Giving away shares

sanfairyanne

My mother kindly informed me she'd like to split up some of her shares with my sister and myself. I wasn't sure if she can just transfer them to us. They are held with an online share dealing account. Obviously we'd need online accounts of our own, but are there other issues we have not thought of ?
Many thanks in advance. 

p00hsticks

I think she'd need to pay Capital Gains Tax on any profit since she bought them, unless they're currently held in a S&S ISA. 

I'm not sure if she can simply transfer them - it may be easier for her to sell them and give you and your sister the money to buy them back yourselves.

Although that does lead on to the question -  without looking a gift horse in the mouth - if you had the cash in your hands, would you really want to then buy those particular shares with it ? Holding shares in any individual company is by definition at the riskier end of investing, and as you say you don't already have online share dealing accounts of your own, it's probably not the best way to start investing in the markets.

sanfairyanne

Thanks poohsticks, I didn't want to confuse the post, I do actually have an online share dealing account, I'm familiar with it and could easily set one up for my sister. As far as I know money or shares can be given away, however, i understand there's a 7 year rule meaning after 7 years the 'gift' would not be considered part of an estate after death. 

Brie

There is also the potential issue of deprivation of assets if mom needs local authority support for her care at some point.  If she needed care and had no money but had shares she might be expected to sell them.  If she gives the shares to you and sis you both might be expected to give the shares or their value back.

wmb194

sanfairyanne said:

My mother kindly informed me she'd like to split up some of her shares with my sister and myself. I wasn't sure if she can just transfer them to us. They are held with an online share dealing account. Obviously we'd need online accounts of our own, but are there other issues we have not thought of ?
Many thanks in advance. 

Which stockbroker? Have a look through its help pages. It can be done and there was a recent thread on it that I cannot find: IIRC someone's broker had the donor fill out a document stating it was a gift. Obviously you'd need an account with the same broker. 

Keep_pedalling

If the share have gained in value since their original purchase and are not held within an ISA, then mother faces a potential capital gains tax liability on the transfer. She could have cause sell them pay any tax due and gift the remaining cash. 

Linton

Physically it is possible to transfer ownership of shares assuming the share dealing account provided the facility.  To add a bit to @poohsticks comment:

If you want the shares in an ISA in your name you would have to sell and rebuy within the ISA.

Because Mother is giving  the shares to "connected persons" she would have to pay any Capital Gains Tax due based on the market price of the shares when gifted even though she personally did not make any gain.

As with any other gift, if Mother dies in the following 7 years Inheritance Tax could be due even though she did not own the shares when she died. 

I assume the shares are not seriously valuable (perhaps  >> £100K). Otherwise the tax implications should be considered more deeply.

I agree with @poohsticks comment on whether you actually want those shares or the cash equivalent would be more useful.

p00hsticks

sanfairyanne said:

As far as I know money or shares can be given away, however, i understand there's a 7 year rule meaning after 7 years the 'gift' would not be considered part of an estate after death. 

There is such an Inheritance Tax rule, but for many it is of little significance, as the majority of estates - especially those of surviving spouses who are leaving their property to descendants - are not high enough for the tax to be relevant.   

sanfairyanne

Brie said:

There is also the potential issue of deprivation of assets if mom needs local authority support for her care at some point.  If she needed care and had no money but had shares she might be expected to sell them.  If she gives the shares to you and sis you both might be expected to give the shares or their value back.

We're both planning on keeping them for exactly that purpose.

sanfairyanne

p00hsticks said:

sanfairyanne said:

As far as I know money or shares can be given away, however, i understand there's a 7 year rule meaning after 7 years the 'gift' would not be considered part of an estate after death. 

There is such an Inheritance Tax rule, but for many it is of little significance, as the majority of estates - especially those of surviving spouses who are leaving their property to descendants - are not high enough for the tax to be relevant.   

I understand £350k can be passed from one partner to the other amounting to £750k which would not be taxable but they collectively have around 1.2M

sanfairyanne

Linton said:

Physically it is possible to transfer ownership of shares assuming the share dealing account provided the facility.  To add a bit to @poohsticks comment:

If you want the shares in an ISA in your name you would have to sell and rebuy within the ISA.

Because Mother is giving  the shares to "connected persons" she would have to pay any Capital Gains Tax due based on the market price of the shares when gifted even though she personally did not make any gain.

As with any other gift, if Mother dies in the following 7 years Inheritance Tax could be due even though she did not own the shares when she died. 

I assume the shares are not seriously valuable (perhaps  >> £100K). Otherwise the tax implications should be considered more deeply.

I agree with @poohsticks comment on whether you actually want those shares or the cash equivalent would be more useful.

There is around £200k each, so not an insignificant sum. Some of the stock might be wise to sell, it's definitely worth considering. I understand the ISA implications, most of her holdings are not in ISA.