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Beneficiary Designation/Death of Account Owner
Beneficiary Designations
Shareholders may designate beneficiaries on their applications when opening an account. Although optional, this is an important step that enables the account owner to ensure that, upon death, account assets will be distributed according to your wishes. We recommend a periodic review of your beneficiaries, in particular after a marriage, divorce, birth, and death of a beneficiary. You may make as many changes to beneficiaries as you deem necessary.
Benefits
- In general, when you designate a beneficiary on your account, the assets will not be subject to probate (the legal process that includes distributing the deceased’s assets to heirs), which can sometimes be costly.
- You can designate “primary” and “secondary” beneficiaries. Secondary beneficiaries receive assets only if there are no surviving beneficiaries.
- For IRA accounts, you can add the phrase “lineal descendants per stirpes” after a beneficiary’s name. This means that a deceased beneficiary’s descendants would receive that portion of the account assets.
Non-IRAs
- Add or remove beneficiaries from your non-ira account using the Change of Account Information form.
- If your beneficiary is not your spouse, the cost basis of your shares is generally adjusted upward to the market value as of the date of your death. This is called a “step up” in cost basis and eliminates the tax liability the beneficiary may have on any gains.
- If your beneficiary is your spouse, the cost basis of your shares is adjusted upward, but will typically be just a “half step up” in cost basis. For example, if the gain on the asset at the time of death is $10,000, then a “half step up” in cost basis would be $5,000.
- If your account does not have a beneficiary or if all beneficiaries predecease you, your assets will be distributed to your estate.
IRAs
- Add or remove beneficiaries from your IRA account using the IRA Change Account Information form.
- Because IRA distributions are treated as ordinary income, there is no cost basis adjustment to your shares after death.
- If your beneficiary is your spouse, they can treat the IRA as their own. Annual distributions thereafter may or may not be required; please contact us for more details.
- If your beneficiary is not your spouse, a Beneficiary IRA may be established. According to IRS rules, annual distributions will be required; please contact us for more details.
- If you are single and do not designate a beneficiary or if all beneficiaries predecease you, your estate will be considered the beneficiary.
- If you are married and do not designate a beneficiary or if all beneficiaries predecease you, your spouse will be considered the beneficiary.
If you’re not sure who is listed as a beneficiary on your account, please log on to your account or give us a call at 800-332-5580.
Death of Account Owner
Some of the most complex transactions are the ones involving a change in ownership due to the death of an account owner or trustee. The documentation required for the process of distributing assets to heirs or changing ownership vary depending on the type of account, beneficiary designation and the decedent’s affiliation to the account (e.g. owner, trustee, power of attorney, etc.). Below are the requirements for the most common situations; if you are unable to obtain any of these documents, please call us at 800-332-5580 or email us at info@sitinvest.com for information on suitable alternatives.
Non-IRA Accounts
Individual Account With Listed Beneficiaries
- Notarized Affidavit of Domicile
- If one beneficiary: Change of Account Information Form with Medallion Signature Guarantee to confirm the new ownership/registration
- If multiple beneficiaries: each beneficiary completes an account application; one beneficiary provides a Medallion Signature Guaranteed letter of instruction
Individual Account With No Listed Beneficiaries
- Copy of Letters Testamentary naming the executor of the estate
- Medallion Signature Guaranteed letter of instruction from the executor
- Notarized Affidavit of Domicile
- Account application for the estate
- Account application for each recipient of the assets from the estate
Joint Account
- Notarized Affidavit of Domicile
- Change of Account Information Form with Medallion Signature Guarantee to confirm the new ownership/registration
- NOTE: if all owners are deceased, then follow the instructions above for accounts with or without beneficiaries
Trust Account
In addition to the below instructions, a notarized Affidavit of Domicile is required if the decedent’s social security number is listed on the account for tax reporting.
- Remaining and/or successor trustee(s) complete a Change of Account Information Form with Medallion Signature Guarantee to confirm the new registration of the account
- Copy of the title and signature pages of the trust as well as the applicable page(s) naming the successor trustee(s)
IRA Accounts
Please visit the IRA Beneficiaries page.
For account types that are not mentioned above or for situations which differ from those noted, please call an investor services representative at 800-332-5580 to ensure the most expedient transition for the account assets.