You can put stocks in a trust, and for most people it’s a straightforward retitling of the brokerage account from your personal name into the trust’s name. The transfer keeps the shares out of probate, lets a successor trustee manage them if you become incapacitated or die, and—depending on whether the trust is revocable or irrevocable—can either leave your taxes unchanged or reshape how dividends, capital gains, and your estate are taxed. One important limit up front: stocks held inside an IRA, 401(k), or other qualified retirement account cannot be moved into a trust during your lifetime without triggering a full taxable distribution. For those accounts, the trust goes on the beneficiary line instead.
How to Retitle Your Stock Into a Trust
The legally meaningful act is changing the account registration. Until the brokerage account is retitled from “Jane Smith” to something like “The Jane Smith Revocable Trust, dated March 15, 2026,” the stock remains your personal asset and will pass through probate no matter what your trust document says.
You handle the retitling with your brokerage firm directly, or with the company’s transfer agent if you hold paper certificates. Most firms want to see the trust agreement—often just the first and last pages plus the trustee certification—so they can confirm the trust exists and verify who has authority to act for it.1Mellon Investor Services Guide. A Guide for Transferring Stock You’ll also fill out the firm’s own re-registration form. Some brokerages take uploads; others still want paper in the mail. Call first and ask for the exact checklist before you start.
Physical stock certificates add a step. You’ll need a Medallion Signature Guarantee, a special stamp issued by a participating bank, credit union, or brokerage that verifies your identity and authorizes the transfer.2Investor.gov. Medallion Signature Guarantees: Preventing the Unauthorized Transfer of Securities Expect to get it from a financial institution where you already have an account. Walk-ins without an existing relationship are routinely turned away.
Revocable or Irrevocable: Which Trust Should Hold the Stock
The choice drives everything that follows—control, taxes, creditor exposure, and what your heirs eventually owe.
Revocable Living Trust
A revocable living trust is the common choice. You keep full control: buy, sell, trade, change beneficiaries, or dissolve the trust whenever you want. You typically serve as your own trustee, so managing the portfolio feels no different from owning the account outright. The payoff is probate avoidance and continuity. If you become incapacitated, the successor trustee you named can step in without a court proceeding.
What a revocable trust does not do is reduce estate tax or shield assets from your creditors during your lifetime. Because you keep full control, both the IRS and creditors treat the stock as still belonging to you.
Irrevocable Trust
An irrevocable trust requires you to permanently give up ownership. You can’t pull the shares back, change the terms, or swap assets in and out unless the trust document specifically grants a limited substitution power. That loss of control is the point. Because the assets are no longer yours, they’re removed from your taxable estate and generally sit beyond the reach of your personal creditors.
The estate tax benefit can be large. Stock transferred into an irrevocable trust today, plus all its future appreciation, stays outside your gross estate at death. For a growth-heavy portfolio, the appreciation shielded from estate tax often outweighs the value transferred. The decision is permanent, though, and the capital gains consequences surprise people.
How Stock in a Trust Gets Taxed Year to Year
Dividends, interest, and realized capital gains inside the trust are taxed based on whether the IRS treats the trust as a “grantor trust” or a “non-grantor trust.” That classification matters more than the revocable-irrevocable label, though the two usually line up.
Grantor Trusts
Most revocable trusts, and some irrevocable trusts deliberately drafted as “intentionally defective grantor trusts,” fall here. Under Internal Revenue Code Sections 671 through 679, all income, deductions, and credits flow through to the grantor’s personal return.3Internal Revenue Code. 26 USC 671 – Trust Income, Deductions, and Credits Attributable to Grantors and Others as Substantial Owners The trust files no separate income tax return. Dividends and capital gains show up on your Form 1040 at your individual rates. For income tax purposes, the trust is invisible.
Non-Grantor Trusts
A non-grantor trust—typically an irrevocable trust where the grantor has surrendered enough control to lose grantor status—is its own taxpayer. It files Form 1041 and pays tax on income it keeps rather than distributes.4Internal Revenue Service. Instructions for Form 1041 and Schedules A, B, G, J, and K-1 (2025) The sting is in the brackets. For 2026, trusts hit the top 37% federal rate on taxable income above just $16,000.5IRS.gov. 2026 Form 1041-ES Estimated Income Tax for Estates and Trusts An individual doesn’t reach that rate until income is well into six figures. Because of the compression, most trustees distribute investment income out to beneficiaries, who then pay tax at their own lower individual rates.
Step-Up vs. Carryover Basis: The Biggest Long-Term Difference
This is where picking revocable or irrevocable has the largest tax impact, and it catches people off guard more than almost anything else in trust planning.
Stock in a revocable trust gets a step-up in basis when the grantor dies. The cost basis resets to the fair market value on the date of death, wiping out capital gains that accumulated during the grantor’s lifetime.6Office of the Law Revision Counsel. 26 USC 1014 – Basis of Property Acquired From a Decedent If you bought shares at $10 and they’re worth $100 at your death, your beneficiaries inherit them with a $100 basis. Sell the next day, owe zero capital gains. The step-up applies because revocable trust assets remain in your gross estate.
Stock gifted to an irrevocable trust during your lifetime generally carries over your original cost basis.7Office of the Law Revision Counsel. 26 USC 1015 – Basis of Property Acquired by Gifts and Transfers in Trust Same example: your beneficiaries inherit the $10 basis and owe tax on $90 of gain when they sell. For highly appreciated stock, that capital gains bill can meaningfully offset the estate tax savings. The IRS confirmed in Revenue Ruling 2023-2 that even intentionally defective grantor trusts don’t get a basis step-up unless the assets are brought back into the grantor’s gross estate.
The practical rule: irrevocable trusts work best for stock you expect to appreciate substantially after the transfer, since only the post-transfer growth escapes estate tax while the pre-transfer basis follows the shares. Loading an irrevocable trust with stock that has already run up locks in a painful future capital gains bill for your heirs.
Gift Tax Reporting When You Fund an Irrevocable Trust
Transferring stock into an irrevocable trust is a completed gift for federal tax purposes. In 2026, you can give up to $19,000 per recipient without any gift tax or reporting requirement.8Internal Revenue Service. What’s New – Estate and Gift Tax Gifts above that annual exclusion must be reported on Form 709 and reduce your lifetime exemption.9Internal Revenue Service. Instructions for Form 709 (2025)
The federal lifetime gift and estate tax exemption for 2026 is $15,000,000 per person, following the increase enacted by the One, Big, Beautiful Bill Act signed on July 4, 2025.8Internal Revenue Service. What’s New – Estate and Gift Tax Married couples can shelter up to $30 million combined through portability. For most people the gift tax itself is never owed, but the Form 709 filing still has to happen whenever a single gift tops $19,000, because filing starts the statute of limitations on that gift’s valuation.
Stock Types That Have Their Own Rules
Not every share can simply be retitled. A few categories have restrictions that can create real tax damage if handled wrong.
S-Corporation Stock
S-corporations are limited to specific types of shareholders. Putting S-corp stock into the wrong trust terminates the S-election and converts the company to a C-corporation subject to double taxation. A standard revocable trust is fine during your lifetime because grantor trusts are explicitly eligible shareholders.10Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined No special election is needed while you’re alive.
The danger comes after the grantor dies. The trust remains an eligible S-corp shareholder for only two years from the date of death.10Office of the Law Revision Counsel. 26 USC 1361 – S Corporation Defined After that window, the trust must either distribute the shares to an eligible individual or qualify as a Qualified Subchapter S Trust (QSST) or Electing Small Business Trust (ESBT), each of which requires specific drafting and a formal IRS election. Build the language in from the start; retrofitting after death is hard and sometimes impossible.
RSUs and Stock Options
Restricted stock units and incentive stock options generally cannot be transferred into a trust before they vest. Most corporate compensation plans prohibit it outright, and unvested RSUs aren’t yet your stock—they’re a contingent promise. Once RSUs vest and shares land in your brokerage account as regular stock, you can retitle them the same as any other publicly traded share. Read your employer’s plan documents before assuming a transfer is possible.
Closely Held Business Stock
Privately held shares often sit under shareholder agreements with rights of first refusal, buy-sell provisions, or consent requirements that can block or delay a transfer. Review the agreement before you initiate anything. You’ll also need a formal business valuation for gift tax reporting if the stock goes into an irrevocable trust, since there’s no public market price to put on Form 709.
Stocks Held Inside Retirement Accounts
Here’s the distinction that catches most people. Stocks inside an IRA, 401(k), or other qualified retirement account cannot be retitled into a trust. Pulling the assets out of the retirement account wrapper triggers immediate taxation on the whole balance as a distribution. The tax-deferred wrapper is itself the asset you’d be destroying.
The workaround is to name the trust as the beneficiary of the retirement account. The account stays in your name while you’re alive, and the trust receives the proceeds at your death under its terms. This works, but it brings complications. Under the SECURE Act’s 10-year rule, most non-spouse beneficiaries must empty an inherited IRA within 10 years of the owner’s death. When a trust is the named beneficiary, it has to qualify as a “see-through” trust for the IRS to look through to the underlying beneficiaries and apply the 10-year rule instead of a more aggressive 5-year rule. A see-through trust must be valid under state law, become irrevocable at the owner’s death, and have identifiable beneficiaries. If retirement accounts are a large part of your wealth, the trust document needs to be drafted specifically to handle them; generic forms almost always fall short, and the cost of getting it wrong is accelerated taxation of the entire balance.
What the Successor Trustee Faces After You Die
A big reason to put stock in a trust is a clean handoff. The successor trustee named in the document can take over the portfolio without waiting for a probate court to appoint an executor. Clean doesn’t mean instant, though, because the brokerage has its own verification steps.
Expect the firm to ask for a certified death certificate, a trustee certification showing the successor’s authority, and sometimes additional documents such as an affidavit of domicile.11FINRA.org. When a Brokerage Account Holder Dies – What Comes Next Each brokerage runs its own checklist. The successor trustee should call promptly and get the full list. Make sure the trust document is accessible, not locked where no one can get it. A successor who can’t produce the required paperwork faces delays that defeat the point of avoiding probate.
What It Costs to Set Up
Professional fees vary widely with the complexity of your estate. A basic attorney-drafted revocable living trust typically runs between $1,000 and $5,000 for an individual, with joint trusts for married couples 25% to 50% higher. Estates involving business interests, multiple property types, or specialized provisions such as S-corp shareholder language can push fees above $10,000. Online trust services sit at lower price points, but for any of the complications above, attorney drafting is worth the cost.
If you appoint a corporate trustee—a bank or trust company—rather than a family member, plan on ongoing annual fees of roughly 1% to 2% of trust assets under management. The percentage usually scales down as the trust gets larger, so a $500,000 trust pays a higher rate than a $5 million one. Some corporate trustees also charge separate fees on income generated inside the trust, which adds up fast on a dividend-heavy portfolio. Get the full fee schedule in writing before signing.