Valuing
shares for probate is a crucial step in administering an estate in the UK.
Probate is the legal process of managing the estate of a deceased person, and
accurate share valuation is essential for correctly calculating inheritance tax
and ensuring fair distribution among beneficiaries. When valuing shares for
probate, the key principle is to determine the market value at the date of
death. This value reflects what the shares would reasonably fetch if sold in
the open market. The process varies slightly depending on whether the shares
are publicly traded or held in private companies.
Publicly Traded Shares
For shares
listed on a recognised stock exchange, the valuation is relatively
straightforward. The value is typically the mid-market price on the date of
death. This is the average of the highest and lowest selling prices of the
shares on that day. If the death occurred on a non-trading day, the closing
price on the last trading day before the date of death is used.
Private Company Shares
Valuing
shares in a private company is more complex, often requiring a professional
valuation. Factors such as the company’s assets, liabilities, earnings, and
potential future performance are considered. An independent valuer, such as an
accountant or specialist valuer, usually undertakes this process to ensure an
accurate and fair valuation.
It is
essential to document and report these valuations accurately in the probate
application to HM Revenue and Customs (HMRC). Incorrect valuations can lead to
penalties or delays in the probate process. Consulting with legal and financial
professionals can ensure compliance with all requirements and facilitate a
smoother probate process.