Wrong. The shares can be distributed as shares, or the estate can sell them for cash, or anything in between. The executor make the call ideally in consultation with the heirs.
An issue @Loach has that doesn’t often enter into it, is that these particular shares are not in the form of the typical brokerage account. Instead they’re wrapped up in some kind of employee ownership stock purchase program. I’ve had stock like that and it can be a PITA to do anything other than sell or hold.
So the way these particular shares of this particular company are held might force the executor to sell them to cash because the holding agency just makes it difficult approaching impossible to transfer them in kind.
Assuming the shares of that class are also publicly traded ,even if @Loach was forced to receive the value as cash there’s no reason he could not go buy the same dollar value of XYZ the next day. The only difference is whatever small price change occurred during the time the money was in cash form.
I did get updates on the hoops she has to jump through but I don’t want to give details because I’ll probably get them wrong. I do know they are regular publicly traded stock. The aunt that bought them would be around 110 if she were alive so you can guess how long ago she was buying. When companies had full pension plans some allowed stock buying as an extra savings plan. Kind of like before the TSP the Army would let you deduct money and buy savings bonds. Because these stocks were owned by old people they were never transferred into any electronic form. I’m not sure about the ins and outs of how it’s being held but it does seem that cashing them will be the easiest way to disburse.
Googling, P&G stock has underperformed the S&P 500 in recent years. So rationally, the smart thing might be to switch to a low-cost index fund. But I can understand hanging onto the stock for emotional reason, as long as you hold sufficient other assets.
In my opinion, you should diversify your investments.
If you hold all your savings in one place, there is a risk you can lose it all.
So I would keep about 1/3 of the shares (they seem a reasonable investment); put another 1/3 into your investment account that you mentioned and with the other third either pay off debt / save for your pension / spend it.
As for your sentiment, I’m certain your mother would want you to be financially OK and happy.
So only keep the shares as long as they make you money.
When my mother passed away, my brothers who were the executors wound up liquidating all of the stocks and distributing them that way. May or may not have been the ideal decision, long-term, but I didn’t really care. It made for a large chunk of cash, anyway.
In our case, we wound up using that cash to fund our lifestyle while we maxed out our IRA and 401(k) contributions for several years. It’s a big part of why we have the nest egg in our retirement accounts. It wasn’t clear from what you said whether you’re currently retired, or planning for it; if the latter, I’d personally suggest you do something similar with at least some of the stock.
From a sentimental standpoint, by all means keep some of it in that company. I wonder whether you could transfer stock directly into an IRA? (assuming you are still working)
If it is for sentimental purposes, see if you can get a physical certificate for the stock for 1 share. Not sure if the executor can do this for you. Frame it, maybe with a picture of your mom and aunt.
It is not all of my savings. If it was there wouldn’t be a thought of course I would diversify. I’m also lucky to have a good actual pension that I can live off of until inflation cuts the value in the future.
I personally don’t get sentimental attachment to a stock so I’m guessing the what to do depends on what that means to you?
Would that sentimental itch be scratched by selling the stock off and simultaneously buying a more reasonably sized position of the stock in your regular account(s)?
This sounds like a situation where the executor has to deal with a transfer agent. The one time I had to do that involved getting a Medallion signature guarantee, which is an absolute pain in the ass. Get the proceeds in cash and buy your sister a drink or two when all is said and done.
I suggest not getting sentimental about the P&G stock itself, but recognizing that the value of the stock is the real gift from the departed. So rather than keeping it in P&G, you can put the cash in with your accounts, but still segregate it by investing it in a fund that is similar to your other investments. For instance, if you have your money in an S&P index fund from Fidelity, purchase a non-Fidelity S&P index fund with the P&G proceeds. Both funds should perform very similarly. For discussion purposes, call it Fund B. Fund B will always be the inherited funds, and when the time comes, you can use the funds in a way that honors the memories of your mother and aunt.
The money is the gift. P&G was just the wrapping paper.
I’d probably split the baby. Sell most of it but keep a very round number like $10,000 as a testament to your aunt and her time at the company, just to watch grow. Although as a second consideration, if it really was that much of a PITA for the estate, you may want to get rid of it so that your heirs don’t have to go through the same thing.
Back when I was married to my now late wife I received a bunch of shares of my employer as an “incentive stock grant”. Which was held by a corporate “transfer agent”.
The process of transferring those shares from my transfer agent in my name to my brokerage in our joint names defeated not only my broker, but my then-wife the banking attorney, and her pet banks who could provide the appropriate signature guarantees. In the end we sold them for cash and transferred that value with zero hassle. Just sayin’.
The cash option may be what @Loach is stuck with. Best of luck in any case.
From what I gather it’s much easier with stock bought the modern way. As long as you name a beneficiary it’s an easy transfer after the proper people get the death certificate.
Let me just veer off a second to remind people to double check that every account (big or small of any kind) has your desired beneficiary named. Luckily my mother did that for most things. The stock and one IRA did not have a beneficiary. The IRA couldn’t be transferred. It had to be cashed and taxed before being absorbed into the estate. Thankfully that was a small part of her savings. Of course not naming a beneficiary makes the stock issue more complicated.
I’ve considered changing this advice to my legal name. It’s so essential. Make sure your beneficiaries are updated any time there’s a major change in your life (kids, divorce, death in the family, etc.). Beneficiary designations are absolute - if you name a spouse that you later divorce and never change their designation, that person is getting your money - with nearly zero room for other heirs to fight it.
My dad left his bitterly divorced ex-wife (his 2nd wife, not my mother) on an old account. There wasn’t much in it, so my brothers and I didn’t really care. But if it had been the majority of his estate, I know he’d have been really pissed at himself.
When we started dealing with my mother’s estate I realized some of my accounts had no named beneficiaries. Not as bad as naming the wrong one but still a pain for your loved ones. I rectified that.
I personally don’t think emotion is a valid reason for holding or selling financial investments. It should be based upon the fundamentals underlying the securities.