Selling US Shares can be tricky
In order to sell any US shares owned by a deceased, the executors of the Will first have to have the shares transferred into their name or the name of the beneficiaries and have received the new share certificate or Direct Registration Statement.
It is not like in the UK where you just register the Grant of Probate with the companies share registrars and then the Executors can sell the shares through stockbrokers.
For easy reference, we have divided the whole process into four steps.
1. Fixing of the Medallion Guarantee
When selling US shares, you are required to confirm your identity and signature via the Medallion Guarantee program recognised by the transfer agent.
2. Transferring the Shares
In order to transfer the shares into the name of the Executors or Beneficiaries, you will need to provide the following documents to the company’s share registrars:
- Affidavit of Domicile
- Letter of Authority – so Share Data can act on your behalf
- Affidavit as to assets situated in the United States
- Court Sealed and Certified copies of the Grant and the Will – Note Registrars may require that they be court sealed and certified less than 45 days.
- Original copy of the Death Certificate
- The original Share Certificate(s) and/or Direct Registration Statement (sometimes called a “DRS Statement”) or other evidence of the deceased’s ownership of the shares
- Form W-8 BEN
- Irrevocable Stock Power or Transfer Request with Medallion Guarantee affixed
Affidavit of Domicile & Affidavit as to Assets in the United States
Please note that in due time both must be sworn before a Notary Public. We advise that you have an Apostille also affixed to each document.
Affidavit of Loss
If any share certificate(s) has been lost, you will need to prepare and Affidavit of Loss. There will be a premium payable for the bond that will be issued, which can be between US$ 1000 and US$600 and is usually charged at the rate of about 3% based upon the value of the shareholding.
Power of Attorney
We highly recommend that you do not appoint someone to act on your behalf under a Power of Attorney in order to obtain a Medallion Guarantee stamp without seeking the appropriate independent professional advice beforehand, as by failing to do so could lead to the risk of fraud or theft of your investments.
3. Federal Transfer Certificate (FORM 5173)
If the deceased’s assets in the USA exceeded a value of US$60,000 as at the date of the death, then the company registrars will probably ask for the Federal Transfer Certificate which involves filing Form 706-NA and other documents with the US IRS.
It will take the US Internal Revenue Service (US IRS) about a year to issue the Federal Transfer Certificate from the time that Form 706-NA and all of the other needed documents are filed with them for processing. 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.
If the deceased was not domiciled in the US, then you can claim the benefit of the US/UK Tax Treaty which will result in no US Estate Tax being payable. In this case, you will have to provide copies of legal documents issued by the English authorities such as the Form IHT 421 – 400 – 205, Confirmation letter from the HMRC as to payment of the UK inheritance tax and others.
4. Selling the US Shares
Your solicitors or financial adviser should have an account with the broker in charge of selling the US Shares in which a sub-account in the name of the deceased will be created. Once the shares are sold, the broker will account for the net proceeds of the sale directly into this account.
Whether you require help with the completion of some of the forms, the organisation of the transfer of the shares, arrange the sales or you would like us to provide the Medallion Guarantee, give us a call on +44 (0) 1403 271170 or fill out this short form to get in touch and see how we can help you.