Do you have an estate with US or Canadian shareholdings?
During the administration of an estate, you may come across assets held in the USA or Canada. Many shareholders find themselves with US shares in companies due to buyouts or mergers.
If you are administering an estate with North American assets, you can expect to encounter complicated procedures. Both the USA and Canada have adopted procedures which can appear to be complex, strict, and not particularly user-friendly for those situated outside of either country.
Registration of death and share transfer
When dealing with North American assets in a deceased estate, the usual formalities include registering the death with the share registrar or transfer agent. This process allows you to either transfer the shares out of the name of the deceased or arrange to sell the shares.
Each company has its own set procedures for completing this process, so be prepared for variations.
Medallion Signature Guarantee
When administering North American securities, there is a legal requirement from the transfer agent or asset company to obtain a Medallion Signature Guarantee.
Medallions are a statutory requirement for managing the movement of securities and shares. They limit liability by safeguarding against forged signatures.
If a fraudulent transaction occurs where a Medallion stamp has been provided, the asset holder can take recourse against the provider of the Medallion stamp.
US estate tax form – Form 5173 Transfer Certificate
For estates with assets in the US which are over the tax threshold of US $60,000, there will be a requirement to comply with the Internal Revenue Service (IRS) reporting procedures when dealing with the administration of US shares – even when no tax is payable due to the UK/US double tax treaty.
Withheld tax
Executors will also be required to complete IRS tax forms requested by the transfer agents for death registration. If these forms are not completed correctly, the asset may be subject to up to 28% withholding tax.
Unclaimed property and escheated assets
In the US, all financial institutions are required to report to the relevant State all instances when personal property has been abandoned or unclaimed after a period of time specified by State law. This is usually due to a long period of inactivity.
Personal Representatives of an estate can claim these funds from the relevant state. However, this can be a lengthy process, with requirements differing on a case-by-case basis. The Personal Representative or their agent must provide the necessary evidence of entitlement to the unclaimed property.
If you have an estate where there are US or Canadian shares involved and would like any further information, please do not hesitate to contact our Wills, Trusts and Probate solicitors at Scott Bailey LLP on (+44) 01590 66933 or by email [email protected].
