It’s understandable that you would want to leave as much money behind for your loved ones as possible, when you pass away, so you can provide for their future. It’s important that you familiarise yourself with the probate process, so you can write a will which is sure to benefit your loved ones. Helping you navigate this area, Prestige Tax and Trusts asks: what counts as an asset for probate?
Valuing your estate
If you have written a will, then your executors must apply for a grant of probate, to gain the right to administer your estate to your beneficiaries. As part of this probate process, your executors will need to value your estate, to determine whether it owes a 40% inheritance tax to the government, which it does if the value of the assets held in your estate eclipses a certain threshold (currently £325,000).
Identifying probate assets
This begs the question, what qualifies as an asset for probate purposes? It is crucial that you understand what an asset is within this context, so you can write the kind of will needed to ensure that your executors can conduct probate quickly. The following assets count as an asset for probate…
- Any property or land you own, either as an individual or with other people. In the latter case, if you own the home as ‘tenants in common’ only your share in the property is an asset.
- This applies to any cash you have in a bank account, building society or savings account, and any cash that is not in a bank account needs to be paid into one by your executor.
- Property fixtures. If you owned any property fixtures, e.g. furniture such as sofas, then these items count as assets for the purposes of probate, and should be included in estate valuations.
- Other possessions. This encompasses a wide range of items – basically anything with monetary value, including collectibles, jewellery, books, artworks etc.
- Unpaid wages: If your employer owed you any outstanding wages, when you died, they rightfully belong to you, and your executor should claim them and include them in your estate.
- Benefits: Do you receive any benefits, such as jobseeker’s allowance, or get state pension pay outs? Any of these payments you receive prior to your passing are probate assets.
- Investment products. This applies to any shares, stocks, premium bonds and national savings certificates that were in your possession when you died.
- Business assets. If you ran your business as a sole trader, all the assets you possessed as the company owner are probate assets. However if you had a business partnership, this is automatically dissolved when you die, and any shares you owned go into your estate.
Considering other assets
The list of things which count as an asset for probate is extensive, however there are some assets which may not fall into this category. If you took out a life insurance policy, for example, and it was written in trust, it can be paid out immediately, as it is not subject to inheritance tax, so it does not count as an asset for probate. However, if it is not written in trust, your life insurance policy is an asset.
We should also mention that you can have ‘nominated assets,’ which are a specific type of assets that you choose to bequeath to someone in particular, and are treated differently than other assets for inheritance tax purposes. This only applies, however, to any deposits you made in friendly, industrial and provident societies (with a maximum value of £5,000), or any national savings investments you owned, which are dated at 28th February 1981 or earlier, so nominated assets are a rare phenomenon.
Prestige Tax and Trust Services
Writing a will can be an effective way of making sure your loved ones are taken care of, when you’re no longer here. But your executors will need to apply for probate, before they can do anything else, and this can be a legally complex process, so it is handy to have expert help. We are experts in will writing, so we can ensure your will lists all the assets required to make it as easy as possible for your executors to complete probate and give assets to the special people in your life, when you pass away.