When a person passes away their estate needs to be collected, administered, and distributed to their beneficiaries. The executor of the estate is responsible for identifying all of the estates assets and their value. An estate will include a variety of different assets. Most commonly a person will hold property, bank accounts and shares. If an estate is subject to probate, the executor will need to obtain valuations for the assets. This is to give the correct information to HMRC.
Establishing what shares the deceased had
To start the executor should collect the shareholding certificates. There are a few places where the deceased may have stored these. They could have kept certificates at home with their other financial or personal paperwork. Alternatively share certificates could be stored with their bank, their accountant, their solicitor, or an investment management company. Create a list of how many companies there are shares for and how many shares with each company.
You should also categorize the shares the deceased owned by type. For example, Listed shares, ISA’s, Unit Trusts etc. Different types of investments may need to be valued using different methods.
Once you have a list of the deceased’s shareholdings you will have a clearer picture of what needs to be valued. You can then make a decision of how you should go about doing this. Handling shares can be quite complicated. Managing them can be quite time consuming, especially if the deceased held a lot of shares.
Valuing Listed Shares
A listed share is “a share in a company that can be bought and sold on a particular stock market”. In England and Wales this can be the London Stock Exchange or another recognised stock exchange.
The value used for the IHT calculations will be the closing price of the share on the day that the person passed away. You can value shares yourself using stock exchange websites or by checking the financial pages of newspapers. This is easier to do when the deceased didn’t hold a lot of shares or held shares with large public companies.
It is common that a person will own several shares in one company, sometimes hundreds. You will need to work out the total value that’s held in one company. You can use the value of a singular share (at the closing price on the date of death) to work out the total value of the shares they owned with that company.
The process of collecting information and valuing can take some time and can sometimes be a quite confusing. Especially if there are several shareholdings, investments, or portfolios of shares. In these circumstances it’s recommended to use a professional valuer or stockbroker. Using a professional can speed up the process and reduce the risk of providing HMRC with incorrect values or calculations.
An ISA (Individual Savings Account) is valued at the closing price of the accounts on the date of death. You can directly request a valuation from the Institution holding the ISA. If part of a portfolio of investments, the Fund Management company can provide valuations. This process would be the same for PEPs (Personal Equity Plans) and TESSAs (Tax Exempt Special Savings Accounts).
Valuing NS&I’s and Premium Bonds
National savings and Investments or premium bonds can be valued by NS&I. They will ask you for any information you have about the deceased’s holdings with them. The more information you have the quicker and easier it will be for them to track down the investments. You should look for Passbooks, Bonds, Certificates or other records in the deceased’s paperwork. These documents can be used to help value the investments.
If you believe that the deceased held NS&I’s or Premium bonds but cannot locate any physical documentation you can use NS&I’s tracing service. This will highlight any investments that the deceased held with them.