Death of shareholder

Death of shareholder

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Hi,

Just took on a new client, signed up etc then they mention that the father ( shareholder ) died and they are needing help to sort this out. I have not had experience of this and while I have read a lot I am still a bit nervous. If he had mentioned this before signing, I would have upfront suggested he spoke to another person.

Father's will leaves shares to his wife - exempt from stamp duty.

Son, also a shareholder, needs to declare dividends ( preferred method, albeit could revert to salary).

Company has retained reserves at date of death, but is in the building industry and so has had a very poor last two years.

If the Mother 'gifts' the shares to the son, given the current trading of the company, would this be a taxable transfer, or could it be argued that the shares weren't worth anything.

Thanks

Lorraine

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By LyneT
16th Sep 2011 15:20

It is difficult to see here whether the shares are actually worth anything.  If they have a value then you will not be able to pursuade HMRC that the do not have a value.

However, there is no need to do this.

Mum has one of two options.

1.  Make a gift to son.  There is a capital gain on the difference between the probate value of the shares and the value of the date of sale. (gift relief may be available).  This would be a PET with no tax to pay if she survives 7 years.

2.  Do a deed of variation of the will and get mum to vary the will so that son receives the shares.  Provided both an IHT and a CGT election has been made, son will get shares at probate value and no PET.  It may however, be that if the shares do have a value, then IHT will be payable on the value of the shares in the estate now.

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