Inheritance: How Brokerage Fees Affect Heirs

Upon the death of a securities account holder, heirs often discover that the favorable fee terms enjoyed by the deceased no longer apply. Some families consider this situation unfair, but it is perfectly legal, as the ombudsman of the French Financial Markets Authority (AMF) has pointed out. Here is an explanation of a little-known pitfall in estate planning.

The End of Preferential Benefits Upon the Account Holder’s Death
The case involves a family faced with higher-than-expected brokerage fees when liquidating a securities account. Upon their mother’s death, the children entrusted a notary with the sale of the securities. To their surprise, the bank applied standard commissions, which were significantly higher than the preferential rate enjoyed by the deceased.
 

In response, the AMF reiterated a clear principle: agreements between a financial institution and its client are entered into intuitu personae, that is, based on the individual. Upon the account holder’s death, these agreements automatically cease to be effective. The heirs therefore cannot claim the same discounts as the deceased.
 

In this specific case, the bank also cited a technical reason: the reduced fee applied only to orders placed online or by phone. Since the notary had submitted his request by mail, the standard fee applied automatically.
 

This situation illustrates a reality: upon the opening of the estate, an “estate account” is created in the name of the joint heirs. This account is governed by the financial institution’s terms and conditions, without taking into account the benefits enjoyed by the deceased.

Plan Ahead to Avoid Unpleasant Surprises
While the principle is legally indisputable, it can prove costly for the heirs, especially when a substantial portfolio must be liquidated. In the case of a Stock Savings Plan (PEA), the law imposes a cap on brokerage fees, which varies depending on the channel through which orders are transmitted. However, no such protection exists for a standard securities account, where each financial institution is free to set its own rates.
 

The AMF Ombudsman therefore recommends planning ahead for these issues. Certain types of policies, such as life insurance, offer greater protection: in the event of death, the death benefit is paid directly to the designated beneficiaries, outside the estate, without any unexpected brokerage fees.
 

This episode underscores the importance of having a thorough understanding of the rules governing various financial products. While death automatically terminates favorable contractual terms, heirs still have options to limit estate costs, provided they plan ahead for the transfer of assets.