How to Handle a Medallion Signature Guarantee Issue with a Virginia Estate or Probate Administration Matter

Medallion Signature Guarantee

What Is a Medallion Signature Guarantee?

Please Note:  Smith Strong, PLC can assist you with your Medallion Signature Guarantee issue related to a deceased loved one in Virginia, as part of a probate or estate administration matter.  To get started simply call or message us when you're ready.  To provide background and assistance, here's an in depth look at how we resolve Medallion Signature Guarantee issues.

A medallion signature guarantee is a unique certification stamp that guarantees a signature authenticating a transfer of securities. A Medallion signature guarantee is needed when:

1. You are selling or transferring securities (such as stocks, bonds, mutual funds, or anything defined by the U.S. Securities and Exchange Commission (SEC) as a “security”) and

2. You have a physical certificate to sign. It is important to note that not all companies issue physical certificates for their stocks. If there is no physical certificate, you DO NOT need a Medallion stamp.

The purpose of the signature guarantee is to prevent forgery and fraud.  When you sell or transfer a security, the transfer agent keeps a record or ledger of the transfer of ownership.  To help to ensure that the transfer is authentic, the transfer agent will require a signature guarantee. The signature guarantor accepts liability if there is a fraud or forgery.

A medallion signature guarantee is NOT a notary stamp. A Notary Public cannot guarantee the signature on a security in any state.

Who can provide a Medallion Signature Guarantee?

Brokerage firms, banks, and credit unions that choose to join the program can provide the Medallion Signature Guarantee.  They must pay an annual membership fee and use a special Medallion stamp with special ink for added security. The ink is always bright green.

If a financial institution is not a member of a recognized Medallion Signature Guarantee program, it would not be able to provide a signature guarantee.  When contacting a financial institution, the first thing to ask is if they are a member of the Medallion Signature Guarantee program. The second thing to mention is the amount of the security. The amount of the security is important for two reasons:

1. most financial institutions impose a Medallion Signature Guarantee for transaction amounts above a certain threshold (usually $25,000, but this varies from institution to institution)

2. Not all institutions in the program will guarantee securities over certain amounts (usually $5 Million).

There is also a Medallion Signature Guarantee website (www.msglookup.com) where you can type in your zip code to find a bank or credit union near you that will provide medallion signatures.

When you open an account at a bank or brokerage firm, you sign an application form and maybe a signature card.  A copy of your signature is kept on file.  If you need a signature guarantee, the best place to go is to a bank or brokerage firm where you have an account.  They can compare your signature on the certificate you are transferring against the signature they have on file.  Then they can add the Medallion signature guarantee stamp.  They can be held liable if the signature is a forgery.

Typically, you need to provide your driver’s license and a statement of ownership concerning the investment account or security that is being transferred/redeemed to the financial institution.

What if my financial institution does not participate in the Medallion Signature Guarantee program?

If you are not a customer of a participating financial institution, it is likely the financial institution will not guarantee your signature. If you do not have an existing account, you may need to open a new account and wait for 60 days or more to establish an ongoing customer relationship before you can get a signature guarantee. The financial institution’s internal policies may prohibit guaranteeing the security for some reason, even with newly established banking relationships, and these policies vary.

What if I am administering an estate or in probate and I need to transfer the security to the estate account?

If you are an executor or administrator of an estate, you will also need to provide the death certificate, certificate of qualification, power of attorney, or small estate affidavit, depending on whether you are in probate or simply administering an estate. This is in addition to your driver’s license and a statement of ownership concerning the investment account or security that is being transferred/redeemed to the financial institution.

When you are transferring or liquidating a security for a decedent, you MUST prove that you have authority to act on behalf of the Estate of that decedent. Generally, the same Virginia Statutes and circumstances that determine whether you enter into probate, or are able to bypass probate and just administer the estate, apply. This includes the value of the decedent’s assets and any benefit or threshold that a small estate affidavit may provide.

VA Code Sections 64.2-600 & 601, state that a small asset includes any bank account, savings institution account, credit union account, brokerage account, security, deposit, tax refund, overpayment, item of tangible personal property, or an instrument evidencing a debt, obligation, stock, or chose in action.

The value of a small asset refers to the value on the date of the decedent’s death, of no more than $50,000 in order to utilize the Affidavit. If the stock or security is above $50k, you must go through probate.

What should I do after I receive the Medallion Signature stamp on my security?

Follow the instructions of the Transfer Agent regarding the documentation they require. Fill out the documents, provide any ancillary documents or information requested, along with your stamped security and mail it to the Transfer Agent.

What is a Transfer Agent?

A transfer agent is a trust company assigned by a corporation for the purposes of maintaining an investor's financial records and tracking each investor's account balance. The transfer agent records transactions, cancels and issues certificates, processes investor mailings, and handles a host of other investor problems, including reissuing lost or stolen certificates. Typical transfer agents include Computershare and Broadridge. The name of the transfer agent will always be listed on the investor’s statement as it is required by law. Learn more about Transfer Agents by visiting the U.S. Securities and Exchange Commission at  https://www.sec.gov/divisions/marketreg/mrtransfer.shtml