Author Topic: Eviction from overseas share nominee service - best strategy  (Read 528 times)

gta

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I have an odd situation which I wonder if anyone might have an opinion on. I'm a 25-year permanent resident of the US, but have a couple of small shareholdings still in the UK (thanks to grandparents a long time ago). One of these is Royal Dutch Shell. I just received a communication from their nominee service (Equiniti) that due to MIFID they are terminating service to non-EEA residents.

So my choices are to either find another nominee service (presumably has to be in the UK CREST system) or to take a paper share certificate (seems a bit archaic and inconvenient). It scarcely seems worthwhile to set up and maintain a UK brokerage account simply to hold this. Maybe take the paper certificate and hope that some dematerialisation process in coming years provides a better answer?

I suppose I could also simply sell the shares while they are still in the nominee system (until Sept) but that doesn't seem a very good plan - I then need to figure out capital gains etc, and cost basis, which will be a challenge. That will have to be done at some point, but I'd just as soon defer it, and integrate it with other planning.

My own investment preferences are to simply maximize retirement account contributions to a set of (mostly) Vanguard funds. Our joint taxable income was ~$75k last year (to which I expect little change), so selling off this $18k of shares would put these in the 15% capital gains tax bracket (actually higher than regular income). Other than that our finances are pretty simple: no debts, no mortgage, approx $50k/year retirement contributions (401a, 403b and 457). I've managed to keep things simple enough never to need particular advice before but this is a bit out of the ordinary and the best solution isn't obvious to me. Any opinions?

Thanks...

MustacheAndaHalf

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Re: Eviction from overseas share nominee service - best strategy
« Reply #1 on: June 27, 2018, 06:16:23 AM »
I suspect selling is actually the best option, but that's a very rough guess.

First, the mess with capital gains won't get easier by delaying it.  Why not take a rough estimate now?  If the shares were gifted to you about 15 years ago, and I assume 15% long-term tax rates, I get a roughly 1/10th cost in taxes.

For the past 10 years, this stock averaged 2.7% per year, which is about +30.5% up over 10 years.  But over the past 1 year the stock gained +37.3%.  That tells me that for the 9 years leading up to mid-2017, the stock had a -7% loss.  And that entire performance was turned around in the last 1 year.  You can use your gut, and hang on until it's at a loss again.  Or you can think about what "sell high, buy low" means, and realize selling now is a reasonable decision.

I'd also avoid paper stock certificates.  You'll pay to have them issued, and pay to have another firm accept them.  In your place, I'd sell at the high point and then buy an index fund to get the market return (and hopefully avoid +2.7% a year, but there's no guarantees).