The gift of stock is one that can keep on giving long after you’ve made the gift or transfer. That’s because the stock can continue to provide gains for the new owner for many years to come. While the process for transferring stock can seem confusing and complicated to the novice investor, it’s actually quite simple.
1. Acquire a Transfer of Stock Ownership form from your broker or the company whose stock it is. Complete the form by filling in each section as instructed in the form. Make sure to indicate how many shares you want transferred and the name of the company holding the stock. You’ll also need to include your address and Social Security number, and the address and SSN of the person getting ownership.
2. Write a letter of instruction to describe how the stock shares should be transferred. For instance, you may choose to have the shares transfer on death, which means that you retain ownership until your death, at which point ownership automatically transfers to the designated person. Or you may choose to have a joint tenant with right of survivorship, which means that all tenants share an undivided interest in the stock shares, and if one person dies, the survivor gets the shares in their entirety.
3. Sign the back of your original stock certificate. You may also need to have your signature “Medallion Guaranteed” depending on how many shares are being transferred. The Medallion Stamp Program simply ensures that signers of a stock certificate are the registered owners. Banks, credit unions and other financial institutions routinely offer this service.
4. Make copies of the stock certificate and the Transfer of Ownership form for your own records.
5. Gather other required documents. For instance, if you are transferring the shares to a minor, you may need to submit a copy of his birth certificate. If you are transferring the shares as part of a divorce proceeding, you may need a certified copy of the divorce decree.
6. Submit the original stock certificate, transfer form and other required documents to your broker or transfer agent by registered mail. Request a return receipt.
- While you don’t have to, it may be a good idea to insure stock certificates prior to sending them out in the mail. That way, if they are lost, you can get a replacement at no cost to you. It’s common to insure stock certificates for 1 percent of their market value.
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