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What Happens to Stocks When Someone Dies?

Stocks pass to whoever is named on a transfer-on-death registration or a joint account, or through the estate if the shares were in the owner’s name alone. The cost basis resets to the value on the date of death, so heirs owe capital-gains tax only on growth after that date. Transfers run through the brokerage or the company’s transfer agent.

Settled Estate cover: inheriting and transferring stocks after death
By Settled Estate Editorial Team

The Short Answer

How stock moves at death is set by how the account was titled, not by the will. Shares in a transfer-on-death account or held jointly go straight to the survivor. Shares in the owner’s name alone go through the estate and are handed out by the executor. Either way, the heir gets a fresh cost basis as of the date of death, which is the single most valuable thing to understand about inheriting stock.

How Stocks Transfer

  • Transfer-on-death (TOD) registration. The owner named a beneficiary on the brokerage account. The shares pass to that person outside probate on proof of death.
  • Joint account with right of survivorship. The surviving co-owner already owns the account and simply removes the deceased owner’s name.
  • Through the estate. Shares held in the deceased’s name alone, with no beneficiary or joint owner, are a probate asset. The executor transfers them using letters testamentary.

The Step-Up in Basis

Inherited stock gets a step-up in basis: its cost basis for tax purposes resets to the market value on the date of death. If a parent bought a stock for $5,000 that is worth $50,000 when they die, the heir’s basis becomes $50,000, and the $45,000 of lifetime gain is never taxed. The heir owes capital-gains tax only on growth after the date of death. Selling soon after inheriting often means little or no capital-gains tax.

Moving the Shares

To claim shares held at a brokerage, the heir or executor typically provides:

  • A certified copy of the death certificate.
  • The account number and a completed transfer or beneficiary-claim form.
  • Proof of authority: a beneficiary claim for a TOD account, or letters testamentary for an estate account.

The brokerage then re-registers the shares into the heir’s account, or sells them and pays out the proceeds. Order several death certificates, since each institution wants its own copy.

Paper Stock Certificates

Old paper certificates are handled by the company’s transfer agent, not a stock exchange. The heir sends the certificate, a death certificate, and a stock power form bearing a medallion signature guarantee (a stamp a bank or broker applies to confirm the signature). The agent reissues the shares in the heir’s name or converts them to electronic form. Lost certificates can be replaced, though the agent may require a surety bond.

Frequently Asked Questions

Do inherited stocks go through probate?
It depends on how the account was titled. Shares in a transfer-on-death (TOD) account, or held jointly with right of survivorship, pass directly to the named person and skip probate. Shares held in the deceased owner’s name alone, with no beneficiary, are part of the probate estate and are transferred by the executor.
Do I pay tax on stocks I inherit?
You do not owe income tax simply for inheriting the shares, and the cost basis resets to the value on the date of death. If you later sell, you owe capital-gains tax only on the growth since that date, which is often small. Dividends you receive after death are taxable to you as ordinary income.
How do I transfer stock out of a deceased person’s name?
You contact the brokerage or the company’s transfer agent and provide a certified death certificate, the account or certificate details, and proof of your authority (a beneficiary claim form for a TOD account, or letters testamentary if it goes through the estate). The shares are then re-registered into your name or a new account, or sold and paid out.
What do I do with paper stock certificates?
Paper certificates are transferred through the company’s transfer agent, not the stock exchange. You send the certificate along with a death certificate and a stock power form that carries a medallion signature guarantee (a special stamp from a bank or broker). The transfer agent then reissues the shares in the heir’s name or converts them to electronic form.

Information current as of July 16, 2026

Settled Estate is not a law firm, and this content is for informational purposes only and does not constitute legal advice. Probate laws and procedures in your state can change. Consult with a qualified attorney for advice specific to your situation. Full disclaimer.