Asset Valuation - a pain in the probate!
There are occasions when executors dealing with a deceased estate need a valuation of assets in the form of the chattels ie the everyday items of furniture and possessions. Unlike a property or investment a valuation can not only be difficult to obtain but also wildly inaccurate.
One problem is that a high valuation of chattels on an estate that is well below the inheritance tax threshold (£312,000 for 2008/9) will not make a significant difference however, where inheritance tax must be paid a realistic open market value must be used. Following a rise in living standards it is now quite normal for people to have a chattels of a substantial value (on this subject the value for contents insurance is very often well below the actual replacement value!).
Generally speaking the appropriate valuation is the ‘open market value’ ie the value for which they could be sold. It is essential that all specialist items such as works of art, stamps, china, book and coin collections etc should be valued by a professional, cars (unless vintage) can be valued by reference to a trade guides although any boats or yachts should be valued by a broker.
Items specifically mentioned in the will should be valued individually if it is believed they are worth more than £500 although Items which are normally traded on the open market (such as musical instruments) can, in some cases, be valued by reference to prices on Internet auctions. Another problem that is becoming more common occurs when there are a number of chattels, some of which may be valuable and some of which are not, and the relative value of each is not easy for the executors to know.
Where the executor is likely to have the contents of the house cleared, it is possible for quite valuable chattels to be disposed of for little value or even thrown out. When chattels are being distributed (say where there are three children, each entitled to a third of the chattels), it is also important for values to be known, because the distributions made will need to be equal unless agreed otherwise by the beneficiaries. Since many assets are in the form of sets (china and furniture for example), some horse-trading may need to be done and having an idea of the values of the different chattels will prove helpful.
One problem is that a high valuation of chattels on an estate that is well below the inheritance tax threshold (£312,000 for 2008/9) will not make a significant difference however, where inheritance tax must be paid a realistic open market value must be used. Following a rise in living standards it is now quite normal for people to have a chattels of a substantial value (on this subject the value for contents insurance is very often well below the actual replacement value!).
Generally speaking the appropriate valuation is the ‘open market value’ ie the value for which they could be sold. It is essential that all specialist items such as works of art, stamps, china, book and coin collections etc should be valued by a professional, cars (unless vintage) can be valued by reference to a trade guides although any boats or yachts should be valued by a broker.
Items specifically mentioned in the will should be valued individually if it is believed they are worth more than £500 although Items which are normally traded on the open market (such as musical instruments) can, in some cases, be valued by reference to prices on Internet auctions. Another problem that is becoming more common occurs when there are a number of chattels, some of which may be valuable and some of which are not, and the relative value of each is not easy for the executors to know.
Where the executor is likely to have the contents of the house cleared, it is possible for quite valuable chattels to be disposed of for little value or even thrown out. When chattels are being distributed (say where there are three children, each entitled to a third of the chattels), it is also important for values to be known, because the distributions made will need to be equal unless agreed otherwise by the beneficiaries. Since many assets are in the form of sets (china and furniture for example), some horse-trading may need to be done and having an idea of the values of the different chattels will prove helpful.
posted by Brooks-Partners at
16:17
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