What problems do private client professionals face when dealing with shareholdings?
Dealing with shares in probate can add an extra level of complexity to your processes. If the deceased was a company director in a limited company it can become even more complicated to transfer the assets. You may encounter restrictions or pre-exemption rules that govern how the shares can be distributed, and you will need to determine if inheritance tax is due and consider whether the shareholdings are eligible for business relief.
We sat down with Sian Flanagan, our Securities Manager, to look at the process and how our Share Services can help.
Hi Sian, tell us a bit about yourself.
I have over 25 years of experience working with shares, having spent much of my career with Cambridge Securities Limited, a firm established to assist solicitors dealing with share portfolios in probate matters, based in East Anglia. I recently joined Estatesearch as Securities Manager, running our Shares Service.
Why is it important to identify shares in an estate?
It’s really not uncommon for people to have shares. In the 80’s British Gas was nationalised and there was even an advertising campaign encouraging people to buy shares in the company. Since then the British Gas business has been through a lot of mergers and name changes, those original shares could now be held in Shell, National Grid or Centrica. A report by the Dormant Asset Commission indicates that there’s around £150 billion pounds worth of shares registered. They estimate that 0.1-0.3% of that lies forgotten about. That means that if we take into account the value of the unpaid dividends, we’re taking over £600 million pounds of dormant shareholdings. That’s why it’s really important that due diligence is undertaken to determine the whole estate upfront and that includes shareholdings.
What are some of the common issues you come across?
In the first instance identifying current shareholdings can be a very time-consuming process for clients. It’s often the case that the family has come across a stack of paperwork alluding to the fact that there might be shares in the estate, there might be some certificates, tax vouchers and so on but it can be an overwhelming task to sort through it all. Companies might have merged, changed names or been dissolved over time so it’s important to find out what we are dealing with as the first step. Even if there is no paperwork present, shares are often uncovered during our Financial Asset Search process so we’ll then need to look at replacing missing certificates.
Once shares are found, they need to be verified. As I mentioned before, companies undergo relatively frequent changes and people don’t always keep track. Old, and often invalid, Share Certificates are retained which can cause confusion. We offer a service where we register the Death Certificate with the company Registrars to obtain written confirmation of the shareholdings and ascertain whether they are held in certificated or nominee form.
So once the shares are identified and verified, what’s the next step?
Valuation. It’s known as the ¼ up method. We have to work out the value of the shares, at the time of death, for inheritance tax purposes.
How can Estatesearch help?
We were often approached by clients, frustrated with the time-consuming and complex nature of dealing with shares in probate. Our Shares Services were developed to help take away some of the pressure.
Not only can we support clients in the initial stages of identification, verification and valuation, even sorting through stacks of paperwork if required, but we also have a range of additional services such as providing a Schedule of Dividends and obtaining missing certificates. When it comes to the sale or transfer of shares we can take care of the registration of the Grant of Representation and prepare the appropriate forms before proceeding. It really is a full process support service for private client practitioners dealing with more complex matters.
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If you would like help in identifying shares in an estate or find out more about how our expert Share Services can support your processes, please email [email protected]. Alternatively, why not request a call back from a member of the Estatesearch Team?
Sian Flanagan provides a fantastic professional service for probate valuations for shares, historic dividend information and encashing shares where possible. I am very happy to personally recommend Sian to all my clients and other lawyers for her quality and bespoke service.
Jonathan Sleep STEP, Senior Associate, Blake Morgan LLP