Valuation Date

Significance

The valuation date is the date on which the value of the property and assets is established.

It determines which date the tax is payable and when the  CAT returns are due to be filed. Where the valuation date is:

• between 1 January and 31 August, the pay and file deadline is 31 October in that year
• between 1 September and 31 December, the pay & file deadline is 31 October in the following year.

The valuation date is important in a number of contexts with gift and inheritance tax.  The concept can be ambiguous, particularly in the case of inheritances.  It is generally clearer in the case of gifts.

Broad Overview

The valuation date

• for a gift is generally the date of receipt
• for an inheritance is the earliest of the date:
  • the date the executor or administrator is entitled to retain the asset for the beneficiaries
  • the date on which the asset is retained
  • the date the executor or administrator transfers the asset to the beneficiary
• is the date of death if:
  • for a  gift in anticipation of their death
  • where there is a failure to exercise a power of revocation
  • the property passes by survivorship on the death of a joint tenant

Actual Receipt Date

The valuation date of a gift is generally the date of the transfer of the asset. The giving and the receipt will be one.

The transfer to a trust will not generally be a valuation date until assets are transferred or appointed out. In the case of appointment from the trust assets, the valuation date is the date on which the assets are appointed (transferred) to the beneficiary.

There need not involve the transfer of legal title.  The valuation date is the date when the assets go from being held under a discretionary or other trusts, to being held unconditionally by the trustee for a particular beneficiary.

Automatic Passing

In the case of jointly owned property, the valuation date is the date of death.

The valuation date will usually be the date of death, where there is a failure to exercise a power of revocation. There may have been a separate limited benefit before that date.

In the case of a donatio mortis causa, a gift in contemplation of death, an inheritance taken by the recipient, the date is when the person giving it dies. Where a person has the power to revoke a benefit, the date is the date of death of the donor or other person.

In the case of settled interests, such as rights which pass automatically from a tenant for life to a successor,  the date of death of the life owner is likely to be the valuation date.

Probate & Administration

See the sections on succession on the manner in which assets pass on death.  Legal and beneficial title passes initially, in most cases, to the legal personal representative, be it an executor or administrator.  The executor or administrator has duties to get in the assets and ultimately distribute them or the proceeds of sale in accordance with the will or the intestacy rules.

In the case of an inheritance from an estate, the valuation date is the earliest date when the personal representative or trustee is entitled to retain the asset for the benefit of the beneficiary, either legally or beneficially, i.e. on his own behalf.

The valuation date does not arise until the particular asset is “retained” for the benefit of the successor. The benefit may be ascertained and available for the successor even if it is not actually transferred. This will usually be the point at which the beneficiary has a beneficial interest.

If the date of actual retention predates the entitlement to retention, then the former is the valuation date. In any event, if an asset is paid or delivered or transferred, then this would be the valuation date, even if it is earlier.

There may be several valuation dates for different types of asset classes and circumstances in one estate.

Early Valuation Dates

In some cases, the valuation date may precede the grant of probate or the executor’s year.  In the case of jointly owned property, the valuation date is the date of death.

The date on which the asset is retained may be the date of delivery or payment to or the satisfaction or discharge of the obligation to the successor. If monies are advanced to a beneficiary prior to probate, this may be the valuation date in respect of that payment.

Where the beneficiary is in actual possession of the assets, such as in the case of a bequest of a particular property, the date of death is usually the valuation date. If the estate is solvent and there is a bequest, the valuation date may be the date of death.

Probate Commonly Required

The issue of a grant of representation is usually a prerequisite to the transfer or entitlement to transfer the assets from the estate. Generally, an executor or other personal representation may not be subject to proceedings to enforce the administration or distribution of the estate assets within a year of death, at least without the consent of court.

It could be argued that the asset is not retained until that time.  Therefore, the valuation date will most commonly not be until the grant of probate or letters of administration.

In the case of a bequest of specific assets, the beneficiary may be deemed to be entitled to it from death, at least if it is clear that the estate is solvent and it will not be required to pay debts or liabilities.  In this case, the valuation date may be the date of death.

A contrary argument may be accepted that a grant of representation is required before the valuation date arises.  However, as against this, the definition focuses on the retention and availability, in fact, rather than the right of the beneficiary to enforce the distribution.

The Revenue can agree or determine the valuation date. They may allow it to be the date of grant of representation by way of concession.

Estate Specific Factors

The date of ascertainment of the residuary may often be the valuation date, as it is the point in time the extent of the shares is known. It is possible that there are different valuation dates for different parts of the residue.  Accordingly, as assets and elements of the estate are ascertained and fixed, then there may be valuation date referable to them with later valuation dates in respect of the remaining elements.

In some cases, an external factor, such as the existence of contingent liabilities or litigation, may postpone the valuation date.  The executors may not be in a position to distribute the estate where proceedings are a risk or are pending, given his prospective personal liability.

This might commonly arise in relation to a possible claim for a legal right share or a S.117 application by a child. The will itself may be challenged in a probate action.

In some cases, the executor may have responsibility for tax, such as where the beneficiary is resident abroad. In this case, the valuation date may be postponed in part or in whole pending clearance.

Administration

Technically a will is valid from death, and there is power to act under it. The grant of probate is a practical necessity as proof of the validity of the will as a true and last will of the deceased.

In contrast, the assets of the deceased technically vest in the President of the High Court and the letters of administration vest entitlement as on their date, but not earlier. As a general proposition, the valuation date in the case of letters of administration is less likely to be  before the grant than in the case of probate.