Posted for an IFA friend:
We’ve had 2 cases in the last 3 years where clients have died with employee shares schemes from US employers of over $60,000. In both cases, the advice from the probate lawyer is that this needs to be reported to the IRS. No tax is due in the US, but the assets cannot be sold down until the IRS has approved the tax return. For one client this has caused a nearly 4 yr delay as the IRS return has still not been processed. The most recent client has been advised the wait is at least 2 yrs for sign off. Until sign off is achieved, the funds cannot be sold down or disbursed, if this is a clients major source of Wealth for their family, this could cause serious hardship.
It would be good to know if anyone else has experience of this problem and if they know whether this reporting requirement affects clients with discressionally managed funds where the shares / assets are held in their own names, or clients on self-selection platforms.
My understanding is that US$ shares held within MPS, funds, ISAs, pensions, Bonds and Trusts are unaffected, but would be good to have this confirmed.