If you have restricted stock units (RSUs), you may wonder how those affect your estate plan. For example, you might have unvested stock that you want to put into a trust. According to the California Courts, property in a living trust does not have to go through probate, which makes your beneficiary’s life much easier and potentially gives them more money.
Continue reading this article to learn more about planning your estate around restricted stock units. Neglecting your unvested stock might delay or prevent a beneficiary from obtaining them.
Unvested stocks and trusts
In most cases, you cannot transfer unvested stocks into a trust until their vesting date. However, you need to review your restrictions on the stock you own. Even if you cannot transfer RSUs into a trust immediately, you can use a transfer-on-death order that guarantees stock transfers to your trust if you die before the vesting date. California Probate Code allows the security owner to designate a beneficiary without the need for probate or estate administration.
Before you how to distribute your RSUs, understand what triggers vesting. Sometimes RSUs depend on reaching a specific stock price or other performance goals. Not every RSU can transfer to a trust if you die before the vesting date. Ensure you talk to a financial advisor before promising any stock options to a beneficiary.
Estate planning does not have a one-size-fits-all solution. For many people, living trusts are a good option. However, depending on the nature of your assets, your estate planning needs will vary.