Executor: transfer/sale of shares

[fredpuli47]

A deceased's estate consists entirely of quoted shares, to a substantial value , c�1 million,at time of death. There is but one beneficiary, her son. The Will did not bequeath the shares as a specific or identified gift. The executors appear to have these choices:

1) sell the whole portfolio and pay the beneficiary the proceeds, less tax
2) transfer the whole portfolio to the beneficiary, having sold some to pay tax
3) do a bit of both, sale and transfer, at their discretion

Now, as to (2) transfer :Assume that the portfolio is worth substantially less than at date of death.What is the tax position ? Is the disposal taken at death value when received ,so the beneficiary holds a false overvalue and could sell at a 'loss',( which he could use against future, real, gains )? Or are the executors not just able, but bound, to recalculate the value, redeclare it, and reclaim any loss by reclaiming tax ? Is there now, or post April 6th, any real and obvious tax benefit if the 'false value' option is available?

As to (1) sale of the portfolio, there seems no option: the proceeds reflect the true value.

As to (3) a bit of both, the answer is, I take it, it all depends on what shares remain and and what losses there are on them :)

[dzug]

Any shares that are transferred to the beneficiary are regarded as having been acquired by him at probate value, regardless of when they are transferred.

Shares that are sold are accounted for in the estate - which will (subject to an allowance) have to pay capital gains tax on any profit since the probate valuation and will be able to offset any losses against that profit. If there's a net loss then tough.

[fredpuli47]

So on a transfer of shares the beneficiary would acquire �1 million of shares less tax after allowances. He would then own shares which are worth less than their probate value, but deemed acquired at probate value. If he then sells at the current market value, can he himself claim that as a loss against any future gains ,that being the difference betwen probate value and the value when he got them?

[dzug]

The value when he gets them is irrelevant for his personal CGT situation - he can claim the loss between the probate value and the amount he eventually sells them for

[dzug]

That does mean it could be advantageous for the beneficiary to sell them - his losses can be carried forward for future years, whereas those incurred by the estate lapse once it has been wound up.

I also have a vague memory that the CGT allowance for an estate is smaller than an individual's after the first year.