Valuing all the chattels in an estate can become a mission-critical exercise for a deceased-estate executor. Or an individual drafting their will for that matter. You see, when someone dies in England, everything they own becomes part of their estate for inheritance tax purposes.
This ‘everything’ includes not only property and money, but also chattels. Most people view chattels as the owner’s everyday movable items, such as jewellery, watches, artwork, antiques, vehicles, and household contents for example. However, there may be more to chattels than this.
Why Valuing All These Chattels Matters
Many of us underestimate the value of our chattels, because the property we own is normally our major asset. But what happens if we underestimate the value of our chattels, and declare a total inheritance tax value which turns out to be simply not true?
It works this way down at the tax office. The officials value chattels at their open market value. This means that granny’s jewellery is not valued at the original purchase price. It’s value is whatever it would reasonably and unemotionally sell for today
If We Value Chattels Incorrectly Then …
Valuing chattels in an estate is a two-edged sword. If we undervalue them, then a tax official has the right to charge penalty interest. If, on the other hand, we value them too high, then our estate may end up paying more tax than necessary and leaving less to our heirs.
Of course, these subtleties may not matter if we own a property that’s not worth anywhere near the current inheritance tax threshold. Although, possibly, it could be wise to give Jeffrey Avery a call if you own paintings, collectibles, or designer jewellery.
Accurate valuations can also help avoid family disagreements. When items are fairly priced, executors can divide estates more easily, and ensure everyone is treated fairly. Valuing chattels correctly ensures the right amount of tax is paid over, and that’s very important too.
Valuing All The Chattels in England
The law in England says that chattels include all forms of personal, movable property. ‘Movable’ distinguishes chattels from land and fixtures. A wise executor may find the following check list handy, to be sure they are valuing all the chattels in an estate in England.
There Are Two Main Classes of Chattels
CHATTELS REAL
This rather archaic term refers to interests in land, that English law treats as personal property rather than real property. ‘Chattels real’ interests include:
- Leasehold properties with fixed-term leases.
- Tenancy rights including rights of occupation.
- ‘Profits à prendre’ rights to extract minerals.
- Property rights granted to a non-owner.
- Time-share interests relating to land.
English law treats time share interests as personal property, even though they relate to fixed property.
CHATTELS PERSONAL
‘Chattels personal’ are equally important when valuing all the chattels in an estate for inheritance tax purposes. This class has two subdivisions, namely physical objects (‘choses in possession’) and enforceable rights (‘choses in action’).
Tangible Chattels (Choses in Possession)
NB: The lists that follow are just examples of objects that we could touch. A prudent executor takes videos and photographs during site inspections, to make sure they have spotted everything.
HOUSEHOLD AND PERSONAL GOODS
- Furniture, appliances, and clothing.
- Electronics, books, and tools.
- Personal medical equipment.
- Etc.
VEHICLES & TRANSPORT
- Cars, motorcycles, bicycles.
- Boats, submersibles, aircraft.
- Etc.
LIVESTOCK AND ANIMALS
- Pets, horses, and farm animals
- Etc.
BUSINESS MACHINERY & EQUIPMENT
- Industrial machinery.
- Agricultural equipment.
- Construction plant.
- Etc.
BUSINESS STOCK-IN-TRADE
- Raw materials.
- Work in progress.
- Finished goods.
- Etc.
MONEY AND CURRENCY
- Cash (notes and coins in circulation)
- Collectable currencies in mint condition.
VALUABLES AND COLLECTIBLE ITEMS
- Jewellery, art, and antiques.
- Coins and precious metals.
- Etc.
Choses in Action (Intangible Chattels)
It is important to remember our intangible rights too, that are enforceable by legal action. Especially when valuing all the chattels in an estate for inheritance tax purposes.
FINANCIAL RIGHTS
- Bank account balances.
- Shares, bonds, and unit trusts.
- Pension entitlements.
- Etc.
CONTRACTUAL RIGHTS
- Debts owed.
- Rent receivable.
- Insurance claims.
- Royalties.
- Etc.
INTELLECTUAL PROPERTY
- Copyrights and patents.
- Trade marks and design rights.
- Etc.
DIGITAL ASSETS
This emerging category currently embraces the following:
- Domain names.
- Cryptocurrency.
- Non fungible tokens.
- Digital wallets.
- Etc.
Final Thoughts on Chattels in Estates
We hope you find this list useful when valuing all the chattels in an estate. The same principles apply, whether you are a deceased estate executor, or planning your own last will and testament.
Valuing yoru chattels correctly should guide you to making the right decisions at this critical point. Remember Avery Associates are here, if you need help valuing those chattels that concern you.
Knowing the market-related value of these possessions will help you reach the right decisions at this critical moment. Why not contact Avery Associates now, for professional advice that’s affordable and documented in writing.
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