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How to Transfer Stock After Death

More articles.

  •   1. How to Make a Name Change on Inherited Stock
  •   2. How to Transfer Stocks After a Death in California
  •   3. How to Leave Stocks to Someone

The procedure for transferring ownership of stocks after someone passes away depends on how the deceased chose to hold the shares. An account beneficiary may be able to carry out the change of ownership on her own. When the stock must go through probate, the responsibility for transferring ownership of the shares falls to the executor of the estate.

Ownership Transfer

Stock can be held in brokerage accounts, as paper stock certificates or in an account with the issuing company’s transfer agent. Transfer agents are firms that handle securities transactions on behalf of corporations. No transfer of ownership is necessary when shares are held in a joint account with right of survivorship. Single-owner brokerage accounts normally have a named beneficiary who can conduct the change of ownership. This is also true when an account with a transfer agent has a beneficiary. If the original owner did not specify a beneficiary for a transfer agent account or if the shares are held as stock certificates, the stock must go through probate.

Transfer by Beneficiary

When an account containing stocks has a named beneficiary, the shares do not have to be probated. If you are the beneficiary, you need to contact the account provider and furnish proof of death. Typically, this means a certified copy of the death certificate. Be prepared to show a valid photo ID issued by a government agency. The account provider will process the ownership change and credit the shares to an account in your name.

Probate Procedure

When stocks must be probated, the probate court first reviews the will or documents left by the deceased owner and determines who inherits the shares. The probate court then issues a letter empowering the executor of the estate to act as the deceased owner’s representative. To transfer stocks, the executor also needs a copy of the will or a letter from the probate court stating the name of person who is entitled to receive the shares. These documents will be sent to the transfer agent.

Transfer by Executor

The executor contacts the transfer agent to obtain a transfer of ownership form, plus any additional documents required. Some transfer agents provide forms online as downloadable files. The executor takes the form to a bank or other financial institution that can provide a Medallion Signature Guarantee. Transfer agents require the Signature Guarantee rather than a notary’s seal, except for small amounts of stock. The transfer of ownership form, accompanying documents and any stock certificates are sent to the transfer agent. Once the change of ownership is processed, the transfer agent credits the shares to an account in the heir’s name.

  • New York City Bar: What Is an Executor?
  • Fidelity: Investment Accounts: Transfer on Death

Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.

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Transferring Assets

Here are some ways to transfer assets from one person to another.

Transfer on Death (TOD) Registration

Transfer of ownership.

Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity upon your death without having to go through probate. By having a TOD registration, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated.

However, TOD beneficiaries must take steps to re-register the securities in their names. This typically involves sending a copy of the death certificate and an application for re-registration to the transfer agent.

State law, rather than federal law, governs the way securities may be registered in the names of their owners. In addition, brokerage firms may decide whether or not to offer TOD registration.

For more information about TOD registration, please visit the website of the National Conference of Commissioners on Uniform State Laws. There you’ll find a summary of the Uniform TOD Security Registration Act, explaining how TOD registration differs from joint ownership. You’ll also find a list of the states that have adopted the Act and the full text of the Act.

If you hold securities in physical certificate form and want to transfer or sell them, you will need to sign the certificates or securities powers. You will probably need to get your signature "guaranteed" before a transfer agent will accept the transaction. Although it's an inconvenience to get your signature guaranteed, the process protects you by making it harder for people to take your money by forging your signature on your securities certificates or related documents.

Transfer agents insist on signature guarantees because they limit their liability and losses if a signature turns out to be forged. One way to avoid having to get your signature guaranteed is to have your securities held in street name, meaning that your securities are held in the name of your brokerage firm instead of your name.

An investor can obtain a signature guarantee from a financial institution -- such as a commercial bank, savings bank, credit union, or broker-dealer -- that participates in one of the Medallion signature guarantee programs. The three Medallion signature guarantee programs are the:

  • Securities Transfer Agents Medallion Program (STAMP) whose participants include more than 7,000 U.S. and Canadian financial institutions.
  • Stock Exchanges Medallion Program (SEMP) whose participants include regional stock exchange member firms, and clearing and trust companies
  • New York Stock Exchange Medallion Signature Program (MSP) whose participants include NYSE member firms

Transfer agents can refuse to accept a signature guarantee from an institution that does not participate in the Medallion program or that is not recognized by the transfer agent. While guarantor firms can charge a fee for their services, they often don't and offer them as part of their customer services.

Contact Kemark Financial Services, Inc., the program administrator for STAMP and SEMP, at [email protected] if you have general questions about Medallion signature guarantees or how the Medallion program works. We are providing Kemark’s email address for information purposes only. We cannot endorse any commercial entity, and we do not endorse or recommend any of its products or services. For specific questions about a security, the Shareholder Services Department of the company whose shares you own, or its respective transfer agent, may be best suited to assist you.

If you hold stocks in physical certificate form and want to sell them, you will have to send the certificate to your broker or the company’s transfer agent to execute the sale. You probably will need to get your signature guaranteed. Once the brokerage firm has the stock certificates, the sell order can be executed.

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  • Estate Planning Overview

Investment Accounts: Transfer on Death

An investment account can transfer fairly easily, as long as you designate a beneficiary and consider his or her ability to manage the account.

On a nonretirement account, designating a beneficiary or beneficiaries establishes a transfer on death (TOD) registration for the account. For an individual account, a TOD registration generally allows ownership of the account to be transferred to the designated beneficiary upon your death.

Do investment accounts pass through probate?

NO, generally, as long as the TOD designation is in place. Keep in mind that if the will stipulates anything about such accounts, the named beneficiaries on the accounts take precedence over anything stated in the will and the assets will be distributed to the named beneficiaries.

YES, if there are no TOD beneficiaries named on the account or if there is a complication with the named beneficiary. For example, if the named beneficiary has passed away first and the designation was never updated, the account will be subject to probate.

For joint ownership with right of survivorship or tenants by entirety accounts, the joint registration transfers account ownership upon the first death, usually directly to the surviving accountholder. TOD becomes effective for joint accounts if both owners pass away simultaneously.

Joint and TOD registration generally allow an account to pass outside the probate estate, enabling the surviving owner or beneficiaries to avoid the time and expense of that process for this account.

Regardless of the account type, estate taxes may be assessed on your taxable estate. Be sure to consult with your attorney or tax advisor to discuss ways to minimize or eliminate estate taxes.

Can the beneficiary manage an investment account?

Not everyone may be comfortable managing an investment account on their own. If you think your beneficiaries may prefer not to take on the responsibility, consider placing the account in a trust or arranging for professional management.

If one of your beneficiaries is a charity, donating complex assets such as certain types of securities may have tax advantages for both parties. In addition, donor-advised funds can help the charity manage such assets if it lacks the expertise. For more on this topic, see Strategic giving: thinking beyond cash donations in Fidelity Viewpoints ® .

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transfer on death (TOD)

a provision of a brokerage account that allows the account's assets to pass directly to an intended beneficiary; the equivalent of a beneficiary designation

Estate Planning and Inheritance Glossary

joint ownership with right of survivorship

ownership arrangement in which two or more individuals own the whole of an asset equally; when one owner passes away, assets pass to the other joint owner(s)

tenants by entirety

form of joint ownership of an asset by spouses in which both own the asset equally; upon death of one spouse, ownership passes automatically to the surviving spouse

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Fast Answers

Transfer on death (tod) registration.

May 16, 2011

Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity (your "TOD beneficiary") upon your death without having to go through probate. By setting up your account or having your securities registered this way, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated. However, TOD beneficiaries must take steps to re-register the securities in their names. This typically involves sending a copy of the death certificate and an application for re-registration to the transfer agent .

State law, rather than federal law, governs the way securities may be registered in the names of their owners. Most states have adopted the Uniform TOD Security Registration Act, although some have modified it. In addition, brokerage firms may decide whether or not to offer TOD registration.

For more information about TOD registration, please visit the website of the National Conference of Commissioners on Uniform State Laws. There you’ll find a summary of the Act , explaining how TOD registration differs from joint ownership. You’ll also find a list of the states that have adopted the Act and the full text of the Act.

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Transferring Stocks After Death

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  What Are Securities and What is Securities Law?

Securities refer to shares of stocks , bonds , debentures, and various interests involving an investment in which the return is primarily or exclusively dependent upon the efforts of a person other than the investor.

The sale, purchase, and creation of security interests are governed by several federal laws and regulations, which aim to ensure that all investors, whether large institutions or private individuals have access to specific basic facts about an investment before investing.

The Securities and Exchange Commission (SEC) in the United States enforces securities law. Its primary task is to protect investors and maintain the integrity of the securities market. To accomplish this, the SEC requires public companies to disclose all meaningful financial and relevant information to the public. This enables the public to evaluate security investments to the best of their ability and knowledge.

Can Stocks or Securities Be Transferred to Beneficiaries?

What are the benefits of transferring ownership of securities, and how can it be done, what else should i know about securities, do i need an attorney for estate planning and transferring stocks after death.

Passing on stocks and securities to beneficiaries through estate planning is generally possible. This can be achieved by including them in a legally valid will. However, not all states allow such a transfer, and some have adopted the Uniform Transfer on Death Security Registration Act, which allows people to name their beneficiaries for their securities without going through the probate process.

The Uniform Transfer on Death Security Registration Act is a law that allows people to name who they wish to inherit their stocks, bonds, bank accounts, and other securities without going through the probate process. The transfer of such securities can be accomplished through a transfer on death provision (“TOD”) for securities accounts or pay on death provision (“POD”) for bank accounts.

One of the main advantages of using the Uniform Transfer on Death Security Registration Act is that it allows the transfer of securities to beneficiaries outside the probate process. This means that the transfer of securities can occur quickly and efficiently without needing a court proceeding. This can save time and money for both the estate and the beneficiaries.

Another advantage of using the Uniform Transfer on Death Security Registration Act is that it allows people to avoid potential probate disputes. Probate disputes can arise when family members or other beneficiaries disagree about the distribution of assets. By using the Uniform Transfer on Death Security Registration Act, you can avoid probate disputes by clearly stating who will inherit your securities.

To use the Uniform Transfer on Death Security Registration Act, you must register your securities as being transferable on death with a financial intermediary, such as a brokerage house or bank. This process typically involves filling out a form and designating a beneficiary for the securities.

Once the registration is complete, the beneficiary will be able to receive the securities upon your death without going through the probate process.

All states do not recognize the Uniform Transfer on Death Security Registration Act. Therefore, those who wish to use this law should consult with an estate planning attorney to determine whether it is available in their state and how to use it properly.

Transferring securities through the Uniform Transfer on Death Security Registration Act allows for the quick and easy transfer of ownership to beneficiaries without probate. This means the securities can be liquidated into cash quickly and used to pay for estate expenses and debts.

To transfer ownership of securities, they must be registered as transferable on death with the financial intermediary from whom they were purchased. For example, if the securities were purchased from a brokerage house, they must be registered as transferable on death with the same brokerage house. After the owner’s death, the beneficiary can request to have the securities registered in their name, usually by providing proof of the death certificate.

Investors should be aware of legal procedures for transferring securities and adhere to them. The Securities Act of 1933 was established to prohibit fraud, deceit, and misrepresentation in the sale of securities.

Insider trading and fraud are the most common forms of securities abuse, which can result in theft from securities accounts.

Here are a few examples of insider trading:

  • A corporate executive learns that their company is about to be acquired by another firm and purchases a large number of shares in the company before the acquisition is publicly announced.
  • An employee of a pharmaceutical company learns that a new drug is about to be approved by the FDA and purchases shares in the company before the information is made public.
  • A board member of a tech company sells their shares in the company after learning that the company is experiencing financial difficulties that have not yet been disclosed to the public.

Fraud in the transfer of stocks after death is a relatively rare occurrence, but it can happen.

Here are a few examples of fraudulent activities related to the transfer of stocks after death:

  • Forgery of documents: A beneficiary may forge documents or signatures to make it appear as if they are the rightful inheritor of the stocks or securities when they are not.
  • Misrepresentation of identity: A person may pretend to be the rightful inheritor of stocks or securities by impersonating the deceased or the intended beneficiary.
  • Theft of documents: A person may steal important documents, such as a will or a transfer on death form, in order to transfer stocks or securities to themselves.
  • Unauthorized trades: A financial advisor or other person with access to a deceased person’s securities account may make unauthorized trades on behalf of the account, resulting in financial losses for the estate and beneficiaries.

If securities fraud is suspected, potential remedies include:

  • Notifying law enforcement.
  • Beginning a class action lawsuit.
  • Contacting the Securities and Exchange Commission.

Investors should ensure their brokerage firm is licensed by checking with the Financial Industry Regulatory Authority (FINRA) or the Securities and Exchange Commission. This is important because licensed brokerage firms are regulated and must follow specific rules and regulations designed to protect investors.

Checking with the Central Registration Depository (CRD) is also important to verify that the broker is licensed and has not had any disciplinary actions taken against them.

Finally, maintaining communication with the broker is important to stay informed about any changes in the investor’s portfolio and to ensure that the investor’s investment goals and risk tolerance are being met. Regular communication with the broker can also help prevent fraudulent activity or errors in the handling of investments.

A skilled securities attorney can help plan an estate, including transferring stocks and securities after death. They will be familiar with specific state laws and can ensure that securities are properly registered and provisioned. An estate attorney can also advise on legal options for avoiding taxes and transfer issues.

LegalMatch is an online legal matching service that can help you find a securities attorney experienced in estate planning and transferring stocks after death. You can submit your case for review and receive multiple attorney referrals based on your specific needs and location. This allows you to compare attorneys and choose the one you feel best suits your case. LegalMatch also offers a satisfaction guarantee to ensure you are happy with your chosen attorney.

Use LegalMatch to find a securities lawyer today.

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The Common Executor

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The Common Executor

How to Transfer Stocks Owned by the Decedent

11 Tuesday Oct 2016

Posted by Robert Dowling in Probate

≈ 8 Comments

Affidavit of Residence Form , Beneficiary , Brokerage Firm , Common Estates , decedent , estate , Executor , Inheritance Tax Waiver Form , Joint Account , Medallion Signature Guarantee , Notary , probate , Stocks , Tax Id Number , Transfer Agent , Transfer Form , Transfer Stocks , Transfer-On-Death Accounts , W-9 Form

transfer stocks owned by the decedent

  • If the decedent held stocks in an account with a Transfer on Death registration, and the account has designated beneficiaries, the beneficiaries handle the transfer process.
  • If the decedent held stocks in a joint account, the surviving account holder owns the stocks. However, the surviving account holder is responsible for the transfer process if the surviving account holder wants to drop the name of the decedent from the account.
  • If the decedent held stocks in an individual account and the stocks were only in the decedent’s name, then the stocks would have to go through probate and the executor transfers the stocks to the estate.
  • If the decedent named a beneficiary in the will to receive the stocks and the stocks weren’t needed to pay the debts and taxes of the estate, then the executor transfers the stocks to the beneficiary at the end of the probate process.

If the executor determines that their involvement in the transfer process is necessary, then the executor should contact the brokerage firm or transfer agent that holds the stock for instructions on how to transfer stocks owned by the decedent.

Transfer Stocks Owned by the Decedent

In the estate I handled, I had to transfer stocks to the estate. After contacting the transfer agent handling the stocks, on instructions from the representative, I downloaded the transfer package that contained all the forms needed to complete the transfer. Also, the transfer package included instructions to complete the entire transfer process. So, by following instructions, these are the steps I completed to transfer stocks owned by the decedent to the estate:

  • Complete the enclosed Transfer Form. On the transfer form you provide information about the existing account, the new account, and the amount of shares to transfer. In the new account section, you will provide the name of the estate and the name of the executor as you must open a new account in the name of the estate. Don’t sign the form yet.
  • Complete the W-9 form for the new estate account. On the W-9 form, use the estate tax id number you received when opening the estate.
  • Complete state tax agency requirements. If the decedent lived in a state that has an inheritance tax, you must obtain an Inheritance Tax Waiver Form from the state tax agency. Conversely, if an Inheritance Tax Waiver Form isn’t required, you must complete the enclosed Affidavit of Residence form attesting to the decedent’s state of residency and have the completed form notarized.
  • Once you complete all the forms, bring them to the bank where you set up the estate bank account to obtain a Medallion Signature Guarantee and to have the completed Affidavit of Residence notarized, if needed. While at the bank, a bank official will look over the forms for accuracy and will have you sign the completed transfer form. Then the bank official will stamp the MSG and sign the form. Most banks will have a notary in the branch and the notary will stamp the affidavit, if needed. As a reminder, bring a copy of the death certificate and your letter of authority. The bank should have the copies from when you opened the estate bank account, but you should always carry a copy of those forms anytime you conduct estate business.
  • About 5 to 10 days after mailing the package back to the transfer agent, you should receive confirmation of the completed transfer to the new estate account. Furthermore, you should receive the access code needed to get into the new estate account. Once you receive the access code to the new estate account you have control of the shares of stock.

The process of transferring stock owned by the decedent is just paperwork. Whether you are an executor of an estate or a beneficiary, the process is similar. The only difference is naming the new account and the tax id number you need to use. And if you need help, representatives from the brokerage firm or the transfer agent holding the stock will provide assistance every step of the way. So, in the end, the task to transfer stocks owned by the decedent is really a straightforward task.  

Recommended Reading

After transferring stocks to the new estate account or individual account, and you eventually sell the stock,   you need to understand the tax implications of the sale. Refer to the article Calculating Capital Gains to understand the treatment of capital gains on inherited stock.

Do you think the transfer process is a straightforward process? Do you have questions regarding the topic of transferring stocks to an estate or individual? Share your comments and questions in the comment box below.

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8 thoughts on “how to transfer stocks owned by the decedent”.

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August 29, 2023 at 5:24 pm

I am the executor for my parents estate. My father died in September 2015 and all his estate went to my mother who dies in February 2022. The an estate account for remaining funds is in a local credit union. I do retain an estate attorney. The beneficiaries (myself, a brother, two sisters, and three grandchildren are beneficiaries) are in the process of getting our parents house sold. In a random box of papers I came across a Stock Certificate for Microsoft Stock. There was no other paper work with the document. Reading your information it states I should contact compushare and I had tried that once and have been very frustrated by the process. I am very computer literate but do not seem to be able to make sense of how to actually get the information to them. Is there any other transfer agent you can recommend

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August 31, 2023 at 10:39 am

Hello Rebecca,

Yes, any brokerage firm, such as Fidelity, could provide information on how to handle the stock certificate. Fidelity, at least in my area, has many branch offices. You could actually call for an appointment, or perhaps walk-in. I would try the retail brokers such as Fidelity or Schwabb first. There are many, but a lot of them are on-line brokers with few offices. Fidelity and Schwabb have branch offices where you could actually talk to someone in person.

I hope this helps.

Good luck, Robert

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June 23, 2023 at 7:47 pm

I was just appointed Administrator of my dad’s Estate, with Full Authority. He left no Will, Trust, or Beneficiaries. My sister and I are the sole heirs ( intestate law). We have no disputes. My father owned stock shares, valued around 200,000. Do we have to wait for a Probate Referee to appraise, or can I transfer the shares 50/50 now? Do the shares have to be transferred to the Estate Account, then transfer again to give her her share later? Thanks!

June 25, 2023 at 4:19 pm

Sorry for the late response. Since the estate needs probate, you will need to go through a transfer process with the financial firm that holds the stock. You will need to contact the financial firm and ask for the transfer package as you will need to provide details about the account and the shares your father owned. In many cases you can request this package online and the forms will be sent to you. There are a few articles in this blog that point you in the right direction and explain the process I had to use. However, all you really need to do is call or go online to the financial firm and they will guide you.

I hope this helps. Robert

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September 6, 2021 at 3:47 pm

My sister in law died testate holding several stocks. My husband is the Executor of her estate and the only surviving family member. We do not need the stocks to pay for any of her final expenses. My question is do we have to transfer the stocks to the Estate account or can we transfer directly to him as her will gives all her estate to him?

September 7, 2021 at 12:55 pm

Hi Jeannette,

It depends on how the stocks were left to your husband. If your husband was listed as the beneficiary only in the will, the stocks would need to go through probate. If the decedent listed your husband as a TOD beneficiary on the account where the stocks are held, then the stocks would go directly to your husband. Your husband would need to call the financial institution holding the stocks regardless to make the transfer to him or to an estate account. The financial institution would provide him with a transfer packet and instructions on how to claim the stocks. It takes a little paper work, but the process is straight forward.

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February 1, 2020 at 5:21 pm

i need to sell three of the stocks held by my father(deceased) and the other three i would like to transfer directly to the 3 heirs. my question is do i transfer the three i need to sell to his estate? and then can i transfer directly from fathers name to the heirs names

February 1, 2020 at 5:49 pm

It depends on how the stocks were held. If the stocks were held in a registered Transfer on Death account with designated beneficiaries, the beneficiaries will handle the shares left to them. If the stocks were held in an account solely in the name of your father, then the stocks will need to go through probate. This means at the point you are ready to move the stocks you have to set up accounts through a transfer agent such as compushare. You will need to set up four accounts: 1 for each heir and one in the name of the estate. Once the transfers are made you can sell the stocks in the estate account. Since you transferred stocks to account in the name of heirs, the heirs can take control of their accounts.

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How to handle a deceased person’s investment accounts.

When someone dies and leaves behind investment accounts, it can be confusing to know how to handle them. The good news is that most brokerage firms prepare for this situation by offering ways for someone to transfer their investment accounts to someone else when they die. The process isn’t as complicated as you might expect. Here’s what to know when it comes to handling a deceased person’s investment accounts.

Transfer on death (TOD) vs. beneficiary designation

A brokerage account with a beneficiary designation is an account in which the brokerage firm has been told whom to transfer the assets of that account to when the person dies. This is usually done by filling out beneficiary forms when the brokerage account is initially created.

When someone sets up a transfer-on-death account, the person listed on the transfer-on-death stock form immediately receives the assets in the account at the time of your death. You may wonder why someone would choose to transfer stock ownership after death with a transfer on death account rather than simply naming a beneficiary in the will. A transfer on death account is different from making brokerage account beneficiary designations in the will for two important reasons:

  • A transfer on death account is immediately transferred to the listed person when the owner dies. This means the account avoids going through probate entirely.
  • Since the account is transferred immediately on death and avoids the probate process, the account is not subject to any debts the deceased person may have owed.

These two reasons are two huge benefits to the beneficiary and good reasons for opening up a transfer on death account rather than just naming a beneficiary of your investment accounts in the will. By setting up a TOD account, they’re helping the beneficiary to avoid the hassle of inheriting a brokerage account that needs to go through probate.

How do you cash in stocks of the deceased?

Cashing in stocks of a deceased person can be done by going to a brokerage office and doing what is called a stock transfer. There will typically be a form that you fill out to transfer ownership, which will then become available at the brokerage office for your signature. Once you have signed the appropriate documents, the brokerage firm will cash in the shares of stock for you.

The brokerage firm will then send the money to the person who is now the legal owner of that account, which can then be used as they see fit, typically by taking it out in cash or depositing it into another brokerage account.

Selling stock in an estate account

If you're the executor of the estate and need to sell stock in the estate account, here are the steps to follow:

  • Check that you have the authority to sell the estate's stock. You'll need to get documentation showing you have the authority to act on behalf of the decedent's estate and that you are the executor of the estate before you sell stock in the estate's account.
  • Apply with the IRS for an employer identification number. You can contact the IRS by phone or by completing this online form . The EIN will be attached to the estate account and is used to track any tax that is due as well as your transactions.
  • Open up an estate account with a financial firm. You'll need documentation showing that you're the executor of the estate in order to open an estate account. Once the account is opened, transfer the desired assets into the estate account.
  • Sell the stock according to the distribution orders listed in the will or listed in your state's probate laws.
  • Be sure to file taxes. As the executor, you're responsible for filing taxes for the estate. If you sell any stocks in the account, you're required to report this to the IRS.

How to divide inherited stocks

If you’ve inherited stocks and are attempting to divide them amongst others, you’ll want to initiate a transfer with your brokerage firm. Stocks can be transferred to others or gifted to recipients from the owner’s account. Simply get in touch with your brokerage firm and request a transfer form or information on how to gift stocks to others.

How to sell inherited stock

You may be thinking, "I inherited stocks...now what?" Two easy options to consider are holding the stocks for long term value or selling the stocks. For those interested in liquidating stocks after a death, the process is quite simple. Once you've inherited the stocks, you'll need to follow these steps:

  • Open an account at a brokerage in your name. You can open an account at a new brokerage firm or continue at the firm that the decedent did business at.
  • Identify goals and plan ahead. Depending on the stocks you inherit, it may be worthwhile to keep some while selling others. Getting in touch with a financial authority is likely a good idea if you're new to the stock market and aren't sure which stocks can help you reach your goals quickest. Additionally, you should consider any tax implications from selling your stock. Meeting with a financial advisor regarding beneficiary or transfer on death tax implications can help you avoid making a costly mistake.
  • Sell your stock. Once you've identified your goals, know what stocks you'd like to hold and which ones you'd like to sell, simply sell your stock on the platform you're using. If you're working with a financial advisor or broker at this stage, let them know the ticker symbol of the stock, the name of the company and the amount of shares you'd like to sell.

Contact investment firms

When you’re ready to get in touch with the investment firm in order to transfer ownership of an investment account, here’s how to do so. (Additionally, it can be helpful to contact these firms before a passing to check their process for how beneficiaries will receive funds if you are the account owner.)

Handle finance tasks with our checklist

Contact the company's customer support team at 1 (800) 387-2331 for information on how to transfer account ownership after someone has passed. You will likely need to fill out this form and mail it.

By overnight mail : ETRADE Securities LLC Harborside 2 200 Hudson Street, Suite 501 Jersey City, NJ 07311

By regular mail : ETRADE Securities LLC P.O. Box 484 Jersey City, NJ 07303-0484

Edward Jones

Contact the company's customer support team at 1 (800) 441-2357 for information on how to transfer account ownership after someone has passed.

Fidelity Institutional Wealth Services

Complete this form and mail it into Fidelity. You will need to include a certified copy of the death certificate alongside the form. Call 877-895-5951 and ask for Fidelity Inheritor Services. Their support team should be able to assist with any questions you have during this process.

Fidelity Investments Institutional Operations Company, INC., (FIIOC) P.O. Box 770002, Cincinnati, OH 45277-0090

You can also mail this completed form via overnight delivery to:

Fidelity Investments Institutional Operations Company, INC., (FIIOC) 100 Crosby Parkway, KC1E, Covington, KY 41015

Interactive Brokers IBKR Lite

Contact the company's customer support team at 1 (877) 442-2757 to get a full overview of what you need to do to transfer account ownership. You will likely need to fill out this form and email it to [email protected], in the subject line put 'Estate Processing' and the account number if you have it.

J.P. Morgan Investments

Notify Chase of the passing by calling the Client Service Center at 1-800-392-5749 option 1 or go to a local branch .

Confirm that you can receive information related to the individual's assets. Only certain authorized individuals are able to receive information, such as beneficiaries and executors or estate administrators.

Review Chase's account table to determine the type of account held by the deceased and identify the type of documentation that's required.

Obtain the listed documentation and fax all documentation to 1-855-605-0487.

LPL Financial

If you know them, contact the financial professional associated with the decedent's account. If you're unsure who that is, you may call (800) 558-7567 for information on how to transfer account ownership.

Merrill Edge

Contact the company's customer support team at 888-637-3343 for information on how to transfer account ownership after someone has passed.

National Advisors Trust

Contact the company's customer support team at 877-527-3476 or by email at [email protected] for information on how to transfer account ownership after someone has passed.

Northwestern Mutual

Contact the company's customer support team at 1 (866) 950-4644 for information on how to transfer account ownership after someone has passed.

Pershing Advisor Solutions

Contact the company's customer support team at 201-413-3333 for information on how to transfer account ownership after someone has passed.

Raymond James Investment Advisors Division

Contact the company's customer support team at 727-567-1000 for information on what forms you need to fill out and what kind of documentation is needed. For assistance with the forms, email [email protected].

Schwab Advisor Services

For a full overview of what to expect, head here .

You'll need the following information:

  • The decedent's full name
  • The decedent's Social Security number
  • A death certificate (you won't need this at the start, but you'll need it eventually)

Notify Charles Schwab of the death of the account holder, here . Once you notify them and upload the death certificate, they'll verify the death certificate and will reach out to you within 5 business days.

SoFi Active Investing

Contact the company's customer support team at 1 (855) 456-7634 for information on how to transfer account ownership after someone has passed.

TD Ameritrade Institutional

In order to start the transfer process, you'll need the following information:

  • Their TD Ameritrade account numbers (if you have them)
  • A death certificate

Once you have the above information, fill out this form .

Zacks Trade's website

Contact the company's customer support team at 312-265-9406 or email them at [email protected] for information on how to transfer account ownership after someone has passed.

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What is transfer on death (TOD) for estate planning?

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Planning for the inevitable is never easy, but a smooth transition of your belongings can ease the burden on your loved ones after you pass away. One of the strategies that can help you achieve this is setting up a transfer on death (TOD) order for your financial accounts. 

The transfer-on-death designation allows your assets to bypass the probate process and pass directly to your named beneficiaries upon your death. A TOD account can allow beneficiaries to focus on healing rather than on the complex task of managing your estate. 

Here’s what you need to know about transfer-on-death accounts and how they work. 

What is a transfer-on-death account?

A transfer-on-death account is an arrangement that allows the assets held within a brokerage account or bank account to pass directly to a named beneficiary upon the account holder’s death, thus bypassing probate. Probate is a legal process that can be time-consuming and costly, involving the settlement of your estate and distribution of your assets under court supervision. 

By avoiding probate, a TOD account ensures a quicker and more efficient transfer of assets to your loved ones, meaning your money can go to those heirs you want to have it.

How does a TOD account work?

A TOD account works allows the account owner to designate one or more beneficiaries who will receive cash or investments upon the owner’s death. During the owner’s lifetime, the beneficiaries have no access to or control over the account. 

Once the owner dies, the assets in the account are transferred to the beneficiaries, when they provide proof of death, such as a death certificate, to the financial institution where the account is held. The institution then typically opens a new account in the beneficiary’s name and transfers the assets into it. 

It’s important to note that the rules and regulations for TOD accounts may vary by state, so check with the financial institution to see how the process is handled in your area. 

What types of assets can have a TOD designation?

TOD designations are found primarily on investment accounts, but other assets can also have a TOD designation. For example, real estate can have the designation via a transfer-on-death deed, and vehicles can have a TOD designation through a transfer-on-death title. 

In contrast, banks usually offer a payable on death (POD) form to transfer money from a bank account, but the process is similar to a TOD designation. 

How does a TOD account benefit estate planning?

TOD accounts offer several benefits for estate planning , particularly in their flexibility. 

  • Simplicity: TOD accounts provide simplicity by enabling the automatic transfer of assets to beneficiaries upon the account holder’s death, bypassing the potentially long and costly probate process. 
  • Full control of assets: TOD accounts give you full control over your assets while you’re alive, with the flexibility to change beneficiaries at any time. You can also name multiple beneficiaries and specify the division of assets according to your wishes. 
  • Avoidance of probate costs: A TOD account can help heirs avoid some probate-related expenses. However, it’s important to note that it doesn’t protect against an estate’s debts. Beneficiaries may still be subject to inheritance taxes and capital gains taxes .

What is the difference between a TOD account and a will?

A TOD account and a will serve different purposes in estate planning. A TOD account allows for the direct transfer of assets to beneficiaries upon the account holder’s death. On the other hand, a will is a legal document that outlines your wishes regarding the distribution of assets and the care of any minor children after your death. 

Unlike a TOD account, a will goes through probate and its instructions are carried out by an executor. It’s important to note that if there’s a discrepancy between your will and your TOD account, the TOD account typically takes precedence. 

So, if you name your brother as the beneficiary of your brokerage account in your will but your sister is listed as the beneficiary on the account’s TOD form with the brokerage company, your sister will inherit the account, not your brother. Experts recommend that TOD accounts should not conflict with your will, so that your assets go to the person you really want to have them. 

How to set up a TOD account for estate planning

Setting up a TOD account is relatively easy, and it’s usually as simple as filling out a TOD designation form provided by your broker or financial institution. This form will ask you to name the beneficiaries and specify the proportions of assets each will receive upon your death. 

If you’re naming a minor as a beneficiary, be aware that a court-appointed custodian may be needed to manage the assets until the child reaches adulthood. It’s essential to periodically review and update your beneficiaries as necessary, and to make sure your TOD account is part of your comprehensive estate plan. If you don’t verify your beneficiaries periodically, your assets may not go to whom you now intend, and heirs may have little recourse.

After you’ve passed away, your beneficiary should contact the firm and inform them of your death. The brokerage firm will then request documents to verify your death, such as a death certificate or a current court letter of appointment. Once the necessary paperwork is submitted and verified, the firm usually establishes a new account for the beneficiary, transferring your securities and funds into it.

What are the tax implications of a TOD account?

Despite the convenience of avoiding probate, a TOD account does not inherently provide tax benefits or protections against estate or inheritance taxes.

Upon your death, estate taxes may apply if the total value of your estate exceeds the federal exemption threshold, which is $13.61 million in 2024. Most people won’t come anywhere close to this level. However, a handful of states do impose inheritance taxes , which are paid by beneficiaries, though these exemption amounts are also generously high. 

For capital gains, beneficiaries get a step-up in basis to the fair market value of the assets at the date of your death, which can provide significant tax benefits if the assets have appreciated in value. 

What are the potential downsides of a TOD account?

A TOD account can help avoid the costs of probate but it doesn’t eliminate all potential issues. Some of the key downsides of a TOD account include:

  • Does not eliminate the need to pay off debts: While TOD accounts offer convenience and simplicity, one risk is that your estate might not have sufficient funds to pay off debts, potentially requiring your estate’s executor to liquidate property to satisfy the debt. 
  • May interfere with an inheritor’s government benefits: If a beneficiary receives government benefits, a sudden and hefty inheritance could jeopardize those benefits.
  • May conflict with a will: TOD accounts can conflict with your will, but TOD designation supersedes a will. Confusion over your wishes may create strife among your heirs.
  • Does not offer help if incapacitated: A TOD provision offers no assistance in the event of your incapacity to act, unlike a power of attorney or trust, as beneficiaries can only access the funds after your death. This setup can prove problematic if you have expenses but loved ones cannot access your assets to pay for those expenses.  

Bottom line

A TOD account can be a useful tool in estate planning, offering a straightforward way to pass assets directly to beneficiaries upon your death. However, it’s important to consult with an estate planning attorney or financial advisor to ensure that a TOD account aligns with your overall strategy and goals. Remember, while TOD accounts can help avoid probate, they aren’t a substitute for a comprehensive estate plan.

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What Is Inherited Stock?

Understanding inherited stock.

  • Inherited Stock in Estate Planning

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  • Trust & Estate Planning

Inherited Stock: Definition, How It Works, and Example

transfer of stock ownership after death

Investopedia / NoNo Flores

As the name suggests, inherited stock refers to stock an individual obtains through an inheritance , after the original holder of the equity passes away. The increase in value of the stock, from the time the decedent purchased it until their death, does not get taxed. Therefore, the beneficiaries of the stock will only be liable for income on capital gains earned during their own lifetimes; that income will be taxed at the long-term capital gains rate.

Key Takeaways

  • Inherited stocks are equities obtained by heirs of an inheritance after the original stockholder has passed. 
  • Any increase in value that occurs between the time the decedent bought the stock until they die, does not get taxed.
  • Inherited stock is not valued at its original cost basis, which refers to its initial value, at the time of its purchase.
  • When a beneficiary inherits a stock, its cost basis is stepped up to the value of the security at the date of inheritance.

Inherited stock, unlike gifted securities , is not valued at its original cost basis —a term used by tax accountants to describe the original value of an asset. When an individual inherits a stock, its cost basis is stepped up to the value of the security, at the date of the death.

The United States has taxed the transfer of wealth from a decedent's estate to their heirs since the passage of the 1916 Revenue Act, which complemented the existing income tax, in order to help finance America’s entry into World War One.

Proponents of this legislation argued that taxing estates can help raise much-needed revenue, while simultaneously discouraging the concentration of wealth among a small percentage of individuals. Opponents of the estate tax, who frequently refer to it as the "Death Tax," argue that it’s unfair to tax someone’s wealth after it has already been taxed as income.

The taxation of inherited stock is a highly-contentious element in the debate over the taxation of inheritances, but it's also part of the conversation about capital gain taxation methodologies. For practical purposes, governments only tax capital gains after the underlying asset has been sold.

This differs from income taxes, which must be paid annually. Proponents of the stepped-up basis exemption argue that capital gains should be taxed more lightly than income, in order to promote investment in the economy through increased consumer spending.

Inherited Stock and Estate Planning

Because heirs will not have to pay capital gains taxes on stock that are unsold at the time of a decedent's death, benefactors should resist the urge to sell off the equities they plan to bequeath to their heirs during their living years.

At the same time, heirs to stocks cannot claim a loss for losses incurred while the original owner was alive. Thus, if a decedent purchased a share of stock for $100, then the value plummeted to $25 by the date they passed, an heir's cost basis would be $25, and that $75 loss may not be used to offset gains with other investments.

Example of Inherited Stock

Consider a person who inherited 100 shares from a deceased relative. The cost basis of these shares is equal to their value on the day of the owner’s death. In other words, taxes will be based on this new cost basis, as opposed to the original cost. After providing a death certificate, proof of identity, probate court order, and others, the heir can either transfer the shares into their account or sell the shares for the proceeds. Ultimately, this has the potential to save significant sums of money due to the tax loophole.

How Do You Transfer Inherited Stock?

The executor of the estate will handle the necessary paperwork for stock transfers. They will fill out necessary stock transfer paperwork and then send it to the appropriate place.

How Do You Cash out Inherited Stock?

After the heir receives the stock into their account, they can sell the shares and transfer the proceeds to a bank account.

What Is the Cost Basis of Inherited Stock?

When an individual inherits a stock, its cost basis is stepped up to the value of the security, at the date of the inheritance.

Inherited stock refers to company shares that have been passed on from an investor to a beneficiary. In terms of taxes, the cost basis of inherited stock is the value at the time of the original owner's death, not the value when the stock was originally purchased. The person inheriting the stock only owes taxes on the change in stock price between when it was inherited and when it was sold. These taxes are charged at the long-term capital gains rate.

Correction—August 6, 2023: This article was edited to clarify that the income earned on inherited stock during a beneficiary's lifetime is taxed at the long-term capital gains rate.

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What Happens to the Ownership of Stocks After a Person Dies?

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What happens to stocks when you die? Who gets them? Or do shares have to be sold on death so that beneficiaries can receive cash? And if the shoe is on the other foot, how do you cash in stocks of deceased loved ones?

All these are uncomfortable questions to ask yourself or your loved ones. However, since nobody lives forever, they are relevant questions that need answers. You can rest assured that your shares don’t have to be sold upon your death.

​ Read More ​: The Difference Between Stakes, Shares and Stocks

What Happens Without A Will?

The state of dying without a will is known as intestacy. It usually causes plenty of confusion for those who have been left behind. And your loved ones may end up not receiving the shares and other assets you meant for them to have in the ratio you would have preferred.

Typically, if you are married and your spouse is your only survivor, he or she may automatically inherit your shares. However, if you co-owned the shares with someone else in a joint account, the co-account owner may end up with your stock after presenting your death certificate. In the latter case, the shares will not go through the probate process.

If there is no transfer-on-death designation on your stock certificates, and you have not left a will, your shares will be transferred to your estate. And then, local succession laws will likely take precedence in how your entire estate is distributed to the people you have left behind, including your spouse, children, siblings and parents.

If none exist, the state will likely inherit what you left behind, even if you meant for your shares to go to a charity. So, take note of that.

Transfer-on-Death Designation

Transfer-on-death (TOD) designation is available for many stock investors except those whose accounts are based in Texas or Louisiana. You can use it to designate the beneficiary who will take ownership of your stock after your death.

If you opt for a TOD designation for your brokerage account, your beneficiary can’t touch your shares when you are alive. But when you die, they can claim your shares without going through the probate process. And once they do, they can sell or hold the shares for as long as they want.

​ Read More ​: Transfer-on-Death States

What Happens With a Will?

If you create a will that designates beneficiaries of your shares, your brokerage account will become part of the probate process. When you die, probate courts will supervise the probate process for your estate. They will first ensure your estate has paid off all its debts. And then, the shares and other assets that remain will be distributed to your beneficiaries according to your will with the help of the executor you appointed.

How Do You Cash In Stocks Of Deceased?

If you are the beneficiary of a TOD designation, you need to contact the brokerage account and present the death certificate to access the shares the deceased left behind for you. You may also need to present valid identification documents. Then, you may be required to fill out the ownership transfer forms before accessing the shares. The same rules may apply if you are the co-owner of the brokerage account.

If there was no will, the probate process will occur. You will be required to present a probate court letter or the will of the deceased to initiate the transfer of ownership of the shares left behind.

Generally, you should follow the instructions the deceased’s financial institution gives and present all the documents you have been requested to provide. In addition, you should be prepared to create a new account and wait a while before you can trade the shares you inherit.

To ensure that your shares go to the beneficiaries you prefer, ensure that you use the TOD designation in your brokerage account or write a proper will. That way, there will be no confusion concerning where your assets should go.

  • Trust and Will: Dying Without a Will - What Happens?
  • Find Law: What Happens If You Die Without a Will?
  • Nolo: Naming a TOD Beneficiary for Stocks and Bonds
  • LegalZoom: What Is the Procedure to Transfer Stock From a Deceased Owner to a Beneficiary?
  • Finra.Org: When a Brokerage Account Holder Dies—What Comes Next?
  • LegalZoom: The Probate Process: Four Simple Steps

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The Guide To Liquidating Stocks After Death

If your loved one dies and leaves behind a significant portfolio of stocks, navigating the legal process to liquidate those assets can be complicated and often stressful. And if you are the executor or the trustee in charge of handling the estate’s property, the complexities are even more significant. For this reason, it’s advisable to consult with an experienced lawyer before making any decisions about how to distribute assets and whether to liquidate stocks. 

How Do You Liquidate Inherited Stock?

The process for liquidating inherited stock is fairly straightforward. Once the stock is in the beneficiary’s brokerage account, they can sell the stock by placing a sell order through the brokerage. The beneficiary can choose to sell the stock all at once or to sell it in smaller portions over time.

Before liquidating inherited stock, however, beneficiaries should keep in mind that the sale may have tax implications. We suggest consulting with a tax professional before making any decisions about selling your inherited stocks.

Should the Executor Liquidate Stocks?

Whether an executor should liquidate stocks depends on the specific circumstances of the estate and the goals of the beneficiaries. The decision to liquidate stocks should be made in accordance with the terms of the will and with the best interests of the beneficiaries in mind.

If the will specifies that the stocks should be sold, then the executor is obligated to follow the terms of the will and liquidate the stocks. Likewise, if the will specifies that the stocks should be transferred, the executor must obey those instructions.

However, if the will does not specify what should be done with the stocks, then the executor should consider the financial needs and goals of the beneficiaries when making a decision about whether to sell the stocks.

Regardless of the decision, the executor has a fiduciary responsibility to act in the best interests of the beneficiaries and to manage the estate’s assets prudently. If the executor is unsure about whether to liquidate stocks, they should consult with an estate attorney for guidance.

How Should We Divide Inherited Stocks?

The division of inherited stocks should be guided by the terms of the will or trust if one exists. If no estate planning documents are available, then the stocks must be divided according to state intestacy laws.

If the deceased person had a will or trust, it should specify how the stocks and other assets should be divided among the beneficiaries. The executor or administrator of the estate should review the will to determine the exact terms of the distribution.

However, if the deceased person did not leave any estate planning documents explaining how their assets should be distributed, the stocks will be allocated according to the intestacy laws of the state where they passed away.

State intestacy laws dictate how the person’s assets, including stocks, should be distributed among their heirs. The specifics of intestacy laws vary by state, but generally, the assets are distributed among the deceased person’s closest surviving relatives, such as their spouse and children. 

Do Beneficiaries Pay Taxes On Inherited Stocks?

No, beneficiaries typically do not pay taxes on inherited stocks they do not sell.

This is because the U.S. has no federal inheritance tax and only six states (Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania) levy inheritance taxes at the state level. Additionally, even in the states  that have inheritance taxes, close family beneficiaries and smaller inheritances are often exempt.

However, stocks that are inherited through the probate process can be subject to estate taxes if the deceased person has a large enough estate. Nonetheless, estate taxes are paid by the estate, not the beneficiary who will inherit the stock. By the time the beneficiary inherits the stock, the executor of the estate will have already handled the estate taxes and the beneficiary will not have to pay. 

Still, it’s important to keep in mind that beneficiaries do have to pay income taxes on their taxable gains if they sell inherited stocks. The taxable amount will be calculated by subtracting the stock’s fair market value (FMV) on the day the deceased person passed away from the final sale price. So if you sell an inherited stock for more than it was worth on the date of death, the difference will be considered a taxable gain.

Can I Contest How Stocks Are Distributed?

Yes, you may be able to contest how stocks are distributed in some situations. 

However, it’s essential that you understand that you cannot contest the distribution of stocks just because you disagree with the deceased person’s wishes. Generally, the distribution of stocks and the estate’s other assets will be controlled by the deceased person’s will or trust. If this document provides explicit instructions for how the stocks should be distributed, the executor or trustee is legally obligated to comply with them,. For this reason, you typically won’t be able to challenge the distribution without contesting the legal validity of the the estate planning instrument itself.

However, there may be some instances where the will or trust does not explicitly detail who should receive stocks or how they should be distributed. In these instances, you may be able to contest a distribution of stocks that goes against the deceased’s expressed wishes or is not in the best interest of all of the beneficiaries.

If you disagree with how stocks are being distributed after a loved one’s death, you should consult with a knowledgeable probate litigation attorney as soon as possible. Your lawyer will be able to explain your rights under the will and trust involved and advise you as to whether you have an enforceable legal claim. 

Have questions? We’re happy to discuss. Call  (424) 320-9444  or email  [email protected]

Read more who are the parties in an estate the guide to family trust embezzlement and stealing the definitive guide to partition actions the penalty for stealing from an estate the disinherited child’s guide to getting an inheritance, about rmo lawyers, llp.

RMO LLP provides personal and efficient inheritance dispute services to individual and institutional clients. The firm’s attorneys focus on probate litigation involving contested trust, estate, probate, and conservatorship matters. Serving California and Texas, with offices in Los Angeles, Pasadena, Orange County, San Diego , Fresno, the Bay Area, Dallas, and Houston. For more information, please visit  https://rmolawyers.com/ .

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What Happens to the Ownership of Stocks After a Person Dies

When a person passes away, the transfer of stock ownership will depend on the provisions made by the deceased before their passing. If a married person who held stocks jointly with a spouse dies, then the surviving spouse typically becomes the sole owner of those stocks. However, the process is different if the decedent held stocks on his or her own.

Transfer of stocks to a beneficiary If a person who holds stocks designates a beneficiary prior to their death, then that beneficiary becomes the owner of the stock once the holder passes. Most legal and financial experts recommend naming a transfer-on-death beneficiary in order to avoid the probate process.

Uniform Transfer on Death Security Registration Act Many states have adopted the Uniform Transfer on Death Security Registration Act, which allows investors to designate a transfer-on-death (TOD) beneficiary for whatever stocks they own. This enables the beneficiary to receive those stocks automatically once the holder passes away. The stocks do not have to be listed in the deceased person's will, which means they can be transferred without having to go through probate.

If a TOD beneficiary is named, then after the holder of stock dies, his or her securities are transferred immediately to the designed party; the executor or administrator of the original owner's estate does not need to take any steps to facilitate the transfer. The only thing a TOD beneficiary needs to do is re-register the stocks in question in his or her name, which generally involves sending a copy of the previous holder's death certificate and a form of proper identification to a transfer agent (a person in charge of maintaining records of stock ownership), who can complete the transfer.

The probate process If a person who holds stocks passes away without naming a TOD beneficiary, then the probate process must be initiated. Probate is a legal process for settling a deceased person's estate. When a person leaves stocks behind, a probate court must first determine who gets the shares and then direct the executor of the estate to transfer ownership accordingly. To facilitate a transfer, the executor will need a copy of the decedent's will or a letter from the probate court confirming that the beneficiary in question is indeed the person entitled to receive the shares. The executor must then send these documents to a transfer agent, who can complete the transfer of ownership.

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What Happens to Stocks Upon the Death of the Owner?

How to name a beneficiary on stocks.

You can control what happens to your stocks by choosing your beneficiaries before you die. You can create a will and leave your individual stocks to family members and friends. The stocks are included in your estate and transferred to your beneficiaries when the estate is closed. If you own a few stocks, you can designate a specific beneficiary on the stock certificate and avoid the time and expense of opening and administering an estate.

No matter which estate planning technique you use, you can change your stock beneficiaries as you see fit.

TL;DR (Too Long; Didn't Read)

Your estate planning technique – or lack thereof – will determine whether your stocks transfer to a beneficiary or joint owner or whether the state makes the decision about what happens.

Understanding Joint Ownership

If you own stocks with another person, you are both considered joint owners of the shares. When you die, the stocks immediately transfer to the surviving joint owner . The stocks don’t go through the probate process and are never included with your estate.

The surviving owner can contact the brokerage firm to get your name removed from the stock certificate . He must complete the form to retitle the stocks and provide the brokerage firm with a certified copy of your death certificate. The stocks are then registered in his name, making him the sole owner of your stocks.

Automatic Stock Transfer

Your stocks immediately transfer to a beneficiary when you die if you use the pay-on-death designation. Also known as transfer-on-death, the POD designation lets you give your stocks to a beneficiary outside of the probate process.

For example, say you own your stocks as John Doe, POD to Mary Smith. When you die, Mary immediately inherits the stocks. After completing the transfer form and submitting your certified death certificate, the brokerage firm will list Mary as the sole owner of the stocks.

Transfer Through a Will

If you die and leave a will, your beneficiaries will have to wait until your estate is probated to inherit your stocks . The court will appoint a representative to make sure your final bills are paid before your stocks are transferred. The terms of your will control how your beneficiaries inherit your stocks.

For example, if you leave 100 shares of stock to Jane Doe, John Doe isn’t entitled to receive those shares. If your will says your stocks are to be sold and the proceeds divided equally, Jane and John each will receive 50 percent of the net proceeds.

Let the State Decide

If you don’t identify the beneficiaries you want to inherit your stocks, your state’s laws will decide for you. You may think that your surviving spouse gets all your stocks when you die. However, if you have children, many states give your surviving spouse only a fraction of your stocks and divide the remainder among your children .

If you are single with no children, your stocks go to your nearest blood relatives , such as your parents or grandparents. If you have no blood relatives, your stocks pass to your state of residency .

More Articles

How Does a Transfer Upon Death Work on Investment Accounts? →

Gifting Shares of Stock →

Freely Transfer Shares →

  • Nolo Press: How Joint Owners Can Transfer Survivorship Property After Death
  • The Elder Law Firm of Robert Clofine: Uniform Transfer-on-Death Security Registration
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  • Elder Law Answers: What Happens If You Die Without a Will?

Based in St. Petersburg, Fla., Karen Rogers covers the financial markets for several online publications. She received a bachelor's degree in business administration from the University of South Florida.

What Happens to Stocks and Bonds after Someone Dies? | Illinois Probate and Estate Administration

Key takeaways, in this article....

transfer of stock ownership after death

In this article, we explain how to transfer stocks and bonds after someone dies.  We also answer the questions, "How to determine what stocks and bonds the decedent owns", "How to determine whether stocks and bonds should be part of a probate estate", as well as How to transfer sticks and bonds after someone dies", and "What if you can't find stock certificates and bonds when someone dies."

One of the responsibilities of an executor or estate administrator (collectively known as the “personal representative” of the estate) is to collect the assets of the deceased individual (“the decedent”) and disburse those assets to creditors and beneficiaries of the estate.   

How to Determine What Stocks and Bonds the Decedent Owned

In order to determine what stocks and bonds the decedent owned, the personal representative should check the decedent’s personal files, safe deposit box, and mail for the following:

  • Physical stock and bond certificates;
  • Statements from financial institutions such as banks, brokers, and advisors showing stock or bond ownership; and
  • Statements from corporations showing that the decedent owned corporate stock.

If the decedent possessed physical stock certificates and bonds, the personal representative should compare the values of the certificates you have located against interest statements from the companies to ensure that you have found all of them.  See below to find out what to do if some are missing.  

How to Determine Whether Stocks and Bonds Should Be Part of a Probate Estate

The manner in which a stock or bond (or stock or bond account) is registered determines whether the stock or bond should be included in the decedent’s probate estate.  To learn more about probate generally, check out our article: The Illinois Probate Process Explained .  

  • Stocks and Bonds Owned by a Trust: Instruments or accounts registered to a trust will generally be administered through the trust and not included in the probate estate.  
  • Stocks and Bonds that are Jointly Owned with Rights of Survivorship: If a stock, bond, or investment account is jointly owned with rights of survivorship, the instrument will not go through probate, but will instead transfer directly to the surviving owner.
  • Stocks and Bonds With Transfer-on-Death Designation: If the stock, bond, or account is registered with a transfer-on-death designation to a living beneficiary, the instrument will pass to this beneficiary without going through probate.  
  • Stocks and Bonds that are Jointly Owned Without Rights of Survivorship: If a stock, bond, or account is jointly owned with another person, but no rights of survivorship are indicated, half of the value of the instrument will go to the surviving owner, while the other half will go through probate.
  • Stocks and Bonds that are Owned in the Decedent’s Name: Stocks, bonds, and accounts that are owned exclusively in the name of the decedent will go through probate, unless a probate case is not required, in which case the instruments will pass to the beneficiaries of the estate via small estate affidavit.  To learn more about this, check out: When is Probate Required in Illinois?  

How to Transfer Stocks and Bonds After Someone Dies

If decedent’s stocks and bonds are held in an investment account by a financial institution, the process of transferring the account to the estate or to the name of a beneficiary is fairly simple.  The personal representative should contact the financial institution and determine what forms and documentation the institution requires.  This will usually consist of the financial institution’s internal transfer form, the Letters of Office issued by the probate court or Small Estate Affidavit if probate is not necessary, and a certified death certificate.  

If the personal representative finds physical stock and bond certificates of a private company, the personal representative should first determine the transfer agent of the company.  This can usually be found online or by calling the company’s investor relations department.  The personal representative will then generally be required to provide the following documents to the transfer agent:

  • The original stock certificate;
  • Letters of Office;
  • Certified death certificate;
  • Affidavit of Domicile;
  • Power of Assignment;
  • Letter of Direction;
  • A W-9 Form form the individual receiving the certificate.  

Savings bonds, which are issued by the government rather than a private company, follow a different process.  You can find the forms necessary to transfer savings bonds here .

Even if stocks and bonds are required to go through the decedent’s probate estate, the decent has the option to either transfer the instruments to the estate and then from the estate to the beneficiaries or, alternatively, to transfer the instruments directly to the beneficiaries while recording the value as part of the estate.  Which option makes sense depends on the complexity of the estate, the number of stocks and bonds, and how many beneficiaries are involved.

What if You Can’t Find Stock Certificates and Bonds After Someone Dies?

If the decedent possessed physical stock certificates and bonds, but the personal representative is unable to locate them, he or she should contact the transfer agent who will provide the forms required to obtain a new certificate.

About the author

Kevin O’Flaherty is a graduate of the University of Iowa and Chicago-Kent College of Law. He has experience in litigation, estate planning, bankruptcy, real estate, and comprehensive business representation.

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COMMENTS

  1. Transferring Stock Ownership After Death

    The easiest way to transfer stock ownership after death is through a transfer to a beneficiary. Shares held in a jointly owned account become the property of the surviving owner. Each brokerage's ...

  2. What Happens to the Ownership of Stocks After a Person Dies

    When a person passes away, the transfer of stock ownership will depend on the provisions made by the deceased before their passing. If a married person who held stocks jointly with a spouse...

  3. Transfer on Death (TOD): What It Is and How the Process Works

    A transfer on death designation is generally used for brokerage accounts, stocks, bonds, and other investment types. Key Takeaways Transfer on death (TOD) applies to certain assets that must be...

  4. How to Transfer Stock After Death

    The procedure for transferring ownership of stocks after someone passes away depends on how the deceased chose to hold the shares. An account beneficiary may be able to carry out the change of...

  5. When a Brokerage Account Holder Dies—What Comes Next?

    January 11, 2023 Death is an unavoidable fact of life—and of financial planning. When it comes to the death of a brokerage account holder, many firms have trained staff and resources to help the living manage estate matters such as how brokerage account assets will pass to heirs and beneficiaries.

  6. Transferring Assets

    Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity upon your death without having to go through probate. By having a TOD registration, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated.

  7. What Happens to Stocks When You Die?

    Generally, there are three ways a stock owner can prepare for the transfer of shares when they pass away: Add one of more beneficiaries to their investment account where the shares of stock are held transfer on death (TOD) beneficiary Bequeath shares of stock to heirs in their will

  8. Investment Accounts: Transfer Of Death

    For an individual account, a TOD registration generally allows ownership of the account to be transferred to the designated beneficiary upon your death. Do investment accounts pass through probate? NO, generally, as long as the TOD designation is in place.

  9. SEC.gov

    Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity (your "TOD beneficiary") upon your death without having to go through probate.

  10. Plan Now to Smooth the Transfer of Your Brokerage Account Assets on Death

    The account transfer process is a good opportunity to confirm your beneficiary designation is in accordance with your wishes. Account Ownership Structure. The type of account you own at the time of death dictates how assets are transferred and the documents required in doing so. Here are some common types of brokerage accounts:

  11. Transferring Stocks After Death

    Transferring Stocks After Death Where You Need a Lawyer: Zip Code or City: Chicago, IL 60290 Chicago HTS, IL 60411 Chicago Heights, IL 60411 Chicago Lawn, IL 60629 Chicago Ridge, IL 60415 (This may not be the same place you live) Choose a Legal Category: Family Law Real Estate and Property Law Criminal Law Personal Injury Employment

  12. How to Transfer Stocks Owned by the Decedent

    So, by following instructions, these are the steps I completed to transfer stocks owned by the decedent to the estate: Complete the enclosed Transfer Form. On the transfer form you provide information about the existing account, the new account, and the amount of shares to transfer.

  13. Managing the Account of a Deceased Shareholder

    Complete the forms online Computershare's website We can help If you find you are struggling with the process of transferring the shares and would like someone to contact you, send us an email with the deceased shareholder's name, a contact name, and telephone number. [email protected]

  14. How to Handle a Deceased Person's Investment Accounts

    Cashing in stocks of a deceased person can be done by going to a brokerage office and doing what is called a stock transfer. There will typically be a form that you fill out to transfer ownership, which will then become available at the brokerage office for your signature.

  15. Death of a shareholder: how to transfer shares owned by someone who has

    Death of a shareholder: how to transfer shares owned by someone who has died | Brodies LLP Our Insights Share Now Related insights The importance of tailoring articles where there is more than one shareholder by Liz Bruce Corporate Directors' duties: Are you aware of the "creditor duty"? by Lesley Wisely Corporate

  16. What is transfer on death (TOD) for estate planning?

    A transfer-on-death account is an arrangement that allows the assets held within a brokerage account or bank account to pass directly to a named beneficiary upon the account holder's death, thus ...

  17. Inherited Stock: Definition, How It Works, and Example

    Inherited Stock: A stock that an individual obtains through an inheritance after the original holder has died. The cost basis for the stock is based on the market value of the security upon the ...

  18. What Happens to the Ownership of Stocks After a Person Dies?

    If there was no will, the probate process will occur. You will be required to present a probate court letter or the will of the deceased to initiate the transfer of ownership of the shares left behind. Generally, you should follow the instructions the deceased's financial institution gives and present all the documents you have been requested ...

  19. The Guide To Liquidating Stocks After Death RMO Lawyers, LLP

    The decision to liquidate stocks should be made in accordance with the terms of the will and with the best interests of the beneficiaries in mind. If the will specifies that the stocks should be sold, then the executor is obligated to follow the terms of the will and liquidate the stocks. Likewise, if the will specifies that the stocks should ...

  20. What Happens to the Ownership of Stocks After a Person Dies

    Probate is a legal process for settling a deceased person's estate. When a person leaves stocks behind, a probate court must first determine who gets the shares and then direct the executor of the ...

  21. What Happens to Stocks Upon the Death of the Owner?

    Also known as transfer-on-death, the POD designation lets you give your stocks to a beneficiary outside of the probate process. For example, say you own your stocks as John Doe, POD to Mary Smith. When you die, Mary immediately inherits the stocks. After completing the transfer form and submitting your certified death certificate, the brokerage ...

  22. Joint Owners of Stock May Take Advantage of Transfer-on-Death Ownership

    4 Tips for Owning Jointly Held Stock in Beneficiary Form The following is an overview of some of the rules surrounding joint ownership of stock or mutual funds and registering the asset in beneficiary form: Stock or mutual funds that are owned jointly with another person can still take advantage of the Act and name a transfer-on-death beneficiary.

  23. What Happens to Stocks and Bonds after Someone Dies?

    In this article, we explain how to transfer stocks and bonds after someone dies. One of the responsibilities of an executor or estate administrator (collectively known as the "personal representative" of the estate) is to collect the assets of the deceased individual ("the decedent") and disburse those assets to creditors and beneficiaries of the estate.

  24. What Happens to Stocks When You Die?

    Naming beneficiaries, setting up transfer on death designations and creating a will or trust can help ensure that your stocks aren't stuck in limbo after you're gone.

  25. PDF Transfer of Ownership Package

    Transfer From Completed Transfer of Ownership with Substitute W-9 Form (enclosed). Single Owner (due to deceased owner) Transfer From Joint Account or Addition of Transfer on Death Completed Transfer of Ownership with Substitute W-9 Form (enclosed). If transfer is less than $10,000, please see page 10 for details regarding the Medallion

  26. How to transfer shares after the death of a shareholder

    The key considerations when a shareholder dies With business owners and beneficiaries in mind, here is a summary of the key considerations when transferring the shares of a shareholder who has died: Check the will, Articles of Association and any Shareholders Agreement