One of the main benefits of working for Publix for both part-time and full-time employees is the ability to participate in the ESPP, or the Employee Share Purchase Program. This program highlighted in our first blog post allows employees of Publix to purchase non-qualified shares of Publix Stock. The plan document for the ESPP highlights the mission of this plan is to allow long-term investing by employees into the company so that they too will be owners of the company. Many employees do take advantage of this and accumulate sizable amounts of stock over their careers at Publix, which does allow for some special financial planning.
There are two key features within the plan that employees can use to maximize the benefits of Publix Stock ownership. One of these benefits is how the stock is registered (who owns it). An employee can purchase a certain amount of stock each year using their own funds but they can register it in their own name, they can register it in a joint name (an employee and their spouse), and finally as a custodial registration (a minor child). If stock is jointly owned, should anything happen to the employee, their spouse would immediately own the stock rather than having to petition for ownership. Additionally, joint ownership in many states has more creditor protection than sole ownership making joint ownership an effective risk management and estate planning tool. Finally, many employees see Publix Stock as a great long-term investment. As such, it is a common practice to purchase the stock in their minor children’s name to fund a variety of things. This practice constitutes a gift and opens up the second benefit of the plan: gifting.
According to the Publix ESPP Plan Document, Publix Stock can be gifted or transferred to other owners which opens up a great opportunity for planning. Many employees who have worked for Publix for a long period of time have purchased a large amount of stock that may have a low-cost basis. As employees age and raise families, many often buy stock in their minor children’s names to fund college or other expenses for their children or other family members. An opportunity exists where an employee could buy stock in their own name at the current price and gift stock to younger family members, as opposed to buying it in the minors name. This achieves the same goal of purchasing it in the minor’s name, but it also increases the cost basis for the employee. This is a great win-win for both the employee and minor receiving the gift. That being said, each situation is different and should be reviewed by an advisor.