Used with permission from The United States Securities and Exchange Commission.
Caring for Loved Ones
Financial considerations are an important part of caregiving. Sometimes, the caregiver must take time away from a paying job to care for a loved one. Here are some suggestions from the Women’s Institute for a Secure Retirement (WISER):
- Create a household budget. Determine the priorities and how to pay for them.
- Plan carefully before leaving a job. Exhaust all other options. Leaving your job means losing a paycheck and possibly health benefits.
- Don’t dip into your 401(k) or other retirement savings. This will reduce your nest egg and could set your retirement plans back by many years.
- Look into purchasing long-term health insurance. This way, you can access a wide range of supportive services and living arrangements for your own retirement.
Here are some ways to transfer assets from one person to another.
Transfer on Death (TOD) Registration
Transfer on death (TOD) registration allows you to pass the securities you own directly to another person or entity upon your death without having to go through probate. By having a TOD registration, the executor or administrator of your estate will not have to take any action to ensure that your securities transfer to whomever you have designated.
However, TOD beneficiaries must take steps to re-register the securities in their names. This typically involves sending a copy of the death certificate and an application for re-registration to the transfer agent.
State law, rather than federal law, governs the way securities may be registered in the names of their owners. In addition, brokerage firms may decide whether or not to offer TOD registration.
For more information about TOD registration, please visit the website of the National Conference of Commissioners on Uniform State Laws. There you’ll find a summary of the Uniform TOD Security Registration Act, explaining how TOD registration differs from joint ownership. You’ll also find a list of the states that have adopted the Act and the full text of the Act.
Transfer of Ownership
If you hold securities in physical certificate form and want to transfer or sell them, you will need to sign the certificates or securities powers. You will probably need to get your signature "guaranteed" before a transfer agent will accept the transaction. Although it's an inconvenience to get your signature guaranteed, the process protects you by making it harder for people to take your money by forging your signature on your securities certificates or related documents.
Transfer agents insist on signature guarantees because they limit their liability and losses if a signature turns out to be forged. One way to avoid having to get your signature guaranteed is to have your securities held in street name, meaning that your securities are held in the name of your brokerage firm instead of your name.
An investor can obtain a signature guarantee from a financial institution -- such as a commercial bank, savings bank, credit union, or broker-dealer -- that participates in one of the Medallion signature guarantee programs. The three Medallion signature guarantee programs are the:
- Securities Transfer Agents Medallion Program (STAMP) whose participants include more than 7,000 U.S. and Canadian financial institutions.
- Stock Exchanges Medallion Program (SEMP) whose participants include regional stock exchange member firms, and clearing and trust companies
- New York Stock Exchange Medallion Signature Program (MSP) whose participants include NYSE member firms
Transfer agents can refuse to accept a signature guarantee from an institution that does not participate in the Medallion program or that is not recognized by the transfer agent. While guarantor firms can charge a fee for their services, they often don't and offer them as part of their customer services.
Contact Kemark Financial Services, Inc., the program administrator for STAMP and SEMP, at firstname.lastname@example.org if you have general questions about Medallion signature guarantees or how the Medallion program works. We are providing Kemark’s email address for information purposes only. We cannot endorse any commercial entity, and we do not endorse or recommend any of its products or services. For specific questions about a security, the Shareholder Services Department of the company whose shares you own, or its respective transfer agent, may be best suited to assist you.
If you hold stocks in physical certificate form and want to sell them, you will have to send the certificate to your broker or the company’s transfer agent to execute the sale. You probably will need to get your signature guaranteed. Once the brokerage firm has the stock certificates, the sell order can be executed.
Diminished mental capacity, due to Alzheimer’s disease or other forms of dementia, may impair a person’s ability to make appropriate decisions. This is particularly true in the area of finances.
If you are a caregiver to someone you think may have dementia, there are a number of steps you can take to safeguard their finances.
Know where financial documents are located and ensure they are in a safe location. These documents include:
- Tax returns for the past seven years, including any W-2 forms, income statements, and canceled checks for deductible expenses
- Bank statements
- Insurance policies, including car, health, life, rental and/or homeowner’s insurance
- Retirement plan and/or pension plan statements
- Mutual fund and other investment statements
- An inventory of assets owned and a record of major purchases
- An inventory of debts and regular obligations, with a list of the institutions to which they are owed
- Deed to home or other properties
- Titles to vehicles
- Important papers such as birth, marriage, death, and divorce certificates
- Legal documents such as power of attorney, Living Will and/or Will
- Any stock or bond certificates
- Account numbers, passwords, and locations of safety deposit boxes
- A list of important contacts, such as doctors, lawyers, and financial professionals
Older people with diminishing mental or physical capacity can be easy targets for financial abuse. This may occur when someone exploits a position of influence or trust over an elderly person to gain access to that person’s assets.
Here are red flags of elder financial abuse:
- Sudden reluctance to discuss financial matters
- Unusual or unexplained account withdrawals, wire transfers, or other financial changes
- Cash or other items missing from the home
- Drastic shifts in investments
- Abrupt changes in Wills, trusts, power of attorney, or beneficiaries
- Concern or confusion about missing funds.
If you work for a bank or other financial institution, your state may require you to report suspected cases of financial abuse of an elderly person. In most states, you can report concerns to Adult Protective Services (APS), whose role is to investigate and intervene if needed.
As a senior, you can protect yourself by making sure your financial and legal affairs are in order. If they aren’t, consider hiring a professional to help, and be sure to ask and check that the professional is registered. You also may want to enlist the help of a trusted friend or relative.
If you are a concerned friend or family member, ask to look at the person’s account statements to check for any unauthorized transactions. Call and visit as often as you can. Isolation can increase the vulnerability of the elderly to financial abuse.