United States of America
We can arrange for the shares to be sold or transferred to the persons entitled to the same, and for the Medallion Guarantee to be affixed as part of the process.
The United States can be very complex as if the deceased had assets which at the date of death had a value of US$60,000 or more, a Federal Transfer Certificate (Form 5173) needs to be obtained before the share registrars will transfer the shares to the Executors or to the Beneficiaries entitled to the same. We are familiar with the process, but the US IRS themselves state it will take about a year from the time that all of the necessary documents are submitted to them, before they will issue the needed Federal Transfer Certificate (although they are trying hard to shorten the time involved), so patience is very much a virtue in this regard.
We are familiar with the Form 706-NA process, and so if the deceased had such assets worth over US$60,000 and you need a Federal Transfer Certificate (Form 5173).
US Citizen / Dual Citizenship
(1) If the deceased was a dual citizen or had a United States passport, then we need to know if Form 706 has been filed, or if it is necessary to file Form 706 (this is different from Form 706-NA and so you need to be careful). Form 706 does not have to be filed if the deceased’s worldwide estate had a value of less than US$5,300,000 as at the date of death, but a Federal Transfer Certificate may nevertheless still be required by the share registrars or by the bank in which any of the deceased’s monies are held.
Under the US/UK Tax Treaty:
(a) If the deceased died domiciled in the USA, then from a US viewpoint, US estate tax will be payable upon the UK assets of the deceased, and any US Estate taxes will be paid upon the same, and the UK will not be able to tax the US assets.
(b) If the deceased died domiciled in the UK, then from a UK viewpoint the deceased will not pay US estate taxes upon the US assets as they will have been subject to UK Inheritance Tax.
Jointly Owned Property
(3) If shares were jointly owned by the deceased an another, unfortunately the Americans do not recognise the legal position as to a joint tenancy and that you are entitled to all of the shares by simple act of survivorship being proved upon production of the deceased’s death certificate. This means that the Transfer Request Form / Stock Power Form Form will have to be signed by the Executor for the deceased transferring the shares into the name of the survivor. This will require a Medallion Guarantee (see below).
Please note that if it might be that the shares were jointly owned as a tenancy in common by the deceased, then the surviving tenant in common will still own one half of the shares outright, and the one half of the shares owned by the Deceased will have to be transferred into the name of the Executors so that the same can be sold (or perhaps transferred direct to the Beneficiaries entitled to the same).
This group of companies is extremely complex because of all the break ups of the group in recent years and now subsequent takeovers.
Tyco International and its related companies of TE Connectivity, Covidien Plc; Pentair and ADT; and now Mallinckrodt and Medtronic are involved.
We are therefore dealing with probably up to six (6) different companies;and with three (3) different share registrars with the result that all of the documents will have to be done in triplicate.
Recently ADT has been taken over for cash and taken private; and Covidien was taken over by Medtronic for a mixture of shares in Medtronic and cash.
The research into missing shares possibly owned by the deceased can therefore long and complex.
When Kraft split up on 1st October 2012 it was divided into Kraft Foods Group and Mondelez. The Mondelez shares were issued on the basis of 1 old Kraft share equals one new Mondelez share, and the new Kraft Foods Group shares were issued on the basis of roughly 3 old Kraft shares equalled 1 new Kraft share. This means that the Mondelez shares will be roughly three times the number of the new Kraft Foods Group shares.
These Mondelez shares can be transferred in the UK by using a special form
You must note that even though it seems that you can transfer the Mondelez shares via Computershare in the UK, these shares are treated for US Estate Tax purposes as being US shares as Mondelez is incorporated in the USA, and so we will need details of the Mondelez shares for the purposes of filing Form 706-NA and/or for the preparation of the Affidavit of Domicile and as to US Assets (see below). We simply need to know the number of shares owned by the deceased as at the date of death for these purposes.
Do not worry about US Estate Tax, as under the UK/USA Tax Treaty, no US Estate Tax is payable on the Mondelez shares, if the deceased was domiciled in the UK as at his or her date of death.
Paper Share Certificates
If the shares are in paper share certificate form, they have to be converted into electronic form in order to be sold. This conversion takes place at the time that all of the documents are sent to the share registrars (usually any one of the three major shares registrars – American Stock Transfer (AST); Computershare; and Wells Fargo) to transfer the shares into the names of the Executors.
You should note that if any paper share certificate has been lost, then an Affidavit of Loss and Indemnity will have to be prepared and sworn, and bond premium paid (usually about 3% of the value of the current market value of the shares with a minimum bond amount of about US$100).
Dividend Reinvestment Programmes at Share Registrars
If the shares are in a dividend re-investment programme, you may find an “Investment Plan Statement” amongst the Deceased’s papers. These re-investment shares are known as DSPP shares.
If the shares are such a re-investment programme, then we have to convert the DRP / DSPP / ESPP IBM shares (as shown in the Investment Plan Statement) into book-entry form. We will prepare the needed DSPP Letter for signature by the Executors.
We normally send this DSPP Letter off to the share registrars when we send them all of the other documents for processing (see below).
If the deceased died several years ago, and it may be that the share registrars have already escheated the shares to the local State Unclaimed Monies Department. This means that the shares will have been sold for cash in the market at the time of escheatment, and the monies and any dividends will be with the State from where the monies can now be collected. We may not know if the shares have in fact been escheated until we send off the documents to the share registrars to process the transfer of the shares into the names of the Executors, and so please be prepared for this possibility.
Escheatment usually occurs about 3 – 5 years after the date of death or the last time that any dividend cheque was cashed, and if the share registrars have not heard anything from the deceased or the Executors. It does not mean that you have lost the monies, it simply means that we shall now have to deal with the appropriate State Department to recover the monies which the estate is entitled to recover.
If the deceased has in fact been cashing the dividends, or if the shares are part of a dividend reinvestment programme (see above), then this usually prevents escheatment from taking place. Please can you let us know the situation (or at least let us have copies of whatever documentation you have found).
For your easy reference, we have divided this article into four parts: (A) The Account Opening & Medallion Guarantee Requirements; (B) The Transfer of the Shares; (C) The sale of the Shares; and (D) the Dividends. You can therefore pick and choose what parts of the article are of interest to you at this time, and regard the remainder as useful information for future reference.
The fixing of the Medallion Guarantee should not be a problem, but it is a complex procedure because the Medallion Guarantee issuers insure the value of the shares in case there is fraud, and they have to pay out any damages to the claimant (please see our article about Medallion Guarantees).
The documents that we will need are:
(A) The Medallion Guarantee Requirements
Dr Pepper Snapple
1) Copy of the Direct Registration Advice Statement
Copy of the Direct Registration Advice Statement (see below) or other evidence of ownership of the shares. Sometimes a copy of whatever correspondence has been found will be most useful as well as a copy of any letter you have received from the share registrars which confirms the shareholding. What we are trying to do is show the deceased’s ownership of the shares.
As the shares are what is known as “book entry” shares, i.e. they are held in electronic form, then a dividend statement will be sufficient for our purposes, or as mentioned, a “Direct Registration Advice” (sometimes simply called a “DRS Statement”). These DRS Statements are usually issued by the Company’s share registrars every 6 months, and so the most recent DRS Statement will be best. If you also have the original DRS statement that was issued when the shares were first converted into electronic form (in 2008), this also will be very useful to establish and confirm the deceased’s ownership of the shares. Again, if you send us a copy of the DRS Statement, the copy that you send us must be certified by a solicitor as being a true copy of the original.
If the dividends were re-invested in the purchase of more shares (as mentioned above – DSPP shares) then a copy of the Investment Plan Statement will be sufficient for our purposes.
Other USA Companies
1) The original share certificate (if any) or other evidence of ownership of the shares
The original share certificate (if any) or other evidence of ownership of the shares. Sometimes a copy of whatever correspondence has been found will be most useful as well as a copy of any letter you have received from the share registrars which confirms the shareholding. What we are trying to do is show the deceased’s ownership of the shares.
If the shares are in share certificate form, our insurers insist that we have the original share certificate in our possession before affixing the Medallion Guarantee (unless of course the share certificate(s) are lost, in which case we will need confirmation of such loss – a letter from the share registrars or solicitor confirming such loss, will be needed). If you hold an original paper share certificate, then you MUST send us the original share certificate(s). Copies will be unacceptable. We will return the original share certificate with the Medallion Guarantee unless you want us to supervise the whole transfer and/or sale process of the shares.
As the deceased may have owned the shares for some time a copy of a recent dividend statement will be required, and if that does not show the deceased’s shareholding, then a letter from the company or its share registrars will be required to show the deceased’s ownership of the shares.
If the shares are what is known as “book entry” shares, i.e. they are held in electronic form, then a dividend statement will be sufficient for our purposes, or a “Book Entry Advice” / “Financial Holding Confirmation” / “Share Balance Summary” / “Direct Registration Advice” (sometimes simply called a “DRS Statement”). These DRS Statements are usually issued by the Company’s share registrars every 6 months, and so the most recent DRS Statement will be best. If you also have the original DRS statement that was issued when the shares were first converted into electronic form, this also will be very useful to establish and confirm the deceased’s ownership of the shares.
You should note that if any share certificate was issued and it has been lost, then the share registrars will need an indemnity from you based upon the current market value of the shares. You will have to pay an insurance premium to the share registrars (or their nominated insurer / indemnifier) which may be a minimum amount US$100. The amount is usually about 3% of the current market value of the shares at the time of payment, with a minimum premium being payable.
2) Original copy death certificate (the green coloured version)
3) Sealed copy of the Grant of Probate / Letters of Administration / Scottish Grant of Confirmation / Notarial Act (if the deceased died in continental Europe)
Sealed copy of the Grant of Probate / Letters of Administration / Scottish Grant of Confirmation / Notarial Act (if the deceased died in continental Europe) of the deceased. Some people provide us with an Exemplification of the Grant which is very useful. Also a sealed and certified (by the Probate Court) copy can be used. Any of these three documents will be sufficient for our purposes.
If the estate is quite small, and therefore obtaining a Grant of Probate / Letters of Administration may not be very practical, it will save a number of problems in due time if the Grant confirms the Executors’ authority to act, based upon the power given to the Executors by the deceased’s Will. You will still be able to obtain the Medallion Guarantee without a Grant being obtained, but in such a case the copy of the Will (see also below) MUST be certified as being a true copy of the original by a Solicitor.
If the deceased’s estate is small then in order to obtain the Grant of Probate / Letters of Administration you will first have to file with Probate Registry the tax form (usually Form IHT 205 has to be completed), and at the same time you will file with the same District Probate Registry, the Probate Application Form (Form PA -1) and any other needed documents (including the Death Certificate). Once the Probate Registry is satisfied as to the correctness of the Forms – and they will ask you to attend for an interview to confirm the details entered on the Forms – the Probate Registry will issue you with the Grant of Probate / Letters of Administration.
4) Copy of the Will
Copy of the Will;
If the Grant of Probate was issued in the USA and the Grant does not name the Executors, then we will need a certified copy of the Will, also certified as being a true copy by a local Notary Public.
Again if the Grant of Probate is not going to be obtained, and the Will names the Executors, then we will need a certified copy of the Will, also certified as being a true copy by a solicitor.
Copy of the Passport of each Executor
Copy of the Passport of each Executor (duly certified as being a true copy by a solicitor or notary; or by a certified or chartered accountant; or by someone registered with the Financial Conduct Authority such as a stockbroker / financial adviser; or by the post office). If any Executor is overseas, then generally speaking certification by a Notary Public is compulsory.
If an Executor or Administrator does not have a passport then any of:
(a) Pension Book;
(b) Employment ID with signature;
(c) HMRC Tax Notification (NOT a P45 or a P60 form);
(d) Armed Forces ID;
(e) Photo Driving Licence;
(f) Photo ID Bus Pass;
(g) Photo ID disabled parking permit.
can be used to identify them provided that the copies are certified by a solicitor or notary; or by a certified or chartered accountant; or by someone registered with the FCA as being true copies of the originals. These documents are required because of Anti-Money Laundering Regulations.
If none of these documents are available then we will prepare a Certificate of Identity for use by the Executor / Administrator. We obviously will need a copy of the Grant of Probate and a copy of the utility bill that is going to be used, together with any other evidence supporting the identity of the person concerned such as a Driving Licence (or one of the documents listed in (a) – (e) above, even if they do not have a photograph of the person concerned) in order to draft the Certificate of Identity. We will need two (2) passport size and type photos for this Certificate).
We will need a Certified copy of the Marriage Certificate of any Executor who is married, and who has not changed her passport to her married name.
If any Executor is a trustee company, then additional requirements need to be met, and documents produced. These requirements and documents are listed in our article about Medallion Guarantees (please see the appropriate tab).
6) Copy utility bill
Copy utility bill, (or if no utility bill is available a copy of a bank statement (we do not need to see the numbers which can be blanked out), credit card statement, tax statement, council tax bill – even though it is outside the three month period, or similar document that shows the home address), for each Executor dated within the last three months (again duly certified as being a true copy by a solicitor or notary; or by a certified or chartered accountant; or by someone registered with the FCA, or by the post office, as mentioned above).
7) Original Stock Transfer / Stock Power Form / Transfer Request Form / Transfer of Stock Ownership Form / Legal Transfer Form / Securities Transfer Form
Original Stock Transfer / Stock Power Form / Transfer Request Form / Transfer of Stock Ownership Form / Legal Transfer Form / Securities Transfer Form duly signed by all of the Executors. We will prepare this Form for you as part of our service to you.
8) Broker's Terms of Business Form
If an account is to be opened at our brokers so that the shares can be sold or transferred to the Beneficiaries who wish to hold the shares in the Nominee System for future benefit (see more below as to the advantages of using the Nominee System) then the broker’s Terms of Business Form duly completed (we will prepare this for you for signature); and
9) Nominee Account Agreement Form
Again, if an account is to be opened at our brokers, then a broker’s Nominee Account Agreement Form duly completed (we will prepare this for you for signature);
10) Forms W-8BEN and Form W-8BEN-E
Forms W-8BEN and Form W-8BEN-E (which we will prepare for you as part of our service)
11) A cheque in favour of RB Seals
A cheque in favour of RB Seals for £295 per company including VAT, in payment of the Medallion Guarantee Service; and there is a discount if more than one Medallion Guarantee is required for the same client.
12) Certified copy of the Federal Transfer Certificate (Form 5173)
Certified copy of the Federal Transfer Certificate (Form 5173) (this is only required if the shares have a value exceeding US$60,000 as at the date of death – see our article about Federal Transfer Certificates (Form 5173) as to how we can obtain the same for you).
As we will be dealing directly with the share registrars in the USA, you may care to note that on many occasions they have a time limit within which the Sealed and Certified Copy of the Probate / Confirmation / Letters of Administration must be dated (usually somewhere between 45 – 60 days before being submitted to the US Registrars). A certified copy by solicitors will not be sufficient for USA registration purposes, it must be a copy certified by the local District Probate Registry. We will obtain this on your behalf.
You should note, as mentioned above, that when we write to the share registrars sending them the documents for processing, the share registrars will require a sealed and certified copy of the Grant (we need a cheque in favour of HMCTS for £10 / 10.50 / 11.00 in payment of the probate registry fees in order to obtain the same), and an original Death Certificate (the green coloured version).
As regards any restrictions on the transfer of the shares (a Rule 144 issue), we will need the details as to the same, as although it is possible to remove the restriction, and it sounds easy to do so, in fact it can be quite complex and time consuming, but it can be done.
If the shares are not publicly quoted, then a copy of the most recent set of Accounts will be needed.
You should also note that if the deceased’s assets in the USA (including the shares) exceeded a value of US$60,000 as at the date of death, then the company registrars will probably ask for the Federal Transfer Certificate (Form 5173) which involves filing Form 706-NA and other documents with the US IRS. It will take the US IRS a year to issue the Federal Transfer Certificate, but there can be urgent situations where the US IRS will issue a partial release to enable some of the shares to be transferred and then sold, although this is rare.
We can help you in this area if you so wish, as we are familiar with the process, but it will be a long and complex process – please see our article on Federal Transfer Certificates (Form 5173).
You will not have to attend our offices, as all of the process can be dealt with by e-mails, letters and telephone calls.
(B) The Transfer of the Shares
i) Registration of the Death
First of all, has the death been registered with the share registrars, and have they therefore issued a new Direct Registration Advice / DRS Statement / Financial Confirmation of Holding / Share Balance Statement (or similar document) (“DRS Statement”)?
If the deceased’s house (or registered address) has been sold, or there is no mail forwarding, or it is not practical to obtain the needed original DRS Statement from that address, then what we should do is consider registering the death with the share registrars; and ask them to issue a new DRS Statement to the Executors at the address of the Executors as shown in the Grant of Probate. The share registrars will use the first Executor and his / her address for this purpose.
At the time of notification we will need to state that there has not been any change in beneficial ownership, so that the share registrars are aware that the needed transfer documents and supporting documentation will be forthcoming in due time; and it also makes such notification much easier for the share registrars to process.
What we will need is an original death certificate (the green coloured version) and a sealed and probate court certified copy of the Grant of Probate / Letters of Administration. We will obtain this, but we need a cheque in favour of HMCTS for £10 in payment of the probate court fees.
If more than one USA share registrar is involved, then each share registrar will require its own sealed and certified copy of the Grant, which means that the cheque in favour of HMCTS will change – £10.50 for two (2) copies; and £11 for three (3) copies.
You should note that on many occasions the Share Registrars have a time limit within which the Sealed and Certified Copy of the Probate / Confirmation / Letters of Administration must be dated (usually somewhere between 45 – 60 days before being submitted to the US Share Registrars). A certified copy by solicitors will not be sufficient for USA registration purposes, it must be a copy certified by the local District Probate Registry. We will obtain this on your behalf.
Once we have the new DRS Statement from the share registrars showing that all of the shares are in electronic form (having converted any paper share certificates into electronic form), then provided we also have our broker’s Forms to open the account (see below) and Form W-8BEN and Form W-8BEN-E which we will send to you – we must use the official Form, not some form prepared by a third party such as a share registrar; our brokers will organise the sale of the shares and for the proceeds of sale to be paid to yourself / our instructing Firm (such as solicitors, lawyers / accountants / financial advisers) direct as we do not handle client’s monies, but in any event we will need all the other documents mentioned in due time. By dealing with the notification of the deceased’s death at this time, time will be saved later.
ii) Transfers – General Information
Assuming that the USA assets (including the shareholding) of the deceased have a value of less than US$60,000, we will be able to use a simpler process to transfer the shares (although it will still be complex), as we will not have to deal with the US IRS and the filings that are involved when the US assets at date of death exceed a value of US$60,000.
What is certain, is that the company’s registrars will probably need one or more of the following documents, in due time:
a) Affidavit of Domicile (which we will prepare for you for signature by the Executors)
b) Letter of Authority for us to act
Letter of Authority for us to act (which we will draft for your signature and return if the shareholding has not been confirmed by a recent statement from the company’s registrars);
c) Affidavit as to assets situated in the United States (again which we will prepare for you for signature by the Executors); and
d) Court Sealed and certified copy of the Grant; and
e) Court Sealed and certified copy of the Will;
f) Original copy of the Death Certificate (the green coloured version);
g) The original Share Certificate(s) and/or Direct Registration Advice (sometimes called a “DRS Statement”)
The original Share Certificate(s) and/or Direct Registration Advice (sometimes called a “DRS Statement”) or other evidence of the deceased’s ownership of the shares – such as a recent dividend statement. In this case I expect that you will only have an opening or dividend statement from the company’s registrars, showing the balance of the shares; although if you have a recent Direct Registration Statement (or equivalent) this will be very useful;
h) Forms W-8 BEN and Form W-8BEN-E
Forms W-8 BEN and Form W-8BEN-E. The company registrars will require an original Form, and the brokers will require a copy of this Form in due time, even though the intention is to sell the shares. We will prepare and send you these Forms in due time.
The US IRS has recently started to reject Forms W-8BEN and Form W-8BEN-E prepared by share registrars, and UK regulations also require that the US IRS Official form be used, and so it is best to use the official IRS Form, which is the form that we will send to you to sign. You should note that these Forms have to be renewed every three years starting from the 31st December of the year in which the Forms are first filed with the share registrars or with the company in which the shares are held, if the Executors change their minds and decide to hold on to the shares.
If you have already filed Form W-8BEN within the last three years, can you please send us a copy of the same, as we can then send this to the registrars when we transfer the shares to his existing account.
i) Stock Power Form or Transfer Request Form or Legal Transfer Form
Irrevocable Stock Power Form or Transfer Request Form or Legal Transfer Form duly signed by the Executors with the Medallion Guarantee affixed (we will prepare this document on your behalf – see above); and
j) Letter of Transmittal
There may also be a Letter of Transmittal required following the merger of Kraft with Heinz. If you have such letter, can you send it to us please?
You should note (as mentioned above) that when dealing directly with the share registrars in the USA, they have a time limit within which the Sealed and Certified Copy of the Probate / Confirmation / Letters of Administration must be dated (usually somewhere between 45 – 60 days before being submitted to the US Registrars). A certified copy by solicitors will not be sufficient for USA registration purposes, it must be a copy certified by the local District Probate Registry / Sheriffs Court. Please therefore do not apply for the sealed and certified copy of the Grant until we ask you to do so, as it may well be deemed to be out of date by the US share registrars. It is therefore better if we organise the sealed and certified copy of the Grant in due time.
We will also need a Court sealed (with the impressed court seal) copy of the Grant of Probate / Letters of Administration when we apply to open the account with the brokers.
At this time a simple photocopy of the Grant of Probate / Letters of Administration; Will; the Death Certificate; and the passport of the deceased; and evidence of the shareholdings; will be sufficient to enable us to start preparing the needed documents. Whatever you do, please do NOT surrender, cancel or destroy the Deceased’s passport until after all the work has been completed, especially as we will need copies of the passport for the Affidavit of Domicile.
As regards the Affidavit as to Assets in the United States, please note that in order to draft the same we will require the place and date of birth of the deceased, and details as to the US assets.
We will also prepare the Affidavit of Domicile. In order for us to prepare this Affidavit we will require the following information:
(i) Did the deceased have a US bank account, and if so please let us have details of the same, a copy of a recent bank statement will be needed?
(ii) If the deceased never had a US bank account, we need such confirmation.
(iii) Did the deceased ever reside in the USA?
(iv) If the deceased did reside at any time in the USA, between what dates (or several dates if the deceased lived there for short periods of time over a long period of time – rough dates will do for the moment, but if you have accurate records, that will be very useful).
(v) As regards residence in the USA did the deceased have a Green Card?
(vi) If the deceased resided in the USA did the deceased have a social security number and taxpayer identification number (“TIN”), and if so can you please let us have the same?
(vii) We will also want confirmation that the deceased was not a resident of any State within the United States of America at the time of death of the deceased.
(viii) Where was the last residential address of the deceased – if this is a care home or equivalent, where was also the last “proper” place of residence of the deceased, if it is not the address stated in the Grant of Probate?
(ix) How long did the deceased reside in England and at the address(es) mentioned in (viii) above – (a rough idea will do) prior to the date of death of the deceased?
(x) Can the Executors (if they know the same) confirm that the deceased was domiciled in England?
If the Executors cannot make such confirmation, are there any family members who can make such confirmation?
(xi) As mentioned above, we will also need details of the deceased’s passport (and if this has been surrendered, we can write to the Passport Office for such details) to enable us prepare this Affidavit.
If we have to write to the passport office, we will need an original Death Certificate (the “green” coloured version); a sealed copy of the Grant of Probate; and also a copy of the passport or photo driving licence of each Executor (the sealed copy of the Grant and the original Death Certificate will usually be returned to us by the Passport Office in due time).
If you have the deceased’s passport, then a photocopy of the same will be sufficient for our purposes in order to prepare this Affidavit.
(xii) We will also need to know where the share certificates were physically located or where control over the shares was physically located as at the date of death. If the share certificates have been lost, we do not need an exact address where they were last seen (unless this is known) but at least a rough idea where they were last seen (or where they would have been expected to be seen) will be needed.
(xiii) If there are any bonus shares represented by a share certificate which has been lost, then when did the Executors (or other persons in the know) became aware of such loss, and of the circumstances of such loss (if known).
If any of the share certificate(s) have been lost, we will have to prepare an Affidavit of Loss and Indemnity in due time. There will also be a premium payable for the bond that will be issued, and as mentioned above, the minimum amount is about US$100, and the amount is usually about 3% of the current market value of the shares, with the minimum premium being payable.
Please note that in due time both the Affidavit of Domicile and the Affidavit as to Assets in the United States must be sworn before a Notary Public. We advise that you have an Apostille also affixed to each document, as the Apostille confirms that the Notary is in fact a properly appointed Notary, and so the Apostille will avoid any unnecessary questions and delays in the future.
As mentioned above, we will need the Letter of Authority (which we will prepare and send to you for signature and return) and the same applies for Form W-8 BEN (again, which we will send to you in due time).
If you need our help, then once we have an idea of what will be involved, we will give you a fixed quote for the cost of doing the work – We operate on a fixed fee basis, although if extra unanticipated work is involved, we may ask for a review. The disbursements are likely to be the Medallion Guarantee fees which cost about £295 per company as mentioned above, (subject to the discount if more than one company is involved) and other minor miscellaneous charges, such as £65 to cover postages including overseas postages; and the fixed charge of £30 for printing; the costs of the sealed and probate court certified copy of the Grant – HMCTS for £10; Notarial fees and the cost of the Apostille also have to be taken into account, but these will be paid by the Executors direct to the Notary. As you may be aware the Royal Mail’s registered mail/ recorded delivery supervision ends at the US border as the US postal service does not recognise foreign mail sent to a US address by registered mail or recorded delivery, although recently the Royal Mail has been providing an International Signed For Service which we have used successfully (so far).
As mentioned above, you should also note that if the deceased’s assets in the USA exceeded a value of US$60,000 as at the date of death, then the company registrars will probably ask for the Federal Transfer Certificate which involves filing Form 706NA and other documents with the US IRS. It will take the US IRS a year to issue the Federal Transfer Certificate, but there can be urgent situations where the US IRS will issue a partial release to enable some of the shares to be transferred and then sold, although this is rare.
We can help you in this area if you so wish, as we are familiar with the process, but it will be a long and complex process; and our fees change to reflect the extra work and time involved. We will give you a separate fee quote if Form 706-NA has to be filed.
If you do not have a regular firm of stockbrokers that you use who are able to sell foreign shares, then we will send to you the appropriate forms to enable you / your firm to open an account with our brokers for the sale of the shares in due time. Our brokers are a firm with which we have been working for many years, and they will need you to complete their Terms of Business Form and the Nominee Account Agreement Form.
In order for the shares to be sold there is a two (2) stage process:
(i) We will open an account in the name of yourself / your Firm with our brokers; and
(ii) We will then open a sub-account to your / your Firm’s account in the name of the deceased.
Once these two accounts have been opened, and when the sale of the shares has been completed, our brokers will account directly to you / your firm, for the net proceeds of sale (we are not authorised to hold client’s monies). They need you to complete a “Terms of Business” Form, which will need to be signed by your firm; and they need the Executor / Administrator to complete their Nominee Account Agreement Form.
At the same time that you return the Terms of Business and the Nominee Account Agreement Form, can you please send us a copy of the passport of each Executor / Administrator; and also a utility bill / credit card statement / bank statement (we do not need to see the numbers, so you can blank these out) dated within the last three (3) months for each Executor / Administrator showing each Executor’s / Administrator’s home address. We also need the same documents for the signer of your firm (“our instructing Firm”) who is going to sign on your Firm’s master account at our broker’s. If your signer has a practising certificate, then a certified copy of that certificate can be used instead of the utility bill etc above mentioned.
Can you please make sure that each copy of the passport and of the utility bill / credit card statement / bank statement (we do not need to see the numbers, so you can blank these out) is certified as being a true copy by a solicitor or by an accountant or by someone registered with the Financial Conduct Authority or by the post office? As you will understand, this is to satisfy red tape Anti-Money Laundering Regulatory requirements.
The Stockbrokers Nominee System
As mentioned above, the shares will be in your chosen broker’s Nominee System immediately prior to sale or transfer, once everything is completed, and you may therefore wish to know a little bit more about the Nominee System.
The Nominee System applies when the shares have been converted into electronic form as no paper share certificate will be issued. This means that your shares will be held by the brokers in their Nominee System until you either ask for the shares to be sold; or for the shares to be transferred – either to your own stockbroker to hold on to the shares; or to someone else who is able to hold the shares in electronic form.
We advise that you do not open your own personal, individual account with the share registrars as such account simply creates and repeats in due time the very same situation in which you are in now, with all of the accompanying documentation, problems, costs, medallion requirements and hassle factors. It is simply not worth doing so, and of course will be even more expensive to remedy and solve in due time. We expressly advise against the creation of such personal, individual account with the share registrars. Nevertheless, if you insist upon the creation of such account with the shares registrars instead of with our brokers, then our brokers will move the shares into such account if and when requested to do so.
The creation of such personal, individual account also means that in future the share registrars will send dividends and other communications direct to yourself, which can result in dividends not being cashed; or even as a result of not cashing the dividends, of having the shares and uncashed dividends being escheated; which will just add additional costs in the future when it comes to collecting the same from the State to which the shares and dividends have been escheated. Sometimes this escheatment can happen whilst you are alive, which results in more difficulties as you will have “lost” the shares (and all rights, bonus, split issues and future appreciation) as once escheated the shares are simply sold by the State to which they have been escheated, and turned into cash until collected by yourself or your estate. The State will not pay any interest on the monies received, and the monies will simply depreciate in value as time passes because of inflation. Hence our advice against you having a personal, individual account.
Our brokers can (and will) transfer the shares to your chosen stockbroker, if you prefer to take this course of action, otherwise you can simply leave the shares in the the broker’s Nominee System until either the shares are sold or transferred at some point in the future. Our brokers will account to you for the dividends received (see below).
There are several advantages in using the Nominee System to hold the shares in electronic form:
(a) You can easily buy and sell shares in the US or Canadian (or other world) markets without having to go through the Medallion Guarantee process on each occasion or any of the other problems that have arisen so far; and this avoids the problem that each time you sell shares, the share registrars will have to issue you with a new DRS / Transaction Advice Statement showing your current balance before you can sell some more shares. If this DRS / Transaction Advice Statement is misplaced it can create a problem. There is no initial charge for the Nominee Service, apart from a charge of around £40 every three years if the account is inactive during that time.
(b) If you die, then on your death the brokers will require little more than a copy of the Grant of Probate and Death Certificate, and they can then transfer the shares to the new owner/beneficiary of the shares without the hassles of additional documentation such as is now being required, or of the need for a Medallion Guarantee (Share Transfer Process) with its related costs. In connection with the US or Canadian markets all of the Medallion Guarantee and other transfer requirements are avoided (although if you own US assets exceeding US$60,000 the Form 706-NA and related documents will still have to be filed with the US IRS). We can do this for you if you so wish, as we are familiar with the process and the Forms.
(c) The Nominee System removes all the need for a paper share certificate which can get lost or damaged, as all of the shares will be held in the Nominee System in electronic form; and you will receive statements from time to time stating that our brokers are holding the shares on your behalf, and giving you a statement showing how many shares our brokers are holding.
You can have these statements as often as you would like, for example weekly, monthly, quarterly, half yearly, annually. If you wish to use the Nominee System, we need to know how often you wish to receive these statements, and so can you please let us know how often you wish to receive these statements (we suggest quarterly or half yearly unless you wish to have the statements more frequently).
(d) As you may be aware, many clients simply do not bank dividends when received because they are usually in a foreign currency and the costs of conversion and bank transfer fees make such collection of the dividends prohibitively expensive for the client. The Nominee System avoids such loss (see below).
However, our brokers will account to you for the dividends when they are received from the US shareholdings(s), and one advantage is that they will organise the payment to you in £ sterling (GBP) or in US $, or in whatever unrestricted currency you want. This will save the bank charges and exchange rate risks that you might otherwise run, as our brokers give you the market exchange rate at the time, which rate we have found to be very competitive and certainly a better rate than you will usually obtain from your own bank.
(e) All bonus, splits of shareholdings and spin-offs are automatically credited to you by our brokers; and when a rights issue is involved or other decision has to be made by you, a simple A4 size letter is sent by our brokers to you saying in simple language that you can understand (instead of being sent the usual verbose documentation that you are unlikely to understand), what are your options, and asking which course of action do you wish to take?
(f) If you wish to transfer the shares to your own children or to others in due time, this can be easily done by our brokers – you only have to speak to them, and they will tell you what documents they need, unless you wish us to organise such transfers on your behalf.
(g) On many occasions we find that dividends have not been cashed because the banks charge too much for converting small cheques which are in united state dollars (US$) into pounds sterling (GBP); and the banks also do not give a very good exchange rate.
As a consequence, and because the cheques have not been cashed the US / Canadian shares registrars start time running before escheating the uncashed dividends and the underlying shares to the local State Unclaimed Monies Department. Escheatment usually occurs between 3 – 5 years from the last time that any dividend cheque was cashed. This in turn means that the deceased’s estate and the beneficiaries never receive the shares, but will only receive the monies resulting from the sale of the shares at the time they were escheated to the State Unclaimed Monies Department, as the State will not hold on to the shares but simply sell the same at the time they receive the shares, and will convert the shares into cash. This means the family lose out on any increases in shares, share splits, bonus shares or shares resulting from take-overs or mergers.
This can result (and frequently does result) in the original shares being converted into monies which are of considerably less value than the current market value of the shares (not including any splits, bonus shares etc as mentioned above).
This in turn means that an application has to be made to the local State for the return of the monies which can take up to 2 years to receive, especially if the monies have to be recovered from Delaware State. There are of course the additional costs and notarial fees, and sometimes Medallion Guarantee costs involved in such recovery.
This whole problem and issue can be avoided simply by having the shares put into the Nominee System.
In any event our brokers will be legally liable to account to you for the shares that they hold on your behalf in their Nominee System. They have to send regular (usually monthly) reports to the FCA setting out the shares they hold and accounting for the same. The Nominee System is separate from the other assets of the brokers, and so that if there is a run or financial difficulties at the stockbroker, your shares will be protected. Furthermore, we are informed that the brokers carry insurance for any lost shares (which we are told is up to £1,000,000 per claim).
The one disadvantage of the Nominee System is that if you have had dividends automatically re-invested in the purchase of more shares, this cannot be done when the shares are in the Nominee System because the Nominee System can only deal in whole shares, and not in fractions or parts of shares. What the brokers will do to solve the problem is accumulate the dividends, and then will periodically buy a whole number of shares with the accumulated dividends.
(C) The Sale of the Shares
In order for the shares to be sold (if the Executor wishes to sell the same instead of simply having them transferred to the Executors or to the Beneficiaries entitled to the same, and as the shares will already be in the Nominee System, all you need to do is contact the brokers or ourselves.
We will let you have the contact details at the brokers during the course of the transaction, and certainly once everything is completed and the shares are in the Nominee System ready to be either transferred or sold, as both you and our instructing Firm need to know that everything is in order. If the shares are to be sold or transferred after everything has been initially completed, all you / our instructing Firm will need to do is contact the brokers direct, and they will then organise matters for you, there will not any need for you to contact ourselves (unless of course you wish to do so, in whch case we will be pleased to help).
The brokers (as mentioned above) will account directly to you / our instructing Firm for the net proceeds of sale (we are not authorised to hold client’s monies).
The brokers will charge on a sliding scale, but it is roughly 1.75% on the first £10,000 and 0.5% on the balance with a minimum charge of £25. When the sale of the shares has been accomplished the brokers will issue you / our instructing Firm with a Contract Note which will tell you the net proceeds of sale and the net amount due to be paid to your Firm’s nominated bank account, and it will also state the day on which payment will be made into your / our Instructing Firm’s nominated bank account. We have been finding that it takes the banking system about 3 – 5 days to actually complete the transfer of the monies into your / our Instructing Firm’s nominated bank account from the day that payment is made as set out in the Contract Note, so do not worry if there is a slight delay.
First of all, if possible, please keep open the deceased’s bank account, because you should be able to pay monies into that account, even if you are unable to pay monies out of that account. The bank will be able to advise you in this regard.
If the cheques have not been crossed, then you should be able to endorse the same into your own bank account.
As regards any uncashed and outstanding dividends, this is becoming something of a problem since the share registrars will only reissue cheques in the name of the deceased and not in favour of the Executor or lawyers acting for the estate.We have raised this issue with several share registrars on several occasions but unfortunately it just falls on dumb ears. We suspect that until the dividends are large enough to justify legal action, the share registrars will continue to adopt their theft of assets that belong to the estate of the deceased.
The above is why if you still have kept the deceased’s bank account open, you may be able to cash any re-issued dividend cheques that are received.
We have found that if you are licensed to handle client’s monies, then your local bank will accept the reissued cheque and bank the same, although some banks appear to be better than others.
We believe this very much depends upon the working relationship with the local bank, and the fact that endorsing cheques is not very common; with the result that many bank managers have no idea what you are talking about, and that endorsing a cheque is perfectly legal especially as the monies are monies belonging to the deceased and which the deceased’s estate is entitled to receive. There is no question of money laundering, since the issue does not and cannot arise in such situations, especially as the Executors are doing their statutory duty of gathering in the assets of the deceased.
We have also found that if the cheques are endorsed by the executors and countersigned by the law firm / accountants / regulated firm, then some banks will allow such dividend cheques to be cashed by the law firm / accountants / regulated firm.
Another suggestion, is for the Executors to open a new account at the local bank into which dividends in the name of the deceased can be paid. You need to make sure that the bank will cash the cheques before opening the account, otherwise it will be a waste of time and effort.
The only alternative is to wait until several years (usually 3 – 5 years) have passed when share registrars are then forced to transfer the monies to the appropriate local US State Unclaimed Monies Department whereupon the Executors will be able to reclaim the uncollected dividends without a problem other than the completion of the appropriate claim form and a Notarised Affidavit of Claim. If the State to which the monies are transferred is Delaware, then it will take many months before they will issue the cheque from the time that the Claim Form and supporting documents are submitted to them for processing (see below).
(E) Escheatment – Delaware
The Escheatment process is very long as the State of Delaware (by its own admission) takes about 90 days to answer simple letters. To start the process we have to complete a Request Form, with supporting documents, and when that has been submitted a claim number is issued; and we then have to complete the Claim Form and submit it for processing. It will then take a number of months before the cheque is issued by Delaware State.
We can start the process by completing the Request Form (we have one on file) and submitting it without waiting for the DRS Statement (if any) that we might receive from the share registrar (see above).
The next question is fees, and in the case of Delaware they do not require a Medallion Guarantee, but do require the documents to be notarised. They also want to see a utility bill dated within the last 3 months showing each Executors home address; as well as two (2) photo identity documents (usually certified copies of the passport and driving licence for each Executor / Trustee).
Delaware will also need:
(1) Original Death Certificate (the green coloured version) (a pink coloured version is the original document issued in Northern Ireland);
(2) A sealed and certified copy of the Grant of Probate in favour of the Executors – we will need a cheque in favour of HMCTS for £10 in payment of the Probate Registry fees; and
(3) Copy of Form W-8BEN (which we will prepare if it has not been filed with the share registrars within the last three (3) years); and probably Form W-8BEN-E;
(4) Two (2) forms of identity for the Executor in addition to a utility bill / credit card / bank statement dated within the last three months showing the Claimant’s home address.
Please let us know if you wish us to proceed with the escheatment recovery process.
If you want us to help you, please can you let us have:
(1) Copy evidence of the shareholdings of the deceased (including copy share certificate(s) if any shares are in share certificate form);
(2) Copy Death Certificate;
(3) Sealed copy of the Grant of Probate;
(4) Copy of the Passport of the Deceased;
(5) The certified copy passport or driving licence and utility bill dated within the last three (3) months showing the home address of each Executor;
(6) Cheque in favour of HMCTS for £10 in payment of the Probate Registry fee for the sealed and certified copy Grant;
And we will be able to start drafting the various documents for you. We will be sending these to you with a long covering instruction letter in due time.
As regards a time frame, you should budget about 6 – 8 months at the very least (if Form 706-NA does not have to be filed, and if Form 706-NA has to be filed 12 – 18 months is not unusual – see above), as it will take 3 – 5 weeks to obtain the needed sealed and certified copies of the Grant; 6 – 8 weeks to notify the share registrars of the death, and have the share registrars issue the needed DRS Statement, and you receiving the same; 2 – 4 weeks to open the account at our brokers, about 3 – 4 weeks to obtain the Apostille (after the Affidavits have been notarised – say 2 – 4 weeks); and once the DRS statement and other documents have all been completed and received, it will take about 2 – 4 weeks for the shares to be transferred into the stockbrokers central dealing system by the share registrars (we have to wait while the share registrars actually transfer the shares into the brokers central electronic dealing system, but once there the brokers will usually sell the shares within 24 hours) and for the monies to paid into your nominated bank account. I am sorry it takes so long, but on viewing the above you will see that most of the time delay is outside our personal control.
We hope this is helpful to you, and if you have any questions please contact us.
We await hearing from you, when you have had a chance to consider the above.