NYC Estate Planning Lawyer: Estate Planning for Stocks and Bonds

The past few years have seen more and more people investing their money in stock and bonds. With the advent of mutual funds, investing in stocks and bonds became easier.

Additionally, brokers have made the process of trading in stocks easier, especially to the people that are busy.

Due to this, many people have ended up with a huge chunk of their holdings tied in stocks and bonds. The lawmakers have not been left behind, coming up with simple ways for people to leave their securities to their families without the need for probate.

Let us look how this works out.

Transfer-on-death (TOD) Registration

When you register for the stocks and bonds, you have the choice to make on how the securities will be passed on to the beneficiary.
One of the ways is to use the TOD. Here, the beneficiary doesn’t have any right to the stock as long as you are alive. So, when the papers that reflect ownership of the securities are issued, they will also reflect the names of the beneficiaries.

While you are still alive, you can do anything with these securities. You can sell them or give them away, choose a different beneficiary or even close the account with the broker without anyone contesting your decision. However, upon your death, the beneficiary has a right to claim the stocks and bonds without going through the probate process. All they need to do is to provide a death certificate and identification to the broker.

Unfortunately, you might find yourself in a state that doesn’t support this law, but the good thing is that you can forge ahead if the stockbroker has an office in a state that has adopted this law.

What if The Broker Fails to Cooperate?

We have many brokers that offer TOD registration, but they do this out of their own will and not as required by the government. If the state passed the law recently, then your broker might not have any information regarding it.
You have the option of educating the broker or using a broker that understands what is happening.
Joint Ownership

If you bought the securities as a joint account with your spouse, the law allows you to name beneficiaries as well.

This is true when you have a clause that allows your securities to pass to your spouse when you die. This means that the surviving spouse takes over full ownership of the account and can do anything they feel like with it.

When one of the account holders dies, the remaining one has the power to choose another beneficiary.

However, if you wish to have specific beneficiary to inherit the securities, then you can lock in one so that the surviving spouse has no option but to stick to the option.

When you have a joint account, your spouse has a right to the way you dispose of the securities as well – even if the account is fully registered in your name. However, the extent of the rights depends upon the laws in your state.
Naming Your Children as Beneficiaries

You are allowed to name a minor as a beneficiary to your securities. However, this comes with some complications. The law might not allow the minor to manage a property of a substantial amount without having an adult to supervise.

When this complication arises, you have the option of housing someone to manage the securities on behalf of the minor. Make sure you indicate who the person is on the registration document, naming him as the custodian of the property.
Handling Multiple Beneficiaries

When you decide to name more than one beneficiary, make sure you indicate the name son the form in no particular order. This means that the beneficiaries will inherit the stocks equally unless you declare otherwise.

If you wish to leave the beneficiaries unequal shares, then you need to consult with the broker to find out if his policy allows it.

If one of the beneficiaries dies before you do, then it is legal to name another one in their place. The surviving beneficiaries share the securities in equal measure.

You are always free to change the beneficiaries as you feel like without their consent. However, consider the implications because it might cause a strain in your relationship with the person.
Final Words

To plan your estate around securities, you need to work with an estate planning lawyer that understands all about the topic. They make things easy and fast for you.

You can get more information by consulting our expert estate planning lawyers at Trusts and Estates.