My late client died on 4th February 2020. He was the holder of this bond which was valued at that date in the region of £317,000. But the insurance company was not notified of the death until 17th March 2020, by which time the value of the underlying investments had fallen by about 20%.
The bond value was reported for IHT and tax paid on the basis of the date of death value as advised. However the settlement payment was based on the value at the date of notification, so my executor clients are some £63,000 short and have paid inheritance tax on the higher amount.
The company concerned is very reticent about providing me with the data used to calculate both the date of death figure and the settlement figure, but they have provided me with a certificate showing the chargeable gain calculated on the date of death figure, albeit that as an overseas insurer it is not a statutory certificate.
So on the face of it my clients are triply disadvantaged. They have incurred a loss; it does not appear to me to be relievable for inheritance tax under sec 178 IHTA- although I’d be very glad to know if anyone else has succeeded in claiming it in these circumstances; finally the deceased’s final income tax liability may be based on an unrealistic valuation and it’s not clear to me how I might utilise the loss against that.
Has anyone else encountered this problem before, and what were they able to do about it?
Gibbons Solicitors Limited
3 East Street
Tel 01962 736926
Gibbons Solicitors Limited is authorised and regulated by the Solicitors Regulation Authority No 617854
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