If you inherit stock from a person who has passed away, you may wish to redeem, or sell, the shares. Selling the shares is a simple matter, but ownership of the shares must be legally transferred before you can redeem them. The process of transferring ownership varies, depending on how the decedent held the shares. Additionally, the executor or administrator of the estate may be required to sell the shares and distribute the proceeds to comply with the decedent’s will or to satisfy creditors’ claims.
1. Determine how the deceased owner held the stock. If you and the decedent owned the stock jointly in an account with right of survivorship, you can simply place an order to sell the stock or transfer it to another account. However, if you are the beneficiary of an account owned by the decedent or you are left the shares pursuant to the will, you must have the stock transferred to your name before you can redeem the shares.
2. Contact the brokerage firm or other financial institution where the decedent held the stock. If you are named as the beneficiary of the account, the stock and other assets in the account do not have to go through probate. You will need to provide a copy of the death certificate and proof of your identity. The brokerage firm will transfer the shares to your name. Once the transfer is complete, you can sell the shares, hold them or move them to your own brokerage account.
3. Contact the transfer agent of the company that issued the shares if the deceased owner held the shares in an account with the transfer agent or as paper stock certificates. You can only do this if you are the executor or administrator of the estate. Shares held in these forms must go through probate and the executor or administrator must arrange for transferring ownership of the shares. As executor or administrator, first obtain a transfer of ownership form from the transfer agent.
4. Complete the transfer of ownership form. Take the form to a bank, credit union or brokerage firm and have your signature witnessed using a Medallion Signature Guarantee. Do not have your signature as executor or administrator witnessed by a notary public, as this will not be accepted. Transfer agents require the Medallion Signature Guarantee unless ownership of only a few shares is being transferred. The transfer agent will require decimation from the probate court authorizing the executor or administrator to act as the decedent’s representative. Additionally, the transfer agent will want a copy of the will or a statement from the probate court identifying the heir who is entitled to the shares.
5. Complete the transfer of ownership section on the back of paper stock certificates, if this is how the shares are represented. Send the transfer of ownership form, supporting documents and paper stock certificates to the transfer agent by certified mail. Once the transfer agent has processed the change in ownership, the executor or heir who now owns the shares can sell them or move them to another account simply by calling the transfer agent and placing the appropriate order.
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