Valuation of assets and liabilities

Question 1

why do assets need to be valued? what is important to remember?

Answer 1

This must be done to ascertain the probate value of the estate and the value for IHT purposes

NB: the probate value and the value for IHT purposes may be different e.g. joint property will not pass under the GOR but is chargeable to IHT

Question 2

what is the probate value? what is the probate value used for?

Answer 2

the amount passing under the grant that will vest in the PRs (i.e. only the value of assets passing under the Will / intestacy)

the probate value is used (non-exhaustive):
o to determine whether a probate fee is payable or not
o the value of the estate for a family provision claim

Question 3

how is an asset valued?

Answer 3

Each asset is given a value based on its open market value or a relevant property valuation rule is applied:
o Related property
o Valuation of quoted shares

Question 4

what is the gross estate?

Answer 4

value of assets before deduction of debts (cited on GOR application)

Question 5

what is the net estate?

Answer 5

value after deduction of debts and funeral account

Question 6

explain the related property rules

Answer 6

if assets have a greater value as one unit rather than individually (e.g. matching antique vases), they are valued together

If D owns one asset and their spouse/CP owns the other, they can be valued together under this rule. Designed to prevent tax avoidance.

this rule does not apply if the assets do not fetch a better value together.

Question 7

why does IHT need to be calculated at this stage?

Answer 7

This needs to be calculated at this stage because IHT400 needs to be filed before the GOR application can be made.