When a loved one passes away, managing what happens to their money might not be at the top of your priority list but it’s an important process that you will eventually need to go through. Although you will be dealing with emotional turmoil and upset, you may find yourself in the position where you will need access to the deceased’s investments. In this article, what happens to my stocks and shares Isa when I die, we take a look at the process and steps involved.
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For a free initial discussion on how we can help you with the legal aspects of gaining access to your loved one’s investments when he or she dies, get in touch with us today. We will review your situation and discuss the options open to you in a clear and approachable manner. Early expert legal assistance can help guide you through the whole process and also help you avoid the stress of dealing with these issues on your own. Simply call us on 0345 901 0445 or complete our online enquiry form and a member of the team will get back to you.
What steps to take when someone dies
In addition to dealing with the funeral arrangements, there are a number of steps that need to be taken before you can deal with the deceased’s financial affairs:
- You should register the death within 5 days. By doing this you will obtain a death certificate. This is an important document that you must keep safe as you will need the original in order to gain access to the deceased’s bank accounts.
- If the deceased left a Will, an executor will have been named. This is the person responsible for handling the estate of the deceased. Once the executor has the original copies of the Will and the death certificate, they can apply for probate. If someone dies without a Will, the application process is the same, but you’ll get ‘letters of administration’ rather than a ‘grant of probate’.
- You will need to estimate any inheritance tax liability and notify HMRC of the same. We can advise on this.
- Once you have the Will, death certificate, and grant of probate, you are then in a position to notify the banks, utility and insurance companies.
What happens to my Isa when I die?
If you have a stocks and shares Isa, your executor will be able to instruct your Isa provider to do one of the following:
- Sell the investments in order to pay the cash proceeds to either the administrator or your beneficiary.
- The investments within the Isa can be transferred without being sold.
Thanks to current ISA rules, your spouse or civil partner can now inherit your ISA savings and thereby retain the valuable tax-free benefits of ISA savings built up by a loved one. Since April 2018, when an investor dies, their ISA becomes a ‘continuing account of a deceased investor’ or a ‘Continuing ISA’ (this does not apply to Junior ISAs).
When you die, your Stocks and Shares ISA will become a ‘continuing ISA’ for a limited amount of time. The continuing ISA will remain open until the administration of your estate is completed, or the ISA is closed by your executor. However, if neither of the above happens within three years and one day from your death, your ISA provider will close it.
Your ISA can continue to grow and retain its tax benefits prior to being closed, but no one will be able to contribute more money to the ISA during this time. ISA inheritance rules vary depending on whether you leave the assets in your ISA to your spouse/civil partner or to a friend or family member.
Will my spouse inherit my Isa?
Since April 2015, your spouse or civil partner can inherit the value of your Stocks and Shares ISA through an ‘additional permitted subscription’ (APS). This means that they will have a one-off, additional ISA allowance that is equivalent to the value of your ISA when you died or the day your ISA is closed. However, it should be noted that these rules do not automatically entitle the surviving spouse or civil partner to the underlying assets of the ISA. They may only definitely get the assets if they are specifically left to them in your will.
There are two ways for your spouse or civil partner to use their inherited APS:
- Cash transfer – all investments such as funds and shares could be sold, and the resulting cash transferred to a new provider who has a Cash ISA.
- In specie transfer – investments can be transferred directly without being sold.
ISA providers do not have to accept APS allowances as transfers, so make sure that you do careful research to determine which providers will accept inherited savings.
What happens if I want to leave my stocks and shares Isa to somebody else?
You can leave your ISA value to a friend or family member, other than your spouse or civil partner, in your will. However, the ISA tax wrapper will no longer exist, and any income earned will be subject to normal tax rules. Also, if the beneficiary chooses to sell the assets, they will be subject to capital gains tax from the valuation at the date of death.
ISAs form part of the deceased taxable estate. If the ISA is left to a friend, family member, or anyone other than a spouse, it may be subject to Inheritance Tax.
How we can help
We have a proven track-record of helping clients deal with probate matters. We will guide you through all the necessary legal due diligence in a comprehensive and timely manner. We firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting.
How to Contact our Wills and Probate Solicitors
It is important for you to be well informed about the issues and obstacles you are facing. However, expert legal support is crucial in terms of guiding you through the often emotional process of probate in a sensitive and supportive manner and help ensure you achieve a positive outcome.
To speak to our Wills and Probate solicitors today, simply call us on 0345 901 0445, or allow a member of the team to get back to you by filling in our online enquiry form. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.