“If I am an executor to my father’s estate, and the shares have fallen 18pc since his death, will I have to pay inheritance on the value at his death, even though I will be selling them for far less?”
Beneficiaries are often caught out if there has been a drop in share or property prices after the Inheritance Tax (IHT) has been paid.
Sean McCann of NFU Mutual says that IHT is calculated on the value of the assets at the time of death and is normally payable within six months. Fortunately, there is a straightforward process to follow to reclaim any overpaid tax.
“All qualifying investments sold by the executor in the 12 months following death have to be included in the claim, not just those that have fallen in value. This means that any gains made since your father’s death will reduce the amount of IHT that can be reclaimed.”
“If you, as executor, sell any ‘qualifying investments’ including listed shares, unit trusts or open-ended investment companies within 12 months of your father’s death and the value has fallen, it is possible to substitute the sale price for the value at the date death, and reclaim the excess IHT paid on the higher value”
“If some of the shares in your father’s estate have increased in value since death, it may be possible to pass these direct to the beneficiaries named in the Will rather than sell them. This will allow you to make a claim only for those shares that have fallen in value, ensuring you claim back the right amount of tax.”
Only the person liable for the tax – which will normally be the executor of the Will - can make the sale of the qualifying investment and the claim.