A registered representative learns that a client passed away. The client's will specifies that all assets in their brokerage account should be transferred to a specific beneficiary. Before the firm receives official documentation, the beneficiary contacts the representative, asking to liquidate a portion of the account to cover funeral expenses. What is the representative's most appropriate action?
- AAdvise the beneficiary to send official death certificates and letters testamentary/administration before any action can be taken.
- BInform the beneficiary that the funds can be released once the account is re-registered in their name.
- CConsult with the firm's legal department immediately to determine the best course of action.
- DLiquidate the requested amount, as the will clearly states the beneficiary, and funeral expenses are a valid need.
Show answer & explanationAnswer & explanation
Correct answer: A. Advise the beneficiary to send official death certificates and letters testamentary/administration before any action can be taken.
Before acting on the instructions of a deceased client's estate or beneficiaries, a firm must receive proper legal documentation, such as a death certificate and letters testamentary or letters of administration. This ensures that the assets are transferred and distributed according to law and the deceased's wishes, protecting both the firm and the representative from liability.
Why the other options are wrong
- B. Re-registering the account and releasing funds also requires the same official documentation first.
- C. While consulting legal is good practice, the immediate and primary action is to request official documentation from the beneficiary.
- D. Liquidating assets without proper documentation is a serious violation and exposes the firm to liability.
Deceased Client Procedures
When a client dies, firms must follow strict procedures requiring specific legal documentation (e.g., death certificate, letters testamentary) before assets can be transferred or distributed.
- Death certificate is always required.
- Letters testamentary/administration establish legal authority of executor/administrator.
- No transactions can occur until proper documentation is received and verified.
- Protects against fraud and ensures legal transfer of assets.
Memory trick: When a client's gone, don't rush the fund flow; get the probate papers, then you can go.