Ownership Change Due to Life Events - T. Rowe Price

Ownership Change Due to Life Events - T. Rowe Price

Ownership Change Due to Life Events Information Guide At T. Rowe Price, we understand things happen that create a need to change the owners of an acc...

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Ownership Change Due to Life Events Information Guide

At T. Rowe Price, we understand things happen that create a need to change the owners of an account. We want to make that process as easy as possible while protecting you. The documentation required will vary depending on the current ownership and situation. Common events in life that require a change of owners on an account include: • Death • Financial or estate planning • Marriage • Divorce • Gifts • Minor has reached age of majority Cost Basis Information T. Rowe Price is required to keep track of the cost basis of the covered securities in your account for reporting such information to the Internal Revenue Service (IRS). To help you provide us with the proper cost basis information, we provide some general guidelines, which may help you discuss the topic with your tax advisor and assist you in completing our forms for recording the proper cost basis information. Due to complexities of the rules, you should always consult your tax advisor with respect to the proper cost basis of the assets transferred to your account and should not rely solely on these guidelines. Due to the differences between IRS regulations governing basis determination by your financial institution and by you for your tax reporting, you should note that the basis reported to you may not always be the same as the basis you should report on your tax returns and that you are solely responsible for reporting the correct basis in your tax returns.

1

Death

When an account owner dies, notify T. Rowe Price by phone so that we can place a hold on the account until the proper documentation is submitted.

1A

Current Ownership: One Owner (No Beneficiaries on File)

1. C  omplete the Ownership Change form to move assets into an estate account. Signatures are required from all executors. 2. Complete the New Account form for the estate and provide the estate TIN. If moving assets into another account from the estate, also follow the steps outlined under Financial Planning, Marriage, Divorce, or Gifts: Current Ownership: Estate. 3. Submit letters testamentary (or other appointment of the executor) from the probate court appointing executor of estate (certified by the court within 60 days) or the applicable small estate affidavit. Any cost basis adjustments, if applicable, should be provided by the personal representative. See Section 1G, Cost Basis, for more details. 4. S  ubmit an inheritance tax waiver if required by state law.

1B

Current Ownership: Estate With Deceased Executor

1. C  omplete the Ownership Change form. Signature with signature is required from newly appointed executor. guarantee 2. Complete the New Account form. Signature is required from newly appointed executor. 3. Submit letters testamentary (or other appointment of the successor executor) from probate court appointing successor executor of estate (certified by the court within 60 days).

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To use this guide, find the life event that best describes your situation and follow the instructions. If you do not see your situation, or if you would like help completing the forms, please call. We can complete the form over the phone and send it to you securely via online access. You will complete two forms: • Ownership Change form • New Account form (Mutual Fund New Account form or Brokerage New Account form as applicable)



This paper clip indicates you may need to attach documentation. This stamp indicates a signature guarantee is required. TIN = Tax identification number

1C

Current Ownership: One or More Owners (Beneficiaries on File)

All Owners Deceased 1. C  omplete the Ownership Change form. Signature with signature is required from the beneficiary. Each inheriting guarantee beneficiary should complete a separate Ownership Change form. 2. C  omplete the New Account form. Signatures are required from all owners of the new account. a. If moving assets into a trust that is a named beneficiary, submit the trust document pages that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. 3. Submit a certified copy of all deceased owners’ death certificates. Copy must have an original stamp or seal from the issuing agency. 4. If the beneficiary requests a cost basis other than fair market value, submit letters testamentary (or other appointment of the executor) from the probate court appointing executor of estate (certified within Any cost basis 60 days) or the applicable small estate affidavit. adjustments, if applicable, should be provided by the personal representative. See Section 1G, Cost Basis, for more details. 5. S  ubmit an inheritance tax waiver for each deceased owner if required by state law. Account Has Surviving Owner(s) 1. C  omplete the Ownership Change form. Signature of surviving joint owner(s) is required. If adding new owners, a signature guarantee also is required. 2. Complete the New Account form (unless assets will go to an existing account with all the surviving and/or new owner names). Signatures are required from all owners of the new account a. If moving assets into a trust for the surviving owner, submit the trust document pages that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. 3. If the surviving owner requests a cost basis other than fair market value, submit letters testamentary (or other appointment of the executor) from the probate court appointing executor of estate (certified Any cost within 60 days) or the applicable small estate affidavit. basis adjustments, if applicable, should be provided by the personal representative. See Section 1G, Cost Basis, for more details. 4. Submit a certified copy of all deceased owners’ death certificates. Copy must have an original stamp or seal from the issuing agency. 5. S  ubmit an inheritance tax waiver for each deceased owner if required by state law.

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1D

Current Ownership: Two or More Owners (No Beneficiaries on File)

All Owners Deceased 1. Complete the Ownership Change form. Signatures are required from the executor(s) of the most recently deceased owner. If the account has community property or tenants in common ownership, signatures are required from all executors of each of the deceased owners’ estates. 2. Complete the New Account form for the estate and provide the estate TIN. If moving assets into another account from the estate, complete an additional set of forms as outlined under Financial Planning, Marriage, Divorce, or Gifts: Current Ownership: Estate. 3. Submit a certified copy of all deceased owners’ death certificates. Copy must have an original stamp or seal from the issuing agency. 4. Submit letters testamentary (or other appointment of the executor) from the probate court appointing executor of estate (certified by the court within 60 days) or the applicable small estate affidavit for If the account has commuthe most recently deceased owner. nity property or tenants in common ownership, letters testamentary (certified by the court within 60 days) or the applicable small estate affidavit is required for each of the deceased owners. Any cost basis adjustments, if applicable, should be provided by the personal representative. See Section 1G, Cost Basis, for more details. 5. Submit an inheritance tax waiver for each deceased owner if required by state law. Account Has Surviving Owner(s) 1. Complete the Ownership Change form. Signature of surviving joint is required if: owner(s) is required. Signature guarantee a. Adding new owners—signature guarantee is required from surviving joint owners. b. Community property or tenants in common ownership—signature is required of all surviving tenants and the executor guarantee of the deceased owner’s estate. c. Surviving owner is disclaiming assets. 2. Complete the New Account form (unless assets will go to an existing account with all the surviving and/or new owner names). Signatures are required from all owners of the new account. a. If moving assets into a trust for the surviving owner, submit the trust document pages that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. 3. Submit a certified copy of all deceased owners’ death certificates. Copy must have an original stamp or seal from the issuing agency. 4. S  ubmit an inheritance tax waiver for each deceased owner if required by state law. 5.If the account has community property or tenants in common ownership or has been disclaimed by the surviving joint owners or the surviving owner requests a cost basis other than fair market value, submit letters testamentary (or other appointment of the executor) from probate court appointing executor of estate (certified within 60 days) or the applicable small estate affidavit. Any cost basis adjustments, if applicable, should be provided by the personal representative. See Section 1G, Cost Basis, for more details. 6. If the surviving owner has disclaimed the assets, submit a copy of the disclaimer as required by state law. A death certificate is not required.

1E

Current Ownership: Trust With Deceased Trustee(s)

a. If moving assets into a different trust, submit the trust document pages (certified within 60 days) that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. 3. Submit a certified copy of all deceased trustees’ death certificates. Copy must have an original stamp or seal from the issuing agency. 4. If a new trustee has been added, submit the trust document pages (certified within 60 days) that name the new/successor trustees.

1F

Current Ownership: Minor With Deceased Custodian

1. C  omplete the Ownership Change form. a. M  inor has not reached age of majority: Signature with signature is required from a new custodian. guarantee b. Minor has reached age of majority: Signature with signature guaris required from the former minor. antee 2. C  omplete the New Account form. a. Minor has not reached age of majority: Signature is required from the new custodian. b. Minor has reached age of majority: Signatures are required from all owners of the new account. 3. S  ubmit a certified copy of the deceased custodian’s death certificate. Copy must have an original stamp or seal from the issuing agency. 4. Submit documentation of a new custodian. a. If a new custodian has been appointed by the court, submit the court-certified appointment. b. If a new custodian was appointed by the deceased custodian prior to death, submit a copy of the notarized or witnessed instrument of designation. c. U  pon the minor reaching age 14, in general, the minor may appoint a new custodian within 60 days of the custodian’s death by submitting signed instructions and a copy of the minor’s birth certificate. d. If the deceased custodian was a resident of Missouri, the executor of the custodian’s estate may appoint the new custodian by submitting signed instructions and letters testamentary (or other appointment of the executor) from probate court appointing executor of estate (certified by the court within 60 days).

1G

Cost Basis

If you are receiving mutual fund stock or corporate stock (stocks) from a decedent, your cost basis in the securities may depend on the type of account and your relationship to the decedent. For purposes of tracking cost basis, we will equally divide tax lots unless the personal representative instructs otherwise. Current Ownership: One Owner (the Decedent) Your cost basis in the stocks acquired from the decedent’s account is generally the fair market value of the stocks on the date of death. The estate may also choose to value the stocks on an alternate valuation date (see IRS Form 706 instructions). Beneficiaries will receive fair market value basis for their portion of inherited assets unless the personal representative provides a different percent. If the stocks should be valued on an alternate valuation date, provide the date of death on the form and, on a separate page, the alternate valuation date and the value of the stocks.

1. C  omplete the Ownership Change form. Signatures are required from all remaining and new trustees. If a new trustee has been is required from the remaining added, a signature guarantee trustees. If there are no remaining trustees, a signature guarantee is required from all new trustees. 2. Complete the New Account form. Signatures are required from all new trustees.

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Current Ownership: Two or More Owners If all owners are deceased, refer to Current Ownership: One Owner (the Decedent) above to determine how you should complete the Ownership Change form. If you are a surviving joint owner, your basis in the portion of the property you received is generally the fair market value of such portion at the date of death (or on an alternate valuation date, if so elected) to the extent that the value of such property is included in the decedent’s gross estate. See IRS Publication 551, Basis of Assets, for more information. Complete the “Inherited Assets” section of the Ownership Change form by filling in the date of death and inserting in the box “Fair Market Value Basis Percent” the portion of the account that should have a basis equal to the fair market value on the date of death. If the account is held only by spouses as tenants by the entirety or joint tenants with right of survivorship, we will treat the account as “qualified joint interest”—50% of the equally divided assets will be at fair market value basis for the surviving spouse unless the personal representative provides a different percent. If the account is community property, the surviving spouse is generally entitled to full fair market value basis, and 100% will have a cost basis at fair market value for the surviving spouse unless the personal representative provides a different percent. See IRS Publication 555, Community Property, for more information. In all other cases, we will treat the inherited assets as noncovered securities not entitled to fair market value basis unless the personal representative provides a separate page to accurately identify specific shares that may receive fair market value basis. “Noncovered” refers to securities, including mutual funds, that are not subject to cost basis reporting on Form 1099-B, such as stocks purchased prior to January 1, 2011, and mutual fund shares purchased prior to January 1, 2012. NOTE: Special rules apply to stocks from a decedent who died in 2010. See IRS Publication 4895, Tax Treatment of Property Acquired From a Decedent Dying in 2010.

2

Financial Planning, Marriage, Divorce, or Gifts

In these scenarios, the current owner(s) is alive. For IRA owners needing to transfer assets due to divorce, complete the IRA Divorce Transfer form. For IRA inheritance, complete the IRA Distribution form.

2A

Current Ownership: One Owner

1. C  omplete the Ownership Change form. Signature with signature is required from the current owner. Exceptions: guarantee a. If moving assets to a trust and the current owner is the sole trustee, signature guarantee is not required. b. If moving assets to a Uniform Gifts to Minors Act (UGMA)/ Uniform Transfers to Minors Act (UTMA) account where the current owner is the custodian, signature guarantee is not required. 2. Complete the New Account form (unless assets will go to an existing account with all the new owner names). Signatures are required from all owners of the new account. a. If moving assets into a trust, submit the trust document pages that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. b. If appointing an agent using a power of attorney (POA) document drafted by an attorney, submit an original of the POA document or a copy certified within 30 days.

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2B

Current Ownership: Two or More Owners

1. C  omplete the Ownership Change form. Signatures with signature are required from all current owners. Exceptions: guarantee a. If moving assets to a trust and current joint owners are also the only co-trustees, signature guarantee is not required. b. If moving assets to an UGMA/UTMA account where one of the current owners is the custodian, signature guarantee is not required. 2. C  omplete the New Account form (unless assets will go to an existing account with all the new owner names). Signatures are required from all owners of the new account. a. If moving assets into a trust, submit the trust document pages that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. b. If appointing an agent using a POA document drafted by an attorney, submit an original copy of the POA document or a copy certified within 30 days.

2C

Current Ownership: Trust

All Trustees Acting 1. C  omplete the Ownership Change form. Signatures with signature are required from all current trustees. If trustee guarantee names are not listed in the account registration, submit the trust document pages (certified within 60 days) that include the trust name, date, current trustees’ names, and signatures. 2. C  omplete the New Account form. Signatures are required from all trustees of the new account. If moving assets into a different trust, submit the trust document pages that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form. Change Trustee (Not Due to Death) 1. Complete the Ownership Change form. Signatures with signature guarantee are required from all remaining and new trustees. 2. Complete the New Account form. Signatures are required from all trustees of the new account. a. If a new trustee has been added, submit the trust document pages (certified within 60 days) that name the new/successor trustees. b. If a trustee has resigned or has been removed, submit the trust document pages (certified within 60 days) that document the trustee resignation/removal. c. If moving assets into a different trust, submit the trust document pages (certified within 60 days) that include the trust name, date, current trustees’ names, and signatures. If a Brokerage account, also submit the Brokerage Trustee Certification form.

2D

Current Ownership: Minor

Generally, an account with a minor as an owner is listed as UGMA or UTMA. The custodian listed on the account has the authority to act on behalf of the minor. When a minor reaches age of majority as determined by state law, ownership may be changed to the former minor. Minor Reached Age of Majority 1. C  omplete the Ownership Change form. Signature is required from custodian. If the minor is adding a joint owner, signature with is required from minor. signature guarantee 2. C  omplete the New Account form. Signatures are required from all owners of the new account. or a signature 3. S  ubmit a copy of the minor’s birth certificate is required from the custodian on the Ownership guarantee Change form.

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Resignation of Custodian 1. Complete the Ownership Change form. Signature with signature is required from the resigning custodian. guarantee 2. Complete the New Account form. Signature is required from new custodian. 3. Submit documentation of a new custodian. a. If a new custodian has been appointed by the court, submit the court-certified appointment. b. If a new custodian was appointed by the resigning custodian, submit a copy of the notarized or witnessed instrument of designation. c. Signed written notice of acceptance from the new custodian. The document should clearly state who is resigning and who is being appointed as successor. d. If a successor custodian has not been appointed, then upon the minor reaching age 14, in general, the minor may appoint a new custodian within 60 days of the custodian’s resignation by submitting signed instructions and a copy of the minor’s birth certificate.

2E

Current Ownership: Estate

1. C  omplete the Ownership Change form. Signatures with signature are required from all executors. guarantee 2. Complete the New Account form. Signatures are required from all owners of the new account.

2F

Cost Basis

Gift We are generally required to treat a transfer as a gift unless the originating account and the receiving account have at least one common owner. If we are required to treat the transfer to you as a gift, your basis in the account is generally the same as the transferor. However, there is an exception. If the fair market value of the stocks on the date of the gift is lower than the transferor’s basis in such stocks, then your basis for determining gain is the transferor’s basis, but your basis for determining loss is the fair market value on the date of the gift. You would not have any gain or loss if you sell the stocks at a price between the fair market value on the date of the gift and the transferor’s basis. We are not required to make any basis adjustment for any gift tax paid. The above only explains how we report your transactions to the IRS. You may have to report differently on your tax return. See IRS Publication 551 for more information on determining your basis in gifts. Spousal Transfer (Marriage or Divorce) If the account is transferred to you by your spouse, your basis is generally the same as the transferor’s basis. This also applies to a transfer incident to the divorce, generally a transfer that occurs within one year after the cessation of the marriage, or if the transfer is related to the cessation of the marriage, a transfer that occurs within six years of the cessation of the marriage. See IRS Publication 504, Divorced or Separated Individuals, for more information.

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