If you own valuable stock, mutual funds, or other investments, you may want to leave them to family members. There are a few ways to pass on your investment vehicles, and the right way for you depends on the type of investment and who you wish to receive it.
Pass on Investments In Your Will
Stocks, mutual funds, and similar investment vehicles belong to the person who purchases them. This means that you can pass on your investments to your chosen heirs in your will. If you have specific heirs in mind for specific investments, then you can spell out your choices in the legal document that you sign.
If you simply want to make sure that the investments become part of your estate and go to your heirs, then there is no need to list them specifically in the will. They will be included as part of your overall estate that is divided up in the manner you choose (such as half to your spouse and one-sixth to each of your three children). You should, however, make sure that your relatives can find your brokerage accounts or stock certificates if you pass away. For example, you might keep a list of passwords, paper files with the account opening documents, or a safe deposit box containing the stock certificates.
Pass on Investments Without the Need for Probate
If you pass on investments in your will and you own other property too, it is likely that your executor will have to probate the will. This requires an expensive and possibly lengthy court proceeding. People who would rather pass on their investments outside probate should consider taking advantage of transfer-on-death securities.
A transfer-on-death security works like a payable-on-death (P.O.D.) bank account. When you take ownership of a stock or other security, you specify that you want to own it in transfer-on-death or beneficiary form. Most brokerages offer this option when purchasing securities, though you may need to ask about it or fill out special paperwork.
Transfer-on-death securities work just like other securities until you pass away. During your lifetime, you can do whatever you want with the transfer-on-death security – including sell it or transfer it to a different owner. After you pass away, your chosen beneficiary can take ownership of any of these securities that you still own without going through probate. Transfer-on-death registration allows an easy change of ownership directly to the beneficiary you desire.
Planning your estate? Look to Janet Brewer, Esq. for thorough and thoughtful estate planning advice. Janet’s more than 20 years of legal experience will give you confidence and peace of mind. To schedule a “Get Acquainted” meeting, visit Janet's website or call her office at (650) 469-8206.