medallion signature - estate stock transfer

[n***@none.org]

Person dies in Illinois. All assets with one exception are in a typical
"living trust" so they are outside of any probate process.

The exception is some shares of stock from an insurance company, current
market value about $4,000.

Some outfit named "Computershare" handles the stock and sends out
dividend payments. To transfer the stock to the estate, they send a
form which requires something called a "medallion signature guarantee"
which looks like a super-notary process. Basically Computershare
outsourced the verification process to any bank that will provide this
medallion. Unlike other financial institutions (IRAs, annuities, life
insurance policies) who dealt directly with beneficiaries, Computershare
does not care about seeing any documents themselves.

The first bank I contact says they need a court document showing who the
executor is. Well, there is no probate, there is no court document.
Illinois has something called a small estate affadavit for estates under
$100,000, but local bank says that isn't good enough for them, they want
to see a judges signature. I think Illinois law says you can file a
civil suit against someone who refuses to honor or accept the small
estate affadavit, but with the executor in another state and who knows
where Computershare is, that seems like a lot to expect.

So, is there a better way? Is there some way to force Computershare to
deal directly with the legal representative according to Illinois law
instead of letting them drag a third party (madallion bank) into the
proceedings? If it was possible to sell the shares "as is" they would
be reported under the deceased's SSN not the estate tax ID, wouldn't
that be a problem with the IRS? What if the impass continues between
executor and Computershare, what eventually happens to the shares?

[Deadrat]

Post by n***@none.org
Person dies in Illinois. All assets with one exception are in a
typical "living trust" so they are outside of any probate process.
The exception is some shares of stock from an insurance company,
current market value about $4,000.
Some outfit named "Computershare" handles the stock and sends out
dividend payments. To transfer the stock to the estate,

The stock is automatically in the estate of the deceased. I think what
you want to do is sell the stock or transfer the ownership.

Post by n***@none.org
they send a
form which requires something called a "medallion signature guarantee"
which looks like a super-notary process. Basically Computershare
outsourced the verification process to any bank that will provide this
medallion. Unlike other financial institutions (IRAs, annuities, life
insurance policies) who dealt directly with beneficiaries,
Computershare does not care about seeing any documents themselves.
The first bank I contact says they need a court document showing who
the executor is. Well, there is no probate, there is no court
document. Illinois has something called a small estate affadavit for
estates under $100,000, but local bank says that isn't good enough for
them, they want to see a judges signature. I think Illinois law says
you can file a civil suit against someone who refuses to honor or
accept the small estate affadavit, but with the executor

I'm confused. How did there get to be an executor? If there's an
executor, then that person has the proper papers.

Post by n***@none.org
in another
state and who knows where Computershare is, that seems like a lot to
expect.
So, is there a better way? Is there some way to force Computershare
to deal directly with the legal representative according to Illinois
law instead of letting them drag a third party (madallion bank) into
the proceedings?

Probably not. Computershare is already willing to deal with the legal rep.
They just want assurance that the rep is who he says he is.

Post by n***@none.org
If it was possible to sell the shares "as is" they
would be reported under the deceased's SSN not the estate tax ID,

I'm confused again. Selling the shares "as is" requires that the owner
identify himself, but the owner is dead, so a "proper" living person needs
to do it. What estate tax ID? Are you concerned with filing Form 706? I
think that's only for large estates.

Post by n***@none.org
wouldn't that be a problem with the IRS? What if the impass continues
between executor and Computershare, what eventually happens to the
shares?

My advice is talk to the office of your County Clerk. Explain that you
need an official document, and they should be able to tell you how to get
an appointment as the administrator of an intestate estate. Ask your local
bank what you need beyond your appointment papers and a certified copy of
the death certificate.

*** I am not a lawyer, so this can't be legal advice. ***

[Stuart Bronstein]

Post by Deadrat

Post by n***@none.org
Person dies in Illinois. All assets with one exception are in a
typical "living trust" so they are outside of any probate
process.
The exception is some shares of stock from an insurance company,
current market value about $4,000.
Some outfit named "Computershare" handles the stock and sends out
dividend payments. To transfer the stock to the estate,

The stock is automatically in the estate of the deceased. I think
what you want to do is sell the stock or transfer the ownership.

Post by n***@none.org
they send a form which requires something called a "medallion
signature guarantee" which looks like a super-notary process.

Yes, it is sort of a super-notary process. My understanding is that,
in addition to notarizing the signature it also guarantees (backed by
cash) that the transaction is legitimate.

Post by Deadrat

Post by n***@none.org
The first bank I contact says they need a court document showing
who the executor is. Well, there is no probate, there is no
court document.

Doesn't matter. If there is a will, there may be an executor named
even though he is not appointed by the court. If there is no will,
the intestate heirs can likely nominate one of them to act for them
all for this purpose.

This issue is present a lot whenever a living trust is used. Take
the situation of a living trust with a QTIP trust. An election needs
to be made to determine how much of the QTIP is taxed in which
estate.

The law (IRC § 2056(b)(7)(B)(v) says, "An election under this
paragraph with respect to any property shall be made by the executor
on the return of tax imposed by section 2001."

If a court appointed executor were required, then a probate would be
required everytime someone dies owning a living trust. Not even the
pedants at the IRS require that.

I don't practice in Illinois, but there is a similar small estate
statute here in California. I went to take a look at the Illinois
statute, and it (755 ILCS 5/25-1(c)) says, among other things,

"If safe deposit access is involved or if sale of any personal
property is desirable to facilitate distribution pursuant to the
small estate affidavit, all persons named in paragraph 11 of the
small estate affidavit (excluding minors and unascertained or
disabled persons) may in writing appoint one or more persons as their
agent for that purpose. The agent shall have power, without court
approval, to gain access to, sell, and distribute the property for
the benefit of all persons named transfer, access or issuance shall
be made or granted to or on the order of the agent."

That appointed person clearly takes the place of and has the powers
of the executor.

Post by Deadrat

Post by n***@none.org
So, is there a better way? Is there some way to force
Computershare to deal directly with the legal representative
according to Illinois law instead of letting them drag a third
party (madallion bank) into the proceedings?

Probably not. Computershare is already willing to deal with the
legal rep. They just want assurance that the rep is who he says
he is.

They are required to cooperate under Illinois law. But they may be
entitled to a medallion guarantee in any case. I'd think the bank
asked to give the guarantee is the one you should complain to - they
should be satisfied by the small estate affidavit rather than asking
that a probate be opened.

Post by Deadrat

Post by n***@none.org
If it was possible to sell the shares "as is" they
would be reported under the deceased's SSN not the estate tax ID,

I'm confused again. Selling the shares "as is" requires that the
owner identify himself, but the owner is dead, so a "proper"
living person needs to do it. What estate tax ID? Are you
concerned with filing Form 706? I think that's only for large
estates.

Stock brokers are particularly sticky on this point - they need to
establish that everything is done strictly according to law. But
with the small estate affidavit you might be able to get a local
stock broker to sell them and hand over the cash.

Stu

[n***@none.org]

Post by Deadrat
Probably not. Computershare is already willing to deal with the legal rep.
They just want assurance that the rep is who he says he is.

That's what the Illinois Small Estate Affidavit is supposed to be.
Here's something from Illinois law (755 ILCS 5/) Probate Act of 1975.

"Sec. 25-3. Recovery upon refusal to pay or deliver.) If a person or
corporation to whom an affidavit under Section 25-1 or Section 25-2 is
delivered refuses to pay, deliver, transfer or issue the personal estate
as provided by this Article, it may be recovered in a civil action by or
on behalf of the person entitled to receive it upon proof of the facts
required to be stated in the affidavit. For the purpose of the action
the affidavit is prima facie proof of the facts stated therein. "

So the problem is Computershare says, "talk to a bank", the bank says
"we want to see something from an Illinois court", and Illinois says
"you don't need a court, only a small estate affidavit". A vicious
circle. My question is how or why can Computershare demand more than
required by Illinois law? What if they never get their precious
"medallion signature", what happens to the stock?

Post by Deadrat
My advice is talk to the office of your County Clerk. Explain that you
need an official document, and they should be able to tell you how to get
an appointment as the administrator of an intestate estate. Ask your local
bank what you need beyond your appointment papers and a certified copy of
the death certificate.

The "personal representative" is not in Illinois. I've talked to an
Illinois lawyer but service is slow and I'm looking for a second opinion
about whether I should have to spend all this time and money for what
looks like an unjustified requirement by Computershare for a "medallion
signature".

[M***@yahoo.com]

[OP wants to effect transfer of securities; gets STAMPed (Securities
Transfer Agents Medallion Program).]

Here's a website commiserating with OP's situation and describing what
one might do with an analogous Washington state decedent. (Washington
also has a small estate procedure.)
http://www.small-estate-affidavit.com/Small-Estate-Affidavit-Proc.htm

Having said that, I note that OP has omitted details such as (1)
whether decedent died testate, (2) in what capacity OP is acting and
(3) what, specifically, OP is trying to do.

If, for instance, I were trying to sell the shares in order to
distribute the proceeds I would talk to the broker through whom I
planned to sell the shares. It's a physical certificate, so the broker
is going to have to walk me through delivery anyway. Alternatively, if
I were trying to pass the shares along to a legatee or heir then I
might check the investor relations section of the issuer's website. I
might also talk to the new owner's broker, since the new owner will
likely want the shares in street name anyway.

OP's big stick isn't suing Computershare, it's calling the issuer's
investor relations department. Computershare works for the issuer.

--
I am not your lawyer. This is not legal advice.

[Barry Gold]

Post by M***@yahoo.com
OP's big stick isn't suing Computershare, it's calling the issuer's
investor relations department. Computershare works for the issuer.

That's one good way, and it will probably work if the issuer is
competent and cares about investor goodwill. My wife found a
creative solution to a similar problem.

Sometime in the 1930s, my in-laws acquired a parcel of commercial
property in LA's Fairfax area, along with the mineral rights. If
you're familiar with LA, you know that entire area sits on top of a
big pool of oil. Not being in the oil business, my parents leased
their share of this to a company that specialized in extracting
and selling oil.

At the time of my mother-in-law's death, this lease was producing an
income of about $200/year, along with a quarterly multi-page
accounting of the sales and expenses. My wife, as successor trustee
of their living trust, contacted the lessee, now doing business as
Plains Exploration & Production (PXP) to transfer the rights to her
name.

PXP insisted on papers appointing her as her parent's executor. This
was irrelevant because their assets passed to her through the trust
rather than by a will. An asset that pays $200/year just isn't worth
opening a probate case for, much less going to court over. So it
looked like she was stymied.

Not being willing to let PXP get away with this stupidity, my wife
wrote them and suggested that they find a way to transfer the account
to her name, or she would quitclaim her rights to the IRS.

She now gets a check every quarter payable to "Lee Gold, FBO (her
mother) deceased."

[Stuart Bronstein]

Post by Barry Gold
At the time of my mother-in-law's death, this lease was producing an
income of about $200/year, along with a quarterly multi-page
accounting of the sales and expenses. My wife, as successor trustee
of their living trust, contacted the lessee, now doing business as
Plains Exploration & Production (PXP) to transfer the rights to her
name.
PXP insisted on papers appointing her as her parent's executor.

Whether it's because of a transfer in trust or because of the small
estate procedure, they are required by law to transfer the property.
And if they don't do so they would be liable for damages for failure to
do so.

In the small estate situation the heir is entitled to attorneys fees if
the title isn't transferred. See Probate Code §13105(b).

As for refusal to transfer title out of a trust, no such rule
apparently exists.

Stu

[n***@none.org]

Post by M***@yahoo.com
[OP wants to effect transfer of securities; gets STAMPed (Securities
Transfer Agents Medallion Program).]
Having said that, I note that OP has omitted details such as (1)
whether decedent died testate, (2) in what capacity OP is acting and
(3) what, specifically, OP is trying to do.

Started to in an earlier post, thought it was too long. Person died
with all assets except this $4K of stock in a living trust. "Personal
representative" is trustee. Original will has gone missing but
"personal representative" was named executor in the copy that is
available, not that anyone cares about the copy. "Personal
representative" basically has been and still is handling everything.

The goal is to sell the stock, get the money into the trust or otherwise
distributed to heirs (equal split), and have the 1099-B tax form show
the tax id of the trust/estate, not the SSN of the deceased person.
This is so the Form 1041 return can be done correctly. When a person
dies and there will be any income from the estate you are supposed to
get a a new tax ID from the IRS and you can't keep on using the SSN of
the dead person, so I have been told.

Before you say "see a lawyer", over the past five years 3 estate-type
lawyers have been involved, they are all very slow to respond to
anything and answers are sometimes vague. Just looking for additional
insight or opinions. The estate is not big or complicated.

Post by M***@yahoo.com
If, for instance, I were trying to sell the shares in order to
distribute the proceeds I would talk to the broker through whom I
planned to sell the shares. It's a physical certificate, so the broker
is going to have to walk me through delivery anyway. Alternatively, if
I were trying to pass the shares along to a legatee or heir then I
might check the investor relations section of the issuer's website.

The link you provided was cheerful, thank you. There is no broker and
the deceased did not have a physical certificate. The stock was
acquired directly from the company and Computershare mails out the
dividend checks.