Asset Valuation Problems – Chattels

chattels
Asset Valuation Problems – Chattels

In the administration of an estate, the valuation of the deceased’s personal property is a growing challenge for executors. In probate terminology, chattels refer to ‘everyday’ assets such as furniture and common possessions, as opposed to real estate and investments. These latter assets are relatively easy to value as estate agents and other specialist valuers can be called upon, and in the case of listed investments, their market values at any moment in time are readily available.

An increase in wealth and estate values has drawn a growing number of estates into the inheritance tax (IHT) net, which presents a challenge. Where the value of the estate is significantly less than the IHT threshold (£325,000 for 2016/17), even a relatively optimistic valuation of the chattels is unlikely to result in an IHT liability. However, when IHT must be paid, a reasonable and justifiable open market value must be determined.

A second aspect of the rise in living standards is that it is now more common for individuals to possess valuable personal property than it was in the past. Many households may have an insured value for ‘contents’ that is significantly lower than the actual value of their domestic contents.

When valuing assets for probate purposes, the appropriate valuation is the ‘open market value’—the p price at which they could be sold to a willing buyer or willing seller. If specialised assets, such as works of art, stamps, books, and coin collections, are likely to be of significant value, they should be appraised by a professional appraiser. Automobiles can be appraised using a trade guide, and vessels can be appraised by a yacht broker.

Any items specifically mentioned in the will should be valued separately, and as a general rule, items worth more than £500 should be evaluated separately. In some instances, the value of extensively traded items (such as musical instruments) can be determined by referencing the prices at Internet auctions.

When there are a number of chattels, some of which may be valuable and some of which are not, and it is difficult for the executors to determine the relative value of each, this is a growing issue. When the executor is likely to have the home’s contents removed, it is possible for valuable items to be sold for pennies on the dollar or even discarded.

When distributing personal property (e.g., when there are three children, each entitled to a third of the personal property), it is also essential to know the values, as the distributions must be equal unless the beneficiaries agree otherwise. Due to the fact that many assets are in the form of sets (such as China and furniture), horse-trading may be necessary, and knowing the values of the various chattels will be useful.

by DLS Solicitors
Law
3rd October 2023
DLS Solicitors

Our team of professionals are based in Alderley Edge, Cheshire. We offer clear, specialist legal advice in all matters relating to Family Law, Wills, Trusts, Probate, Lasting Power of Attorney and Court of Protection.

All author posts
Related Posts
  • equity release
    A Guide To Equity Release

    DLS Solicitors offers a comprehensive guide to equity release, helping you understand the process and implications. Explore our concise overview to grasp the benefits, risks, and legal considerations associated with releasing equity from your property.

  • What Happens To A Will After Probate Is Completed?
    What Happens To A Will After Probate Is Completed?

    Welcome to DLS Solicitors, where we aim to provide comprehensive guidance on the intricacies of probate law and how it impacts the administration of wills in the United Kingdom. Understanding what happens to a will after probate has been completed is crucial for executors and beneficiaries alike. This guide walks you through the post-probate process,

  • What Is Inheritance Tax (IHT)?
    What Is Inheritance Tax (IHT)?

    Welcome to our comprehensive guide on Inheritance Tax (IHT), designed to provide you with a clear understanding of what IHT is, how it works, and the various considerations and strategies you might employ to manage its impact. At DLS Solicitors, we are committed to offering professional and practical advice to help you navigate the complexities

  • Understanding The Differences Between Legal Separation And Divorce
    Understanding The Differences Between Legal Separation And Divorce

    Legal separation and divorce are two terms that are often used interchangeably, but they actually refer to two distinct legal processes. Understanding the differences between legal separation and divorce can help you make informed decisions about your relationship and future. In this guide, we will explore the key differences between legal separation and divorce in