Author Topic: Certificated shares...?  (Read 7133 times)

RMD

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Certificated shares...?
« on: February 17, 2014, 05:32:18 PM »
I inherited stock as a kid and just leave it alone.  It's dividend reinvested and I forget about it until the quarterly statement comes.  At any rate, a portion of the shares are certificated and the rest are not.  Can someone explain the purpose of certificated shares? 

matchewed

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Re: Certificated shares...?
« Reply #1 on: February 17, 2014, 06:06:49 PM »

RMD

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Re: Certificated shares...?
« Reply #2 on: February 17, 2014, 07:24:54 PM »
Okay, so there is no real difference between the shares I hold that are certificated and those that are not?  Is there any reason I might want to consider certificating the shares that are not...any benefit to doing so?

Nords

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Re: Certificated shares...?
« Reply #3 on: February 17, 2014, 10:34:27 PM »
Okay, so there is no real difference between the shares I hold that are certificated and those that are not?  Is there any reason I might want to consider certificating the shares that are not...any benefit to doing so?
When you want to sell shares that are held in your broker's account, you click a mouse button on a website.

Holding shares as certificates is generally a hassle of preserving paper in a safe deposit box.  When you want to sell your certificate shares then you have to endorse them, mail them (perhaps certified) to your broker, have him credit them electronically to your account, and then execute the transaction-- for a higher fee.  You also have to know your cost basis for the shares so that you can correctly calculate your gain and pay the right amount of taxes.  The brokerage doesn't have that information because the purchase didn't go through them. 

Of course you really only care about this if you're worried about losing the shares (theft/fire) or selling them.  However if you're incapacitated or killed then your conservator/heirs have an extra hassle in settling your finances.

Vjklander

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Re: Certificated shares...?
« Reply #4 on: February 24, 2014, 12:40:21 PM »
Okay, so there is no real difference between the shares I hold that are certificated and those that are not?  Is there any reason I might want to consider certificating the shares that are not...any benefit to doing so?
When you want to sell shares that are held in your broker's account, you click a mouse button on a website.

Holding shares as certificates is generally a hassle of preserving paper in a safe deposit box.  When you want to sell your certificate shares then you have to endorse them, mail them (perhaps certified) to your broker, have him credit them electronically to your account, and then execute the transaction-- for a higher fee.  You also have to know your cost basis for the shares so that you can correctly calculate your gain and pay the right amount of taxes.  The brokerage doesn't have that information because the purchase didn't go through them. 

Of course you really only care about this if you're worried about losing the shares (theft/fire) or selling them.  However if you're incapacitated or killed then your conservator/heirs have an extra hassle in settling your finances.

And that doesn't even begin to talk to splits, mergers, spinoffs, reorgs, etc etc etc.  And the potential the certificate is just plain lost...

RMD

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Re: Certificated shares...?
« Reply #5 on: February 24, 2014, 01:13:10 PM »
This sounds like fun.  :S

So, if I were to want to "uncertificate" shares (is there such a thing?) can I do that without selling them? (I'm guessing not...but I thought I'd throw it out there...) I'm pretty sure when my grandfather bought these many moons ago he bought them directly.  They are now managed through ComputerShare.  I have no idea how to find the cost basis but ComputerShare does have the history and there is a date listed that might match the date the shares were certificated? 

It's awkward to have questions but not know what to ask.  I'm not even sure what questions I should have!  Bear with me while I figure it out, please...because I'm probably going to be around asking some questions that will make knowledgable folks wonder what planet I'm from.

Bruinguy

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Re: Certificated shares...?
« Reply #6 on: February 24, 2014, 10:55:26 PM »
My understanding is that your broker can assist with the change from the certificate to "un-certificated."  They should be able to walk you through the process.  It can be done.

Vjklander

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Re: Certificated shares...?
« Reply #7 on: February 25, 2014, 08:21:43 AM »
This sounds like fun.  :S

So, if I were to want to "uncertificate" shares (is there such a thing?) can I do that without selling them? (I'm guessing not...but I thought I'd throw it out there...) I'm pretty sure when my grandfather bought these many moons ago he bought them directly.  They are now managed through ComputerShare.  I have no idea how to find the cost basis but ComputerShare does have the history and there is a date listed that might match the date the shares were certificated? 

It's awkward to have questions but not know what to ask.  I'm not even sure what questions I should have!  Bear with me while I figure it out, please...because I'm probably going to be around asking some questions that will make knowledgeable folks wonder what planet I'm from.

You don't know the half of it !!  ;)    I could qualify for a degree in forensic investmentology.  If you have a clear certificate, you should be able to just surrender it to your broker and convert to journaled shares. If the stock has had splits, mergers, or spinoffs, you may have to have surrender the certificate and receive new certificates, which you then surrender to your broker. Your basis will depend on any of these events as well. Your broker can help with all of these activities, but don't be surprised if there are fees involved.  Don't be surprised if you need your grandfather's death certificate and will before you can do anything. In some inheritance cases, the basis will reset to the value at the time the holder dies, but these rules seem to change yearly and you will need a good tax advisor to sort that out.  If it turns out that you have a certificate for 100 shares of XYZ Corp and there have been no splits or other events, then you can assume the price on the date you have will be accepted as the basis. Don't forget, the basis may be reduced by the amount of any dividends paid out.
The company's investor relations MAY help you out too, but, they may blow you off as well.

RMD

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Re: Certificated shares...?
« Reply #8 on: February 25, 2014, 09:41:20 AM »
I think I should be okay as far as the death cert and will go...I was custodial minor and we were able to transition that...as a matter of fact, I'm not 100% sure that the certificate wasn't issued at that time.  The date is around a year or so after my grandfathers death...but I was no longer a minor at that time. So, hmmmm... I know I've been paying taxes on it since high school. Starting to wonder if *I* consider it an inheritance but it wasn't actually structured that way and I should consider it a gift more than an inheritance? I think I need to call my mom and see if she has a better recollection of how it all went down 20+ years ago.  (wish us luck... ;0)

I do believe there has been at least one split since then...and there was a spin-off and I hold a few shares in the spin off (that I also basically ignore).  I have no plans on really doing anything with these shares so I think I'll hold off on doing anything for now.  But now I feel like I have a clue as to what to ask or have done when I am ready to do something!

Nords

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Re: Certificated shares...?
« Reply #9 on: February 25, 2014, 11:17:02 PM »
This sounds like fun.  :S

So, if I were to want to "uncertificate" shares (is there such a thing?) can I do that without selling them? (I'm guessing not...but I thought I'd throw it out there...) I'm pretty sure when my grandfather bought these many moons ago he bought them directly.  They are now managed through ComputerShare.  I have no idea how to find the cost basis but ComputerShare does have the history and there is a date listed that might match the date the shares were certificated? 

It's awkward to have questions but not know what to ask.  I'm not even sure what questions I should have!  Bear with me while I figure it out, please...because I'm probably going to be around asking some questions that will make knowledgable folks wonder what planet I'm from.
Call Fidelity or Schwab, describe the situation, and see what they can do.

Vanguard can do the same custodial duties for you, but their customer service is a lot shallower.  Once you educate yourself via Fidelity & Schwab you could always decide to go with Vanguard.

I think I should be okay as far as the death cert and will go...I was custodial minor and we were able to transition that...as a matter of fact, I'm not 100% sure that the certificate wasn't issued at that time.  The date is around a year or so after my grandfathers death...but I was no longer a minor at that time. So, hmmmm... I know I've been paying taxes on it since high school. Starting to wonder if *I* consider it an inheritance but it wasn't actually structured that way and I should consider it a gift more than an inheritance? I think I need to call my mom and see if she has a better recollection of how it all went down 20+ years ago.  (wish us luck... ;0)

I do believe there has been at least one split since then...and there was a spin-off and I hold a few shares in the spin off (that I also basically ignore).  I have no plans on really doing anything with these shares so I think I'll hold off on doing anything for now.  But now I feel like I have a clue as to what to ask or have done when I am ready to do something!
You need to have the shares stowed in a safe place.  That could be with a brokerage or in a safe deposit box, but probably not in your residence. 

You also need to have a good handle on what price was paid on their purchase date, when your grandfather died and when you received the shares (which is used to determine your cost basis), and what dates you received splits or spinoffs.  Your heirs (grandchildren?) will be exceptionally grateful that you did not bag them with the same research project with which your grandfather has bagged you.

ritchie70

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Re: Certificated shares...?
« Reply #10 on: February 26, 2014, 10:23:39 PM »
I was actually contacted a few years ago by a company who I, unbeknownst to me, essentially owned shares of and had the certificates.

They had been my dad's when he died, filed in a file of stocks that he believed were worthless but he liked how the stock certificates looked and had always talked about framing them and hanging them on the wall. He may have in turn inherited them from his father who died in '71 - these were old certificates.

Rather than being worthless, they were for a Canadian energy company that, through a chain of acquisitions, became a part of Encana. The company name looked pretty sketchy and they were probably acquired by someone by the time he was dealing with it, so I don't blame him for thinking they were worthless.

As best I can recall, I mailed Encana the certificates I had, they mailed me Encana certificates, and I endorsed and mailed the Encana ones to Fidelity who had no problem dealing with it. Conceptually, it's pretty much like depositing the stocks at at your broker.

Cost basis was pretty hard to even guess at, but the stockholder relations folks at Encana were able to give me the stock price for the dominant predecessor company at the end of 1992. Since my dad died 12/30/92, I said "close enough" and used that. The IRS hasn't complained yet, and it wasn't that much money - I think I ultimately got $1800 when I sold the Encana stock.

MDM

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Re: Certificated shares...?
« Reply #11 on: February 27, 2014, 12:15:23 AM »
RMD, Computershare will in many cases allow you to send in your certificates and they will then hold them for you electronically:
I did exactly this this some years back.

Go to https://www-us.computershare.com/Investor/Company/, enter the stock symbol or name, and you will get a Computershare phone number to call for your specific stock.  I expect you will get an answer similar to the following:

You may convert your certificated shares in the Company to DRS if you wish. To do this, send your stock certificate(s) and the
completed Transaction Request Form to:
Computershare
Attn: Stock Transfer Department
250 Royall Street
Canton, MA 02021

In most cases your tax basis will be the value the shares had on the day you inherited them.  The investor relations office at the company itself should be able to tell you the stock price on that day, and if there have been splits, distributions, etc. since then.  Good luck.