A thrifty lifestyle, solid investing acumen, plenty of patience and the benefits of compounding were at the center of the story of Ronald Read—the quiet and simple-living Vermonter who enjoyed playing the stock market and left behind a nearly $8 million estate when he died last year at the age of 92. But Mr. Read’s situation also shines a light on some estate-planning issues that experts say can pose problems for many average investors. While Mr. Read’s overall estate plan, which included leaving the bulk of his estate to a local hospital and library, was pretty straightforward (his will was only six pages long), the way he went about investing introduced estate-planning complexities.
In its recent article titled “Should You Invest Like Ronald Read?,” the Wall Street Journal explains that much of Read’s holdings were in paper stock certificates secured in a safe-deposit box. In addition, he had stock positions held directly at transfer agents (the official record-keepers for share ownership), as well as in a Wells Fargo brokerage account.
Read was on top of all of his investments; however, experts say that many investors don’t like the idea of holding physical stock certificates. They can also create headaches for heirs, as finding paper certificates and all of the holdings can be a nightmare.
Mr. Read was up to date with his investments, but that’s not always the case. Sometimes, you have to do some detective work. For stocks that pay dividends, you have to obtain the owner’s tax return and trace all stocks owned through the dividends over the year. This is exactly what happened with some of Mr. Read’s stocks that weren't in physical form or in his brokerage account.
It’s much easier if an investor converts his certificates into electronic form and consolidates them with a broker or financial adviser to save heirs from having to search frantically down the road. You may also want to speak with an experienced estate planning attorney about a revocable trust. This will help your heirs avoid a lengthy probate-court process to transfer the title of the assets after the original holder dies. In order to avoid probate, the securities have to be transferred to the revocable trust before the trust creator’s death.