When it comes to estate administration, there is usually a long list of tasks that need to be considered and completed before the process can be concluded, including dealing with all the assets. In some cases, this may involve dealing with assets held overseas. It can be common for UK residents to acquire foreign assets over their lifetime, especially US stock as UK companies are often acquired by US entities.
To put this into perspective, there were 173 acquisitions of UK companies by foreign entities for a total value of £60.1 billion in 2017. Whilst not all of these acquisitions would have been for companies that had shareholders, each one of these acquisitions had the potential for millions of UK residents to become foreign shareholders.
At Title Research, we frequently see individuals who have died without realising they own US stock and both Executors and Solicitors are typically unaware of the implications of dealing with US stock as part of the estate administration process. Title Research are experts in repatriating assets and we use our extensive experience and global network of local professionals to deal with overseas assets quickly and seamlessly. In this blog post, we’re sharing our expertise of dealing with US assets and how you can avoid the pitfalls.
The same language does not mean the same service.
Dealing with the same company and speaking the same language doesn’t necessarily mean that you’re going to receive the same service. Administering assets in the UK is completely different to dealing with US assets, even though many US Share Registrars have UK counterparts.
In the UK, Share Registrars will typically provide the date of death and present-day share balances. Additionally, they will accept a Court sealed Grant of Probate at any time. They can also reissue any uncashed cheques to the estate or a Solicitor.
However, most US Share Registrars will not release any information without a Grant which can cause complications if you’re dealing with a large UK estate and gathering evidence to prepare the IHT400 paperwork.
Additionally, in order for US Share Registrars to accept a Grant, it must be sealed and dated within the last 60 days.
Furthermore, due to the U.S. Securities and Exchange Commission’s (SEC) reporting rules, cheques can only be reissued to the original payee. If you have cheques on an estate for a US asset that are made payable to the deceased and held in US dollars, it’s unlikely that a bank will cash the cheques.
Dividends received on US assets are subject to a 30% Foreign Withholding Tax. There are steps you can take to reduce this tax down to 15% but generally, you have to take into account that dividends owed to the estate will be worth 30% less than expected.
Fractional shares are common with US shareholdings and will continue to accrue during the estate administration. It can be a complicated process to work out what shares were held in the estate at the date of death and what shares have since been accrued.
Instructing an asset repatriation specialist
If you’re dealing with an overseas asset, we highly recommend instructing an asset repatriation specialist who understands the pitfalls and paperwork required to navigate the red tape of the country. We commonly receive instruction from Solicitors who are dealing with estates where UK stock became foreign stock after death. Title Research can assist Solicitors in liaising with US Share Registrars; verifying and valuing US stock; transferring or selling US stock; and dealing with tax issues to mitigate costs to the estate and exclude the estate from paying US Inheritance Tax.
Here are a few examples of ways in which we’ve stepped in to administer US shares and accelerate the estate administration process.
Case study: Dealing with Mrs Davies US shares
We were approached to help deal with shares held by the late Mrs Valerie Davies, in the US company Marsh & McLennan Plc. As part of the requirements, the client was asked to provide proof of the asset.
Many months later after the initial enquiry, the client advised Title Research that they had been in touch with the Share Registrar in the USA on multiple occasions, and found it impossible to obtain a recent statement as proof of the asset.
The client was unimpressed with the service they had received in the USA, commenting that they had easily been able to obtain statements from UK Share Registrars regarding the UK assets.
Title Research agreed to obtain a statement on behalf of the estate, and upon investigations discovered that the asset was actually registered to the Deceased's former work address – from 24 years previously.
Using this information, Title Research were able to liaise with the Share Registrar and obtain proof of the asset.
Case study: Mr Hill's shares in Dr Pepper Snapple Group Inc.
Title Research was instructed to transfer over 5000 shares in Dr Pepper Snapple Group Inc. for Mr Richard Hill, who had died some considerable time before in 2003.
Upon review of the file, a senior member of the overseas assets team pointed out to the client that Dr Pepper Snapple Group Inc. did not exist in 2003 and the only way these shares would have existed is if the Deceased actually had shares in Cadbury as of his date of death.
The client confirmed that this was the case, following which Title Research investigated further and identified that as a result of the former Cadbury shareholding, Mr Hill would also have shares in Mondelez Inc. and The Kraft Heinz Company. Furthermore, if he had over 5000 shares in Dr Pepper, it is likely that the share balances in the additional holdings could increase his US estate in excess of $800,000.
If you’d like to find out more about our asset repatriation services, call our Client Services Team on 0345 87 27 600.