For much older investors who owned shares for retirement and earned dividend income, there is no doubt a need to plan for what happens to all your investments upon death.
What kind of stock should be bought? In which industry? How much of it should be bought? What strategies should be put in place to ensure that they attain the objective for which you purchased them?
Indeed, there are different things to consider before you purchase stocks and even whilst you own them. Beyond these, there is also the question of what happens to them upon the death of the owner.
For much older investors who owned shares for retirement and earned dividend income, there is no doubt a need to plan for what happens to all your investments upon death.
Before listing out the options, it is important to note that your stock investments are assets. As such, they follow the same or similar methods to how you will treat your luxury cars upon death.
These essentially involve inter-generational wealth transfer through the use of a will or private trust. The first and most advisable method is to specifically detail what happens. In other words, you have the opportunity to choose your beneficiaries before the date comes.
To do this, you can create a will and specify which of your family members or friends your specific stocks should be handed to. The terms of your will, therefore, determine how your beneficiaries take over your stocks.
Following the same method by which your assets are secured and given to those you want them to be given to, your stocks can be added to your estate and given to your beneficiaries.
The court will, however, ensure that all the final bills of the deceased are paid before the stocks are transferred.
Asides using a trust, a much simpler approach to passing the stocks on is to write down a specific beneficiary on the stock certificate instead of going through the stress and costs that come with running an estate.
Just the same way you can change your will, you can also change the beneficiaries as many times as you want to. There is also the option of joint ownership.
This happens when you own stocks with somebody else. For example, the same way a man and his wife can purchase an asset like a refrigerator together as a couple, you can also purchase stocks as joint owners of the shares.
Upon the death of one person, the stocks are immediately transferred to the surviving owner.
There is also something called automatic stock transfer where you fill a transfer-on-death designation that allows you to give your stocks to a beneficiary. With this, you can also specify who gets what without having to write a full will.
The bottom line is that your stocks are assets that are transferrable. You get to control what happens to them at all times. Written by
Lawretta Egba.
