Liquidation of positions upon death

Discussion in 'Retail Brokers' started by tyrant, Jun 11, 2011.

  1. tyrant


    What will happen to trading accounts upon death? You may have drawn up a will but I think it might take at least a few months before the beneficiaries have rights to the accounts. In the mean time, what happens if you have huge exposure in futures market? How can those positions be liquidated?

    In short, what should I do now to ensure immediate liquidation of positions upon my death so that the account has zero exposure? The funds can then be passed on to beneficiaries some time down the road.
  2. clacy


    If your trading strategy doesn't incorporate stops, then you could place some stops far away, to prevent catastrophic losses.

    You should probaly have your account #'s/passwords written somewhere for someone you trust.

    I would like to prepare step-by-step instructions for my wife with regards to my finances, should something unexpected happen to me.

    I no longer trade futures or anything with leverage, and I'm somewhat hedged in various asset classes, so time would be a little more kind to me, but I certainly would want my wife to go to cash within a week or so.

    Obviously, a week with no stops in the futures market could be enough time to completely blow your account if you had a large enough position.
  3. Use a fill or kill order.... couldn't resist..
  4. i think the broker will liquidate the positions once they confirm that the account holder has indeed died. somebody does need to notify the broker about the death.

    ask your broker about the exact process.
  5. LEAPup


    As soon as the broker is notified of the death via phone, or letter, the account is frozen.

    If it's an IRA, the $ goes to the beneficiary. If individual account the $ goes to the estate.

  6. when the account is frozen, are the positions closed first?

    interesting thread.
  7. i am reasonably sure that the broker will liquidate the positions ASAP.
  8. LEAPup


    They're held until a copy of the death certificate is received, and before the $ (IRA) going to the beneficiary, or Estate. (Estate meaning this was an individual account, and will be dealt with through a will or probate court.)

    When they call with death notification, the broker is to freeze the account as it is.
  9. i was wrong. the broker only cancels the open orders:

    Account Holder is Deceased
    Upon hearing of the death of an account holder, the broker-dealer's first responsibility is to cancel all open orders and to ensure that no further orders are placed. Then he or she should add the word "deceased" to the name on the account while awaiting confirmation in the form of a death certificate.

    Estate Requirements - Because money lives forever, the broker-dealer will now have to deal with some estate issues.

    First, there may be a court order or a notarized will specifying who has ownership or discretion over the account.

    The account cannot be closed until tax issues - state of legal residence at time of death and official notification from that jurisdiction that all tax claims have been settled - are resolved.
  10. +1

    This is correct.
    #10     Jun 12, 2011