Executors appointed in a Will are required to finalise the affairs of someone who has died. The executor is responsible for the administration of the estate and will find themselves having to manage a wide range of legal, financial and administrative tasks, these may include things such as closing bank accounts, selling property, calculating and paying tax and other liabilities, as well as applying to the Court for a Grant of Probate and paying inheritance to the beneficiaries named in the Will.
Before Probate can be granted, the executor must value the estate; this is required for the Probate application and depending on the value, to allow for HMRC to calculate if any Inheritance Tax is payable and how much.
In order to value an estate, the executor is required to establish all assets held by the deceased person as well as any liabilities, such as loans.
How do I value an estate?
Accurately valuing someone’s estate is really important and requires attention to detail however, it can be overwhelming and you may not know all of the information required so some detective work may be needed. A good place to start is the deceased person’s paperwork. We would also suggest speaking with family members, friends and any professionals such as an accountant or solicitor that may have been used by the deceased person. You will need a value for any assets and liabilities held solely or jointly.
Identify any assets: Make a list of any assets you are able to locate, this could include;
- Properties
- Bank/Building Society accounts
- Pensions
- Shares or Investments
- Life Insurance Policies
- Premium Bonds
- Personal possessions such as cars, jewellery, artwork
Identify any liabilities: Make a list of any liabilities you are able to locate, this could include;
- Utilities
- Council Tax
- Mortgage
- Care/Care Home Fees
- Credit Cards or Store Cards
- Loans
These organisations will need to be contacted by the executor to obtain the Probate value, this will be the value as at the date of death. A death certificate will be required for them to provide this and in some cases, you may need to provide evidence that you are authorised to collect this information, such as a copy of the Will.
Identify any lifetime gifts: Lifetime gifts are cash or assets gifted by the person who has died prior to their death. Any gifts made more than 7 years prior to the persons death will be exempt from Inheritance Tax; this is only applicable if the person who made the gift did not continue to benefit from it in any way.
Calculate the value: Once you have obtained the values for all assets and liabilities held by the deceased person, you can calculate the value.
The gross value of the estate is the total value of all assets held before any liabilities have been deducted. The net value of the estate is the gross estate minus any liabilities, such as debts and funeral expenses.
You can determine whether Inheritance Tax may be payable or not based on the value of the estate; there will be no Inheritance Tax payable if the estate is:
Valued at less than £325,000 or £500,000 if a property is being passed to children or grandchildren
Passing to the deceased persons spouse or civil partner
Passing to a charity
Obtaining an accurate estate valuation for Probate is essential and so it is recommended to consult with a legal professional to ensure this is completed correctly if you are not sure.
Comments