Do stocks have to go through probate? Guide

Do stocks have to go through probate?

This article answers the question “do stocks have to go through probate” and explains when publicly or privately held stocks (and securities in brokerage accounts) become probate assets after an owner’s death. You’ll learn the key factors that determine probate exposure, the probate workflow for securities, practical transfer steps with brokers and transfer agents, probate-avoidance options (TOD/POD, joint tenancy, trusts, beneficiary designations), tax implications, common complications, and an actionable checklist for executors and beneficiaries. Read on to reduce delay, cost, and uncertainty when securities are involved.

Overview / Executive summary

In short: do stocks have to go through probate? It depends. Stocks titled solely in a deceased person’s name usually become probate assets and must pass through the probate court process before final distribution. However, many common ownership structures and designations — transfer-on-death (TOD) or payable-on-death (POD) registrations, joint tenancy with right of survivorship, revocable (living) trusts, and clear beneficiary designations on retirement and insurance accounts — typically allow stocks and other securities to bypass probate and transfer directly to named beneficiaries.

Key takeaway: if you want to avoid the time and cost of probate for stocks, confirm account titling and beneficiary designations now and use TOD registrations or trusts where appropriate.

As of 2025-11-10, according to Bankrate, more investors are using beneficiary designations and TOD registrations to keep brokerage assets out of probate, especially given the administrative delays courts can introduce after a death.

Key factors that determine whether stocks go through probate

Whether or not stocks go through probate depends on several interlocking factors. Below are the most decisive.

Account titling (ownership form)

Account titling — the exact legal ownership wording on the brokerage account or certificate — is usually decisive in determining probate exposure. Common forms:

• Sole owner (e.g., "John A. Smith" only): Stocks in an account or certificate titled solely to a decedent typically become part of the probate estate and require court supervision for transfer.
• Joint tenants with right of survivorship (JTWROS): Surviving joint owners usually receive the shares automatically outside probate.
• Tenants in common: Each owner holds a divisible share that can pass under a will or by intestacy and often requires probate to transfer the deceased owner’s portion.

Because titling language matters, always check account statements and the account agreement to confirm how ownership is recorded.

Transfer-on-Death (TOD) / Payable-on-Death (POD) designations

Many broker-dealers and transfer agents — and a majority of U.S. states — allow transfer-on-death (TOD) or payable-on-death (POD) designations for securities. When a valid TOD/POD beneficiary is named, that designation typically controls and the securities pass directly to the named beneficiary without probate, provided the broker or transfer agent has the beneficiary on file and the proper documentation on death.

Typical TOD process: beneficiary is recorded on the account, the owner retains full control while alive, and after the owner’s death the beneficiary provides the death certificate and affidavit/forms to re-register shares in the beneficiary’s name.

Joint ownership with right of survivorship

Joint tenancy with right of survivorship is a common non-probate transfer method. Under JTWROS, ownership transfers automatically to the surviving owner(s) on death. This generally avoids probate, but it can expose assets to the surviving owner’s creditors and may have unintended estate-tax or Medicaid planning consequences.

Living trusts and other inter vivos trusts

If securities are titled in the name of a revocable living trust or another trust that owns the assets, the trust (not the deceased individually) owns the securities. The trustee administers transfers per the trust terms without probate. Funding accounts correctly into the trust is essential; merely having a trust document without retitling assets into the trust does not avoid probate.

Retirement accounts and life insurance

IRAs, 401(k)s, and life insurance policies typically use beneficiary designations that override testamentary documents and transfer outside probate directly to beneficiaries. These accounts follow their beneficiary forms, so keeping those forms current is crucial. Note that these assets follow different tax and withdrawal rules from taxable brokerage accounts.

State law variations and statutory regimes

State laws vary. Some states have adopted statutory TOD regimes (e.g., the Uniform TOD Security Registration Act) that standardize the treatment of TOD securities. Small-estate or summary transfer procedures also differ by state and can allow transfers without full probate when estate values fall below statutory thresholds (often in the range of $10,000 to $150,000, depending on jurisdiction).

The probate process for stocks (what happens if they do go through probate)

If stocks must go through probate, the process typically follows these steps:

1. Filing the will and opening probate: The executor files the decedent’s will (if any) and a petition to open probate in the decedent’s county probate court.
2. Appointing executor/administrator: The court issues letters testamentary (with a will) or letters of administration (intestate) confirming the executor or administrator’s authority.
3. Inventory and valuation: The executor identifies and inventories assets including brokerage accounts and individually held stock certificates, and obtains valuations as of the date of death.
4. Estate account setup: The executor may open an estate bank account to collect dividends, sale proceeds, and pay estate expenses.
5. Court authority to transfer or sell: The executor obtains court authorization to re-register, transfer, or liquidate securities for payment of debts and taxes if required by the court or by estate needs.
6. Paying debts and taxes: Creditors’ claims are processed and estate taxes (if any) are calculated and paid.
7. Final distribution: After obligations are satisfied, the court supervises distribution of remaining assets per the will or state intestacy rules.

Probate timelines vary widely but commonly take several months to more than a year; complex estates and contested matters take longer. Executors must follow fiduciary rules and may be personally liable for missteps.

How stocks are practically transferred after death (brokerage and transfer-agent procedures)

Executors and beneficiaries typically follow a set of administrative steps to transfer brokerage securities or certificate-based holdings:

• Notify the broker or transfer agent of the account holder’s death.
• Provide the certified death certificate and identity documents for the beneficiary or executor.
• Provide letters testamentary or letters of administration if the account is payable to the estate or requires court authority.
• Complete the broker’s or transfer agent’s transfer or re-registration forms (many firms have specific beneficiary-claim or TOD transfer forms).
• Decide whether to re-register shares in the beneficiary’s name, leave them in an inherited account, or liquidate shares as part of estate settlement.

If the shares are certificated (paper stock), the transfer agent typically requires the certificate, a death certificate, an indemnity bond (sometimes), and transfer forms. If the securities are held in street name at a broker, re-registration is primarily administrative once documentation is provided.

Ways to avoid probate for stocks

Avoiding probate avoids delay and court costs. Common techniques include:

Naming TOD beneficiaries on brokerage accounts

Transfer-on-death registration keeps the owner in control while alive and names a successor beneficiary who receives the securities directly upon death. To use TOD:

• Contact your broker or custodian and request TOD/TPS registration for the relevant account/shares.
• Provide complete beneficiary information and keep it up to date.
• On death, the beneficiary presents required documents (death certificate, ID, and broker forms) to re-register the shares.

Brokerage requirements vary, but TOD is widely available for brokerage accounts and individual securities in many states.

Titling jointly with survivorship rights

Joint accounts with right of survivorship (JTWROS) pass automatically to the survivor(s) at death. Benefits: simple, immediate transfer. Downsides: potential creditor exposure to co-owner, gift-tax and estate-tax issues, and possible problems when relationships change.

Funding a revocable living trust

Move accounts into a revocable trust by retitling the securities in the trust’s name or by naming the trust as beneficiary where permitted. The trustee then administers transfers under the trust’s terms with no probate.

Beneficiary designations for retirement and insurance accounts

Retirement plans and life insurance policies generally transfer by beneficiary form, bypassing probate. Keep beneficiaries current after major life events (marriage, divorce, births, deaths).

Small-estate and summary transfer procedures

Many states provide streamlined procedures for low-value estates. These thresholds and procedures vary (a common range is $10,000–$150,000). Executors or beneficiaries can use affidavits or simplified petitions to obtain transfers without full probate.

Tax and financial implications

When dealing with inherited securities, consider tax and financial consequences:

• Stepped-up basis: For taxable brokerage accounts, beneficiaries typically receive a stepped-up (or stepped-down) cost basis equal to the market value at the decedent’s date of death (or alternate valuation date if elected). This can substantially reduce capital-gains tax when heirs sell inherited securities.
• Retirement accounts: Traditional IRAs and 401(k)s have different income-tax rules on distribution; beneficiaries must understand required minimum distribution rules and potential tax liability.
• Estate tax: Large estates may be subject to federal estate tax (depending on exemption thresholds) or state estate/inheritance taxes. Titling strategies may affect estate tax exposure.
• Market risk and timing: Probate delays can affect a security’s value if the executor must hold or liquidate during volatile markets. Executors should follow fiduciary duties and may obtain court guidance on timing for sales.

Because tax rules are complex and change over time, consult a tax advisor for specific situations.

Common problems and complications

Even with good planning, challenges arise.

Missing or outdated beneficiary designations

Beneficiary forms on retirement accounts and payable-on-death/TOD designations normally supersede wills. A will that attempts to distribute assets already controlled by a beneficiary designation may not override the beneficiary form. Missing or inconsistent beneficiary designations cause delays and possible litigation.

Securities held in foreign accounts or custodians

Foreign custodians and cross-border holdings can create jurisdictional challenges; local probate or ancillary probate may be required in the foreign jurisdiction. Different documentation and translation needs add time and cost.

Privately held shares and transfer restrictions

Privately held stock often has transfer restrictions: shareholder agreements, right-of-first-refusal, or company bylaws may require company or shareholder approval before transfers. These restrictions can complicate probate or TOD transfers if the company’s transfer rules apply on death.

Executor liability and fiduciary duties

Executors must act prudently, inventory assets, collect valuations, pay creditors and taxes, and avoid self-dealing. Errors — missing creditor notices, improper sales, delayed tax filings — can result in personal liability. Executors should seek legal and tax guidance when unsure.

Practical checklist for executors and beneficiaries

After a death involving securities, follow this concise action list:

• Locate account statements, certificates, account agreements and any beneficiary designations.
• Obtain multiple certified copies of the death certificate.
• Notify brokers, custodians, and transfer agents.
• Determine whether accounts have TOD, POD, joint survivors, or trust ownership.
• If probate is required, file the will/petition and obtain letters testamentary or administration.
• Inventory and value accounts as of date of death for tax and probate purposes.
• Decide whether to re-register shares, hold in an inherited account, or liquidate (seek court authorization if necessary).
• Pay creditors and estate taxes before final distribution.
• Consult an estate attorney and a tax advisor for complex estates or cross-border issues.

This checklist keeps estate settlement efficient and minimizes avoidable mistakes.

Estate planning recommendations to minimize probate friction

Investors can take proactive steps to limit probate friction and uncertainty:

• Review and tidy account titling: ensure accounts are titled according to your estate plan.
• Add TOD/POD registrations where available to keep assets out of probate.
• Maintain up-to-date beneficiary designations on retirement and insurance accounts and review them after major life events.
• Fund a revocable living trust if you want centralized control of asset distribution and probate avoidance for larger or more complex estates.
• Coordinate beneficiary forms with will and trust language; beneficiary forms generally control, so ensure they reflect your intent.
• Consult an estate attorney and tax professional for complex ownerships, cross-border assets, sizable estates, or gifting strategies.

Simple, documented changes today can save significant time and cost for heirs.

Frequently asked questions (short answers)

Q: Does a will avoid probate for stocks?

A: No. A will that names beneficiaries does not avoid probate; stocks titled solely in the decedent’s name must generally pass through probate to implement the will’s directions unless a non-probate transfer method applies (TOD, joint tenancy, trust, or beneficiary designation).

Q: Can a beneficiary force a broker to transfer stocks without probate?

A: Only if the securities have a valid non-probate designation (e.g., TOD/POD or joint survivorship) or if the broker’s rules permit summary transfer (small-estate affidavit). Otherwise, the broker usually requires letters testamentary or court authorization.

Q: What if a brokerage account is in joint names but with unequal contributions?

A: Ownership form, not contribution history, governs transfer. If the account is JTWROS, survivorship rules typically apply regardless of who paid more. However, contribution disputes can lead to litigation between heirs and surviving owners.

Q: Are beneficiary designations always stronger than a will?

A: Generally yes; beneficiary forms on retirement accounts and payable-on-death/TOD registrations usually control and bypass the will.

Q: Do inherited stocks get a stepped-up basis?

A: Yes for most taxable brokerage accounts the basis steps up to the fair market value at the decedent’s date of death (subject to exceptions). Retirement accounts follow different tax rules.

State and regulatory considerations

Laws differ by state. States vary in whether they have adopted uniform TOD statutes, their small-estate thresholds, and probate procedures. If you live or own assets in multiple states, you may face ancillary probate in additional jurisdictions. Check state-specific probate statutes or consult local counsel for precise procedures.

Sources and further reading

This article synthesizes guidance from estate-planning resources and financial publishers. For a deeper dive, consult primary legal sources and these explanatory guides:

• "Transferring Stock Ownership After Death" — The Motley Fool (coverage of TOD and practical broker steps).
• Bankrate — articles on preventing brokerage assets from entering probate and small-estate procedures. As of 2025-11-10, according to Bankrate, increased use of TOD accounts has reduced probate workload for many small and mid-size estates.
• SmartAsset — explanations of what happens to stocks and IRAs at death.
• Probate and estate-law firm guides — jurisdictional procedural details about letters testamentary, valuation, and transfer-agent requirements.

Note: check the most current versions of these sources and your state’s statutes for changes after the dates cited above.

Legal disclaimer

This article provides general information only and is not legal, tax, or financial advice. For advice tailored to your situation, consult a qualified estate attorney and a tax advisor in your jurisdiction.

Next steps: If you’re managing an estate or planning now, locate account titles and beneficiary forms today. To learn more about secure custody of digital and tokenized assets, explore Bitget Wallet and Bitget’s custody-related resources for investors who hold both traditional and digital securities.