The key responsibility of the executors is to identify and value the assets of the deceased at the date of the death, due to various reasons. First of all, the probate application calls for the value of the estate for inheritance tax purposes as well as in order to include on the probate itself. Values are essential to calculate the capital gains tax and finally, to make sure the accurate distribution of the estate and payment of debts. This demands precise evaluation of all the assets, liabilities and lifetime gifts of the deceased.
The value which requires for assets; is the open market value, and it is literally the price the asset might plausibly attract if it was sold on the open market at the time of the owner’s death. This portrays the pragmatic selling price of the asset and not an insured or replacement value. Some assets, for instance property and land will require professional evaluation and consultation of HM Revenue & Customs in order to assign a reasonable value. And the size of the estate plays a major role on the decision of how detailed the assessment should be. It is not necessary to get a professional valuation for personal or regular household items that have a value of less than £500, and when in doubt use an estimated value. When valuing an estate it is essential to include all the assets that the deceased had the ownership of or had an interest in such as property and land, insurance policies, stocks and shares, money held in financial institutes, foreign assets, businesses, household items, personal belongings like jewellery, art collections etc. Assets can also be owned jointly in two different ways; “Joint Tenants” and “Tenants in Common” where in the first scenario assets will be passed automatically on death to the joint owner and in the latter the portion owned by the deceased becomes part of the estate.
Gifts made by the departed before their death should be considered to see if they need to be included in the valuation. While assessing lifetime gifts, always consider the value at the date of the gift except for a situation where it was a gift with reservation of benefit, where the date of death value will be taken into account. Gifts can be either small gifts or gifts that were given to a spouse or a partner living in the country. Wedding gifts, maintenance payments to relatives, gifts that can be identified as within the annual exemption limits, gifts made to exempt organizations even after death as well as any gifts made more than seven years before the death fall into this category. Adding up all the assets and gifts, then taking away any debt concludes the process of valuing the assets of an estate.