21st February 2019
When someone dies, all the assets in the estate will need to be valued as early possible for two key reasons. Firstly, an estate valuation must be provided to the probate court before probate will be granted.
Secondly, any inheritance tax (IHT) due will need to be calculated and a payment made. In simple terms, IHT is calculated by deducting the value of any debts from the total value of all assets and any taxable lifetime gifts; the net amount which exceeds the IHT threshold of £325,000 will be charged at 40 per cent. However, there are likely to be reliefs and exemptions that can be claimed to reduce the tax. Stephen Myers, our specialist wills, trusts and estate planning solicitor and Managing Director of Myers & Co Solicitors, explains how an estate will be valued after death, and what can be done to make that process easier.
The personal representatives – the executors named in the will or any individual formally appointed to deal with the estate in the absence of a valid will – have the responsibility for valuing the estate. They must collect details of all assets so that they can estimate a ‘probate value’ of all that was owned, and the value of any debts at the date of death. The value of assets will be determined as at the date of death.
Typical assets include:
Debts are not automatically wiped out when someone dies, and they will be taken into account when valuing the estate.
The total value of any debts, such as a loan secured on property, credit card debts, council tax or residential care fees and funeral expenses, will be calculated and deducted from the gross value of assets to provide a net estate value.
When personal representatives have valued the estate, they can deal with any IHT issues and apply for probate so that they can continue with administering the estate.
Everyone should consider producing a list of assets and details of where share certificates and so on are kept, so that the information is available if required – it can always be updated! Alongside this, an inventory of digital assets will also make life easier for personal representatives.
For further information on any aspect of obtaining probate, please contact me in the private client team on 01782 525007 or email me at email@example.com.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.