Families face probate delays due to US acquisitions

In recent years, families of shareholders who passed away with interests in British public limited companies (plcs) are facing average delays of up to a year in gaining probate. This is primarily due to the complexities involved in liquidating shares in firms acquired by American multinationals.

Finders International, the UK’s largest probate research firm, has documented an average delay of up to 12 months in cases involving shares from companies like CRH, Cadbury Schweppes, Pfizer, and Ferguson Plc. A sample of 748 cases analyzed over the past five years indicates that the challenges have been growing since the early 2000s, when many UK plcs transitioned into US ownership.

Medallion Stamp Prerequisite

A key factor contributing to these delays is the requirement for a medallion signature guarantee stamp, which US transfer agents and financial institutions mandate for share transfers. Unlike the UK, where such a requirement is not standard, the medallion stamp serves to authenticate and approve securities transactions in the US and Canada. It ensures that the person signing over shares has the authority to do so. The stringent compliance requirements set by stamp providers can add weeks or even months to the process, complicating what is already a challenging situation for executors.

"The Cadburys Effect"

Louise Levene, an international expert at Finders International, remarked, “Many of Britain’s most famous plcs have been part of high-profile US-based M&A activity, particularly over the past fifteen years. The implications of this are that many UK shareholders now have an interest in American firms. We call this ‘the Cadburys effect’—a seemingly British firm now part of an American conglomerate.”

Levene further explained, “Many elderly UK shareholders bought shares in what were once UK firms, perhaps decades ago. Executors dealing with estate administration now find these shares owned by US holding companies, subject to US state and federal laws. This presents stricter compliance hurdles that many solicitors used to UK probate matters do not usually encounter.”

Higher Value, Further Complexity

The situation is compounded when UK estates include US assets valued over $60,000. “When UK estates have US assets valued over $60,000 at death, the delays are worsened by needing US estate tax clearance, which is taking at least 18 months now,” Levene noted.

International Compliance Mismatch

Geoffrey Odds, Chair of the International Association of Professional Probate Researchers (IAPPR), commented on the broader implications: “While many of these firms are typically some of Britain’s most famous companies, we’re also finding many European families facing similar complexities, often even longer delays. This is largely due to the challenges they encounter in meeting country-specific compliance and probate requirements across borders.”

As the trend of US acquisitions of UK companies continues, the challenges for families navigating the probate process will likely escalate. It is crucial for solicitors and executors to stay informed about these changes and to prepare for the added complexities in order to best support families during these difficult times.

Photo: Ajay Suresh