Obtaining details of assets and liabilities 47
the foreign property is situated may be such that some tax must be paid
abroad. If this is the case, the personal representatives may have to deal
with the payment of the foreign tax and then deal with claiming some
credit for this if there is a UK inheritance tax liability. If the property needs
to be valued or sold, then expenses may need to be incurred and these may
be deductible from the estate, as a liability.
Types of liabilities in the estate
Liabilities and debts of the estate are anything the deceased person owed
at the time they died. Sometimes liabilities also need a valuation for the
correct amount to be obtained. The personal representatives should nd
details of the liabilities when sorting through the deceased’s paperwork,
but they may also need to contact relevant organisations such as utility
companies to ascertain the amount owed to the date of death.
The personal representatives should review any mortgage statements to
ascertain the relevant information needed. Types of mortgage include:
Endowment mortgages, where only the interest on the loan is paid to
the mortgage provider each year. In addition to having the mortgage,
it is likely that an endowment policy, which is a form of life insurance
and investment policy, was taken out to pay off the mortgage at the
end of the term. If this is the case, then the value paid out by the
endowment policy will be included in the estate.
Capital repayment mortgages are those where some of the capital of
the mortgage (some of the outstanding balance) is paid in addition to
the accrued interest each year. In this case, the outstanding balance
will not automatically be paid off on death. The outstanding balance
can be deducted from the estate as this will need to be paid back to
the mortgage provider. Sometimes the mortgagee (person taking out
the loan) takes out an insurance policy to provide funds to pay off the
mortgage. For instance, to avoid the sale of a property if this is still
required to provide for family etc. If a life insurance policy was taken
out, this should be included in the estate.
Joint mortgages: Many couples own a property jointly and have a
mortgage in both of their names. If this is the case, only deduct the
deceased person’s share of the mortgage.