Houston Estate Planning and Elder Law Attorney Blog
Individual investor Ronald Read has made the news because his personal investing strategy relied heavily on paper stock certificates. Today, investment advisors encourage individual investors to convert stock certificates to electronic form and consolidate stocks with a professionals so that heirs will have an accurate record of ownership.
In addition to his paper stock certificates, Ronald Read had stock positions held directly at transfer agents (the official record-keepers for share ownership), as well as in a Wells Fargo brokerage account.
Is this a good idea?
The Wall Street Journal explains more in an article titled “Should You Invest Like Ronald Read?”
Read was on top of all of his investments (he left behind a nearly $8 million estate); however, experts say that many investors don’t like the idea of holding physical stock certificates. They can also create headaches for heirs, as finding paper certificates and all of the holdings can be a nightmare.
Mr. Read was up to date with his investments, but that’s not always the case. Sometimes, you have to do some detective work. For stocks that pay dividends, you have to obtain the owner’s tax return and trace all stocks owned through the dividends over the year. This is exactly what happened with some of Mr. Read’s stocks that weren’t in physical form or in his brokerage account.
It’s much easier if an investor converts his certificates into electronic form and consolidates them with a broker or financial adviser to save heirs from having to search frantically down the road. You may also want to speak with an experienced estate planning attorney about a revocable trust. This will help your heirs avoid a lengthy probate-court process to transfer the title of the assets after the original holder dies. In order to avoid probate, the securities have to be transferred to the revocable trust before the trust creator’s death.
Reference: Wall Street Journal (March 20, 2015) “Should You Invest Like Ronald Read?”