IHT nil-rate-band when assets appreciate after death

[Chris Jordan]

Can Executors can distribute assets which respect the “nil rate band” in valuations at the date of death, but which are worth significantly more in today’s values without incurring inheritance tax?

I would welcome guidance on this point because my mother died a year ago and some of her shares have now appreciated significantly. The balance of her estate passes to her husband and so will not attract IHT.

[bob.fraser@towrylaw.]

The valuation is based on the date of death. For quoted shares (I am assuming that the shares are listed in the main market) the normal way of calculating the value is the average of the highest and lowest prices for deals executed on the date of death. If the death occured on a non-trading day, reference is made to the latest previous day or the next following trading day (using whichever provides the lower figure).
Any subsequent gain is not liable to IHT (but may be caught by CGT on those who inherit the money)

[bob.fraser@towrylaw.]

PS the reference is TCGA 1992, s272 (3)

[robertmlaws]

With regard to CGT. The estate can pass the shares to beneficiaries at probate value, in which has the beneficiary will bear the CGT, or they can be sold by the estate and the money passed to the beneficiary, in which case the etstate will bear the CGT.

Since the estate has its own CGT allowance (for 3 years IIRC) there is clearly a calculation to do to decide what sequence of sales and transfers will minise the total CGT bill.

Robert