Choosing Beneficiary Ownership of Newly Acquired Stock

After creating your estate plan, certain situations and changes may prompt you to update the plan. For example, if your estate plan was designed to avoid probate administration upon your death, you may later receive or obtain an asset that must be handled to ensure it passes automatically to a beneficiary upon your death. One such example are shares of stock. One way to handle shares of stock is to change your form of ownership to beneficiary form, also known as transfer-on-death form. In many cases, you can do this without issue. The Uniform Transfer-on-Death Securities Registration Act allows brokerages to offer transfer-on-death registration.

Who Can Register Ownership of Stock in Beneficiary Form?

As the owner of stock or a mutual fund account, you can register ownership in beneficiary form if any of the following are true:

  1. Your legal residence is in a state that has adopted the Act.
  2. The stockbroker’s principal office is in a state that has adopted the Act.
  3. The issuer of the stock is incorporated in a state that has adopted the Act.
  4. The stockbroker is in a state that has adopted the Act.
  5. The office of the transfer agent is in a state that has adopted the Act. A transfer agent is a business that is authorized by a corporation to transfer ownership of its stock from one person to another.
  6. The office making the registration is in a state that has adopted the Act.

By registering the stock or mutual fund in beneficiary form, your beneficiary can easily claim the security upon your death without needing to undergo a formal probate administration proceeding solely for that asset.

Before making changes to your estate plan, it is important to consult with your attorney. We encourage you to contact us today for more information at (714) 459-5481.