Executors – What Is An Asset?

When a loved one passes away, executors are tasked with the responsibility of managing their affairs, including handling their assets. But what exactly constitutes an asset, and why is it important for executors to understand this concept? For Executors dealing with an estate, identifying what an ‘asset’ is within an estate can be more complex than you first imagine. It is essential that ‘assets’ are correctly identified so that the winding up of the estate runs smoothly through confirmation/probate being applied for with the correct ‘assets’ noted.

In this discussion, we’ll take a closer look at estate assets and their significance in the context of estate administration. From properties and bank accounts to investments and personal belongings, assets encompass a wide range of items that hold value – both financial and sentimental.

We will delve into practical considerations such as how assets are valued, the executor’s role in safeguarding them, and the steps involved in distributing them to beneficiaries. We’ll also touch upon legal obligations like pay inheritance tax and income tax and the importance of fulfilling the deceased person’s wishes.

This blog will outline the main types of ‘assets’ that Executors should look out for when dealing with estate accounts.

Property Asset

One of the most common types of asset is property. If the person lives in the property when they pass away then this will be classed as ‘heritable property’ for the purposes of confirmation/ grant of probate applications. If the person has an outstanding mortgage on the property then their interest in the property would be noted on the confirmation/probate and then the outstanding mortgage would be deducted from the total value of the estate as a dept.

Moveable assets are generally considered all assets that do not fit the category of heritable property. This will include things like bank accounts, bonds, cash, shareholdings, premium bonds, life assurance policies, personal possessions, and the contents of the properties.

Digital Assets

What constitutes a digital asset is ever-evolving. People may not think they possess any digital assets but with the huge shift toward a digital world, these assets are very common. Digital assets include things like social media accounts, digital photos, and cryptocurrencies. Most digital assets will not have a significant financial value but they have a huge sentimental value to the family of a deceased person.

All assets, even if they are located in a foreign country, require to be noted on the confirmation/probate documents. This would include holiday homes, foreign shareholdings, and any foreign bank account. It is likely that the foreign equivalent of confirmation/probate may be required to deal with the foreign assets and the Executor should seek legal advice in the foreign country in relation to this.

It is essential to know if the deceased made any gifts in the 7 years before they passed away. If they did, then the value of such gifts may be added to the deceased’s estate for the purposes of working out if any inheritance tax is owed from the estate.

Inheritance tax

The Executor must consider all gifts made by the deceased whilst reserving some form of benefit for themselves. This would include trusts, where the deceased is a beneficiary, and property that has been gifted to children in which the deceased still lived without paying rent. These are both important when creating an accurate asset inventory for inheritance tax purposes.

There may be other assets such as business assets owned by a deceased person, it is therefore essential for Executors to consider all assets held by a deceased person before applying for confirmation/probate.

Conclusion

Estate assets play a central role in the administration of a deceased individual’s affairs, and understanding them is essential for executors tasked with this responsibility. From property and finances to sentimental items, assets encompass a broad spectrum of belongings that hold significance to the deceased and their beneficiaries. Throughout this discussion, we’ve highlighted the importance of executors being familiar with the nature and value of these assets, as well as their legal obligations in managing and distributing them appropriately. By gaining a clear understanding of estate assets and their implications, executors can navigate the probate registry process with confidence, ensuring a fair and orderly resolution of the deceased person’s affairs.

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