Nick Emerson looks at the problems that can often emerge when dealing with shares in probate


When it comes to disseminating the assets of a deceased client's estate, the valuation and ultimate sale or transfer of a share portfolio is not always as straightforward as it may seem.



Government privatisations, ease of access to Internet share dealing and higher levels of disposable income are just a few reasons for the increase in private client share ownership. As a result, dealing with the sale of shares in probate is becoming a more regular task for private client solicitors and this is only set to increase in the future.



On the surface, the valuation of a share portfolio may appear to be relatively straightforward, but name changes, mergers, demergers and corporate actions can complicate the process. This can ultimately lead to it being an extremely lengthy process to confirm valid holdings at the time of death, before completing the valuation for probate purposes.



The first step will be to identify the registrars for the deceased's portfolio of shares. If, for example, the client had a portfolio of 30 different shares, contact will need to be made with several registrars to verify the client's holdings. To identify the registrar for each shareholding, it will be necessary to use the Internet and find the company's website, or the information can be obtained through a stockbroker. Alternatively, several financial websites will also provide details of the registrars.



Once the holding in each company - for each respective share - has been confirmed and it has been verified that the share certificate is valid, the registrar will need to be informed of the death. Usually a death certificate is sent to each registrar. It is also useful at this point to request that a hold is put on any dividends. This is to prevent any dividend cheques being sent out to the deceased.



Unfortunately this can be a complex process, much more so if there are many different shareholdings that may have been made decades ago, with missing share certificates only making the process of verification more time-consuming. The more individual companies in the portfolio, the longer the process will be to verify each holding through each registrar to confirm holdings.



Once confirmation of the shareholdings has been made, an accurate portfolio valuation needs to be calculated. This is achieved by obtaining the relevant price information. For each shareholding, the high and low for the share on the date of death is required. The price then taken for valuation purposes is a quarter up from the low to the high price. Remember to add dividend payments to the price if the share has gone 'ex-dividend' but has not been paid as at the date of death.



This historical pricing information can be obtained from the Stock Exchange Daily Official List. It is also available on several financial websites. Stockbrokers can also provide historical price data and can help with ex-dividend information and payment dates.



Having concluded the valuation of the share portfolio, and probate has been granted, the next step is to deliver a sealed grant of probate to each registrar. Usually, this is delivered to the registrar with the share certificates and stock transfer forms so that their records can be updated. On return of share certificates, a stockbroker can then initiate a sale if required.



To assess how much time will be required when dealing with shares as part of a deceased estate, the most important factors to consider include:

- How many shareholdings are there?

- How difficult is it likely to be to identify each holding?

- Are many share certificates missing?

- How organised has the deceased been with keeping records of their portfolio?



With a more complex estate, it could prove to be a better use of time to engage the services of a third party such as a stockbroker who is likely to have more information available immediately and be more familiar with identifying and dealing with the process.



A suitable probate service engaged to deliver such a solution must include: full and immediate valuations; verification of shareholdings; registration of death with company registrars; sale or partial sale of equities concerned for the executor; advice in relation to when to sell; assistance in the case of lost share certificates, company name changes, demergers and so on; and the flexibility to take a view on more complex cases.



Nick Emerson is a director of Simple Investments, a privately owned and independent stockbrokers based in Surrey