FINRA launched the Securities Helpline for Seniors on April 20, and it became very popular, very quickly. In addition to calls from seniors, many calls came from adult children whose parents had died. The heirs weren’t sure what they needed to do to track down their parents’ broker-dealer account assets and how to transfer assets. In response, FINRA published an investor alert, “Plan for Transition: What You Should Know About the Transfer of Brokerage Account Assets on Death.”

The number of calls to the senior helpline concerning the transfer of brokerage accounts to heirs points to a demographic change now underway, as parents of Baby Boomers are passing on, and Boomers are looking for help. In Think Advisor’s “4 Steps to Transfer Deceased Parents’ Brokerage Assets: FINRA,” Michelle Ong, a spokesperson for FINRA, notes that “It’s important to get the word out about this helpline because it’s such a valuable resource.”

Beneficiaries should talk to the deceased’s financial advisor if available. The typical procedure for brokerages is to attempt to put beneficiaries in touch with the financial advisor right away. Advisors will be familiar with the parents’ investments and portfolio.

The article also points out that even though there are many seniors who share their estate planning strategies with their children, they may forget about the transfer of securities that are in a non-retirement brokerage account. Family members and other beneficiaries need to be prepared. These four tasks are recommended:

1. Find All of the Right Documents. Brokerages will need a death certificate, the court’s letter of appointment naming the executor, a “stock power” of attorney, a state tax inheritance waiver, an affidavit of domicile, as well as a trustee certification for accounts that are held in trust.

2. Call the Broker ASAP. When an account holder (the parent) dies, you need to contact the brokerage right away. Watch for account statements-you may not even be aware that an account exists!

3. Know How The Holdings Work. It’s best to have a candid conversation before a death to know the account holders’ assets, review account statements, and trade confirmations. The ownership structure is also something to think about, as asset transfers are impacted based on whether an account is for an individual owner or joint tenants.

4. Be Ready To Open a New Account. After a death, a new account is typically opened for the beneficiary or estate. Any transactions or transfers within the account can’t be completed until everything is legal, and the new account gets set up. It’s also the perfect time to see if the current firm and broker are a good fit.

Depending on the size of the brokerage accounts and its value, state law may provide for a Small Estate Affidavit to transfer the account without opening a probate.

The article urges beneficiaries to explore if there’s a transfer on death plan (TOD) available through the brokerage. If you create a TOD arrangement for your account, then you keep control of the brokerage account assets during your lifetime, and when you pass away, the ownership goes to the named beneficiaries without probate.

Be sure to discuss your options regarding brokerage accounts with your estate planning attorney.

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Philip J. Kavesh
Nationally recognized attorney helping clients with customized estate planning guidance for over 40 years.
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