Per terms of my employment, I’m prohibited from owning shares in a company that a family member wants to gift me. The shares were acquired as part of their compensation package and they’d like to give shares instead of cash for their own tax circumstances.
I am single and make just over $200k annually with a funded emergency fund, maxing retirement fund and investing in a brokerage, so I’m not dying for the cash; they are insistent upon the gift, which I believe would be in the $5-10k range, even though I said I don’t need it right now. I am planning to talk to a financial advisor about my overall financial and future plan, but I’m wondering if there’s any preliminary advice or suggestions I can pass on to the family member that could be helpful.
What to do with stock I am prohibited from holding?
byu/Pumpsnhose inpersonalfinance
Posted by Pumpsnhose
11 Comments
Talk to whoever is prohibiting you from holding the shares (ie your company).
Ask your workplace’s compliance department.
Talk to your employer’s compliance department, and confirm you can accept the shares and immediately sell them. It sounds like you would need to disclose it in any case.
What happens if you take the shares and immediately sell them? Question for your compliance department.
We are talking about $5-10k worth of stock not millions. Just tell them to sell the shares, keep whatever they need to cover their taxes and gift you the remaining cash.
*Usually* you’re only prohibited from holding them if you control them (but this is definitely an ask the company situation).
Two options (I had this at one employer, these were my options, YMMV):
* Accept the gift and sell within 30 days, providing the company all details.
* Take the stock into an account I was unable to directly control (e.g. an irrevocable trust).
In my case we weren’t talking insane amounts of money so setting up a trust was more cost than worth it, so I did the insta-sell option.
Set up a revocable blind trust. Direct the giver to give these assets to your trustee on behalf of your trust.
When you separate from your employer, dissolve the revocable blind trust. You might or might not still own this stock. You won’t know until you dissolve it.
If your family member is insisting on the gift it may be a case where they are gifting the same to multiple family members. Accept the gift gracefully.
If the amount is $5-$10k or even just under the annual gift exemption of $19K it is not enough that you need to talk to a financial advisor on how to handle it. Just invest it like you would a bonus from work.
Simply inform your compliance group and ask them for advice. I suspect that the simplest would be for you to accept the gift and immediately sell the shares.
Can said family member not sell them and just gift you the cash after taking what they’ll need to pay the taxes for the sale?
I am under similar restrictions in my job (Federal government) but there is a level where the prohibition kicks in. I recall it is about $15K. You might check to see if your company has a restriction and, if yes, what it is. You might be ok accepting it.
Place the gift in trust and have it owned by an LLc. You will need a lawyer to set up but it should obsolve you of “ownership” and allow you to keep the stock until the Trust is dissolved.