What Happens to My Shares When I Pass Away?

KEY TAKE-OUTS:

• Who do you want to receive your shares?
  Generally you need to ensure you have a valid Will to allow for your shares to pass to the person(s) you wish.
• Can my husband/wife transfer or sell my shares into their name straight away? Not necessarily, it depends on the share registry. Each registry has different requirements to allow a transfer or sale of a deceased persons shares. This depends on how you own the shares (jointly or in your sole name), the amount and the value of the shares as at date of death.
• Do I need Probate or Letters of Administration to sell/transfer a deceased persons shares? Similarly to the above question, it depends on the requirements of the share registry as to whether it will be necessary for you to obtain a Grant of Probate or Letters of Administration, to finalise a sale or transfer.

The financial market “being in the red” has been one of the hot topics of February 2022. With this fresh on the mind and with the ‘new year’ feeling slowly running away from us, many will now take the time to think “what next?”

When canvasing out your new year financial goals you may have bought shares in companies on the ASX while they are on the low. Perhaps you’ve sold in an almighty hurry. Well, if you have held shares for a lifetime or you are fresh to the land of ASX, then you may wonder what actually happens to your shares should you pass away? Do the big corporates absorb them back in to be sold to someone new? Will my grandchildren sell or transfer them into their name straight away? Can they even do that?

Read on to learn more about the requirements for sale or transfer of shares in a deceased estate.

Who can I give my shares to?

In general, if you own shares in any publicly listed company, solely in your name, then you can give these to whoever you wish in your will.

Example:

Joe Blogs is 99 years old. He has 8 Grandchildren, 12 Great Grandchildren and 1 Great Grandchild on the way!

He has made an inventory of all of the major assets he owns. From his car to his bank accounts and of course his shares! Once he looked back at his snapshot of what he owns he got to thinking about where he wanted it to go. This is where his Will became of paramount importance.

Let’s think about his shares in particular, Joe Blogs has 5,400 shares in Telstra Corporation Limited. He has held them for what feels like a lifetime now. He wants to give his Telstra shares to Sally Blogs, his first-born Great Grandchild. Joe didn’t realise the value of making a valid Will until now. After reading “I Don’t Need a Will. I’m Too Young!”, Joe realised that his wish for his shares to go to Sally wouldn’t come into fruition if he didn’t seek some advice to write a valid Will including a specific gift for Sally.

Can my husband/wife transfer or sell my shares into their name straight away?

Joe Blogs and his wife, Jenny Blogs, came into our office to instruct me to draft their Wills. I know what you’re thinking, “Good on you Joe!”. With his snapshot of assets in hand, it made it easier for Joe and Jenny to know exactly what they wanted to do.

Example:

Joe and Jenny own most of their assets jointly.

Joe owns his Telstra shares (above) in his sole name. This means, that if Joe passes away first, then Jenny (as Joe’s Executor) will need to look at the requirements for Telstra’s share registry.

I advised Jenny that as the Executor it would be her job to organise what Joe owns and realise whether a Grant of Probate will be necessary. I explained to Jenny that Link Market Services is presently the share registry for Telstra. Each asset holder has different requirements to finalise the assets managed by that organisation. Link Market Services has a handy checklist to consider.

If the parcel of shares is valued at over $15,000.00 then this will ignite the moment a Grant of Probate will be necessary to finalise the shares. Yes, you will need Probate whether you intend to sell or transfer the shares.

As an example, the share price today is $3.94AUD and Joe has 5,400 shares. Therefore, the value of the parcel of shares would be $21,276.00 which is over the abovementioned threshold. If something happened to Joe today, a Grant of Probate would be needed before a transfer or sale of the shares may occur.

However, everything else, including a parcel of Origin Energy shares are owned jointly.

Joe and Jenny quickly had a sigh of relief as they realised the Origin Energy shares automatically go to each other. By virtue of being joint, this means that they do not need to go through Probate to finalise the transfer or sale of shares. They can sell or transfer them into the survivors name when they feel ready.

Do I need Probate or Letters of Administration to sell/transfer a deceased person’s shares?

In our example of Joe and Jenny, we can see that it depends on whether you own the shares jointly or if they are in one person’s name. In this way, Joe and Jenny’s family may need a Grant of Probate someday when they both are no longer here. Then everything passes down to the next beneficiaries in their wills. This is because if Joe passed away then the shares are now in Jenny’s sole name. If Jenny then passed away it depends on the value of the shares on that day.