Co-op Legal Services was appointed to administer the Estate of a lady who had no living relatives when she died. Aside from leaving a few gifts to friends, she left the majority of her sizeable Estate to charity in her Will.
The Estate consisted of a property and a large number of shares, both in individual companies and unit trusts.
The case was assigned to Probate Solicitor, Kim Hammond.
How We Helped
When shares are sold, any increases on the Probate valuation can be subject to Capital Gains Tax. Gains on investments are subject to Capital Gains Tax. This means that the Estate would be liable to pay Capital Gains Tax if the shares were sold, ultimately reducing the value of funds passing to the charities.
Kim checked the current value of the shares on a regular basis throughout the Estate administration process and noted that most of them were increasing in value.
She notified the charitable Beneficiaries that there may be a significant Capital Gains Tax liability for the Estate if the shares were sold and asked the charities whether they would like her to 'appropriate' the shares to them instead.
'Appropriation' is a process by which the shares are no longer held for the Estate but on behalf of the Beneficiaries instead. This means that the Beneficiaries become liable for the Capital Gains Tax due when the shares are sold, rather than the Estate. Charities are exempt from Capital Gains Tax due to their charitable status, meaning that once the shares had been appropriated to them, no Capital Gains Tax would be payable.
As appropriating the shares maximised the amount that the charities were set to receive, they were all in favour of it.
Appropriations are done using a legal document called a 'Deed of Appropriation.' Kim drafted the relevant documents to send to the charities so that everything was in place before the sale of the shareholdings.
Most of the shares had increased in value since the date of death, with one holding selling for over £68,000 more than the Probate valuation. The Capital Gains Tax that would have been payable on this without the appropriation would have been around £30,000. As the shares had already been appropriated out of the Estate however, no Capital Gains Tax was payable and the full amount was passed to the charities instead.
With our Probate Complete Service we take full responsibility for getting Grant of Probate and dealing with the Legal, Tax* (excluding VAT), Property and Estate Administration affairs.
*We deal with the Inheritance Tax, Income Tax and Capital Gains Tax matters of the deceased, and apply any tax exemptions or savings where appropriate. We also deal with HM Revenue & Customs (HMRC) on your behalf.
Co-op Legal Services is the largest provider of Probate and Estate Administration services in England and Wales, trusted to deal with over £1.3 billion in Estates annually.
For free initial advice and guidance call our Probate Advisors on 03306069584 or contact us online and we will help you.