Is Probate required for shares in offshore company owning UK property?

Trusts Discussion
1

Our clients are the heirs to the estate of an EU resident.

The deceased owned a UK property via a Panamanian company, with no other assets in the UK aside from the contents of the property.

To our understanding, the deceased died intestate due to a defective will.

Our clients wish to leave the property to the surviving widow (his second wife), also an EU resident.

We know that the shares are no longer exempt from IHT but the estate can take advantage of the spousal exemption.

For a variety of reasons outside of our control, we have only been appointed with just over one month left before we reach the 2-year-limit after date of death to vary the intestacy.

This leads to the following question:

  1. Although the shares aren’t exempt from IHT, are they considered moveable or immovable for probate purposes? If they are immovable, then presumably English intestacy rules apply? But if they are moveable for probate purposes, then would Panamanian succession laws take precedence?

  2. If the latter, then how do we go about applying for the spousal exemption? Do we need to wait for the Panamanian probate process to be completed first? That could still take several months.

  3. Should we just get the heirs to sign a DoV now while we wait to see what happens in Panama?

thanks in advance

Simon

2
  1. Shares are moveable. The relevant law would depend upon the interaction of EU country and Panamanian law.
  2. File a UK IHT return and claim the exemption, assuming it is not an excepted estate.
  3. Get foreign advice on the succession now - I don’t see why the probate process would need to be completed.
3

The shares on death would be governed by the International Business Companies (2000) and (Amendment) Act, 2004

  1. The articles of association should be consulted first as they ought to outline the process on the death of a shareholder.

  2. Its typical for the Panama IBC to have a shareholder agreement. In some cases the shares are held joinlty (by agreement) as preemptive measure on death.

  3. And for the shareholder to execute a will in Panama.

The IBC will have an agent who will advise I assume, its my understanding the Company applys for authorization to transfer the shares.

I’d execute the DoV.

Richard C. Bishop
PFEP

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4

You do not say where your clients are resident/domiciled but I presume from your reference to the widow being “also an EU resident” that they are likewise. No doubt you will have advised them that executing a DOV they or the widow as beneficiary may incur tax in their country.

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5

Much appreciated. We have come to a similar conclusion.

6

Thank you.

Unfortunately, the company seems to date from a time when very few written records were kept in Panama, and there is certainly no will. But I will make enquiries.

7

The lawyers in their domicile are already aware of this. This is just one part of a much larger estate.

Thank you.

8

Hey @SimonM my clients are also dealing with similar kind of situations; if you get your answer please also advice me.

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David
The basic answer is pretty straightforward: if all the UK assets are owned by a foreign company then there is no need to obtain UK probate. However, if the assets include UK residential property, there is a good chance the PRs have an obligation to file an IHT return and potentially also an IHT liability (depending on whether the shares pass to an exempt beneficiary such as a spouse).

Whether they need to take out probate in the jurisdiction of the company, will depend on their precise circumstances.

10

Ok Thanks @andrew.goodman :+1: