A relative with a medical condition has a very short life expectancy. He would like to leave his shares, held in isas, to his wife.
I think it would be easier to cash in his isas now, give the money to his wife, and rebuy the shares in her name. They wouldn't then be in an isa. They would incurr lots of small fees this way, but it might make any probate process much simpler.
They'd be happy to do this if it makes sense. Is this a reasonable plan?
Tony
You can't transfer an ISA, only the contents of it. Therefore, if he transferred, the shares would become hers but they would not be in an ISA.
Rob Graham
I acted as executor for my late father who held shares in various ISAs/ PEPs. It wasn't difficult to do the transfer after his death - from memory, the process is this:
a) get the probate document to confirm authority to act
b) get copy of death certificate
c) Send copy of probate plus death certificate to ISA company, along with a share transfer form for each shareholding. The share registrars will then issue new share certificates for all the shares to his wife.
On death, the ISA wrapper automatically ceases, so at that point, it's just a standard share transfer rather than anything complicated to do with ISAs.
A few points to consider:
a) you don't pay stamp duty on share transfers where that is occuring as a result of a bequest (unless the rules have changed in the last 5 years), so that saves 0.5% on the value of the shares as well as the share selling/buying fees.
b) so it would be cheaper to do it after death; the downside is that you would have to wait for probate to be obtained, which may take some months.
c) if the wife will need the shares to pay any inheritance tax which will be due, then it would be easier to do the transfer beforehand since (again, unless the rules have changed), you can't use the assets to be transferred in an inheritance to pay for the inheritance tax due on the estate. That is, you have to pay the inheritance tax before probate is granted.
So the process of doing the transfer after death is simple and cheaper; the downside is the time to get probate granted.
d) also, if removing the shares from the husband's estate brings the estate value down below the inheritance tax threshold, that might be another reason to do it beforehand.
e) if they decide to do it beforehand, then it might be possible rather than selling/buying, to get the ISA company to transfer the shares out of the ISA in certificated form, then the husband can do a straightforward share transfer rather than selling/buying. They'd still pay stamp duty, but not the broker costs for selling/buying (I think).
HTH Rachel
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