PRACTICAL MATTERS

Investments

Investments held in joint names will nearly always be as Joint Tenants so generally these will not be part of the estate for probate purposes and will pass to the joint owner. Generally all that is needed in this case is to ask the relevant institution to remove the deceased’s name with a copy of the death certificate.
 
Savings held by an individual will be frozen until a Grant of Probate or Letters of Administration confer the authority of the Personal Representative to access them. Some institutions allow access to sole accounts if the amounts are relatively small (often up to £5,000) and some will arrange payment of the funeral expenses on presentation of the funeral bill. When you inform each institution of the death they will write back to you with details of how to close or transfer accounts.
 
Generally, although not always, the death of an account holder should not lead to a financial penalty. For instance, fixed rate, fixed term accounts which normally require money to held held for a certain period will often allow the account to be closed with interest, or will allow the estate or beneficiaries to hold the account to term.
 
ISAs cannot be held after death and will be closed immediately the holding institution is informed. The money should be transferred by the institution to an account paying a reasonable interest rate but charging the savings tax rate.

Banks & Building Societies

Bank and building society accounts will either be in sole or joint names and the treatment of each is different on the death of the holder. Normally a sole name bank account will be frozen once the bank or building society is informed of the death of the holder. This means that no monies can be taken out of the account and this includes direct debits and standing orders which may include utility bill payments, mortgage repayments, life insurance etc. It is therefore important that you check what regular payments normally go out of the account and take any immediate action to inform the recipients and arrange for the payments to be made from other sources if required. However house insurance may still be paid but check with the bank (see earlier for useful tips on house insurance).
 
Similarly receipts into the account may be returned by the bank once the death of the holder is notified. Remember that continuing provision will need to be made for surviving spouses and family if a sole account is frozen. Frozen accounts will only be unfrozen once probate or a grant of administration has been obtained which can take weeks or months. Notification of the death of a bank or building society account holder will require an original or certified copy of the death certificate to be provided.
 
The treatment of accounts held in joint names is different. Once the bank or building society has been informed of the death of one holder they will automatically transfer the account into the name of the surviving holder and the same sort code and account number will be maintained. Direct debit and standing order payments will continue unless you inform the bank otherwise and debit cards linked to the account will continue.
 
If you are unsure what bank accounts the deceased may have held you can visit mylostaccount.org.uk which locates lost accounts.

The Death Notification Service

It is now possible to notify several banks and building societies in one notification using the Death Notification Service. Most major high street banks have signed up to the scheme and a few building societies. Details of the scheme including the participating organisations can be found at https://www.deathnotificationservice.co.uk/

Anyone can use the Death Notification Service, not just the executor. To use the service you will need the following details of the person who died:

  • Full Name
  • Date of birth
  • Date of death
  • Last address
  • Death Certificate number (if known)

Whilst not mandatory, the following additional information may be helpful so that the financial institutions can quickly confirm whether they hold open accounts for the deceased.

  • Bank account number and sort code
  • Building Society account number
  • Confirmation that a credit card was held

You will also be asked to provide details about yourself for identification purposes:

  • Your full name
  • Address
  • Date of birth

You will not be required to provide proof of death to notify the financial organisation but you may be required to do so at a later date. The requirement to provide proof will be dependent on each Financial Institution’s processes.

Shares

Publicly quoted companies (plc’s)

Check for shares held in quoted companies. There may be share certificates or more likely dividend payments will be visible on the bank statements of the deceased. However, this may not be so easy to spot if dividends are reinvested into new shares. If the deceased used the services of a stockbroker then their statements will be useful, but very often shares acquired via State sell-offs will not have been bought via the broker. The Registrars of the listed company will need to be informed of the death of the shareholder and will need to see a copy of the death certificate. The easiest way to find the name of the registrars is to go onto the shareholder/investor section of the company’s website. It is normally easy to contact the registrars by telephone and they generally have an option to notify the death of shareholder. Once the death has been notified most registrars will stop payments of dividends, which are then released once probate has been granted and formally notified to them. Any dividend payments already in progress that are made payable to the deceased will normally be accepted into a bank account if it was previously an account of the deceased.
 
Jointly held shares will pass to the survivor and the share registrar will simply change the ownership.

Valuing shares

There are several companies who will value shares for you but in our opinion they can be relatively expensive. These services are, of course, an allowable expense.
 
Shares are relatively easy to value using the internet. Most PLCs have current and historic share prices on the investor section of their websites. Values can be also be obtained at: Yahoo Finance or Google Finance. They each provide the same data but we prefer Google because by entering “LON:” in the search field before typing a company name, the interactive results are limited to UK companies, making them easier to find.
 
If the total estate value is below £250,000 the valuation of the shares will not affect Inheritance Tax because none may be due. In this case you can just take the closing price on the date of death and multiply it by the number of shares to get a good approximate value of the holding. If the value of the estate is higher than this then you must be more accurate and it is best to follow the “quarter up” method.

Quarter up valuation

Using the “High” and “Low” quotes for the day the deceased died, work out one-quarter of the difference between the two figures and add it to the “Low” figure. The equation is: Low+(High-Low)/4. e.g. If High = 120 and Low = 115 the the valuation figure is 115+(120-115)/4, which is 115+5/4 which equals 116.25.

Death when the Stock Exchange was closed

If the deceased died on a weekend or bank holiday then the Personal Representative can choose either the last day the Stock Exchange worked before the death or the first one after. You are perfectly free to choose the day which gives the lowest valuation if you wish to reduce Inheritance Tax liability but you have to be consistent. You cannot, for instance, choose Friday for some shares and Monday for others.

Ex-dividend values

When a dividend on a share is announced then the owner of that share owns the dividend and will receive it when it is due, even if he sells the shares or dies. If a shareholder dies after a dividend is announced but before it is paid then the dividend must be valued as part of the estate at the time of death. In newspapers shares are marked “XD” when this applies and if using newspapers to value shares the XD value needs to be added to the price. Google and Yahoo, however, show the XD value already included.
 
This means that if you use Google or Yahoo and you receive a cheque for a dividend payable before the death you will not add the amount to the value of the estate because it will already be included. The documentation with the dividend cheque will always show the dividend date.

Private or unquoted shares

Private companies do not have registrars in the same way as quoted companies. You should write to the company informing them of the death of the deceased at the registered office address which can be found on dividend vouchers or at: Companies House.
 
Obtaining a value of unlisted or private company shares for probate purposes is not as simple as for quoted companies, as the shares are not openly traded. The value of the holding for probate purposes will also depend upon the percentage held, and often considerable discounts on a minority holding (a holding of less than 50% of the total shares in issue) are acceptable for probate purposes. If a recent valuation has not been carried out and the estate of the deceased is likely to attract Inheritance Tax you may need to use the services of an accountant to provide a valuation. Find a local accountant here: ICAEW.
 
It is worth checking first with the company in case a recent valuation for another shareholder has been obtained. Holdings of shares in private companies will not necessarily attract Inheritance Tax but will nevertheless need to be returned on the probate forms. If certain conditions are met the shares may attract 100% Business Property Relief

Premium Bonds

Investments in Premium Bonds do not attract any interest so only the face value of any premium bonds will be included in the estate when calculating the value for probate. Premium Bonds are always held in sole names so National Savings & Investments will need to be notified. Premium Bonds cannot be transferred to another person (beneficiary) or to a trust and must therefore be sold. This can be done by letter (see address below) and will require a copy of the death certificate. Premium Bonds may be held for up to a year after death and will continue to be entered in the draw for prizes. If you do this it is worth making a note of the certificate numbers and retaining it. Any prizes received after death will need to be included as estate income (see later). You can also download and complete a form to notify National Savings and Investments by clicking here.  
 
It is worth checking whether any of the Premium Bonds that the deceased owned have won any unclaimed prizes.
 
If you are unsure as to whether the deceased held any premium bonds or you do not know the amount held you can contact the NS&I tracing service and they will carry out a search on your behalf. The tracing service can be accessed via nsandi Tracing Service.
 
Alternatively you can write to NS&I providing as many details as possible such as name of the deceased, their date of birth, address and any previous names. The address to write to is: Premium Bonds, National Savings and Investments, Blackpool FY3 9YP.

ISA’s and Unit Trusts

Although it may be possible to get a valuation from Google Finance it is best to write directly to the fund provider with details of the deceased and the fund, requesting a valuation.

ISA’s

For ISA’s it may be possible, if certain conditions are met, for a surviving spouse or civil partner to transfer the ISA into their own name using an additional ISA allowance equivalent to the value of the deceased’s ISA at the date of their death. Any such additional allowance is known as “Additional Personal Subscription” (APS) and can be used to transfer the ISA into the name of the surviving spouse or civil partner and retain the tax-exempt status. Any such APS is in addition to the normal annual allowance (currently £20,000). It is also possible for a stocks and shares ISA to be transferred to a surviving spouse or civil partner or for the stocks and shares to be sold and the cash funds to be invested in a new cash ISA.
 
This APS is available to the surviving spouse or civil partner even if they do not inherit the deceased’s ISA themselves – however, they would obviously have to use their own resources to make an ISA investment larger than the normal annual allowance under such circumstances. Where more than one ISA was held by the deceased the value of the ISA’s can be aggregated to establish the APS figure. In order to qualify for the APS the deceased and their surviving spouse or civil partner must have been living together prior to the death, unless one of them was in residential care.
 
Normally when a person dies the tax-exempt status of their ISA ceases and any income becomes taxable. If APS is available it can be claimed up to 3 years from the date of death or 180 days after the estate has been administered, if longer. Therefore, when you advise the ISA company of the death of the deceased it is worth enquiring if they are willing to accept APS transfers. Since not all ISA providers will do this, you may need to consider an alternative provider.

Unit trusts

When you advise the issuing company of the death of the holder it is worth enquiring of the procedures to sell or transfer the shares or units once probate has been granted. They will usually provide the necessary paperwork when they acknowledge the notification of death.

Endowments

An endowment policy is an invested savings plan with a life insurance element, usually designed to pay off a mortgage. They have become very unpopular following years of poor returns but millions of people still have them. On death the policy will pay at least the minimum death benefit. Write to the insurer with a copy of the death certificate and request a valuation.