Gathering the estate assets

[scrumpyjack]

Just to add to my comment not to use a solicitor if you can avoid it. If you do use one, do NOT use a London solicitor. Their charge rates will be hugely high than out of town solicitors!

[AdrianC]

Just to add to my comment not to use a solicitor if you can avoid it. If you do use one, do NOT use a London solicitor. Their charge rates will be hugely high than out of town solicitors!

The solicitor in our case is a midlands country bumpkin working out of an old shop. Palatial it is not. Should have low overheads, at least.

[AdrianC]

No progress to report, but I do have another question if you will all indulge me.

I'm set to inherit some shares in the privately held family business. I want to give these shares to my niece and nephew. I assume this will be a simple Instrument of Variation letter. As far as I know it will not impact IHT, the business having 100% Business Property Relief. I expect the letter will need to specify the value of these shares, so I can't come back later and say I didn't know what I was giving away.

The question: can the valuation be from whatever the business was valued at for probate? Dad died in December 2022. Representation granted September 2023. I'm concerned the solicitor will ask for an up-to-date business valuation, adding yet more delay.

[scrumpyjack]

No progress to report, but I do have another question if you will all indulge me.

I'm set to inherit some shares in the privately held family business. I want to give these shares to my niece and nephew. I assume this will be a simple Instrument of Variation letter. As far as I know it will not impact IHT, the business having 100% Business Property Relief. I expect the letter will need to specify the value of these shares, so I can't come back later and say I didn't know what I was giving away.

The question: can the valuation be from whatever the business was valued at for probate? Dad died in December 2022. Representation granted September 2023. I'm concerned the solicitor will ask for an up-to-date business valuation, adding yet more delay.

The value will be the probate value - there is no alternative. The DOV has to be done within 2 years of death as I recall.
You are 'varying' your entitlement until the Will so they acquire the shares at probate value as at the date of death. The only complication might be if any dividends had been paid on those shares since the date of death. They would not be entitled to those dividends as a DOV cannot be retrospective.
I don't think the DOV needs to specify the value of the shares, it simply varies the entitlements under the Will so the shares go to them. The Will will not have stated a value for the shares!

[AJC5001]

I'm set to inherit some shares in the privately held family business. I want to give these shares to my niece and nephew. I assume this will be a simple Instrument of Variation letter.

How old are they? I thought you had to be over 18, but that isn't the case. It depends on the company articles.
From https://www.1stformations.co.uk/blog/minimum-age-shareholder/

"Shareholder
There is no statutory provision that prohibits a minor (under the age of 18) from owning shares in a UK company. As such, there is no minimum age for a limited company shareholder in the UK, unless the company’s articles impose an age restriction on members.

Whilst less common in small private companies, public companies (PLCs) often exclude minors from being shareholders. In such instances, parents or grandparents may hold shares on their behalf, either as trustees/nominees or by using some form of investment trust."

This seems a fairly comprehensive description.
I didn't know anything about most of it, especially

"Directors’ power to refuse a share transfer
In many companies, the articles of association give directors the power to refuse to register a share transfer. This provision is included in the model articles for private companies limited by shares.

Therefore, even if the articles impose no minimum age requirement for shareholders, the board of directors may not agree to accept a transfer of shares to a child.

Accordingly, you should consult the directors prior to making any such arrangements to gift shares to your child."

I don't know if this also applies to nieces and nephews.

(another) Adrian

[AdrianC]

The value will be the probate value - there is no alternative. The DOV has to be done within 2 years of death as I recall.
You are 'varying' your entitlement until the Will so they acquire the shares at probate value as at the date of death. The only complication might be if any dividends had been paid on those shares since the date of death. They would not be entitled to those dividends as a DOV cannot be retrospective.
I don't think the DOV needs to specify the value of the shares, it simply varies the entitlements under the Will so the shares go to them. The Will will not have stated a value for the shares!

Good points, thanks. No dividends paid, as far as I know. Different classes of shares. Dad didn't need the dividends and his class wasn't getting any.
At this point I don't know the probate value of the shares, but the information I do have gives me a pretty good idea. Not that it matters.

[AdrianC]

How old are they? I thought you had to be over 18, but that isn't the case. It depends on the company articles.

Thanks. They are minors. The company directors are the kids' parents and the idea of giving the shares to the kids was their idea. I've told them they will want to check the company articles. Maybe their accountant/business advisor has all that in hand.

I have looked at the company articles available online, which are very old, and there is boiler-plate language saying "no transfer of shares shall be registered if it is to any minor...". Should be an easy fix since everyone wants this to happen.

[scrumpyjack]

How old are they? I thought you had to be over 18, but that isn't the case. It depends on the company articles.

Thanks. They are minors. The company directors are the kids' parents and the idea of giving the shares to the kids was their idea. I've told them they will want to check the company articles. Maybe their accountant/business advisor has all that in hand.

I have looked at the company articles available online, which are very old, and there is boiler-plate language saying "no transfer of shares shall be registered if it is to any minor...". Should be an easy fix since everyone wants this to happen.

The shares simply need to be registered in the name of an adult (a/c child's initials). This then creates a Bare Trust which must be registered online on the Trust Registration Service (unless such bare trust has already been registered - no need to register additional assets going in to the Bare Trust). They become absolutely entitled at age 18.