Securities refer to shares of stocks, bonds, debentures, and various interests involving an investment in which the return is primarily or exclusively dependent upon the efforts of a person other than the investor.
The sale, purchase, and creation of security interests are governed by several federal laws and regulations, which aim to ensure that all investors, whether large institutions or private individuals have access to specific basic facts about an investment before investing.
The Securities and Exchange Commission (SEC) in the United States enforces securities law. Its primary task is to protect investors and maintain the integrity of the securities market. To accomplish this, the SEC requires public companies to disclose all meaningful financial and relevant information to the public. This enables the public to evaluate security investments to the best of their ability and knowledge.
Can Stocks or Securities Be Transferred to Beneficiaries?
Passing on stocks and securities to beneficiaries through estate planning is generally possible. This can be achieved by including them in a legally valid will. However, not all states allow such a transfer, and some have adopted the Uniform Transfer on Death Security Registration Act, which allows people to name their beneficiaries for their securities without going through the probate process.
The Uniform Transfer on Death Security Registration Act is a law that allows people to name who they wish to inherit their stocks, bonds, bank accounts, and other securities without going through the probate process. The transfer of such securities can be accomplished through a transfer on death provision (“TOD”) for securities accounts or pay on death provision (“POD”) for bank accounts.
One of the main advantages of using the Uniform Transfer on Death Security Registration Act is that it allows the transfer of securities to beneficiaries outside the probate process. This means that the transfer of securities can occur quickly and efficiently without needing a court proceeding. This can save time and money for both the estate and the beneficiaries.
Another advantage of using the Uniform Transfer on Death Security Registration Act is that it allows people to avoid potential probate disputes. Probate disputes can arise when family members or other beneficiaries disagree about the distribution of assets. By using the Uniform Transfer on Death Security Registration Act, you can avoid probate disputes by clearly stating who will inherit your securities.
To use the Uniform Transfer on Death Security Registration Act, you must register your securities as being transferable on death with a financial intermediary, such as a brokerage house or bank. This process typically involves filling out a form and designating a beneficiary for the securities.
Once the registration is complete, the beneficiary will be able to receive the securities upon your death without going through the probate process.
All states do not recognize the Uniform Transfer on Death Security Registration Act. Therefore, those who wish to use this law should consult with an estate planning attorney to determine whether it is available in their state and how to use it properly.
What Are the Benefits of Transferring Ownership of Securities, and How Can It Be Done?
Transferring securities through the Uniform Transfer on Death Security Registration Act allows for the quick and easy transfer of ownership to beneficiaries without probate. This means the securities can be liquidated into cash quickly and used to pay for estate expenses and debts.
To transfer ownership of securities, they must be registered as transferable on death with the financial intermediary from whom they were purchased. For example, if the securities were purchased from a brokerage house, they must be registered as transferable on death with the same brokerage house. After the owner’s death, the beneficiary can request to have the securities registered in their name, usually by providing proof of the death certificate.
What Else Should I Know About Securities?
Investors should be aware of legal procedures for transferring securities and adhere to them. The Securities Act of 1933 was established to prohibit fraud, deceit, and misrepresentation in the sale of securities.
Insider trading and fraud are the most common forms of securities abuse, which can result in theft from securities accounts.
Here are a few examples of insider trading:
- A corporate executive learns that their company is about to be acquired by another firm and purchases a large number of shares in the company before the acquisition is publicly announced.
- An employee of a pharmaceutical company learns that a new drug is about to be approved by the FDA and purchases shares in the company before the information is made public.
- A board member of a tech company sells their shares in the company after learning that the company is experiencing financial difficulties that have not yet been disclosed to the public.
Fraud in the transfer of stocks after death is a relatively rare occurrence, but it can happen.
Here are a few examples of fraudulent activities related to the transfer of stocks after death:
- Forgery of documents: A beneficiary may forge documents or signatures to make it appear as if they are the rightful inheritor of the stocks or securities when they are not.
- Misrepresentation of identity: A person may pretend to be the rightful inheritor of stocks or securities by impersonating the deceased or the intended beneficiary.
- Theft of documents: A person may steal important documents, such as a will or a transfer on death form, in order to transfer stocks or securities to themselves.
- Unauthorized trades: A financial advisor or other person with access to a deceased person’s securities account may make unauthorized trades on behalf of the account, resulting in financial losses for the estate and beneficiaries.
If securities fraud is suspected, potential remedies include:
- Notifying law enforcement.
- Beginning a class action lawsuit.
- Contacting the Securities and Exchange Commission.
Investors should ensure their brokerage firm is licensed by checking with the Financial Industry Regulatory Authority (FINRA) or the Securities and Exchange Commission. This is important because licensed brokerage firms are regulated and must follow specific rules and regulations designed to protect investors.
Checking with the Central Registration Depository (CRD) is also important to verify that the broker is licensed and has not had any disciplinary actions taken against them.
Finally, maintaining communication with the broker is important to stay informed about any changes in the investor’s portfolio and to ensure that the investor’s investment goals and risk tolerance are being met. Regular communication with the broker can also help prevent fraudulent activity or errors in the handling of investments.
Do I Need an Attorney for Estate Planning and Transferring Stocks After Death?
A skilled securities attorney can help plan an estate, including transferring stocks and securities after death. They will be familiar with specific state laws and can ensure that securities are properly registered and provisioned. An estate attorney can also advise on legal options for avoiding taxes and transfer issues.
LegalMatch is an online legal matching service that can help you find a securities attorney experienced in estate planning and transferring stocks after death. You can submit your case for review and receive multiple attorney referrals based on your specific needs and location. This allows you to compare attorneys and choose the one you feel best suits your case. LegalMatch also offers a satisfaction guarantee to ensure you are happy with your chosen attorney.
Use LegalMatch to find a securities lawyer today.
