If you’re responsible for a parent’s finances, have you discovered important stock documents hiding in their files or piles of papers and mail?
These could consist of paper stock certificates, statements, or dividend checks possibly issued by transfer agents, such as Computershare or EQ Shareholder Services.
Transfer Agents
What is a stock transfer agent?
A transfer agent is a financial services company that is an intermediary between stock issuers and stockholders. It handles the recordkeeping, reporting, and distribution of stock dividends for the companies it represents. A transfer agent does not charge stock owners a fee for holding their stocks.
How do stocks end up at a transfer agent?
Stock shares may have resulted from spin-offs of stocks held in certificate form or been granted through employee stock option plans.
Why would multiple transfer agents manage an investor’s stocks?
If your parent invested in companies serviced by different transfer agents, the transfer agent for each company would handle their accounts.
What are the different ways individual investors hold stock?
Common means of stock ownership include holding stock via a transfer agent, with a brokerage firm, or in certificate form. Stock certificates are rarely issued these days, but you still may find some among your parent’s documents.
Options and Actions
What could you do if stocks are with transfer agents?
An easy action is to set up direct deposit for dividends, eliminating paper checks.
If your parents hold paper stock certificates, investigate whether they have a brokerage account and transfer the certificates to it. If no brokerage account exists, consider opening one and depositing the certificates so the portfolio can be managed and secure.
What are your options for shares held at a transfer agent?
- Retain shares at the transfer agent. Make sure the shares are titled correctly.
- Sell the shares via the transfer agent. Direct the proceeds to a linked bank account.
- Sell the shares directly. Refer to your documentation or call the transfer agent to learn what is involved. Be sure to find out the cost basis for tax purposes.
- Move the shares. Transfer the shares from the transfer agent to a brokerage account. This is a good option for consolidating your parent’s financial affairs.
What are the advantages of moving shares to a brokerage account?
Managing all financial assets in one place is key to simplifying your parent’s financial affairs. Investments consolidated at one firm will facilitate dividend collection, tax preparation, and estate planning.
In addition, brokerage account fees have dropped substantially, so any savings from transfer agents holding stocks is less significant.
What is required to move the shares?
Check with the brokerage firm to determine what you’ll need to move the shares. Documents may include:
- A recent account statement for each account with a transfer agent
- The acquisition date for each share. This might involve researching historical data on stock splits, etc.
- The cost basis for each security. Again, this may include research as with splits.
- Where the shares originally came from.
- Transfer agent company’s DTC number –a financial institution’s unique identifier that facilitates security transfers.
- Confirmation that the shares are not restricted.
- Forms may need to be signed with a medallion guarantee.
This list is evidence that retaining all stock documents is a must. Statements, receipts, correspondence, etc., authenticate stock ownership history, which is necessary for tax purposes. This documentation is especially important if investments are sold or gifted while your parent is alive.
See other articles in this series – Part 2: “Cash Stashed Under the Mattress;” and Part 3: “Uncashed Checks Going Stale.“ and Part 4: “Uncovering the Coverage.”
For information on our services in this area, please visit our LifeKeeping page.