Settling an estate is a process that takes months or even years when the estate is large and complex. It falls to the executor of the estate to manage the assets until the affairs of the deceased are taken care of and final distribution of property to heirs is complete. During her tenure, an executor may find it necessary to sell stocks or other securities. The securities can’t be sold until the executor changes the account name.
The Executor's Role
When you make out a will, you usually name someone such as an adult child or spouse to serve as executor of the estate. When there’s no will or designated executor, the probate court appoints an administrator to carry out the executor’s functions. It’s the executor’s job to take care of the deceased’s financial obligations, manage assets and distribute property to heirs. At times, an executor needs to sell stocks, bonds or other securities owned by the deceased. However, the name on an account holding these securities must be changed to the name of the estate before the executor can sell them.
A Personal Representative
Even when an executor is named in a will, she must take some preliminary steps in the probate process before she has the authority to change names on accounts and sell stocks or other assets. The executor must ask the probate court to formally designate her as the personal representative of the deceased. First, the will is read and validated by the court. Then the executor is given a letter of administration, also called a letter testamentary. At this point, financial institutions are legally bound to follow the executor’s instructions regarding the assets of the deceased.
Technically, changing the name on an account to that of the estate involves opening a new account and moving assets from the old account. The bank, brokerage or other financial institution requires the executor to present her letter of administration and a certified copy of the death certificate. Other documents needed include an application to open the estate account and an affidavit of domicile, which states where the deceased lived on the date of death. Finally, the financial institution needs a letter requesting the journal of the assets to the estate account, which is a request to move cash, stock and other securities to the estate account. The executor must sign the documents and obtain a signature guarantee.
Reasons to Sell Stock
Executors have a fiduciary obligation to safeguard the value of the estate assets and manage them on behalf of the beneficiaries. The executor can sell shares to prevent or minimize losses unless the will directs that the shares be transferred directly to a beneficiary. However, paying financial obligations of the estate takes precedence. These obligations include the cost of administering the estate, funeral expenses, debts owed by the deceased and estate or other taxes. If there isn’t sufficient cash to cover these costs, the executor may have to sell stocks to pay them.