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CONSOLIDATE YOUR ASSETS INTO YOUR TRUST

As you likely know, in the email world, to use ALL CAPS means that you are “yelling.”  Or, should I say, “YELLING!?”  So the title to this post could be construed as my YELLING and I am ok with that.

For the entirety of my career I have encouraged clients to consolidate assets, put individual stocks into a brokerage account, make sure all assets are in your trust, and sell small assets. It is easier to do all of these things while you are alive rather than after death. It’s a huge gift to your loved ones to organize your affairs so do it for them if not yourself.

As many of my readers know I lost my mom in March of this year. A traumatic event which we are dealing with.  As I mentioned previously my mom gave me the “gift” of keeping me busy cleaning up loose ends.  For years I encouraged her to get all her stocks into her trust and into her brokerage account. For years she worked on this but never quite finished. Her death was unexpected as it typically is so you can’t wait to organize and consolidate your assets. Do it now!

My mom LOVED her stocks. The investments were not huge dollar amounts but she loved feeling like she had ownership in so many companies. In many cases it was just a few hundred dollars but she liked it so she kept on sending $20 a month, or $50 a month, or whatever she could spare to various companies over the years. She took great pride in her stocks.

So my gift has been that I have been able to keep my idle time to a minimum by trying to clean up these loose ends.  I probably found evidence of ownership in 40 or so stock companies. I sent letters to all of them.  Many were quick to reply to say that she had successfully closed the account by moving the balance to a brokerage account. Many replied that there was a small amount of shares there and that paperwork could generate an even longer blog so I’ll save that for another day.

Today I want to focus on why I dislike holding stocks with transfer agents rather than with a brokerage account. Again, I want to remind you, to CONSOLIDATE YOUR ASSETS INTO YOUR TRUST!

Case in point is her holding in JP Morgan Chase & Co. Back in April I sent Computershare, the transfer agent for Chase, a letter indicating that I see my mom used to own shares of Chase and I would like to know if they still exist. Computershare replied that yes she did have a balance but wouldn’t tell me what that balance was.  They did, however, send the normal paperwork for me to fill out as all of the transfer agents have required. That is, merely to change the account from my mom’s name as trustee to my name as trustee I have to fill out multiple forms… for each individual holding since she didn’t get them all into a brokerage account.

  • One form, the affidavit of domicile, requires a notary.
  • One form, the account transfer form, requires a medalion gaurantee which means I have to leave work, wait at the bank, to get a bank official to give a fancy stamp (really just like a notary stamp but more special apparently) to show it’s really me.  Let me pause here and say that my bank did their due diligence and perused the form carefully and finally stamped it
  • I also had to fill out an IRS W9 form with the tax id (or EIN or TIN) of the trust.
  • I had to send a certified death certificate.
  • I had to send a certification of trust.

So let’s say for most people the costs at this point, assuming they are not paying an attorney to help, would be:

  • Notary of affidavit of domicile $10
  • Medallion guarantee on transfer form $10
  • Certified death certificate $20
  • Postage to mail everything $1
  • Paper, ink, gasoline, etc….

Lucky for me I have many notaries on staff so I saved that cost and our credit union agreed to waive the medallion fee so I saved those expenses. However, I am still out some money here and a lot of time.

Now, also, I should say that Computershare is spending money too. They are replying to my letter which requires employee time and postage. Let’s say that the time for an employee to review my first letter, reply to my letter, and postage is $5 in total expense. That’s a wild guess on my part.

So after I sent Computershare the huge package of completed forms they replied with another letter (shall we assume at least $5 more spent as it probably took an employee a little longer to review everything I sent) indicating they couldn’t liquidate the shares because the value would be less than the costs to sell. Ok, so at least I knew then it was a minor holding and I wouldn’t worry more about it.

A few days later I got two separate letters from Computershare. One showing that the account with my mom’s name as trustee had been closed and now had a zero balance. Shall we assume another $5 spent by Computershare!?  Also, on that day I got a letter indicating the new account is set up in my name as trustee and finally showed me the extent of the trust’s holding in JP Morgan Chase & Co. Again, let’s assume Computershare spent yet another five bucks!

If you haven’t given up on me yet I am guessing you want to know what the trust owns right!?

Well, it is .000300 of a share of stock.  The current value of a share of JP Morgan Chase & Co is $62.28 according to the Computershare letter. Thus my mom’s trust now holds .02 (or TWO CENTS) of JP Morgan chase & Co. Look at the far right column below in the picture.

Computershare Statement

How did this happen?  At some point, in the past few years, my mom moved her shares of JP Morgan Chase & Co into her brokerage account. However, a dividend came in after the transfer. Since my mom loved the automatic dividend reinvestment plan Computershare apparently reinvested the small dividend into stock.  My mom didn’t notice or perhaps didn’t get mail since it was a low value I don’t know. Thus the “account” sat with it’s minuscule holding.

What can I do about this?

  1. Ignore it.
  2. Spend another 48 cents to write back to them and ask them if there is some way to just close the account and make the two cents go away. Of course Computershare will likely reply, expending another $5 let’s say, to tell me they can’t do that.

Yes, I have mild OCD and I don’t like this stupid little account out there but probably nothing I can do.

So let my wasting of time be a lesson to you…

  • CONSOLIDATE YOUR ASSETS,
  • PUT YOUR STOCKS INTO A BROKERAGE ACCOUNT,
  • GET RID OF SMALL ACCOUNTS,
  • MAKE SURE EVERYTHING IS IN THE TRUST!

Have a nice day.

-John