Whether you’ve created a trust or are left as successor trustee to distribute assets, selling shares in a trust is different than selling shares you personally own in your name. Because a trust is seen as a separate entity, you’ll need to follow rules similar to those that allow people to trade on behalf of others. Not only will you be required to prove that you’re eligible to make trades for the trust, but you’ll also need to follow trust provisions closely to ensure the sales you’d like to make are allowed.
Read the trust to see what sales are allowed. If you’re the trustee, you generally are allowed to buy and sell as you wish. If you’re a contingent trustee, you’ll need to read carefully. If you are allowed to sell trust assets, generally you must reinvest conservatively if the trust grantor, or creator, has passed away and you’re conserving money for the beneficiaries.
Open a brokerage account to sell the shares. In most cases, the brokerage account should already be in place and the shares are ready to be sold within the account. However, in cases where there are certificates of stock that need to be traded, you’ll need to open a new account and deposit the shares to sell these positions. If the shares aren’t in the name of the trust, you’ll need to read the trust to look for pour-over provisions that allow you to add assets to the trust after the death of the grantor.
Provide the broker with appropriate documents to allow you to make trades. You’ll need proof that you’re the trustee of the trust, so have a copy of the trust or certificate of trust handy. Also, you’ll need a death certificate to prove the grantor passed away. Be sure and have statements and confirmations come to you also.
Place your trades. Decide what type of order to use when selling the trust shares. If you wish to sell quickly, use a market order which executes immediately. If you’re worried about volatility, try a limit order. This order type allows you to specify a price that triggers a sale if the stock plummets. This will help you avoid overpaying, but if the stock price never lowers to your target you won’t sell the position.
Keep records of the stock sale. You’ll need this information for capital gains or losses at tax time. If you’re a successor trustee, you’ll need to be able to provide beneficiaries with records of everything you’ve done. Never commingle these trades with your own. Successor trustees are specifically prohibited from mixing trust assets with their own.
As a former financial advisor to companies and individuals for 16 years, Joe Andrews knows financial planning and marketing from start-ups to personal budgets. He also writes on motor racing, board games and travel. Andrews received his B.A. from Michigan State University in English. He is currently working on a young adult novel.