How to Redeem Stocks for Deceased Owners
Unless you are the joint owner of the stock with right of survivorship or the stock was titled as "transfer on death" to you, you will need to be the executor or appointed representative of the the deceased's estate to redeem stocks. Assuming you are the executor and enough cash is available to pay debts and expenses, the easiest solution may be to transfer stock directly to the heirs named in the will and let them keep it or redeem it. You may need to liquidate stock to pay expenses or to ensure proper division of the estate under the will, or the heirs may agree that they prefer the cash.
Probate the will. This is normally done by filing the will with the court in the state and county where the deceased lived. The court will then issue letters testamentary that you will use to prove your authority to act on behalf of the estate.Step 2
Set up an estate account with a bank. You must have an estate account set up to receive any assets and not co-mingle estate assets with your own assets. Setting up the account will also require filing for a federal tax ID number. This is like the estate's Social Security number for tax purposes.Step 3
Review the will to make sure you can liquidate the stock and it isn't listed as a specific bequest. For example, the will might state that "all shares of XYZ stock go to my daughter, Mary Smith." In that case, the stock would have to be transferred to Mary Smith unless those assets are required to settle the debts of the estate. In that case a special court order may be required.Step 4
Reregister all stocks in the name of the estate as soon as possible after receiving the letters testamentary. This will probably involve contacting the broker or agent for the stock and completing the necessary paperwork. In addition to completed forms, the agent will want you to submit letters testamentary, a certified copy of the death certificate and possibly a copy of the will.Step 5
Sell the stock by contacting the broker or agent. Often this can be done online by setting up an account. Have the proceeds deposited directly into the estate account or request a check made out to the estate. Don't accept or cash a check made out to you. The funds will first need to be deposited into the estate account before being distributed.
- In some cases you may need to sell stock immediately -- if, for example, the stock is very volatile and could lead to a severe loss to the estate if it isn't sold. In that case, you may be able to petition the court for the right to sell assets before letters are issued.
- If any stocks were held as certificates, you will need to send those for transfer.
- Copy all forms before submitting them. Make copies of any stock certificates.
- It may be beneficial to work with a lawyer to make sure you meet all your responsibilities.
- The agent may require a Medallion Signature Seal to verify your signature and your authority to act as executor. This is often available at financial institutions.
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).