When is an asset not an estate asset?

Anything in the deceased’s name would presumably be an asset of their estate and logically most of the time this is true, however, there are times when assets in a deceased name are not part of the Estate.

For example, a joint account or a property held in two names jointly, automatically becomes the asset of the sole survivor and does not belong to the Estate. Confusingly however, when completing the inheritance tax return, formerly joint assets do need to be reported (even if they do not form part of the inheritance tax calculation).

Similarly, money in account opened by the deceased for a grandchild (where the grandparent is specifically named on the account as a trustee) does not form part of the Estate assets as it is deemed to have been a lifetime gift, but depending upon when the account was opened, it may still have to be reported for inheritance tax.

Gifts made within 7 years of a deceased’s death whilst not forming part of the Estate as an asset available for distribution, still have to be reported for inheritance tax purposes and if a deceased gave a gift during their lifetime, no matter how long ago they made the gift, if they have retained a beneficial interest in the gift (for example, putting a house in their children’s name but continuing to live in the house rent free) then it must be included for inheritance tax purposes.

So, determining what is an Estate Asset and what is not and what needs to be reported for tax purposes can be difficult, even without the possibility that there may be assets acquired in the past for which there is no paperwork, where nevertheless an Executor or Administrator is under a duty to search for potential missing assets and report them for Inheritance Tax purposes.

Expert professional guidance and assistance when identifying and understanding assets can be essential to a proper administration.

RMNJ are always glad to discuss any questions you have without obligation and at first instance entirely free of charge.

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