For most people, their estate will need to be wound up by either an executor or, if they have not left a Will, an administrator. Part of this person’s job is to value the estate and account to HM Revenue and Customs for any Inheritance Tax (IHT) that may be due, then prepare estate accounts. The first job is to list all the assets held, which would usually include the following:
You will need to go through the deceased’s papers to find details of where they held assets. This could be bank accounts, shares, investment bonds, insurance policies and pensions. Financial advisers or solicitors who dealt with the deceased may also have information on their holdings.
You should then write to each asset holder to notify them of the death and ask them to confirm that the deceased had a holding with them and what its value was. Before they release the funds to the estate, they may ask to see the Grant of Probate or Letters of Administration which the executor or administrator will apply for if the estate is over a specified value.
A chartered surveyor will be able to provide a probate valuation of any property the deceased owned and it is also necessary to value the contents. Any likely items of value should be listed and can be valued by an expert, in the case of art or jewellery for example, or by checking similar prices for secondhand pieces of furniture or white goods.
Substantial gifts made by the deceased during the seven years prior to their death need to be taken into account. IHT is payable on gifts made during this time on a sliding scale based on when the gift was made.
The executor or administrator will also need to take into account the value of any debts payable by the deceased’s estate. This might include a mortgage, tax, credit card payments, loans, care home fees and utility bills.
The calculations need to be sent to HM Revenue and Customs together with the payment, which should be made by the end of the sixth month after the person has died. The executor or administrator can be held personally liable for mistakes made in drawing up accounts, so it is important to ensure both the figures and the valuations are correct.
It is possible to appoint a professional executor, such as a specialist probate solicitor, to carry out this work if you do not feel you have anyone who is willing or able to take on the role.
If you would like help administering an estate or would like to appoint a professional executor, ring us on 01276 415835/6/7.