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.
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.
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.
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.
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.