have no choice but to hold until the portfolio’s value plummets.

Instead of leaving behind instructions to never sell, consider setting broader investment goals. For example, you might instruct your trustee to grow the value of your portfolio without taking on excessive risk. You could also appoint a financial professional to advise your trustee and help make important investment decisions.

A Revocable Trust Usually Makes the Most Sense

If you enjoy investing and you want to retain control of your portfolio while you’re still alive, choose a revocable living trust. With this approach, you can manage the portfolio while still protecting it from financially illiterate beneficiaries after your passing. In contrast, an irrevocable trust forces you to give up almost all control the moment you transfer your portfolio into it.

Can a Seminole Estate Planning Lawyer Help Me? 

A New Port Richey estate planning lawyer may be able to help you leave your investment portfolio behind in a way that serves the best interests of your beneficiaries. While holding your stocks in a trust is an obvious choice, a lawyer may be able to suggest alternative options. Contact Knudsen Law at 727.398.3600 to learn more.

Source:

 floridabar.org/public/consumer/pamphlet028/