Many times, people are left stocks and shares from a loved one that passes away. It’s not uncommon for people to have questions regarding how to value shares and sell them from a deceased estate.
The process may not be as difficult as you’d expect, but there is a certain protocol that must be followed. Have you recently inherited shares from a deceased relative? Is your goal to understand how to value shares or sell from a deceased estate?
If you said yes, you’re in the right place. This article outlines the process for selling shares from a deceased estate.
Understanding Australian Shares
When any investor holds listed Australian shares, they can be under a broker-sponsored or issuer-sponsored system. Let’s examine the differences between these two.
Broker Sponsored
This is when a broker registers an investor on the CHESS (Clearing House Sub Register System), which is managed by the Australian Securities Exchange. Each shareholder receives a unique identification number that provides a link between the holder and the broker.
Issuer Sponsored
This is when an investor has a separate relationship with each of the companies they hold shares with. They are given a Shareholder Registration Number that links them to each holding instead of a broker. All the transactions are recorded in a registry.
Each of these different scenarios has a different set of rules and challenges when it comes to selling or transferring from a deceased estate.
Selling Shares
When it comes to issuer-sponsored shares, any broker should be able to deal with the transaction provided they have the SRN number. Since this number doesn’t change, usually issuer-sponsored shares are dealt with much easier.
However, in the case of broker-sponsored shares, there may be more than one HIN, which can present problems when attempting to sell from a deceased estate.
A certain set of documents is normally required for these transactions to take place. The following section outlines the documentation needed to proceed with a sale.
Important Documentation
The following documents may be needed to move forward with the sale of shares from a deceased estate.
Broker Holding Statement
Broker-sponsored shares require an updated HIN holding statement if the deceased dealt with more than one broker while they were alive. This will include the HIN number and the names of the shares.
SRN Statements
Issuer-sponsored shares require a copy of each SRN statement. These statements will include the SRN number, the company in which the shares are held, the number of shares, and the investor’s registration details.
Death Certificate
Evidence of the original investor’s death is required to move forward with any sale.
Will or Probate
If probate isn’t mandatory to establish who is entitled to what shares, the will should be enough to suffice. The broker will require a certified copy of the will to move forward with any transactions.
Letter of Administration
Assuming the original investor dies without a will, letters of administration will appoint an executor to move forward with any sales.
Small Estate Indemnity
When an estate’s shareholdings are small, probate may not be mandatory. Usually, a broker will require a small estate indemnity if probate isn’t necessary.
Intestacy Request and Indemnity
When there is no will and probate isn’t mandatory, estate administrators are required to fill out a form known as intestacy request and indemnity.
Executor’s Identification
Proof of identity totalling at least 100 points is required of an executor looking to sell.
Deceased Holder’s Identity Form
If the shareholder’s registration details and legal documentation don’t match, a Deceased Holder’s Identify Form will need to be filled out by the executor.
Section 1071B Statement
Finally, this form is mandatory if the probate or Letter of Administration has been granted in a territory other than where the shares were originally registered.
Once all the paperwork is filled out, the following steps are taken to complete the sale.
• Stockbrokers and Margin Lenders should be notified of the death and given a copy of the certificate
• When probate is sought and granted, a certified copy of the probate letter is made available to the stockbrokers. Alternatively, the will should be made available if probate wasn’t required.
• After these steps, the process of selling the shares can take place. Depending on whether the shares were issuer-sponsored or broker-sponsored, the final steps may differ slightly.
It seems like a lot of work, but when you value shares and sell them from a deceased estate, the process is all about having the right paperwork. Failing to obtain and fill out one single form of importance can throw a wrench in the spokes of the whole process. Otherwise, assuming you have all your ducks in a row, the process is fairly straightforward and is completed in a timely manner.
