If a shareholder dies then their shares may need to be transferred to their Executor(s).
If a shareholder dies then what happens to their shares will need to be ascertained in the light of:
The Will (if any)
- The Articles of Association
- Any Shareholders’ Agreement
- Whether the shares were held jointly
In most cases the shares will have been held in the sole name of the shareholder and will simply pass in accordance with the Will. We have written a blog explaining the process in more detail
Note: In the above blog we explain that once Probate has been granted shares pass by transmission (i.e under operation of law). Technically, an instrument of transfer is not required in a transmission of shares. However, in practice, the transmission to executors or beneficiaries is processed in the same way as a conventional transfer.
Given this above we believe the clearest way for a company to record the transmission of shares is as follows:
Deceased shareholder -----> Executor(s) -----> Beneficiaries
Step 1. Transferring shares to The Executors
On evidence of the death of the shareholder the shares should first be transferred to the Executor(s).
If there is just one executor you would transfer the shares to that person. If there are two or more Executors you would need to create a joint shareholder.
How do I create a joint shareholder?
The option to add a designation is always given after you have transferred shares.
Simply select Yes and add the designation exactly as you want it to appear including any "re" or "as".
In the above example you could add the designation "as executors of XYZ (Dec'd)".
When the Executors are ready to distribute the assets they will advise the company to whom the shares should ultimately be transferred ('the beneficiary').
Note: Often the Executor is the same person as the beneficiary.
Step 2. Transferring shares from the Executors to the Beneficiary
When the Executors are ready to distribute the assets of the estate they will advise the company to whom the shares should be transferred. The company then transfers the shares from out of the name(s) of the executors to the Beneficiary.
If the Beneficiary is a Trust see: How do I transfer shares to a Trust?
Note: Either transfer may give rise to a change in the PSC reporting requirements if there is either a new PSC or a threshold has changed.
FAQs
However, in practice, the transmission to executors or beneficiaries is processed in the same way as a conventional transfer. On evidence of the death of the shareholder the shares should first be transferred to the Executor(s). If there is just one executor you would transfer the shares to that person.
Can shares be transferred in a deceased estate? ›
To facilitate a transfer, the executor will need a copy of the decedent's will or a letter from the probate court confirming that the beneficiary in question is indeed the person entitled to receive the shares. The executor must then send these documents to a transfer agent, who can complete the transfer of ownership.
What are the documents required for transfer of shares of a deceased person? ›
The duly executed indemnity cum affidavit, a copy of death certificate of deceased registered shareholder duly attested by competent authority (magistrate, Notary Public, Government of India or managers of any Scheduled Bank) along with the original share certificate is to be sent to the Bank or to our Registrar for ...
How do you handle shares of a deceased person? ›
Dealing with shares
Shareholdings where the deceased held the certificates are normally reregistered in the name of a beneficiary, once probate has been granted. Executors should contact the registrars listed on the reverse of the share certificate for details of what they need to do.
How do you transfer a deceased stock? ›
Death Certificate – stockbrokers and share registries will require this as evidence of the investor's death. Will or Will Extract and Probate (if required) – if probate isn't required to dispose or transfer assets, the broker will usually request a certified copy of the Will.
Can shares be transferred to an executor? ›
However, in practice, the transmission to executors or beneficiaries is processed in the same way as a conventional transfer. On evidence of the death of the shareholder the shares should first be transferred to the Executor(s). If there is just one executor you would transfer the shares to that person.
Can I transfer shares without probate? ›
In these cases, it is usually up to the board of directors to decide whether or not they will require a Grant of Probate to be issued before actioning a sale or transfer. They may be agreeable to accepting other evidence instead, such as a certified copy of the Will.
Can an executor use a deceased bank account? ›
Executors and administrators of a decedent's estate can only access their bank accounts if the decedent had not designated a beneficiary for the account. The documents an executor/administrator generally will be required to present to the bank include: A valid government-issued ID.
Do executors pay capital gains tax? ›
After someone dies, their estate (money, possessions and property) is left to an executor named in their will. The executor is legally responsible for taking care of their estate, which will likely include paying any taxes that are owed, including Capital Gains Tax.
Can I transfer my shares to someone else? ›
When a shareholder transfers shares from a Demat to another held in his name, there is no tax liability, but the broker can charge a transfer fee. If a shareholder transfers shares to another person, for example, his spouse or children, he has to provide a clear and legitimate reason for doing so.
The cost base for the beneficiary for the purposes of CGT calculations is the market value of the shares as of the date of death. That is, the date on which the beneficiary is deemed to have acquired the shares as part of a deceased estate transfer.
How long does it take to transfer stock after death? ›
The time it will take depends on the circ*mstances and how quickly inheritors complete the paperwork. Most transfers are completed in a few weeks.
How do you transfer stock in an estate? ›
Once appointed, the executor would write to the transfer agent for the company, fill out some forms, present copies of the court documents showing their authority to act for your estate, and request that the stock certificates be re-issued to the estate beneficiaries.
What happens to shares in a deceased estate? ›
When someone passes, the executor of their will can choose to either to sell some or all of the shares owned by the deceased and pay the proceeds to each beneficiary, or they could transfer the ownership of the shares to the beneficiaries.
What happens to stock shares when someone dies? ›
If you own your stocks jointly with someone else, such as a spouse, the joint owner will inherit them after you die. The same goes for bonds. “If your investment assets have a joint owner, they will solely own these assets after your death,” said Eric Croak, CFP, president at Croak Capital.
How does an executor transfer shares to a beneficiary? ›
Once appointed, the executor would write to the transfer agent for the company, fill out some forms, present copies of the court documents showing their authority to act for your estate, and request that the stock certificates be re-issued to the estate beneficiaries.
Can I sell shares of a deceased person? ›
After providing a death certificate, proof of identity, probate court order, and others, the heir can either transfer the shares into their account or sell the shares for the proceeds. Ultimately, this has the potential to save significant sums of money due to the tax loophole.
