How to Transfer Funds From Inherited Stock

How funds from inherited stock are transferred will depend on how the stock was titled at the time of the deceased individual's death. If you are one of the joint tenants with rights of survivorship or the stock was titled as transfer on death -- TOD -- to you, the transfer is automatic and simply involves informing the transfer agent. If the stock is titled in the name of the deceased, it must go through probate and be transferred by the executor or appointed estate representative.

Joint Tenants With Rights of Survivorship or TOD Transfers

Step 1

Request a death certificate from the executor, if it's not you, if the stock was titled as joint tenants with rights of survivorship or transfer on death. Or contact your state's office of vital records. You may have to provide some proof that you are eligible to receive the certificate.

Step 2

Contact the transferring agent for the inherited stock. You should find this on the most recent statement. As a joint owner with rights of survivorship or the recipient of a transfer on death, you automatically own the stock when the other or original owner dies. But unless you inform the agent and have the deceased's name removed from the account, you will have to provide proof of the owner's death at some later date to sell or transfer the stock to someone else. Also, your heirs would have to get a death certificate for the original owner if you left the stock to them in your will.

Step 3

Read instructions sent by the transfer agent carefully and complete all necessary forms. Most likely you will need to include the account number from the account statement. The agent will most likely ask you to include a certified copy of the death certificate, but the agent might accept a photocopy. He may also require that your signature be notarized. If you have any stock certificates, you will have to send them in to have the name changed.

Transfer by Executor

Step 1

Obtain certified copies of the letters testamentary. This is a letter showing that you have the right to act as executor of the deceased's estate and is usually issued during probate. You may have to pay for a certain number of copies, and they may expire on a specific date, but you will need this letter to prove you have the right to transfer the stock.

Step 2

Contact the transfer agent and request the necessary forms to transfer ownership. This information should be available on the account statement. Also review the statement to determine if any stocks were held as certificates and make sure you have those in your possession.

Step 3

Review the will to determine how the stocks should be transferred. The will might name a specific person to receive a certain stock, or it may name several heirs, usually to receive equal shares. You will need to complete the transfer forms accordingly. For example, if two heirs are to receive equal shares, you will list both of them on the form and indicate the percentage or number of shares each should receive.

Step 4

Get a Medallion Signature Guarantee. This is provided by certain financial institutions, like banks, but they will usually require that you hold an account with them. Sign the forms indicating your capacity -- for example, Joe Smith, executor.

Step 5

Submit the completed forms to the stock transfer agent along with a certified death certificate, a certified letter testamentary appointing you executor and any stock certificates. The agent will reissue the transferred shares under the titles requested.

Items you will need

  • Account statement
  • Stock certificates
  • Account number
  • Death certificate
  • Letters testamentary

Tips

  • Some states require an inheritance tax waiver. Check on your state's website or with your lawyer.
  • You will need to know the deceased share owner's Social Security number, which should appear on the death certificate, as well as the Social Security or tax ID numbers of the transferees.

Warnings

  • If sending actual stock certificates, always make photocopies for your records.
  • If your name is different from how it appears on the account -- for example, if you married or divorced -- sign your name as it appears on the current registration, then sign a.k.a with your current name. You may also be required to include proof of the change, such as a copy of your marriage license or divorce papers.
  • Laws vary by state, and transfer agents may vary on what they need. Consider contacting an estates and trusts lawyer.

About the Author

Nancy Cross is a certified paralegal who has worked as an employee benefits specialist and counseled employees on retirement preparation, including financial and estate planning. In addition to writing and editing, she runs a small business with her husband and is a certified personal trainer with the Aerobics and Fitness Association of America (AFAA).

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