Can an executor sell shares before getting probate?

[steve70]

Friend died and was the 100% owner of a company which she was trying to sell at the time of death. The buyer still wishes to go ahead, but without her expertise the business will soon fail. The terms have been agreed and both executors are happy with them. One of the executors is the company secretary (deceased was the sole director).

The Will leaves the shares to the family and they wish the deal to go ahead asap.

So we have a situation where everyone is happy, the will is clear and nobody is disputing anything.

The normal advice seems to be that you need a grant of probate before dealing with shares. But I suppose this is because a company (particularly a quoted company) might refuse to register a transfer without the grant. Not an issue here.

The buyer has said from their point of view they don't need grant of probate - they are happy provided they are physically able to move in and they are on the register of members.

I understand that the executors derive their authority from the will and that the grant is merely confirmation of this. So the executors should have capacity to go ahead?Is there any reason why the sale cannot go ahead now?

The concern is that if for any reason the buyer regrets their purchase, they might try to claim that the purchase was in some way void and reclaim from the estate.

Agreed price for company is £20K. Not big money! My friend's family are not well off so the money will be useful to them.

Thanks for any thoughts.

[wales01man]

Re: Can an executor sell shares before getting probate?

Think you will find until grant of probate and the benefactors known no assets can be sold check with probate law first

[enquirer]

Re: Can an executor sell shares before getting probate?

This may be the way to look at it.

As the executors hold the estate as trustees, an argument can be made that they may act. What they will be doing is converting an unwanted and diminishing asset into it's immediate cash equivalent. This is very much to the beneficiaries advantage.

The executors must however hold onto the money (keep it in trust and not distribute it), until probate is granted (probate really being about ensuring taxes and creditors are paid).

If you go down this route, make sure that you get the beneficiaries consent in writing. (Strictly speaking, trustees don't need consent, but it would be wise to obtain it, lest arguments arise later).

[steve70]

Re: Can an executor sell shares before getting probate?

As the executors hold the estate as trustees, an argument can be made that they may act. What they will be doing is converting an unwanted and diminishing asset into it's immediate cash equivalent. This is very much to the beneficiaries advantage.

Yes, indeed. In fact I am concerned that the executors should sell unless there is a solid reason (ie legal/procedural) not to - else it could be claimed that they were negligent in letting the deal slip through and allowing the estate becoming insolvent. All the spade work was done by my friend when she was alive. (She knew she was dying - just the end came a bit quicker than expected.)

Thanks very much for the answer. The concern I had was that there might be some procedural bar about the transfer of shares - eg something in the companies acts, Stock Transfer Act 1963, or some such. But I can't see it - as far as I can tell the situation is as you stated it, the executors are merely trustees for these purposes.

No problems holding on to the cash until probate is granted and creditors identified etc.

[charitynjw]

Re: Can an executor sell shares before getting probate?

To be on the safe side, I would progress the sale via a reputable expert (Solicitor or bank, etc), & obtain the written agreement of all the beneficiaries.
It may attract a small fee, but will cover the executor's rear end!

[steve70]

Re: Can an executor sell shares before getting probate?

For probate generally, two solicitors have been approached and said that they would not consider a sale of the shares until probate has been obtained. As for negotiation of the sale of the company, the deal is ready to go. The buyer has been great, but both sides recognise it would have to be called off if it doesn't happen in the next few days. Some staff already (amicably) resigned in anticipation of the sale and are working out notice. We were hours from concluding the deal when my friend died, there was nothing contentious remaining. The negotiation had gone on for a few weeks.

No problem getting the beneficiaries approval in writing - they are keen to get the deal done. A wise precaution, thank you.