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Can I sell shares for my child and transfer the proceeds to India?

Samraat Jadhav |2551 Answers |Ask -Follow

Stock Market Expert - Answered on Jan 13, 2025

Samraat Jadhav is the founder of Prosperity Wealth Adviser.
He is a SEBI-registered investment and research analyst and has over 18 years of experience in managing high-end portfolios.
A management graduate from XLRI-Jamshedpur, Jadhav specialises in portfolio management, investment banking, financial planning, derivatives, equities and capital markets.... more

Question by Deepak on Jan 13, 2025Hindi

Relationship

Thanks a lot for the clear answers to the queries. However, from custodial account, do you mean a brokerage account in USA in the name of B only ( but a seperate account as B already has a brokerage account with the same brokerage where A had the account ). If yes, then please let me know how B can have two accounts with the same brokerage ? Also, can B sell the shares on behalf of C and transfer the proceeds to an Indian bank in which an account can be opened in name of C under guardianship of B? Or can B keep the shares in her already existing account and does not sell the number of shares entitled to C until C attains the age of majority ? Would be highly thankful for more info on this aspect.

Ans: Multiple Brokerage Accounts: Yes, B can have two separate brokerage accounts with the same brokerage. This is often done for different purposes, such as managing personal investments separately from those of the minor (C). To open a second account, B would need to follow the brokerage's account opening procedures, which typically include providing identification, completing a new account application, and fulfilling any necessary Know Your Customer (KYC) requirements.
Selling Shares on Behalf of C: As C's legal guardian, B can sell the shares entitled to C and transfer the proceeds to an Indian bank account. B would need to ensure that all legal and tax requirements are met for both the sale and the transfer of funds. The proceeds can be transferred to an account in C's name, under B's guardianship, in India.
Keeping Shares in B's Account: B can also choose to keep the shares in her existing account until C reaches the age of majority. However, B would need to ensure that the shares are clearly designated as C's property and that all transactions are properly documented.
Transferring Funds to India: B can transfer the sale proceeds to India using various methods, such as bank transfers, online money transfer services, or wire transfers. It's important to choose a reliable service that offers competitive exchange rates and low fees.

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Asked by Anonymous - Aug 28, 2023Hindi

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My son, and Indian and working in India, who held shares ( ESOP and RSUs) in USA brokerage account, where Indians are not allowed to have beneficiary listed in the account, expired sometime back. The court has issued succession certificate for part of the shares to be transferred to my grandson's account. But my grandson is a minor, and the court has ordered that the share holding be transmitted to grandson's account u/g his mother. But I asked many brokerage companies and they say that minors cannot open brokerage account. Please suggest what to do.

Ans: Yes minors cannot have a brokerage account. pl consult a CA for this issue

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Stock Market Expert - Answered on Jan 13, 2025

Asked by Anonymous - Jan 10, 2025Hindi

Money

A is an Indian who worked in an Indian company ( a US subsidiary ) and received ESOPs and RSUs as part of his compensation. He expired in 2021 due to covid and left shares in USA which are listed in USA. A succession certificate in favour of B ( A's wife) and C ( A's son ) was submitted to the brokerage account in which 50% shares are to be given to each. Since C is a minor, his 50% share is to be kept till he attains the age of majority. The queries are : 1. After payment of Estate Duty in USA, when the brokerage is allowed to release the shares, where will the shares of C have to be kept? Can they be sold and the money parked in a bank account in India ? 2. When a part of the shares are sold by the brokerage for payment of Estate Duty, will the sale price attract capital gains tax ? 3. What will be the cost of acquisition for B & C? Will it be the price at which the shares were originally acquired or the price on the date of death of the holder ( this is the rate which has been considered for calculation of the Estate Duty ).

Ans: Let's address your queries one by one:
1. After payment of Estate Duty in the USA, when the brokerage is allowed to release the shares, where will the shares of C have to be kept?
o Once the Estate Duty is paid, the brokerage can release the shares. Since C is a minor, his 50% share should be kept in a custodial account until he reaches the age of majority. The shares cannot be sold and the money parked in a bank account in India without following proper legal procedures and tax regulations.
2. When a part of the shares are sold by the brokerage for payment of Estate Duty, will the sale price attract capital gains tax?
o Yes, the sale price will attract capital gains tax. The capital gains tax will be calculated based on the difference between the sale price and the fair market value of the shares at the date of death.
3. What will be the cost of acquisition for B & C? Will it be the price at which the shares were originally acquired or the price on the date of death of the holder (this is the rate which has been considered for calculation of the Estate Duty)?
o The cost of acquisition for B and C will be the fair market value of the shares on the date of death of the holder. This value is used for calculating the Estate Duty.
I hope this helps clarify things. If you have any more questions or need further assistance, feel free to ask.

Samraat Jadhav |2551 Answers |Ask -Follow

Stock Market Expert - Answered on Jan 13, 2025

Question by Deepak - Jan 13, 2025Hindi

Money

Tks a lot for the clear answers to my queries regarding transmission of shares. However, I would like some more clarification on custodial account for shares entitled to C. Custodial account for C will mean a brokerage account in name of C under guardianship of B or an account in name of B but under some category called as Custodial accounts? Alternatively, can the shares entitled for C be sold by B as C's legal guardian and then the sale proceeds be brought in India directly in a bank account in name of C under B's guardianship? Thanks in advance for the support.

Ans: A custodial account for shares typically means a brokerage account held in the name of the minor (C) but managed by the guardian (B). This allows the guardian to oversee the account and make investment decisions on behalf of the minor.
Alternatively, the shares entitled to C can indeed be sold by B as C's legal guardian. The proceeds from the sale can then be brought into India and deposited into a bank account in C's name, under B's guardianship. However, it's important to ensure that all legal requirements and permissions are met, especially if the shares are part of a larger estate or property.
Hope this helps.

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Hi, Am a regular reader of 'Money' section, and wanted to start by thanking you for sharing valuable insights and guidance. A common comment at the end of most of these suggestions is a recommendation to connect with a Certified Financial Planner, which is where my questions are: a) Do these CFPs charge basis a % of portfolio or hourly rate or any other basis? b) Could you please advise on a criteria for selection - is there a rating or grading information that can be viewed to decide on a particular planner? Could you share a few tips on how to make an educated choice? c) Is there a repository / directory that provides CFPs by area [e.g., I went to "FPSB India", and it did provide me with area based options, but only as a list of names. Not sure if it provides any further credentials. Are there any more such sites that helps with a brief Introduction / write-ups for CFPs before connecting with them? Thank you.

Ans: Thank you for reading the ‘Money’ section regularly and for your kind words. It is encouraging to see readers thinking deeply about advice quality and not just products. Your questions are very relevant and show a mature approach to personal finance.

» How Certified Financial Planners usually charge
– A Certified Financial Planner can operate under different models
– If the CFP is also registered as an Investment Adviser (RIA):

They may charge a fixed annual fee

Or an hourly / project-based fee

Or a combination of fixed fee plus a small percentage of assets under advice
– If the CFP is also a Mutual Fund Distributor (MFD):

They do not charge fees directly to the client

They earn performance-linked commissions from mutual funds

This commission is built into the product cost and paid by the fund house
– The key point is transparency: a good CFP clearly explains how they are compensated before engagement

» How to choose the right Certified Financial Planner
– Start with credentials, not popularity
– Check that the person is an active CFP professional and not just using the term loosely
– Important selection criteria to consider:

Years of experience in comprehensive financial planning, not just selling products

Ability to cover all areas like goal planning, tax, insurance, retirement, estate basics

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www.holisticinvestment.in

https://www.youtube.com/@HolisticInvestment

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Hello, i wanted to know , how is IISER PUNE , for doing research and BS-MS in Maths. In case of an option other than the normal B tech or BE courses after JEE ?. Thank you

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If you’re seriously inclined towards Mathematics + research, and you’re looking for a strong alternative to the usual BTech/BE route after JEE, then IISER Pune is actually one of the BEST options in India.

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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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