How to exercise survivor options

How to exercise survivor options

A survivor option (also known as a death put) is an optional redemption feature on debt securities allowing the estate of the deceased to sell the security back to the issuer at face value in the event of the debt owner's death.

You can exercise survivor options by submitting the appropriate forms and required documentation.

To exercise a survivor option, you will need the following:

 

All processes
  • A debt security eligible to be submitted for a survivor option and still in the deceased's account or in an estate account (review the prospectus for the security)*
  • Information for the deceased, including the Schwab account number(s), date of death, last known address Tooltip , and account registration of the deceased
  • Information for the beneficiary/executor, including name, relationship to the deceased, address, phone number, and Social Security number
  • Original, certified death certificate Tooltip  for each security issuer per each unlike-registered account (as an exception, CIT Bank and JP Morgan requires one original certified death certificate per CUSIP)
In addition to the information above, the following security specific information may be required:
Certificates of deposit (CDs) from all issuers
  • A notarized Affidavit of Domicile Tooltip to attest to the decedent's state of residence
  • Adobe® Reader® or Adobe Acrobat® 7.0 or higher (download the latest version on the Adobe website)
CDs issued from Citibank or Barclays Bank Delaware
  • Trade confirmations or other documentary proof the CDs were purchased in the primary market

CDs issued from:

  • American Express Centurion Bank
  • CIT Bank
  • GE Capital Bank
  • JP Morgan Chase
  • Safra National Bank
  • Synchrony Bank
  • SunTrust
  • Citibank
  • Union Bank
  • For IRAs, transfer of death (TOD) accounts, or designated beneficiary plans (DBPs), a Beneficiary Designation Form (IRA Change Beneficiary / IRA Update Beneficiary) on file at Schwab
  • For an individual or estate account (or IRAs, TOD accounts,† or DBPs where no beneficiary is designated or an estate is the named primary beneficiary), the original Letters Testamentary with a court seal and dated within 50 calendar days of the date of certification
  • For a trust account (or IRAs, TOD accounts, or DBPs where the primary beneficiary is a trust):
    • If the security was held in a trust originally established as an irrevocable trust, confirmation the security remains eligible for a survivor option (review the prospectus for the security).
    • The entire trust document and all amendments to it, or a probated will (if a testamentary trust)
    • If any prior or current trustees are not signing the letter of authorization, a copy of a document explaining why (e.g., a death certificate or a letter of resignation)
Bonds/notes
  • For IRAs, transfer of death (TOD) accounts, or designated beneficiary plans (DBPs), a Beneficiary Designation Form (IRA Change Beneficiary / IRA Update Beneficiary) on file at Schwab
  • For an individual or estate account (or IRAs, TOD accounts,† or DBPs where no beneficiary is designated or an estate is the named primary beneficiary), the original Letters Testamentary with a court seal and dated within 50 calendar days of the date of certification
  • For a trust account (or IRAs, TOD accounts, or DBPs where the primary beneficiary is a trust):
    • If the security was held in a trust originally established as an irrevocable trust, confirmation the security remains eligible for a survivor option (review the prospectus for the security).
    • The entire trust document and all amendments to it, or a probated will (if a testamentary trust)
    • If any prior or current trustees are not signing the letter of authorization, a copy of a document explaining why (e.g., a death certificate or a letter of resignation)

* Even if the security has been transferred out of the decedent's account or an estate account, there is a chance the survivor option can still be submitted. Contact your Schwab service team to start the review process.

 If dated between 50 and 60 calendar days of certification, there is a chance the survivor option can still be submitted. Contact your Schwab service team to start the review process.

  1. Select the Affidavit of Domicile form in the forms library on Schwab Advisor Center, locate the form, click Select, and select Open PDF.
  2. Complete all applicable sections and ensure all additional requirements Tooltip for the Affidavit of Domicile are met.
  3. Draft a letter of authorization stating, “Please exercise the survivor option on the following security” and containing all applicable information, including:
    • Date of letter.
    • The Schwab account number in which the security resides.
    • The quantity being exercised and a complete security description (i.e., issuer, rate, maturity date, and CUSIP).
    • For individual or estate accounts: signatures of all executors.
    • For joint accounts: signatures by all surviving joint tenants. Tenants in common must also note the percentage of the deceased's and survivors' interests.
    • For trust accounts, where the debt security is for one of six CD issuers: signatures of all authorized trustees. If any prior or current trustees are not signing the letter of authorization, a copy of a document explaining why is required (e.g., a death certificate or a letter of resignation).
    • For an IRA, TOD, or DBP, where the debt security is for one of six CD issuers: signatures of all primary beneficiaries. If no beneficiary is designated, if all named beneficiaries are deceased or have disclaimed their rights, or if the estate is the named primary beneficiary, follow the signature requirements for individual or estate accounts.
    • If a trust is named as a primary beneficiary, the entire trust document and all amendments to it are required, and the letter must be signed by all successor trustees.
  4. Collect all required non-Schwab documentation, appropriate for your client's scenario, listed in the What you'll need section.
  5. Print the form and letter and obtain the appropriate signatures. Mail all documentation to your Schwab service team.
  1. Draft a letter of authorization stating, “Please exercise the survivor option on the following security” and containing all applicable information, including:
    • Date of letter.
    • The Schwab account number in which the security resides.
    • The quantity being exercised and a complete security description (i.e., issuer, rate, maturity date, and CUSIP).
    • For individual or estate accounts: signatures of all executors.
    • For joint accounts: signatures by all surviving joint tenants. Tenants in common must also note the percentage of the deceased's and survivors' interests.
    • For trust accounts: signatures of all authorized trustees. If any prior or current trustees are not signing the letter of authorization, a copy of a document explaining why is required (e.g., a death certificate or a letter of resignation).
    • For an IRA, TOD, or DBP: signatures of all primary beneficiaries. If no beneficiary is designated, if all named beneficiaries are deceased or have disclaimed their rights, or if the estate is the named primary beneficiary, follow the signature requirements for individual or estate accounts.
    • If a trust is named as a primary beneficiary, the entire trust document, and all amendments to it are required, and the letter must be signed by all successor trustees.
  2. Collect all required non-Schwab documentation listed in the What you'll need section.
  3. Mail all documentation that requires the original document or a notary to your Schwab service team. Once the letter is signed, send it to your Schwab service team via a Schwab Advisor Center service request.

Once you submit the required documentation:

  • Payment and timing are solely at the discretion of the issuer. For bonds/notes and CDs linked to an index, there is typically a timetable explained in the prospectus. Any deadlines in the prospectuses do not consider additional processing time needed by Schwab. In general, add an additional ten days to the deadlines described in the prospectus.
  • The survivor option may take longer than expected. Acceptance of the documents is up to the issuer and its paying agent who may request additional information and thereby delay the payment date.
  • Some CD issuers may also have annual or lifetime caps which could either delay or prevent payment to the beneficiary(ies). Schwab cannot guarantee payment nor confirm in advance when a payment will be made by the issuer of a survivor option CD. When a payment is honored by an issuer, payment can take up to several months. If a payment is denied, Schwab is typically notified within the same time as the payment would have been made. Features and requirements may change at any time.
  • Many issuers do not allow a request to be withdrawn once it is submitted. The prospectus for a particular CUSIP must be reviewed to determine if a particular client's request can be withdrawn.
  • If you have questions about exercising survivor options, call your Schwab service team.

Go to the Forms library on Schwab Advisor Center and select the forms below:

Form: Affidavit of Domicile
Form: Beneficiary Designation Form (IRA Change Beneficiary / IRA Update Beneficiary)

Is a partial exercise allowed?
A partial exercise might be allowed at the issuer's discretion. Review the prospectus for the security or contact the Advisor Services Fixed Income Trading team at 888-986-3700 or AST&OFX@schwab.com.

Is there a deadline or expiration date on the survivor options?
Some issuers do have time limitations for the exercise of the survivor options. Generally, waiting for more than a year after death is not advisable, as issuers may not pay the survivor option. Review the prospectus for specific time limitations.

Is there a fee to exercise the survivor options?
No. Currently, Schwab does not charge a fee to exercise survivor options.

Can I cancel a request to exercise a survivor option?
Many issuers do not allow a request to be withdrawn once it is submitted. The prospectus for a particular CUSIP should be reviewed to determine if a particular client's request can be withdrawn.

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