How to Name a Beneficiary on Stocks

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When you leave stock to heirs in your will, the shares go through probate. It can take months or years until stock is actually passed on to beneficiaries. You can sidestep probate entirely by naming a beneficiary on stocks. Beneficiaries can be individuals or organizations like charities. To name a beneficiary for stocks, you must register the shares in what is known as transfer-on-death form.

TOD Stock Registration

  • The procedure for registering stocks in TOD form depends on the way you hold the shares. Most people keep shares in a brokerage account or in an account with the transfer agent of the company that issued the stock. In either case, request a registration form, complete it and submit it to the account provider. Once this is done, ownership is registered in TOD form. For example, the registration might read: “John Smith, TOD Mary Smith.” You can name multiple beneficiaries and even stipulate how much each beneficiary is to receive provided the account provider’s policy includes these options.

Managing Stocks with Beneficiaries

  • Beneficiaries have no rights to or control of the stock as long as you live. An important point is that TOD registration sets aside provisions of a will. The Wall Street Journal warns that you should carefully review all your estate plans and periodically make sure TOD registration and your will reflect you current wishes and aren’t outdated or in conflict with each other.

References

  • Photo Credit Wavebreakmedia Ltd/Wavebreak Media/Getty Images
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