Everything You Need to Know About Being a Personal Representative

In the Florida probate process, it is required that each estate be represented by someone. This person is commonly referred to as a Personal Representative.

When the owner of an estate passes away, the Personal Representative legally obtains possession and control of that estate. As the person now accountable for the estate, the Personal Representative takes on many responsibilities. For instance, the Personal Representative must ensure all the assets are protected and that all the necessary items have been collected and recorded so that any of the estate’s outstanding debts can be paid, and also so the beneficiaries of the estate can get their inheritance.

Some of the assets may include items such as expensive, unique pieces of art or jewelry, cars, or special clothing. However, aside from these physical items, many estate owners often leave behind financial assets like stocks and bonds. These financial assets are known as “securities,” and a security is defined as a financial tool that represents one of following classes:

Stocks – ownership in a publicly-traded corporation.

Bonds – creditor to a government or corporation.

Options – rights to ownership.

Stocks, bonds, and options are all assets that are issued to individuals by either a government or corporation. The government or company that gives out these securities is known as the “issuer.”

Now, let’s get to know more about securities.

First, it’s important to note that there are 4 different types of securities. We’re going to break them down for you:

1. Direct registration – This class of securities is verified by a transfer agent (usually a financial institution like a bank or trust company) on behalf of the issuer without needing to actually print out the physical certificate because the rights of the issuer and owner are the same.

2. Registered securities – This class of securities has the name of the holder on them, but the issuer keeps a list of essential details relating to the security. In this case, transfers are made through amendments to the register.

3. Certificated securities – This class of securities is held in paper documents.

4. Bearer securities – This class of securities is transferred directly between investors by first endorsing them and then handing them over. Out of the 4 classes of securities, this one is the least common.

So just how does the Personal Representative go about transferring these financial assets to their beneficiaries? Let us explain.

First thing’s first…

As we previously mentioned, the Personal Representative assumes a lot of responsibilities once they take control of an estate. One of the first things they have to do is take all of the stocks and financial securities currently held in the name of the decedent (the deceased property owner) and put them into the name of the decedent’s estate. This is the first step in preparing for legal transfer of ownership.

As a general rule of thumb, we recommend opening a new brokerage account in this ownership name so any dividends and interest that are created before the final transfer of ownership to the beneficiaries can be collected by the estate. A brokerage account is an agreement between an investor and a licensed brokerage firm that lets the investor deposit funds with the firm and place investment orders through the brokerage. Basically, a brokerage account lets you buy and sell the various types of financial securities.

Brokerage firms are very skilled in this area and can help you with this process. But, just so you know, they generally require a certified copy of the letters of administration, an affidavit of the decedent’s home, and a certified copy of the death certificate.

Let’s get reading…

Before you go any further, take a look at the Florida Probate Code. We won’t get too technical here, but basically, you need to know that Florida probate law allows a Personal Representative to take possession and control of the stocks and bonds held by the decedent, even without a court order.

Next, read the decedent’s Last Will and Testament. We know this may not be the easiest thing for you and your family to do, but it is vital to read this document to find out exactly what the decedent’s wishes were, particularly in terms of asset distribution. It is the Personal Representative’s job and legal obligation to follow the decedent’s directions written in the Last Will and Testament, even if the beneficiaries aren’t happy with the outcome.

Time for an examination…

Examine the securities – each and every one of them – because, as you know by now, not all securities are the same. The method in which the transfer of ownership will take place depends on whether or not the asset is a stock or a bond, and whether or not it is a private security or a publicly traded security.

Some important questions you may be asking…

1. What is a Street Name and What Does It Mean?

Stocks and other securities may sometimes be held in a “street name.” This means that the certificates are electronically held by the broker, and not by you. So, your name does not actually appear on the certificate. In this case, the Personal Representative fills out a form provided by the broker that allows him or her to transfer ownership via the broker.

This form recognizes the name, address, and Social Security Number of the beneficiary as the new owner. Additionally, the beneficiary will have to complete a W-9 Federal Income Tax Form so any future income produced by the securities for its new owner can be reported to the U.S. Treasury Department.

Oh yeah, there also has to be a “Medallion-guaranteed signature” provided by the Personal Representative. If you don’t know what that is, don’t worry, we’ll explain more below.

2. How Do I Handle the Transfer of Paper Certificates or Electronic Forms?

When it comes to the transfer of physical paper certificates, a brokerage firm is very helpful. If you choose to use a brokerage firm, the Personal Representative is required to send an official letter of authorization to the brokerage firm letting them know the decedent has passed away, and that they, the Personal Representative, are now legally in control of the estate’s assets. This letter of authorization is given to the Personal Representative by the probate court.

Once the brokerage firm has received this letter from the Personal Representative, they then send the stock certificates they have in their possession and their desired transfer of ownership form to the Personal Representative.

After the transfer of all these documents has been completed, the Personal Representative takes them all to either a bank or a member firm of the New York Stock Exchange where that Medallion-guaranteed signature we talked about is put on the certificates for the Personal Representative to sign. This action is federally required to protect against fraud and theft.

Once the certificates have their Medallion-guaranteed signature, the stocks are given back to the brokerage. Now, the brokerage can redistribute the stocks in the names of the appropriate beneficiaries.

3. What Happens If I Can’t Find a Security but I Know It’s Out There?

If you know there are securities that exist but they cannot be found, the Personal Representative is legally obligated to replace these certificates so they may be legally transferred to the beneficiaries.

4. When Do I Have to Provide an Affidavit?

It is essential that an affidavit (a sworn statement) be provided by the Personal Representative before the transfer can be made. These affidavits are required to show that the decedent’s taxes and debts have been paid.

5. How Do I Know What the Guidelines and Procedures Are?

The method by which you actually transfer each security will be dictated by the security guidelines. Personal Representatives and beneficiaries alike can uncover how each security is held by the estate and how it should be transferred by checking with the Securities Transfer Association (STA) Guidelines.

The STA guidelines cover all types of securities, so there you will be able to find the procedure for any and all types of securities.

6. What Happens When There is a Joint Tenancy with Right of Survivorship?

When a security is held in joint tenancy with the right of survivorship, the surviving tenant legally becomes the exclusive owner of the security after the decedent’s passing. In this case, the Personal Representative has no control over the estate and the surviving tenant legally assumes all of the responsibilities the Personal Representative would usually carry out.