An important decision has to be made: hold or sell?
It’s always a sad time when a loved one passes away and if they leave you something in their will often you’re not in the best state of mind to make decisions.
If you have inherited shares, though, an important choice you will need to make is whether you will hold onto the investment or sell it. If you have received shares in more than one company you may decide to keep some and ditch the rest.
Look at each company as if you were deciding to buy those shares now. Do you think the outlook is good, how has the company been performing and what’s happening in the market?
Also think about how these fit in with the rest of your portfolio. Do you already own shares in the company, for example?
You should also take into account the tax implications when deciding whether
to keep the shares or sell them. You will have to pay capital gains tax if you make a profit when you sell the shares.
If the person you inherited the shares from bought them before September 20, 1985, the cost base will be the market value of the shares on the date they died – not the date you received the shares.
Also add any related costs incurred by the legal personal representative, says the tax office.
If the executor has had the asset valued, ask for a copy of the report. If not, you’ll need to get your own valuation.
If the deceased person bought the shares on or after September 20, 1985, the cost will be the price they bought them for plus any related costs, as well as those incurred by the legal personal representative, says the tax office. The executor should be able to give you these details.
If you opt to keep the shares, then you will need to arrange for them to be transferred into your name.
If you’re not the executor of the will, check with that person first to find out about the status of the shares, as they may have already arranged for them to be transferred to the estate.
If the shares are CHESS-sponsored, you’ll need to go to the deceased person’s broker to arrange the transfer. You can identify CHESS-sponsored shares because they will have a holder identification number (HIN), which begins with an “X”.
If the shares are issuer-sponsored they will have a securityholder reference number (SRN) beginning with an “I”.
This generally means they were purchased in a float or acquired from a demutualisation. An example is IAG shares, which many people acquired from the demutualisation of the NRMA.
If they are issuer-sponsored, you can get in touch with one of the stockmarket transfer companies, Computershare or Link Market Services, to help you with the transfer.