What happens to your brokerage accounts after your death? Do they just pass over to whoever you have named as your beneficiary? Like any of your other assets, you should do some advance planning for assets you hold in the market. Your brokerage account assets will be transferred to someone, and there is a process they go through.
For bank accounts, there is a Payable on Death mechanism, called a POD. This document lists your beneficiary -- or multiple beneficiaries -- who will receive any funds from those accounts when you die. For brokerage accounts, there is something similar. It is called a Transfer on Death Plan, or TOD for short. Like a living trust, you have control of the accounts while you are living, but upon your death, ownership is transferred to your beneficiaries. With a TOD, like a living trust, the brokerage accounts are exempt from having to go through a probate process.
One thing to be aware of is that a TOD supersedes any will or trust that you may have. For instance, if your will says that all of your children are to receive equal shares of your assets, including your brokerage account assets, but your TOD only names one heir, that heir will be the only recipient. The TOD will take precedence of anything in the will. When you create a TOD, the name or names or your beneficiaries will be added to the title of your account. Also, depending on the size of your estate, having a TOD does not necessarily preclude it from estate taxes if any are assessed.
Advance planning goes a long way in showing your loved ones how much you care. It is also a good idea to keep family members informed of the holdings that you have. Keeping good records, account statements and trade confirmations in a place that is known by your heirs, or can be easily found, will also go a long way in avoiding confusion for them as they sort things out.
Source: Financial Industry Regulatory Authority, Inc., "Plan for Transition: What You Should Know About the Transfer of Brokerage Account Assets on Death," accessed Feb. 12, 2016