What Is the Procedure to Transfer Stock From a Deceased Owner to a Beneficiary?

By Tom Streissguth

The transfer of stock shares after a shareholder's death requires a series of steps by the legal representative of the deceased. An executor, trustee or personal representative may have authorization to complete the transfer, according to the terms of a will. Banks and brokerages have standard operating procedures that follow the legal requirements for a transfer of shares.

The transfer of stock shares after a shareholder's death requires a series of steps by the legal representative of the deceased. An executor, trustee or personal representative may have authorization to complete the transfer, according to the terms of a will. Banks and brokerages have standard operating procedures that follow the legal requirements for a transfer of shares.

Executors and Personal Representatives

A will controls the distribution of assets after the death of an individual. If the individual does not have a valid will, he's "intestate" and state law governs inheritance by the survivors. An executor named by the will manages the transfer of stock shares; when probate court handles intestate individuals, the court names a personal representative to carry out this responsibility. Only persons with legal authority to handle the assets of the estate may transfer stock shares and other property.

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Named Beneficiaries

Wills, trusts and insurance policies name beneficiaries who are to receive assets upon the death of the original owner. A beneficiary may also be named on a bank or investment account. This means the assets in the account go directly to the beneficiary or, in some cases, a joint account-holder. No transfer by a third party is required; the "payable on death" or "transfer on death" account automatically overrides any provisions in a will.

Transfer Procedure

When a will goes through probate, the court issues a letter authorizing the executor to handle the estate's assets. The executor uses this authorization to notify the brokerage or transfer agent that holds the stock certificates. The brokerage then sends the certificates and a transfer of ownership form to the executor, who brings the forms to the bank. By rules enforced by the Securities and Exchange Commission, stock transfers require a Medallion Signature Guarantee for the executor's signature on the certificates. After the medallion guarantee is issued, the executor then returns the documents, along with a copy of the will, back to the transfer agent, who re-issues the certificates in the name of the beneficiary.

Street Name Stocks

If the shares are held in "street name" or "book entry" form by a broker, there are no physical certificates to transfer or re-issue. Instead, an executor must complete a stock power form, which authorizes him to handle the transfer through the broker. The stock power requires the name, address and Social Security number of the new owner, as well as a medallion-guaranteed signature of the executor. IRS rules also require that the new shareholder complete a W-9 form, which lists his taxpayer identification number for the broker's tax-reporting purposes.

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Inheritance Rights After a Death

References

Related articles

What Is an Executor Deed?

An executor’s deed is used to transfer real property from the estate of a deceased person to an heir pursuant to the terms of a will. It is similar to an administrative deed, which is used when a person dies without a will. The executor of an estate is the person appointed in the will to marshal the deceased's assets, determine what debts and liabilities need to be paid out of estate funds and ultimately distribute the assets to designated heirs or beneficiaries.

Inheritance Transfer Laws in Oklahoma

A person can acquire a significant amount of money and property during his lifetime. These assets are collectively called an estate. When the owner dies, his heirs may be eligible to inherit from that estate. Title 84 of the Oklahoma Statutes sets forth the procedure for inheritance transfers, either from a will, by intestate succession (when the owner died without leaving a valid will), or automatically by right.

Wills & Shareholder Agreements

Privately-held companies may have restrictions in their shareholder agreements regarding the transfer of company shares to others. This includes the transfer of stock by a recently deceased shareholder through his will. How these agreements influence the distribution of stock through a will to a beneficiary depends on the content of the specific agreement. Please note that laws governing the distribution of property vary by state. Consider hiring a professional to help you interpret your state’s probate laws and the relevant shareholder agreement.

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