Share Holdings - Deceased

wary

My Dad passed away at the end of February. My step-mother has informed me that the shares that were in his name are "frozen" at the price on the day he died, and seems convinced that they will be worth that price when she eventually inherits them.

This surely can't be correct. Unless his brokers sold them that day (apparently they didn't), then surely she'll just inherit the shares and they'll be worth the current market price?

Hence my question is what happens to shares when someone becomes deceased, and why might she think that they're still worth their value as at 28/02 even though they have dropped in price since then? I'm sure her broker must have told her something to give her that impression. What does "frozen" actually mean in this context.

Annisele

The broker might have told her the account was frozen - meaning that the broker won't take instructions from anybody until it knows who has legal authority to deal with your Dad's estate. (In other words, broker won't let anybody buy or sell within the account until probate has been granted).

I agree it's unlikely the shares themselves have been frozen; that would expose the broker to loss if the shares fell in value, but the broker wouldn't gain if they rose.

If the shareholding is relatively small, then the broker might be prepared to sell the shares without probate. It'd want to see things like the death certificate, the will (if there is one), and the marriage certificate, and it'd want somebody to sign an indemnity to say they'll pay the broker back if it turns out somebody else was really entitled to the shares.

CLAPTON

for probate purposes the value of the shares is for the day he died.

the shares can't be sold or transferred until probate is obtained

the value of the shares will continue to change with the market in the normal way

wary

Thanks all for the responses.

How does it work when one sells shares on the open market. Are they effectively being bought by the LSE who then sell them at the higher sell-price at a profit (the profit being the "spread" between the buy & sell price)?

donniej

No - the LSE doesn't buy or sell shares, it just provides the marketplace for you to do so.

When you sell shares, they are bought buy someone else who wants to buy them. The spread is the difference between the buy and sell price of a share - and that will typically depend on how easy it is to buy or sell the shares (if it's hard, the spread will need to be larger, to encourage people to buy/sell the shares you are selling or buying.)

CLAPTON

the stock market provides the forum but the shares are actually bought by the middle men who buy them from you and then sell them to a willing buyer
you don't actually sell them to the 'end' purchaser