North American Asset Administration – Frequently asked questions
North American Asset Administration – Frequently asked questions
During the administration of an estate, it is common to find assets held in the USA or Canada. Many shareholders find themselves with shares in USA companies due to company buyouts or mergers, which they may not have been aware of. A common example is a UK shareholder in Cadbury gaining Kraft Heinz, Dr Pepper Snapple and Mondelēz International shares.
If you are administering an estate with North American assets, you can expect to encounter complicated procedures in both the USA and Canada. Both countries have adopted procedures which can appear to be complex, strict, and not user friendly for those situated outside of either country.
How do you deal with the administration of North American shares?
You will need to register the death with the share registrar or transfer agent, which will then allow you to either transfer the shares out of the name of the deceased or arrange to sell the shares. Depending on the company that you are dealing with, there will be a set procedure for this process.
Administering North American shares will usually require you to obtain a Medallion Signature Guarantee (sometime referred to as a Barcoded Signature Guarantee, or a Medallion Guarantee), which is a legal requirement for the transfer of US shares. With some Canadian shares, this is not always required, depending on what you are planning to do with the shares.
Lester Aldridge is the first UK based law firm to be able to provide the required medallion stamps as a guarantor.
Please visit our Medallion Signature Services page for further information.
What additional requirements are there to deal with North American shares?
This will depend on the shares you are dealing with, but most transfer agents have a set procedure.
Completing the required forms can cause frustration, as they are not always prepared in a user friendly format for those who do not reside in North America. Furthermore, the transfer agents can be incredibly particular about how they are completed, which can often result in the rejection of the papers that have not been completed in precisely the required way. If the forms are not completed correctly, you risk tax being withheld by the transfer agent.
Some of the Canadian transfer agents will now also charge you a fee if your forms are rejected. Our International Private Client team has years of experience in dealing with death registration, transfers of shares and, if required, sale of shares for estates with North American shares.
If you would be interested in receiving a quote for our “Full Registration Service”, please click here for further information.
I do not have confirmation of the number of North American shares held, is this a problem?
It can be. You will only be able to obtain a Medallion Signature Guarantee from us if you have proof of the holding. Furthermore, if you are not sure of the number of shares held and draft the necessary papers in accordance with what you believe the holding to be, you run the risk of not dealing with the whole shareholding during the transaction.
If further shares are later confirmed, you will usually have to go through the whole procedure again to deal with the additional shares. Our International Private Client team can, in most instances, arrange for confirmation of the shares with the North American transfer agent.
Will I have to complete any tax papers or contact the Internal Revenue Service?
This depends on where the deceased was domiciled and what assets you are dealing with, but in most instances the answer is yes. The executor or administrator of an estate has a duty to settle the US estate tax position and they should be wary of the pitfalls.
If you are attending to shares in the US that had a date of death value below $60,000 and the deceased was not a citizen of the US, then the IRS requirements are usually met by completing the death registration procedure with the transfer agents. However, if this is not done correctly, you could find that the asset is subject to withholding tax.
As part of the “Registration Service” that our International Private Client team offers, the required IRS papers are completed and lodged. If the shares are valued at over $60,000 at the date of death, or when combined the total US shares held in the name of the deceased exceed this threshold, a Federal Tax Clearance certificate will be required – often referred to in correspondence from the transfer agents as a, “Form 5173 Transfer Certificate”. Click here for more information about obtaining federal tax clearance through Lester Aldridge.
Can I sell the shares when the death is registered?
Many US transfer agents are now able to arrange to sell shares without the need for you to wait for confirmation of the transfer out of the name of the deceased. This is also possible with some Canadian shares, although some of the largest Canadian transfer agents currently do not offer this service.
Our International Private Client team can arrange for the sale of North American shares when assisting you with the administration of the assets. If the sale cannot be arranged through the transfer agents, then our stockbrokers can in most instances arrange for the required sale.
The deceased died a number of years ago, should this be a concern?
Yes, especially in connection with US shares. Not only may the company in which the shares are invested have been through corporate actions, resulting in a change to the shares held, but also the shares may have been escheated.
Please click here more information about escheated securities and unclaimed property.
The shares are restricted, will this mean that I cannot deal with them?
Shares can have restrictions imposed on them for a number of reasons. There will be set procedures in place to remove any restriction that you may come across. In some instances, a legal opinion letter from a US attorney will be required and our International Private Client team has partners in the US who have frequently assisted us in meeting the requirements to remove a restriction.
How are Canadian shares different?
The requirements in terms of tax papers, registration papers and Medallion Signature Guarantees are different in Canada and should not be dealt with in the same way as US shares. Canadian transfer agents will provide you with details of their requirements.
Whilst a Medallion Signature Guarantee will usually be listed as a requirement for the administration of shares, this is not always required for every estate. Our International Private Client team is experienced in dealing with the administration of Canadian assets and can assist you in the death registration, transfer and any required sale.
Our experience with the various Canadian transfer agents means that we are often able to avoid the requirement for a Medallion Signature Guarantee in instances where the shares are being sold or transferred into the names of the Executor(s).
Do I need to have the share certificate?
Yes. If the shares are held in certificated format the transfer agents will require the share certificate in order attend to the death registration and transfer. Not all shares are held by share certificate, it is becoming more common, especially with US shares, for the shares to be held electronically, often referred to as “book-entry” or “DRS” shares. For book-entry shares, confirmation of the shares is required, but no share certificates. For more information about missing share certificates, please click here.
What about other North American assets?
The requirements to attend to the administration of other North American assets such as bank accounts, property and bonds, will vary from State to State. Certain US States recognise a Uniform Code which allows them to accept certain UK and other non-US grants. In other States, it may be necessary to obtain probate to attend to the assets.
If you believe you may require our assistance with the administration of any North American assets, we would be pleased to discuss your case with you. Please contact us at +44 (0)1202 786194 or 786118 for an initial discussion about your matter, or email us by clicking below:
Our International Private Client team
Trust and Estate Practitioner
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