Stocks & shares after death

Should solicitor encash shares?

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Hello all,

Looking for guidance on whether I should advise my client to seek professional tax help or not.

My client is due to inherit some stocks and shares from a family member that has recently passed. Apparently the solicitor dealing with the estate has advised him that he will be receiving the physical shares rather than these being cashed in and him receive the money. The estate is already over the IHT bracket.

Would I be correct in assuming that the solicitor has suggested receiving the shares rather than cashing them in to save on IHT?

Replies (6)

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By Paul Crowley
12th Dec 2021 14:47

Did the will say that client gets the stocks and shares, rather than getting them as part of the residue?
Cannot see any IHT saving
Any estate CGT issues, or changes in value of shares?

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Replying to Paul Crowley:
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By CTaxservices
12th Dec 2021 15:10

As far as I'm aware, as I haven't seen the will yet, my client along with his 3 siblings are due to inherit everything split evenly 4 ways.
However I'm not sure if my client would be able to say to the solicitor that he wishes to receive cash rather than shares for his portion. Or if that is something that the estate can't do, as I'm trying to see if I can save him CGT - as if the estate cashes them in I believe no CGT will be charged

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Replying to CTaxservices:
RLI
By lionofludesch
12th Dec 2021 15:40

CTaxservices wrote:

As far as I'm aware, as I haven't seen the will yet, my client along with his 3 siblings are due to inherit everything split evenly 4 ways.
However I'm not sure if my client would be able to say to the solicitor that he wishes to receive cash rather than shares for his portion. Or if that is something that the estate can't do, as I'm trying to see if I can save him CGT - as if the estate cashes them in I believe no CGT will be charged

Saves him CGT ?

In what way ? Bearing in mind none is due. Unless I've misinterpreted the facts.

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Replying to CTaxservices:
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By More unearned luck
12th Dec 2021 16:11

I hope that it is obvious to you that there will only be CGT if the shares have grown in value since the death. Subject to the executors making a claim for relief based on the case of Richards' Executors under SP2/04, the gains will be the same regardless of who makes them. The advantage of the sales being made after the BO has passed to to the legatees is that there is likely to be (in this case) four AEA as opposed to the executors' one. Also some of the gains in excess of the AEA might be taxed at 10% depending on the tax positions of the legatees.

It is likely that the decision to sell is one that neither you nor the sols can legally give advice on. It might be different for the sols if one or more of the principals are among the executors. The executors are likely to defer to the wishes of the legatees.

Once the decision to sell has been made, the decision on who sells is tax advice.
The choices are:
Executors qua executors
Executors qua bare trustees for the legatees
The legatees after the shares have been put in their names

Necessity might dictate sales if the IHT is not yet paid or any bridging loan not yet repaid. Also the stage in the progress of the administration might also remove the relevant choice.

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By Truthsayer
12th Dec 2021 15:09

We can't answer this with so little information. We would need to see the will at the very least.

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RLI
By lionofludesch
12th Dec 2021 15:45

Could I just say that, from an admin point of view, splitting holdings up and getting them re-registered in the beneficiaries' names is a lot of hassle ? Especially if the holdings are small.

Much better if one beneficiary takes the entire holding and some adjustment is made to the cash distribution.

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