Only two months after launching a helpline for seniors, FINRA has received a number of calls from stressed family members with questions about the transfer of brokerage account assets upon death, so it has released an extensive investor alert dealing with the issue.
Since the Financial Industry Regulatory Authority introduced the Securities Helpline for Seniors on April 20, FINRA has received more than 600 phone calls on a variety of themes, according to spokesewoman Michelle Ong.
But many of those calls came from adult children of deceased parents who were trying to track down their parents’ broker-dealer account assets, Ong added. As a result, she said, FINRA on June 17 released an investor alert, “Plan for Transition: What You Should Know About the Transfer of Brokerage Account Assets on Death.”
“It’s important to get the word out about this helpline because it’s such a valuable resource,” Ong said.
David Harlow, operations manager of independent broker-dealer Securities Service Network Inc. of Knoxville, Tennessee, said the FINRA alert is a step in the right direction for educating brokerage clients about important elements of the planning process.
However, Harlow urged beneficiaries to speak to the deceased’s financial advisor if one is available. Standard procedure for many brokerages, including Securities Service Network, is to try to get beneficiaries in touch with the financial advisor first.
“If they don’t know who their parents have been working with, we may be introducing them for the first time,” Harlow said. “Advisors are familiar with the parents’ investments and portfolio. They have the same expertise we have with the paperwork but also are better in terms of the practical experience of working with people during a time like this.”
While many seniors share estate-management information about wills, trusts and medical directives with their children, they often overlook the transfer of securities that are in a non-retirement brokerage account, the investor alert says. Family members and other beneficiaries should prepare by doing the following, according to the alert:
1. Collect the right documents. Brokerages typically request a death certificate, a court letter of appointment naming the executor, a “stock power” of attorney, a state tax inheritance waiver, an affidavit of domicile and a trustee certification for accounts held in trust.
2. Contact the brokerage as soon as possible. When an account holder dies, the brokerage should be notified in a timely manner. Family members should keep an eye out for statements, because they may be unaware that an account exists. And if an issue can’t be resolved by working with the broker or its estate transfer specialists, the family should contact the firm’s compliance department.
3. Understand the holdings. If possible, have an open conversation before a death occurs to understand the account holders’ assets, and keep statements and trade confirmations. In addition, ownership structure is a consideration because asset transfers are affected by whether an account is for an individual owner or joint tenants.
4. Be prepared to open a new account. After a death, a new account is usually set up for the beneficiary or estate. Any buying, selling or transfers within the account cannot be executed until legal authority is established and a new account gets opened. This is also a good time to assess whether the current firm and broker are a good fit.
Also, beneficiaries should look into whether there is a transfer on death plan, or TOD. “With a TOD, you keep control of the brokerage account assets during your lifetime. After you die, ownership is passed to the named beneficiaries,” the alert says.
For executors and trustees, FINRA’s alert references the American Bar Association’s, “Guidelines for Individual Executors & Trustees” and an AARP Bulletin, “5 Things to Know About Being Executor of an Estate.”
FINRA’S toll-free Securities Helpline for Seniors number is 844-574-3577.
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