The Security Of Your Securities

On more than one occasion a client has come to me with securities they have found or received from an inheritance that they cannot find a value for. Sometimes it is a company that is now defunct, or it could be that there was a buyout or merger in the past where the original company is no longer in existence. But they have a certificate and no idea of the value.

Sometimes when a client has a relative die they know the deceased had shares of a company but they can't locate the certificate, or they receive a dividend check from a company they knew nothing about.

Having physical possession of stock and bond certificates can make things hard for your heirs and yourself. If a certificate is lost or stolen the owner must complete an affidavit with the facts surrounding the loss or theft, obtain a indemnity bond to protect the corporation and the transfer agent against the possibility that the certificate may be presented later by an innocent purchaser, and the request must be made before must be received before the company receives notice that the missing certificate has been acquired by another bona fide purchaser. Indemnity bonds generally cost about 2% of the value of the lost certificates.

In the event of a corporate merger or acquisition you may overlook the instructions for having certificates of the new company issued and your heirs may not know what happened to the company you originally invested in. If the certificates become part of your estate an affidavit of domicile and copy of your death certificated must be sent to each company to have the shares reissued to your heirs.

Finally, if you wish to sell your shares they must be presented and deposited with a broker dealer before they can be sold. This could cause an inopportune delay in executing your sale.

Having your certificates held in an investment account can make things much easier. You will be informed of any corporate actions requiring your attention, any changes in corporate name, merger, or acquisition will be handled by your custodian, your shares will be in a safe place, will be available for sale on any day the market is open, and if you die your heirs only have one entity (your brokerage firm) to provide with affidavit of domicile and death certificate.

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