What to do when a Merrill account holder dies

No, and this is the sharpest edge in Merrill's estate paperwork. The Transfer on Death Agreement states that it "will not be honored if contingent Beneficiary designations or per stirpes designations are listed," and that the MLPF&S TOD account does not provide for contingent or successor beneficiaries at all. It also has a default that surprises families: if a named beneficiary dies before the account owner and the owner did not check the Section C box redistributing that share among the surviving beneficiaries, the share passes to the owner's ESTATE and goes through probate — the same result if only one beneficiary was ever named and that person predeceases. Merrill's RETIREMENT Beneficiary Designation Form is different: it allows contingent beneficiaries and lets you elect per stirpes or per capita (one or the other, not both, within a class). So a family with grandchildren to protect should expect their IRA designation and their brokerage TOD to behave differently. A TOD Agreement also cannot be signed by an agent under a power of attorney, and it supersedes the owner's will and trust for the assets in that account.

The account is closed, not divided in place. Merrill states on the Transfer on Death Letter of Authorization that it cannot remove or add a name on the decedent's account and cannot liquidate the assets inside it, so each beneficiary's share transfers IN KIND to a receiving account they name — an existing Merrill account, a new Merrill Edge Self-Directed account, or a new Merrill Advisory Center account (888-657-8278, option 1). Fractional or odd shares are sold and the cash divided. Nothing moves until every named beneficiary has returned their own notarized Letter of Authorization, so one unresponsive beneficiary holds up the whole account. Two more mechanics matter. If the account was on margin or pledged to a Loan Management Account, that debt is repaid first, and Bank of America, N.A. as the secured lender can demand full repayment and direct Merrill to liquidate positions before any beneficiary is paid. And any liquidation inside the account after death is reported under the DECEDENT'S Social Security number, with Merrill's final tax statement for the decedent showing no step-up in basis on those sales — a reason to transfer positions in kind and sell from your own account instead. A step-up on transferred positions is applied on request after the transfer.

Two. Merrill accounts are settled by Merrill Life Services (855-450-9015, Mon-Fri 8am-8pm ET; fax 917-778-0797; Merrill Document Processing, PO Box 31024, Tampa, FL 33631-3024), which assigns a Transition Specialist to the case. Deposit, credit card, and loan accounts are settled by Bank of America Estate Servicing (888-689-4466, Mon-Fri 9am-8pm ET), which takes documents by fax at 866-694-9046 or by mail at Bank of America, Estate Servicing Operations, PO Box 31655, Tampa, FL 33631-1655, and gives non-customers a Third-Party Case Manager login to submit and track the case. Bank of America's own estate services page routes Merrill accounts to a separate number, 866-848-6554 (Mon-Fri 8am-8pm ET). Opening one case does not open the other, so an executor working a combined household should expect to file the death certificate and the court appointment papers on both sides. Merrill also requires a notarized Affidavit of Domicile on every claim, which the bank side does not.

The Transfer on Death Agreement is limited to individually owned accounts and to joint accounts held with survivorship rights — CMA-Individual, Joint with Rights of Survivorship, Joint as Tenants by the Entirety, community property held in survivorship form, Individual Investor Accounts (Delaware), and CMA sub-accounts. The agreement lists as INELIGIBLE: Tenants in Common, Joint Tenants - Community Property held without survivorship, trust accounts, UTMA/UGMA custodial accounts, all retirement accounts (which use the Beneficiary Designation Form instead), and 529 accounts (which use a 529 Change of Beneficiary form). It is also unavailable to residents of Louisiana and Puerto Rico, and an owner who moves to either must tell Merrill in writing. Even inside an eligible account, some assets do not pass by TOD: limited partnerships not held in street name, mutual fund shares held at the fund, commodities, and restricted or Rule 144 stock, all of which may have to be probated. Life insurance and annuities that appear on a Merrill statement are held at the insurance company, not in the brokerage account, and are claimed from the insurer rather than through the TOD.