Before going too far it will be nice to know if in fact the Grant has to be resealed in England as if the value is quite small, it might be possible to use a small estate procedure which will save costs. Usually such companies will accept an indemnity from the Executors for shareholdings of a value of less than about £15,000 (about US$25,500).
We will be pleased to send you our Memo which I hope you will find useful, as it contains the questions of HMRC and of the Probate Registry to which we need answers, and if you can answer the questions contained therein we can start the process. You may, if you wish, simply copy the Memo and write the answers thereon and return the copy to ourselves. These questions relate to questions on the Probate Court Forms which have to be answered, and so I am sorry if the questions seem excessive.
If the original Grant has been issued in a Country which is covered by the Colonial Probates Act 1892 & 1927 (such as many Commonwealth Countries particularly Australia, Canada, New Zealand and South Africa), then it is very simple to have that Grant resealed in the U.K.
If the original Grant has not been issued by a country that is covered by the Colonial Probates Act, such as countries of the European Union, South America, and the United States, then a fresh U.K. Grant of Probate must be applied for. The procedures are longer and more detailed for a fresh U.K. Grant than for a resealing application.
If the UK has a double taxation agreement with your own Country, then any taxes that you paid in your own Country upon the shares owned by the deceased in a UK company (or upon any other UK assets) should be offset against any UK taxes that might be payable. The value of the shares and other UK assets has to be in excess of about £325,000 for deaths occurring on or after 6th April 2010 in order for a question of Inheritance Taxes to arise. There are also certain exemptions from Inheritance Taxes, and it may be that an exemption from Inheritance Tax applies to the shares, but we will not know this until we have the answers to the questions set out below.
You should note that if any Inheritance Tax is payable (which is usually unlikely) then until such tax has been paid or arrangements made to pay the same, resealing of the Grant cannot occur, and you will not be able to sell or transfer the shares or other assets in the UK into the names of the Executors or the Beneficiaries. When the Inheritance Tax has been paid or arrangements made to pay the same, a Clearance Certificate will be issued by the Inland Revenue (“HMRC”) and then it will be possible to obtain the reseal of the Grant of Probate, and then be able to transfer the shares to the Beneficiary entitled to the same.
Without having the benefit of your replies to our Memo, the documents that will more usually be required are likely to be the following:
Original Grant of Probate from the overseas Probate Court
Original Grant of Probate from the overseas Probate Court duly sealed and certified by the overseas Probate Court; a lawyer certified copy will NOT be sufficient it MUST be a copy sealed and certified by the Probate Court.
Original copy Death Certificate
Original copy Death Certificate; not a solicitor certified copy – it MUST be an original copy Death Certificate.
Copy passport of each Executor, duly certified by a local lawyer or notary as being a true copy of the original
Copy utility bill / credit card statement / bank statement dated within the last three months
Copy utility bill / credit card statement / bank statement (we do not need to see the numbers) dated within the last three months, of each Executor showing their respective residential address(es) as the same as appearing in the Grant of Probate. If there has been a change of address over time, then a short explanation of the change in address will be required
Copy Power of Attorney from the Executors
Copy Power of Attorney from the Executors in favour of our local lawyer that we use for the Court application. We will draft this and send it out to you for signature and return. Our local lawyer is a senior partner at the law firm that we use. You will see that we have drafted the Power of Attorney for your use, at the end of the Memo;
Draft completed Probate Application Form – PA1
Draft completed Probate Application Form – PA1, again this will be drafted by ourselves or the lawyers from the information you provide (see our Memo)
Draft completed Form IHT 207
Draft completed Form IHT 207 again this will be drafted by ourselves or the lawyers from the information you provide (see our Memo)
The Stockbrokers Nominee System
We will also need a broker’s Nominee Account Form duly completed (we will prepare this for you for signature) if you wish to be able to arrange for the sale of the same from time to time or at any time in the future, and you do not wish to be involved in the present complex and expensive procedures, and want the future sale and transfer of the shares to be very simple. We therefore advise that you have the deceased’s shares put into a broker’s Nominee System which makes life much easier.
If the Executors or the Beneficiaries wish during their lifetimes to transfer the shares they can do so very easily (they simply have to contact ourselves or our brokers) and they will NOT have all of the present problems.
As mentioned above, the shares will be in a broker’s Nominee System 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 our 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 they 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 (if there are USA shares involved); 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 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 UK, US or Canadian (or other world) markets without having to go through the 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 share certificate / Holding Statement showing your current balance before you can sell some more shares. If this share certificate or Holding Statement is misplaced it can create a problem. There is no initial charge for the Nominee Service, apart from a charge of around £50 every three years if the account is inactive during that time.
(b) If you die, then on your death our 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 (if there are any USA or Canadian shares) 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 the deceased owns US assets exceeding US$60,000 as at the date of death, then 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 daily, 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 shareholdings(s), and one advantage is that our brokers will organise the payment to you in £ sterling (GBP), Euros, US $, CA$ or AU$ or in whatever unrestricted currency you want. This will save the bank charges and exchange rate risks that you s might otherwise run, as Redmaynes 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 a foreign currency into pounds sterling (GBP); and the banks also do not give a very good exchange rate.
This problem can be avoided simply by having the shares put into the Nominee System.
In any event broker Nominees will be legally liable to account to you for the shares that they hold on your behalf in their Nominee System. Our broker Nominees have to send regular (usually monthly) reports to the FCA setting out the shares they hold and accounting for the same. Our broker Nominees is separate from the other assets of our broker, and so that if there is a run or financial difficulties in the stockbroker, your shares will be protected. Furthermore, we are informed that our 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 Redmaynes will do to solve the problem is accumulate the dividends, and then Redmaynes will periodically buy a whole number of shares with the accumulated dividends.
We will be able to assist you in obtaining the English Grant of Probate. We generally work on a fixed fee basis, and will give you a quote for our fees, and the charges of our agents will be in the region of £2,500 (about US$4,250) plus disbursements such as Court Fees of about £500 (US$850). As we work on a fixed fee basis, this will be subject to review when we have more details as to what will be needed. In any event, we may ask for an increase in due time if extra unanticipated work is involved, which is unusual.
If you want to have the shares sold, (we will not need monies on account of costs in such event) we can arrange this on your behalf with our regular brokers, and we can then have the monies remitted by the brokers directly into your bank account (we do not handle client’s monies as a matter of policy). The brokers charge on a sliding scale of about 1.75% for the first £10,000 and 0.5% on the balance, with a minimum fee of £25. The brokers will require, two (2) two (2) page forms to be completed and certified copy of your passport and a certified copy of a utility bill/ bank statement / credit card statement dated within the last three (3) months, showing your home address).
As regards time, generally we should be able to have the Grant resealed within a couple of months from the time that we have all the needed documents; and thereafter about a further couple of months to complete the transfer into the names of the Executor(s) or Beneficiaries; and then have the shares sold and the monies transferred to you or our Instructing Firm’s (be they solicitors, lawyers, accountants or firms regulated by the FCA / FSA) nominated bank account or have the monies transferred into a new account in the name of the Beneficiaries.
We hope the above is helpful to you, and if you have any questions please ask as we will be pleased to help you.
We await hearing from you in due time, and if you would like to have a copy of our Memo as mentioned above, please contact us and we will send you a copy.