You’ve always invested in the stock market, and you’ve been successful. You’re happy to say that you have many stocks worth thousands of dollars, and you’d like to pass them on to your beneficiaries and have them continue to grow in value.

It is a good idea to look into the Uniform Transfer on Death Securities Registration Act if that’s the case. With this act, the owner of a stock, bond or brokerage account can name beneficiaries for the assets. This works similarly to a payable-on-death account at a bank.

Does a stock have to go through probate?

Not necessarily. Usually, transfer on death accounts go directly to the named beneficiaries. However, the brokerage will need to have the right TOD paperwork and documents in place to transfer the assets as intended. Any mistake in setting up the transfer on death could mean that the assets end up in probate.

The brokerage may reject the transfer if:

  • The TOD is not signed by the appropriate party, such as the trustee or executor of the estate
  • Forms were filled out incorrectly
  • Documents requested are outdated or were not notarized/given the necessary seals by the court

As you can see, transferring your stocks, bonds or other accounts isn’t necessarily straightforward. It’s a good idea to talk to your attorney about accounting for these assets in your estate plan so that you can work through what you need to be able to transfer these assets on death. If the correct documents are not in place, then your beneficiaries may find that they have to go through the probate process to access the assets that you intended to leave behind for them.