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The Medallion Guarantee Trap

Sometimes people own stock that is held with a custodian. This custodian holds the stock in the individual's name for his or her benefit. Typically, this ownership causes no issues. However, upon the owner’s death, some custodians will require a medallion guarantee stamp before transferring the stock to beneficiaries. This stamp guarantees that the person requesting the transfer is who they say they are.

The main problem with these stamp guarantees is that they are not always easy to get. Only a few institutions, such as banks and financial advisors, provide this service. Some banks and financial institutions no longer even offer this service. In these situations, an individual may have to open an account at another bank to secure the service. The bank account usually must be open for 90 days before the bank will stamp a document which causes delays in distribution.

The attorneys at Elwell and Spain are experienced in reviewing assets and where they are held. We can identify potential pitfalls, such as the requirement of a medallion guarantee, and suggest helpful workarounds or better ways of holding certain assets. This is only one example of when planning with an attorney experienced estate planner pays off.  

Jarred Elwell