One of the first jobs for executors is to obtain ‘date of death values’ for all assets.
So, you’re the executor of a will, and the testator (the person who made the will) has died. Assuming you are going to accept the executor appointment, one of the first jobs for you to do is to gather ‘date of death’ valuations for all assets. How you do this depends on the type of asset. And, some organisations will have their own particular processes to follow to for you to extract the information that you need. Here, we take a look at the most common asset types, and how you go about getting the valuations that you will need as executor of the will.
Why do Executors need date of death valuations?
Executors need date of death valuations so that they can ‘declare’ the value of the estate when applying for probate. And, if Inheritance Tax (IHT) is payable, the valuations will form the starting point for the IHT due. NB – IHT (or some of it at least) is payable when probate is applied for and so the figures need to be right!
How do you get a date of death value for Probate?
We deal (below) with some of the specifics of certain asset types. But, the basic principle is to contact each company, show them a copy of the death certificate (as proof you are entitled to the information) and ask for the date of death value. This is still done in the main by paper post, although increasingly financial institutions are putting in place the systems for this to be done electronically.
Is there anything else to ask for as well as date of death values?
YES!! Top tip – when you write to (for example) a bank, also ask them for:
- Income/tax details (up to date of death) as you will need this for HMRC in due course; and
- Closure procedure – what is there process for closing the account
This saves you contacting them again separately for that additional information. Unfortunately, large institutions can be rather rigid at times, and you may find that even if you ask for that information, they may still generate a standard ‘date of death value’ reply which does not include the additional bits you asked for.
So, lets look at the specifics of asset types.
How do I get a probate value of a Bank Account?
As above, you contact them and provide the evidence they need (usually a death certificate). A bank account is valued for probate purposes as follows:
- Closing balance on the date of death; PLUS
- Accrued but uncredited interest (to that date)
That’s it – easy!
How do I get a probate value for Investments?
Managed investments are likely to be the same process as a bank. And, the probate value will be the capital value on the date of death, plus any accrued but uncredited ‘income’. If the deceased held the investments through an Independent Financial Advisor (IFA), they will often be able to help obtaining the valuations of those assets.
How do you value Shares for Probate?
This will likely be a 2 stage process. If you are aware that the deceased held certain shares, first thing to do is to contact the share registrar and ask for confirmation of the total holding(s). You will often find that even if the deceased held paper certificates, there will invariably be changes – eg re issued holdings, further shares for which certificates aren’t there, and so on.
So, first off get concrete confirmation of the size of all holdings. You will then need to get a proper valuation on what is known as a ‘quarter up’ value. There are now some great online offerings to get these cheaply and quickly. One such offering is Share Valuations – Estatesearch
How do you value personal items?
If you know the deceased had personal items of notable financial value then you should obtain a professional valuation – eg watches. The value would be what they item(s) would realistically reach if sold on the date of death. This will be less than, for example, an insurance valuation.
Cars are easy enough to value – with again there being a number of online options for this.
However, for many, the resale value of personal items will often be very modest, or even nil. Household items will often carry considerable emotional value to a family, with little if any financial value.
It’s worth getting 2 or 3 valuations for a house, and take the average figure.
How do you value a house for Probate?
As with other physical assets, this is the realistic market value at date of death. Most estate agents will provide probate valuations free of charge. It is worth getting 2-3 valuations and taking the average. There are a couple of things to be mindful of with property values and probate.
Firstly, you must NOT be tempted to ask agents to undervalue! That’s tax fraud! And/but, the valuation needs to be realistic around what the property would achieve. Agents (in circumstances other than probate) may be tempted to convince us to use them by suggesting a very attractive possible sale price. The value you need to know is simply ‘what would the house sell for at date of death’?
Next, if the property is owned jointly, then you can apply a 10% discount to the value of the share owned by the deceased on the basis that there won’t be an actual sale.
Also, be mindful of the fact that the probate value for a property will form the base cost for CGT purposes. So, even if a cautious valuation was allowed for Probate purposes, that will form the base cost for CGT purposes and so may give rise to a CGT charge for the executors when the property is sold!
How do you value business assets for probate?
First port of call would be the deceased’s accountant. This is a potentially complex area. And, if IHT is payable, there is every likelihood that HMRC would want to investigate this aspect with their own business valuations team.
Do I need to obtain values for liabilities too?
Most definitely! The ‘net estate’ is calculated as being the gross estate (all assets), less liabilities. If IHT is payable, it is paid against the net, not gross estate. Liabilities might include:
- Credit cards
When do I need to apply for Probate?
The Probate Registry are happy for you to apply for probate whenever you please! However, if you need to submit details of the estate to HMRC, they expect this within 6 months of the date of death.
You may need to submit a return to HMRC even if no tax is payable. Many estates are ‘excepted’ which means there is no need to submit a return to HMRC, and you simply apply directly to the Probate Registry for the grant of probate. You can learn more about this in our article Excepted Estates – When is Probate not required?
When do I have to pay IHT?
Having gathered all asset and liability values, then (as above) HMRC will expect to hear from you within 6 months of the date of death. When you apply for probate, they will also expect the executors to pay the initial instalment of IHT. This comprises all IHT attributable to cash assets, and 10% of the value of IHT payable against property. The remaining 90% can be delayed whilst property is sold, but with 10% instalments falling due annually thereafter.
> Find out more about when you pay Inheritance Tax (IHT)
How do I value my ‘Digital Estate’?
First of all, lets think about what is a digital estate? Well, for most of us it will have no monetary value, and no valuation is needed. It is our online footprint – social media, online productivity (Google/Apple/Microsoft), and perhaps online health wellbeing and personal interest apps.
However, for some, their online footprint may not just have provided them with ‘monetization’ (ie income for the content they created and posted), but increasingly it is something that for top ‘content creators’ it may have provided considerable wealth.
Where income has been drawn from a profile it will (obviously) be held in some other form ie bank balance(s), or assets bought. However, if there are balances held on account then these will be need to obtained from the relevant platforms with a view to being disclosed for the purpose both of obtaining probate, and equally any associated Inheritance Tax (IHT) liability that might arise against the estate.
Free Guide on how to value an estate for Probate
We hope you have found this free guide on how to value an estate for Probate helpful. If you need to know more, do check out the many other resources we have on our website. And, do please also remember that our guides are just that – generic guides. They are NOT intended to be legal advice specific to you, nor should they be taken as such. If you do need legal advice, that’s where our team of expert probate solicitors come in! You can reach out by leaving a comment below, calling, or emailing us. Meantime, thank you so much for visiting QLAW – we really appreciate seeing you here at the home of all things legal!