When a person passes away, the transfer of stock ownership will depend on the provisions made by the deceased before their passing. If a married person who held stocks jointly with a spouse dies, then the surviving spouse typically becomes the sole owner of those stocks. However, the process is different if the decedent held stocks on his or her own.

Transfer of stocks to a beneficiary
If a person who holds stocks designates a beneficiary prior to their death, then that beneficiary becomes the owner of the stock once the holder passes. Most legal and financial experts recommend naming a transfer-on-death beneficiary in order to avoid the probate process.

Uniform Transfer on Death Security Registration Act
Many states have adopted the Uniform Transfer on Death Security Registration Act, which allows investors to designate a transfer-on-death (TOD) beneficiary for whatever stocks they own. This enables the beneficiary to receive those stocks automatically once the holder passes away. The stocks do not have to be listed in the deceased person's will, which means they can be transferred without having to go through probate.

If a TOD beneficiary is named, then after the holder of stock dies, his or her securities are transferred immediately to the designed party; the executor or administrator of the original owner's estate does not need to take any steps to facilitate the transfer. The only thing a TOD beneficiary needs to do is re-register the stocks in question in his or her name, which generally involves sending a copy of the previous holder's death certificate and a form of proper identification to a transfer agent (a person in charge of maintaining records of stock ownership), who can complete the transfer.

The probate process
If a person who holds stocks passes away without naming a TOD beneficiary, then the probate process must be initiated. Probate is a legal process for settling a deceased person's estate. When a person leaves stocks behind, a probate court must first determine who gets the shares and then direct the executor of the estate to transfer ownership accordingly. To facilitate a transfer, the executor will need a copy of the decedent's will or a letter from the probate court confirming that the beneficiary in question is indeed the person entitled to receive the shares. The executor must then send these documents to a transfer agent, who can complete the transfer of ownership. 

