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FINRA Issues New Alert for Estate Planning

The Financial Industry Regulatory Authority (FINRA) issued a new alert regarding the transfer of brokerage accounts upon death. This report has important information for people who are considering using brokerage accounts as part of their estate plans. The alert informs current brokerage account holders, family members, and their other beneficiaries about the processes involved when the account holder passes away.

What is FINRA?

FINRA is the largest independent regulator in the world for all securities that do business in the United States. The organization’s main purpose is to provide investor protection and ensure market integrity through effective and efficient regulation. Some of FINRA’s responsibilities include registering and educating industry participants, examining security firms, writing and enforcing rules, and educating public participants in the market. FINRA also offers dispute resolution for security firms and participants in the securities market.

Contents of the Alert

Entitled “Plan for Transition: What You Should Know about the Transfer of Brokerage Account Assets on Death,” the alert informs the holders of non-retirement brokerage accounts about the steps necessary to conduct a smooth transition of assets from one generation to the next. The senior vice president of FINRA said that “FINRA’s new Securities Helpline for Seniors brought the importance of this issue to our attention, and we hope investors who read this alert will be better prepared to take action.”

FINRA’s alert provides tips and information for making the brokerage asset transfer as efficient as possible and free of issues for the account holder’s heirs. The report also asks potential brokerage account holders to consider whether a Transfer on Death Plan (TOD) is the right estate planning tool for them. A TOD account works by allowing an account holder to manage their assets during their lifetime, and upon their death the assets in the account automatically pass to named beneficiaries.

Tips for Transition

The “Plan for Transition” provides a number of tips for account holders and beneficiaries regarding the transfer process of brokerage account assets. This information applies to the account holders, their family members responsible for collecting information, and possible beneficiaries to the account. These informational points in the report include the following:

· Have a conversation with family members and be as open as possible about the brokerage account holdings.
· Keep track of account statements and trade confirmations. This can help beneficiaries locate the information and notify the firm about the death.
· Work with the brokerage firm to discuss assets, last wishes, and important aspects of the asset transfer process.
· Take the time to carefully consider your beneficiaries and check to see that all of the proper forms are filled out to transfer the account assets upon death. You can always ask the firm to send you the current list of beneficiaries for the account and make any necessary changes.

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