Like any other form of property, stocks have their own transfer rules. What happens to them after the owner passes away is determined by those rules. In the case of stocks those rules are actually not all that complicated, but you will want to know them if you own any stock. This will help you better prepare your estate plan.
Recently, the Motley Fool discussed the possibilities in "What Happens to the Ownership of Stocks After a Person Dies."
The options include:
If you are married and the stocks are jointly owned by your spouse, then after you pass away full ownership will automatically go to your spouse. You do not need to do anything else.
You can designate a beneficiary and make the stocks transfer on death to that beneficiary. The Uniform Transfer on Death Securities Registration Act which has been adopted in many states makes this process very simple. The beneficiary will need to reregister the stocks.
If you do not take action and own the stocks in your name alone with no transfer on death designation, then the stocks will need to go through the normal probate process. If you have a will, ownership will be transferred according to the directions in that will. Otherwise, ownership will go to your closest living relative as determined by your state's intestate statute.
If you have any questions about transferring ownership of your stocks after you pass away, talk to an estate planning attorney. A short conversation can give you peace of mind that any stocks you own will be transferred to whomever you want to have them.
Reference: Motley Fool (Feb. 27, 2016) "What Happens to the Ownership of Stocks After a Person Dies."