How to Transfer Cash and Securities into a Trust
Two assets that trustees commonly use to fund a living grantor’s trust are cash and securities. The ownership records of securities held in street name are maintained by the bond- or stock-issuing financial institutions. These assets are often transferred over Federal Reserve wires.
When you transfer cash and securities, you will sometimes transfer within the same financial institution and sometimes from one institution to another. You may also need to reregister stock and bond certificates.
If the cash or securities being transferred are already with a financial institution in street name and you’re changing only the ownership registration, set up new accounts in the name of the trust. After the paperwork is complete, the grantor can initiate the transfer of the property into the trust’s account.
If you’re moving the assets from one financial institution to another and need to change the ownership registration, complete the same documentation and account opening forms as with transfers within the same institution. However, the process takes longer, so make sure the current institution gets the grantor’s letters directing the transfer.
You can expedite the process if you obtain cash wire-transfer information from the receiving institution and pass it along to the sending one. Don’t forget to get the new custodian’s delivery instructions for any transfers.
To change the registration on physical certificates, reregister the securities from the grantor’s name into the name of the trust. Keep in mind:
The grantor must mail the physical certificates back to the issuing company with written instructions.
In a separate envelope, the grantor should mail stock powers, each of which includes the grantor’s name, the company name, the number of shares, and the new owner’s name. Stock powers must be signed by the grantor and typically also require a signature guarantee.
The company will cancel the old certificates and issue new ones.
Transferring securities from the grantor into the trust requires you to move carefully. Here are a few suggestions:
Use registered mail when transferring physical securities. You want a record that you sent them, and an acknowledgment of receipt.
Never sign a blank stock power. Put that together with a stock certificate registered to the power’s signer, and you’ve just put what is essentially cash into an envelope.
Never sign the stock power located on the back of the stock certificate. Always use a separate document, and make sure you mail it in a different envelope than the stock certificate.
Keep all stock and bond certificates locked safely away in a safe deposit box until you need them. These documents are sometimes extremely valuable and replacing lost, stolen, or destroyed certificates is costly and time consuming.
After the new custodian(s) for the property have assured you that they’ve received all the assets, double-check to make sure that all the assets have left the first custodian and arrived safely at the second. Follow up on your transfers with phone calls, and always ask for an account statement or some other written evidence that the property is where it should be and that it’s been correctly titled.