How to Name a Beneficiary on Stocks
Transfer on death (TOD) is a stock registration that allows a stock to transfer on death to a beneficiary and avoid probate. Alternatively, registering a stock with joint registration with rights of survivorship (WROS) will allow the decedent's portion of the stock to transfer to the surviving shareholder. WROS provides each registered owner with equal rights in life and survivor's rights upon death. You should consult your financial adviser or lawyer to help decide which registration will be best for your situation and whether or not additional options are available.
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Instructions
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Contact your broker to determine the required paperwork if your stock is held at a brokerage and not in certificate form or in your name with the transfer agent. Most forms will require a notary or other certification procedures.
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Contact the transfer agent to set up a TOD registration if you hold your stock in certificate form. The transfer agent's contact information should be available from the investor relations department from the company issuing the stock.
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Provide information to your beneficiary about the registration. Be sure that your beneficiaries are aware of their status and try to leave them instructions to contact the transfer agent and request the stocks be re-registered. Although TOD avoids probate, the shares will need to be re-registered in the name of the beneficiary. In most cases, this will require a copy of the death certificate and a registration form.
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Select WROS when initially setting up your brokerage account. A joint account WROS will extend that registration to all assets within that account. Contact your broker should you choose to change the account registration after your account has already been established.
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Classify your registration as joint WROS when registering your shares with the transfer agent. When you obtain stock in certificate form or book form at the transfer agent, you do not have a brokerage account. In this case, the stock is registered directly with the transfer agent and you should request this registration type at the time that the stock is obtained.
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Verify your account registration with your additional account holders. With TOD, beneficiaries do not have ownership rights until death. Joint accounts WROS offer equal rights to account holders in life and survivorship rights in death. As such, it is expected that account holders with these registrations will be actively involved in their account, so they should be aware of the account status prior to the death of an account holder.
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