Valuation of assets and liabilities (Grants of representation)-FS

Question 1

Why must personal representatives evaluate the deceased’s assets and liabilities?

Answer 1

1. To determine the size and extent of the estate (including the residuary estate)
2. To calculate the inheritance tax (IHT) payable

Question 2

What is the Definition of Residuary Estate

Answer 2

The portion of the estate remaining after all debts, taxes, and specific gifts have been paid. Valuing the full estate is necessary to establish this amount.

Question 3

What types of professionals may personal representatives need to involve during valuation?

Answer 3

• Estate agent – to value real property (e.g., house, land)
• Auctioneer – to value personal possessions
• Accountant – to value unquoted shares

Question 4

At what value are assets usually assessed for inheritance tax purposes?

Answer 4

Assets are valued at their market value at the date of death.

Question 5

What documents should personal representatives collect to identify assets and liabilities?

Answer 5

• Bank statements or passbooks
• Share certificates
• Property deeds
• Insurance policies
• Loan or debt records

Question 6

Steps in Evaluating the Deceased’s Estate?

Answer 6

1. Identify and list all known assets
2. Notify institutions (e.g., banks) of the death and request full balances
3. Collect supporting documents (e.g., death certificate, ID)
4. Obtain valuations from relevant professionals
5. Identify and verify all debts or liabilities
6. Calculate the net estate value

Question 7

What happens if the deceased had liabilities?

Answer 7

The total liabilities must be deducted from the gross value of the estate to determine the net estate, which is the figure used for calculating inheritance tax and distributing assets.