Q&A Share transfers: I purchased 1,500 CRH shares at the equivalent of €6 each in 1995 and additional CRH shares in subsequent years. I wish to bequeath to my daughter, who resides in Ireland, and to my son, who resides in the United Kingdom, 500 CRH shares each, which are currently valued at €18.50 a share.
1) Do I have to go through a stockbroker or can I request the share registrars to change the names on the shares and reissue them to my daughter and son?
2) Will there be a charge from the Revenue to myself for the transfer of these assets to my daughter and son?
3) Will the shares have a nil purchase value for calculation of gain when transferred to my daughter and son if they wish to sell?
4) In transferring these shares to my daughter and son, does the "first in, first out" rule apply to my holding?
P.F., e-mail
Well, the shares may have been valued at €18.50 when you wrote to me but they are now down around €16.25, yet another salutary tale of the volatility of the stock market. Still, you are obviously a long-term equity investor, unlike the many looking for a quick return who have been scared off by the recent bull run.
The shares you wish to transfer can be passed on to your children without the assistance and cost of a stockbroker. The first thing you will need to do is get a stock transfer form from the company registrars, who police the share register. You fill this out and send it on to the Revenue Commissioners. The relevant section is the stamp duty section in the capital taxes department, which is based in Dublin Castle.
Transfers between spouses are not treated as a transaction by the tax authorities, but the same does not apply to transfers of stock from parents to children, and indeed vice versa. As such, the deal will attract stamp duty at 1 per cent. To process this, you will need a "warrant for adjudication", which is available from the stamp duty office or can be downloaded from the Revenue Commissioners' website.
Once the Revenue is satisfied that stamp duty has been paid and that the transfer is in order, they will return the form and the registrars can reissue the shares in the new names. The only charge, apart from possibly some token charge on the stock transfer form, is stamp duty which, given that you are talking about transferring 1,000 shares, will amount to the price of 10 shares.
When you transfer the shares to your children, they will not carry a nil value. Instead, they will be valued at the market price at the time of transfer. This is because you will be liable to capital gains on the disposal of these shares. As you say, they were priced from €6 up when you bought them and are now worth considerably more, even allowing for the Revenue determined indexation factor that is allowed to provide for the impact of inflation in the intervening period. You can also deduct any capital gain by the amount it cost you to buy the shares - i.e. stockbrokers' fees at that time - as the charge is only on your profit from the transactions.
You will need to ascertain the current indexation charge, as a different one will apply to shares bought in different years. Those acquired in the first tranche in 1995 will carry an indexation factor 1.248 or 1.218, depending on whether the shares were bought in the 1994/95 or the 1995/96 tax years.
From the point of view of your children, they will face only a capital gain on the difference between the price at the time of transfer and any later, higher price. As to which shares will be deemed to be sold, you will be working under the "first in, first out" rule that dictates that you first sell those shares you acquired earliest.
SSIAs
I have taken out a variable deposit SSIA account with the ACCBank, contributing the maximum permitted per month, £200. I now find that I want to reduce this amount. How do I go about doing this?
Ms A.C., Dublin
I have no doubt that your position is not unique. With the current economic uncertainty and equity market turmoil, people may well be finding they have other calls on their money apart from the special savings incentive accounts.
The good news is that there should be little difficulty in changing the amount you are paying into the SSIA, provided it is a variable-rate deposit account, as is the case with most of those at the ACC, I gather.
All you have to do is notify the bank from which you are paying money into the SSIA. That may be another account in ACCBank or it may well be an account at another bank. They should be able to adjust the amount being paid each month. It would be no harm to drop a note to the ACC, outlining your account details and the changes you are planning to make. It just stops uncertainty and alarm when the bank sees alterations to the account. However, you don't need to worry about any official forms or the need to notify the Revenue. The joy of the SSIAs is that they are almost infinitely flexible, at least for those who chose the variable deposit accounts. I imagine things might be a little bit more complicated for fixed-rate and equity-based investors but it should still not be impossible.
Some institutions may appear chary about altering downwards the amount paid, especially in the first year of operation of the accounts, but most problems emerge through poor training in this area of counter staff. I have come across several institutions whose front-office people are vague about how the SSIA scheme works and how people can go about adjusting the terms of their account, or even switching it out of one institution to another if desired.
The only restriction on the accounts is that a deposit is made each month for the first 12 months, and that this deposit is for an amount between €12.50 and €254.
Wills
How does one go about reading a will that has been dealt with?
Ms P.F., Dublin
Wills that have been dealt with are available in the Probate Office of the High Court.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
