Fall in share value after death, loss on sale of shares relief

Goosewinggrey

I'm trying to understand how the loss on sale of works in practice.

My father died on the 29th Nov 2022. He has made provision for half of his estate to be given to his children as gifts, and the residue, to be written into a lifetime interest trust for my mother.   At the time the value of stock in his portfolio was approx 50k more than it's current value today. As I understand it there is a system in place for reclaiming the loss of value on his shares if ; -

1. The shares being sold must be “qualifying investments”;
2. Sold within 12 months immediately following the date of death;
3. By an “appropriate person”;
4. For an overall loss.

The final documents applying for probate are due to be submitted next week. There were a number of delays in the preparation of the paperwork, not least of which nursing my mother who suffers from dementia, finding suitable long term care for her, and accurately accounting for my father's lifetime gifts with limited paperwork for the past few years whilst he was being nursed himeself. A number of other delays occured on the solicitor's side.

A sale of stock assets will be nessesary to make the legacy payments.

Neither our family solictor, nor our broker has rasied this issue of selling shares before probate and until I brought up the issue of the loss at our last meeting, and I was under the impression that it wasn't possible to do so without probate being granted. The loss of value on sale only came up in a conversation with my accountant.

My questions are:

1 IS it possible to trade stock before probate ? (as his executor I would meet the criteria for appropriate person).

2. Given that almost 10 months have elapsed since my father's death, our solicitor's take is that it's 'not likely' that any sale will be possible within the statutory 12 month period. Is this a fair assessment of the situation? It strikes me as counterintuitive that it only applies within a year of death, rather than within a year of grant of probate; and very much dependent on the speed that probate may, or may not be granted.

Any advice/thoughts welcomed.

The_Unready

Is that date correct, or is it a prediction?

Keep_pedalling

There is a system for adjusting the value to reduce IHT, but you might be better off reducing the amount that goes to his children to at or below the NRB so there no IHT is payed at all.

Have the shares been sold or are they being put into the trust. If the latter these are just paper losses, and we are all suffering those at the moment.

Goosewinggrey

The_Unready said:

Is that date correct, or is it a prediction?

A typo, 29th Nov 2021

Goosewinggrey

Keep_pedalling said:

Have the shares been sold or are they being put into the trust. If the latter these are just paper losses, and we are all suffering those at the moment.

To meet the legacy gifts half of the shares would need to be sold, the remainder of the share holding being placed into trust to provide income for my mother's care needs.

Re:IHT, the gifts are defined by an existing will and not eligible for variation on the fly.

Keep_pedalling

Goosewinggrey said:

Keep_pedalling said:

Have the shares been sold or are they being put into the trust. If the latter these are just paper losses, and we are all suffering those at the moment.

To meet the legacy gifts half of the shares would need to be sold, the remainder of the share holding being placed into trust to provide income for my mother's care needs.

Re:IHT, the gifts are defined by an existing will and not eligible for variation on the fly.

All wills can be varied by beneficiaries making a deed of variation, and this is often done where the testator had not thought out the tax implications of the will or where the rules have changed after the will was made. You have two years from that date of death to do this.

In this case it would avoid turning what is probably just a temporary paper loss into a real one and avoid paying IHT. It would undoubtedly increase the IHT liability on your mother’s estate but that could be many years away and some tax planing could reduce this over the years.

GDB2222

Keep_pedalling said:

Goosewinggrey said:

Keep_pedalling said:

Have the shares been sold or are they being put into the trust. If the latter these are just paper losses, and we are all suffering those at the moment.

To meet the legacy gifts half of the shares would need to be sold, the remainder of the share holding being placed into trust to provide income for my mother's care needs.

Re:IHT, the gifts are defined by an existing will and not eligible for variation on the fly.

All wills can be varied by beneficiaries making a deed of variation, and this is often done where the testator had not thought out the tax implications of the will or where the rules have changed after the will was made. You have two years from that date of death to do this.

In this case it would avoid turning what is probably just a temporary paper loss into a real one and avoid paying IHT. It would undoubtedly increase the IHT liability on your mother’s estate but that could be many years away and some tax planing could reduce this over the years.

If mother has dementia, tax planning may be difficult, unfortunately.

If I understand the OP's question, it’s quite simple. Can he sell the shares before probate? Can someone here give a definitive answer?

Keep_pedalling

GDB2222 said:

Keep_pedalling said:

Goosewinggrey said:

Keep_pedalling said:

Have the shares been sold or are they being put into the trust. If the latter these are just paper losses, and we are all suffering those at the moment.

To meet the legacy gifts half of the shares would need to be sold, the remainder of the share holding being placed into trust to provide income for my mother's care needs.

Re:IHT, the gifts are defined by an existing will and not eligible for variation on the fly.

All wills can be varied by beneficiaries making a deed of variation, and this is often done where the testator had not thought out the tax implications of the will or where the rules have changed after the will was made. You have two years from that date of death to do this.

In this case it would avoid turning what is probably just a temporary paper loss into a real one and avoid paying IHT. It would undoubtedly increase the IHT liability on your mother’s estate but that could be many years away and some tax planing could reduce this over the years.

If mother has dementia, tax planning may be difficult, unfortunately.

If I understand the OP's question, it’s quite simple. Can he sell the shares before probate? Can someone here give a definitive answer?

Yes, sorry I did not take the OPs mother’s dementia into account, although depending on the exact circumstances a DoV may still save significant tax in the long term. AFAIK it will be impossible to sell any equities without obtaining probate first.

 

p00hsticks

GDB2222 said:

Keep_pedalling said:

Goosewinggrey said:

Keep_pedalling said:

Have the shares been sold or are they being put into the trust. If the latter these are just paper losses, and we are all suffering those at the moment.

To meet the legacy gifts half of the shares would need to be sold, the remainder of the share holding being placed into trust to provide income for my mother's care needs.

Re:IHT, the gifts are defined by an existing will and not eligible for variation on the fly.

All wills can be varied by beneficiaries making a deed of variation, and this is often done where the testator had not thought out the tax implications of the will or where the rules have changed after the will was made. You have two years from that date of death to do this.

In this case it would avoid turning what is probably just a temporary paper loss into a real one and avoid paying IHT. It would undoubtedly increase the IHT liability on your mother’s estate but that could be many years away and some tax planing could reduce this over the years.

If I understand the OP's question, it’s quite simple. Can he sell the shares before probate? Can someone here give a definitive answer?

I can only comment on my recent personal experience, which was that probate was required in order to sell the certificated Aviva shares owned by my late brother (which I did via the shares registrar's own bereavement dealing service) .