What do do with relative's share portfolio following death

[Longtermyieldman]

I keep an eye on an account with HL belonging to my grandmother, who would be 100 in April. Unfortunately I strongly suspect she won't make it; in fact I would be amazed if she's still with us at the end of this month. A life well lived, but of poor quality these days, so a release for her.

I'm joint and several executor of her will and unfortunately my mind must soon turn to what needs to be done. Should I sell all her holdings and turn them into cash when she passes, or leave them invested? There's about £600k worth, a quarter of it in an ISA, the rest a dealing account.

[JohnB]

On the day she dies, buy a copy of the FT, and log into her account and record the valuation. It might be possible to transfer holdings as is, but it will be much easier to sell them, and extract the cash. I'd approach HL with a death certificate and proof that your are an executor and ask their procedure for winding up an account.

[PinkDalek]

[I'm joint and several executor of her will and unfortunately my mind must soon turn to what needs to be done. Should I sell all her holdings and turn them into cash when she passes, or leave them invested? There's about £600k worth, a quarter of it in an ISA, the rest a dealing account.

No, you don't need to sell them immediately, if at all, and it is highly unlikely you'll be able to do so before you obtain Grant of Representation (aka Probate).

Look at the respective brokers' procedures on death. Here is what Halifax have to say:

https://www.halifax.co.uk/investing/help-and-guidance/existing-customer/bereavement-support/

As for valuations, is IHT likely to be in play and will you be using solicitors. If so, they'll get their own valuations done so no need to bother with the FT but, if you wish to, get the FT following the date of death (rather than the day of death as previously suggested) but if at a weekend there is a choice. There are, of course, other sources but I've found they never match what solicitors come up with via their valuation services.

Someone else can go into the ISA situation as I don't presently have the time but see the part about When an investor dies on or after 6 April 2018 https://www.gov.uk/guidance/close-void-or-repair-an-isa-if-youre-an-isa-manager#death-investor.

You may never need to sell anything. The beneficiaries may be happy to take the shareholdings in specie (if I'm using the correct term). Others will inform you in more detail but there are plenty of threads here and at Legal issues on the subject but they are hard to locate. I wrote to both Equiniti and Computershare [edit: in our case the holdings were in certificated form] when the Grant was obtained, enclosing a copy, leaving the matter of Stock Transfer forms to a later date. I can't precisely recall what happened next but it was only after that that the accumulated dividends were released.

E&OE - written in haste.

[Pheidippides]

I keep an eye on an account with HL belonging to my grandmother, who would be 100 in April. Unfortunately I strongly suspect she won't make it; in fact I would be amazed if she's still with us at the end of this month. A life well lived, but of poor quality these days, so a release for her.

I'm joint and several executor of her will and unfortunately my mind must soon turn to what needs to be done. Should I sell all her holdings and turn them into cash when she passes, or leave them invested? There's about £600k worth, a quarter of it in an ISA, the rest a dealing account.

Does anyone have an LPA?

In the circumstances you describe, the efficiency of distributing cash assets vs stock holdings would be in line with her wishes (I assume). In these circustances, my understanding is that you can sell pre-death, but not post- without the GoR

Regards

Pheid

[Lootman]

I keep an eye on an account with HL belonging to my grandmother, who would be 100 in April. Unfortunately I strongly suspect she won't make it; in fact I would be amazed if she's still with us at the end of this month. A life well lived, but of poor quality these days, so a release for her.

I'm joint and several executor of her will and unfortunately my mind must soon turn to what needs to be done. Should I sell all her holdings and turn them into cash when she passes, or leave them invested? There's about £600k worth, a quarter of it in an ISA, the rest a dealing account.

Does anyone have an LPA?

In the circumstances you describe, the efficiency of distributing cash assets vs stock holdings would be in line with her wishes (I assume). In these circustances, my understanding is that you can sell pre-death, but not post- without the GoR

If you sell pre-death then there is capital gains to worry about. Might be quite a lot since £450,000 is in a taxable account. Upon death the cost basis of those holdings will be uprated to current value, so selling before then could be an expensive mistake.

It might be possible to sell after the death but before the grant of probate if the Executor has the signon-id and password, as long as the account has not been frozen. I would not withdraw funds in that case, but merely reallocating the shares to cash might seem prudent to avoid the risk of a major market drop. Many years ago I had an uncle-in-law die with a very large holding in a Japan unit trust. As it happened that very day was the all-time high for the Nikkei Dow index - a level to which it has not returned in the 30 years since. I'm really glad I did as it preserved the value of the inheritance. Markets go down much faster than they go up, and most people don't want somebody else's portfolio.

[Longtermyieldman]

I keep an eye on an account with HL belonging to my grandmother, who would be 100 in April. Unfortunately I strongly suspect she won't make it; in fact I would be amazed if she's still with us at the end of this month. A life well lived, but of poor quality these days, so a release for her.

I'm joint and several executor of her will and unfortunately my mind must soon turn to what needs to be done. Should I sell all her holdings and turn them into cash when she passes, or leave them invested? There's about £600k worth, a quarter of it in an ISA, the rest a dealing account.

Does anyone have an LPA?

In the circumstances you describe, the efficiency of distributing cash assets vs stock holdings would be in line with her wishes (I assume). In these circustances, my understanding is that you can sell pre-death, but not post- without the GoR

If you sell pre-death then there is capital gains to worry about. Might be quite a lot since £450,000 is in a taxable account. Upon death the cost basis of those holdings will be uprated to current value, so selling before then could be an expensive mistake.

It might be possible to sell after the death but before the grant of probate if the Executor has the signon-id and password, as long as the account has not been frozen. I would not withdraw funds in that case, but merely reallocating the shares to cash might seem prudent to avoid the risk of a major market drop. Many years ago I had an uncle-in-law die with a very large holding in a Japan unit trust. As it happened that very day was the all-time high for the Nikkei Dow index - a level to which it has not returned in the 30 years since. I'm really glad I did as it preserved the value of the inheritance. Markets go down much faster than they go up, and most people don't want somebody else's portfolio.

Thanks. Yes, to clarify, there's no suggestion I'd sell her holdings before her death, because it would generate a CGT bill. The question is whether to sell everything when she passes then keep the cash proceeds in the account until we have probate, sell post-probate or distribute shares in specie if the platform will allow. My preference is the first of these but I don't know whether there is any reason why I should not take this course of action - for instance is there an obligation to tell the platform as soon as she dies, resulting in the account being frozen, or some legal rules against it.

[Chrysalis]

There would be a legal rule against it, since after death any LPA ceases, and you do not have rights to access the account except as an executor, and this is almost certain to require probate first.
Perhaps you might get away with it if you log on (if you have access) immediately after death but before informing the broker, but I do not think this would be strictly legal. Would the other executors have a view?
If you do play by the rules, then once probate is granted you have the option of whether to sell and distribute cash or distribute in specie. If you sell before distribution then I think the estate is liable for the CGT if there are gains between death and disposal. If you transfer in specie then the CGT liability lies with the beneficiary and only arises if they dispose of the assets. So as well as considering the views of the executors you might want to consider the views of the beneficiaries.
If it were me, I’d play it straight. Others on these boards will no doubt have other views.

[PinkDalek]

There would be a legal rule against it, since after death any LPA ceases, and you do not have rights to access the account except as an executor, and this is almost certain to require probate first.
... Would the other executors have a view? ...

Sole Executor per the OP.

It isn’t something I’d do but I doubt there is any law being broken.

It is the Will that empowers the Executor; Grant of Representation proves that power. Obviously if the Will is found to be defective there could be issues but that’s why Lootman suggested not distributing the realised cash until probate is obtained.

[Lootman]

There would be a legal rule against it, since after death any LPA ceases, and you do not have rights to access the account except as an executor, and this is almost certain to require probate first.
... Would the other executors have a view? ...

Sole Executor per the OP.

It isn’t something I’d do but I doubt there is any law being broken.

It is the Will that empowers the Executor; Grant of Representation proves that power. Obviously if the Will is found to be defective there could be issues but that’s why Lootman suggested not distributing the realised cash until probate is obtained.

Exactly. An executor is fully able and entitled to manage the assets from the point of death. That right is conferred by the Will and not by probate.

There is a practical problem in that an institution may freeze an account upon being notified of the death. Then the Grant of Probate would be required to un-freeze it. But there is no problem with an Executor performing post-death transactions as long as he/she has access. To take a simpler example, if the assets consisted entirely of cash or diamonds in a safe, then the Executor is free to take custody of them pending distribution to the beneficiaries. In that case probate may not even be needed, although inheritance tax may need to be paid.

So the situation might arise where an Executor, fearing a freeze, might perform transactions and then notify the institution. I do not believe that is in any way illegal as long as he/she is acting in good faith and holds onto the funds until everything has been resolved.

Executorship is not deferred until after probate. Indeed, many estates do not even require probate at all.

[PinkDalek]

Correction: Joint not Sole Executor.

[Longtermyieldman]

There would be a legal rule against it, since after death any LPA ceases, and you do not have rights to access the account except as an executor, and this is almost certain to require probate first.
Perhaps you might get away with it if you log on (if you have access) immediately after death but before informing the broker, but I do not think this would be strictly legal. Would the other executors have a view?
If you do play by the rules, then once probate is granted you have the option of whether to sell and distribute cash or distribute in specie. If you sell before distribution then I think the estate is liable for the CGT if there are gains between death and disposal. If you transfer in specie then the CGT liability lies with the beneficiary and only arises if they dispose of the assets. So as well as considering the views of the executors you might want to consider the views of the beneficiaries.
If it were me, I’d play it straight. Others on these boards will no doubt have other views.

I guess the legal question is whether as an executor (joint, but the other one's my uncle, and is happy to go along with whatever I decide) there's any legal reason why I shouldn't sell assets, such as shares, after death but before probate.

The tax questions may be more complex. If we leave the shares in the account and they rise in value between the date on which we declare the value for probate purposes and it being granted, I assume this generates a CGT bill - for the estate, or the beneficiaries? And what happens if they fall? Does the estate pay inheritance tax on the value on death, which turns out to be greater than the sum transferred to the beneficiaries? And what about income generated by the shares between death and distrbution of proceeds to beneficiaries? Does anyone pay tax on those? Estate or beneficiaries?

And a practical question: once the platform is notified of death, I assume the account is locked. So what happens to the dividends: are they even accepted?

All told it seems to me that a painful process is made less so if we simply sell all shares on death, before notifying the platform - provided this is permissible.

[Alaric]

And a practical question: once the platform is notified of death, I assume the account is locked. So what happens to the dividends: are they even accepted?

You might imagine they are accumulated as cash, to be unfrozen when probate is granted.

[PinkDalek]

[And a practical question: once the platform is notified of death, I assume the account is locked. So what happens to the dividends: are they even accepted?

It is not clear if you have read all the replies on this topic but I hope to have replied to that part in my first effort, either in the body of the post or the links.

[Chrysalis]

In my experience, once a broker has been informed of a death and with a portfolio as large as is being discussed, probate would be needed to access the account.
I take the point that an executor could sell assets before notifying the broker of a death. It is not what I would do, having been in that situation.
The tax situation is complicated and I’m not an expert, although I have been involved in administering an estate of comparable size. Broadly, inheritance tax is calculated on the value of assets at death, and is paid before probate is granted. (Are there other assets that can be used for this purpose? If not, consider liquidating sufficient before death and putting in an account that will allow IHT payments, eg NS and I. I am assuming you have LPA).
The estate is liable for any income or capital gains tax arising during the period of administration- ie from death to distribution of assets. Estates have their own allowances and tax rates, which iirc are not exactly the same as for individuals. However, the total tax liability can differ depending on whether the estate sells assets, or individuals sell assets having inherited them (each individual has a CGT allowance for example, and the estate has only one). So it can be complicated, depending on whether the beneficiaries want cash, or would like the assets, and obviously their own individual tax circumstances.
In our situation we opted to sell the assets after probate but prior to distribution, since none of the beneficiaries wanted to keep the investments (and I always use my own CGT allowance anyway so preferred the liability to fall on the estate). This decision was taken jointly by the executors (who were also the beneficiaries). A small amount of CGT was paid by the estate in respect of the invested assets. Obviously if we had sold the assets straight after death, it’s unlikely CGT would be payable, but we wouldn’t have benefited from the gains during the administration period. (Though equally we might have incurred loss). To be honest I don’t see an advantage to selling straight after death compared with selling when probate comes through.

[Lootman]

In my experience, once a broker has been informed of a death and with a portfolio as large as is being discussed, probate would be needed to access the account.

I take the point that an executor could sell assets before notifying the broker of a death. It is not what I would do, having been in that situation.

Whether it is a good idea to do it really depends on the reasons. In the personal case I cited earlier, the portfolio was 100% invested in a Japan fund and I felt that was unduly risky. Probate can take months, or even years in some cases, and I deemed it prudent to convert the portfolio to cash to avoid downside risk. As it happened, the fund value almost immediately began to decline and so my action was positive for the estate and the beneficiaries (my wife, as it happened).

Now, you could argue that the holdings could instead increase in value, and then the Executor could be criticised for the opportunity cost. But my own view is that is out-weighed by the downside risk if the portfolio is eccentric. Acting as a fiduciary, my first principle is not to lose money and I'd be happy to justify that if needed.

So I think such a move can be prudent if the portfolio is loaded with (say) AIM shares and Chinese internet shares. If it is a balance of index funds, bonds and cash, I'd probably leave it alone.

[AJC5001]

In my experience, once a broker has been informed of a death and with a portfolio as large as is being discussed, probate would be needed to access the account.
I take the point that an executor could sell assets before notifying the broker of a death. It is not what I would do, having been in that situation.

If shares had been sold after death but before the broker had been provided with the death certificate, I wonder what the broker would do if they compared date of death with the date of transactions? I would think such transactions might require investigation given money laundering considerations.

Adrian

[scrumpyjack]

The executor is legally entitled to deal with the assets of the estate in good faith and there are situations where probate is not required (Small estates). Banks have different limits as to whether they will release assets without a grant of probate. This can be up to £50,000
IANAL but I don’t think the executor has broken any law by selling shares in the deceased account where he/she had access, though it might be in breach of the brokers terms of business and would probably be unwise.

What if there was another later Will with a different executor for example?

It really is advisable to get probate so that the executor has legal confirmation of his rights but I agree with Lootman that there may be circumstances where the risks of selling shares before probate is preferable to the risks of not selling them. In the circumstances Lootman outlined I doubt the broker would take any subsequent action.

[Longtermyieldman]

Thanks everyone - some interesting perspectives and advice. One of the frustrations is that I'm sure if I phoned HL to ask for their position on this they'd immediately freeze the account. Having reflected on the situation I'm tempted to phone them now, while my grandmother is still alive but receiving only palliative care. I don't want to break any rules, causing problems, but also I suspect that turning the shares into cash when she passes is preferable to holding the stocks, since the latter generates tax liabilities if there's income and gains but probably doesn't do the opposite if there are losses (IHT being calculated on valuation at death) and also keeps a complex and unpleasant task simpler.

[genou]

.....I suspect that turning the shares into cash when she passes is preferable to holding the stocks, since the latter generates tax liabilities if there's income and gains but probably doesn't do the opposite if there are losses (IHT being calculated on valuation at death) and also keeps a complex and unpleasant task simpler.

I doubt that it will make it simpler. You are almost certainly going to have to do a tax return for the estate, as on a portfolio that size there will surely be dividends received post mortem even if you sell immediately, and you should expect to get interest on balances held pending probate ( that assumes there is interest bearing cash commensurate with the size of the estate ) . The downside to conversion of shares to cash is that unless your grandmother has a very unusual broker, cash in their hands will generate nothing, and taxed income is better than none, particularly if something crops up to delay probate. I fear you are looking for simplicity where it will not be available.

[Lootman]

One of the frustrations is that I'm sure if I phoned HL to ask for their position on this they'd immediately freeze the account. Having reflected on the situation I'm tempted to phone them now, while my grandmother is still alive but receiving only palliative care.

In my experience institutions are very aggressive about locking an account if they believe the account holder has died or or may have done. When my father died I went down to his bank to notify them and the manager there literally ripped the chequebook from my hands. I was somewhat shocked to say the least.

Their conservative approach might be prudent in terms of minimising their exposure. But I would always be very judicious about what I tell an institution in this context, and when.

IANAL but I don’t think the executor has broken any law by selling shares in the deceased account where he/she had access, though it might be in breach of the brokers terms of business and would probably be unwise.

In a situation where you had a LPA/EPA while the account-holder was alive AND were the Executor of the Will upon death, then effectively you have seamless and continuous powers and rights at all times. I'm not sure how a broker's terms of business can exclude someone lawfully acting on behalf of a client and in their interest.

What if there was another later Will with a different executor for example?

Well yes, if there is any doubt about the validity of the Will and who is the executor then that needs to be quickly resolved before anything else can happen.

It really is advisable to get probate so that the executor has legal confirmation of his rights but I agree with Lootman that there may be circumstances where the risks of selling shares before probate is preferable to the risks of not selling them. In the circumstances Lootman outlined I doubt the broker would take any subsequent action.

My view may be a little unconventional about the need for probate, but I have always held the view that probate exists not to benefit the estate, family, next of kin, executor or beneficiaries. But rather it exists to benefit creditors of the deceased, most obviously the tax man, but others as well. It is in fact a pain in the backside for the family of the deceased and, as such, I'd always try and avoid it if I could. You can pay off creditors and the taxman yourself at the right moment, if needed.

So for example if the only asset was a brokerage account then I might be tempted to both sell of the holdings and also maybe transfer the funds to myself. Then there wouldn't even be a need to notify the broker about the death. And as executor I might probably not need probate at all. As long as I am confident about the Will I can distribute at my discretion. It may even be that I am the sole beneficiary and so then the matter is done.

I just wouldn't spend or distribute or even touch that money until a reasonable period of time has passed and I was 100% certain everything was kosher.