Q: My husband recently passed away with stock holdings in his estate. How do I manage these shares?
A: Often, executors and fiduciaries can face challenges while trying to marshal estate assets. While cash assets held in checking and savings accounts can be more straightforward to transfer to an estate, navigating a decedent’s interest in shares of stock can be a daunting task. Though the fiduciary has a responsibility to properly manage all shares that do not have beneficiaries designated, it may be difficult to start the process or communicate with the right representatives.
If you are an executor in this situation, you should first determine whether the stocks are held in a brokerage account or whether the stocks are held directly with the issuing company. If the assets are held in an investment account, you should promptly notify the brokerage to advise them of the passing, as well as your role as fiduciary. The brokerage will typically require you to complete a form that opens a new account in the name of the estate. You will also be required to submit a death certificate, as well as the Letters Testamentary or Letters of Administration from the Surrogate’s Court, which allow you to act.
Alternatively, if the stocks are held with a transfer agent (i.e., EQ Shareholder Services or Computershare), you must do some additional diligence to determine the decedent’s account number and the precise number of shares for each company. If you do not have this information, the transfer agent may send it to the last mailing address they have on file. Once you have all details, you must complete a form for each stock company authorizing a transfer to the estate. As with the brokerage, you must submit a death certificate and your Letters Testamentary to proceed, as well as the original stock certificate, should you have one.
Occasionally, if the holdings exceed a certain monetary value, the brokerage or transfer agent will require you to obtain a special certification called a “Medallion Signature Guarantee” from a financial institution. This Medallion is similar in function to a stamp from a notary public and verifies that you are legally authorized to transfer the stocks to the estate account. Banks and credit unions will offer a Medallion guarantee at no cost to their account holders, but be sure to check with the institution to determine which documents are needed for the seal.
When all documents are submitted to the brokerage and the estate account is opened, you may transfer the stocks “in kind” to each beneficiary, or you may sell all stocks and distribute the proceeds as cash to the beneficiaries. If you choose to liquidate the stocks, you should be aware that the stocks may be subject to capital gains tax if their value has increased since the decedent’s date of death. However, a direct transfer of stock to each beneficiary does not create a taxable event, and accordingly, no taxes would be due from this method.
Marshaling shares of stock can be quite challenging, especially if the decedent did not keep diligent records of their holdings. Nonetheless, fiduciaries have a responsibility to efficiently marshal all estate assets, including stocks. Coordinating with an experienced estate attorney can simplify a complex process and ensure that all assets are collected and distributed in an effective manner.
By Britt Burner, Esq. and Frank Oswald, Esq.
Frank Oswald, Esq. is an associate attorney at Burner Prudenti Law, P.C., focusing his practice areas on Trusts and Estates. Britt Burner, Esq. is the Managing Partner at Burner Prudenti Law, P.C., focusing her practice areas on Estate Planning and Elder Law. Burner Prudenti Law, P.C. serves clients from New York City to the East End of Long Island with offices located in East Setauket, Westhampton Beach, Manhattan, and East Hampton.
Frank Oswald, Esq. and Britt Burner, Esq.