If you obtain shares of stock or a mutual fund after creating your estate plan, it is important to consider whether it is time to update the plan. For example, if you designed your plan in order to avoid the need for probate administration after your death, you may wish to ensure that the stock or mutual fund passes automatically to another individual without requiring court oversight.
One way of doing this is to take advantage of the Uniform Transfer-on-Death Securities Registration Act to change ownership of the stock or mutual fund account to beneficiary form. This can typically be done even if you own the stock or mutual fund account jointly with someone else.
4 Tips for Owning Jointly Held Stock in Beneficiary Form
The following is an overview of some of the rules surrounding joint ownership of stock or mutual funds and registering the asset in beneficiary form:
- Stock or mutual funds that are owned jointly with another person can still take advantage of the Act and name a transfer-on-death beneficiary.
- You and the co-owner must have “rights of survivorship” in the account or stock in order to take advantage of this Act.
- When the first owner dies, the survivor of the stock automatically takes full ownership.
- When both owners have died, the transfer-on-death beneficiary inherits the stock.
It is important to note that when the first joint owner dies, the survivor is free to change the beneficiary to another individual, regardless of the wishes of the first owner. If you have concerns about this happening, consider opening a separate account in your name only, and name the beneficiary that you choose.
Understanding the best way to hold your assets as part of your estate plan requires guidance from an experienced professional. We encourage you to contact us today at (714) 282-7488 for more information.