Bonds After Death
Valuing and Handling a Bond Portfolio
Bonds tend to sit quietly in the background of someone's finances, less talked about than a house or a pension, but often just as significant when it comes to valuing an estate.
If the person who died owned bonds, whether government gilts, corporate bonds, fixed rate bonds or investment bonds, they will almost always form part of the estate and need to be properly identified and valued before Probate can be completed.
It is not usually complicated, but it does involve a few steps that are easy to miss if you have never dealt with this kind of investment before.
Types of Bonds
The person who died may have held government bonds, sometimes known as gilts, corporate bonds issued by companies, fixed rate savings bonds offered by banks and building societies, investment bonds sold through financial advisers, or older style savings bonds.
Each type sits with a different provider and follows its own process once notified of a death, so the first job is simply working out exactly what was held and where.
Valuing Bonds
Getting an accurate valuation matters for several reasons. It helps establish the overall value of the estate, feeds into the Probate documentation itself, is needed for preparing estate accounts, and ultimately ensures beneficiaries receive what they are actually entitled to. For most bonds, the value used is based on the market price on the date of death, rather than the price on the day you happen to get around to checking.
For UK Government gilts specifically, valuations are handled through the Debt Management Office, with Computershare acting on its behalf, and current and historic gilt prices can be checked directly on the Debt Management Office’s website, which is worth knowing if a provider is slow to respond.
Where the estate includes a more complex mix of investments, professional advice can genuinely help, particularly if you are not confident reading bond pricing or working out accrued interest.
Redeeming or Transferring Bonds
What happens to a bond once it has been valued depends on both the type of bond and what the will says.
Some bonds are redeemed, meaning cashed in, with the proceeds added to the estate to be distributed. Others can be transferred directly to a named beneficiary, allowing them to keep the investment running rather than cashing it out immediately. In some cases, bonds simply remain invested until the wider administration of the estate has been completed, particularly where a decision on redemption has not yet been made.
Whichever route is taken, executors should keep clear records of every decision and transaction, since beneficiaries are entitled to see how and why choices were made.
Does the Estate's Value Affect Whether Probate Is Needed?
Often, yes. Many providers apply their own threshold below which they will release funds without seeing a Grant of Probate, though this varies considerably between institutions and is generally somewhere between roughly £5,000 and £50,000.
If the total value of bonds and other assets in the estate is relatively small, it may be possible to deal with a specific holding without waiting for the full Grant, though it is always worth checking each provider’s own rules directly rather than assuming.
A Detail Worth Knowing: Loss Relief If Values Fall
One detail that catches a surprising number of executors out is what happens if bond or share values fall between the date of death and the date they are eventually sold.
HMRC allows a specific relief in these circumstances, meaning beneficiaries are generally taxed on what the estate actually received rather than the higher value recorded on the date of death, provided the qualifying assets are sold by the appropriate person within a set period.
This is a genuinely useful protection during volatile markets, and it is worth asking a solicitor or accountant whether it applies if bond values have moved significantly since the date of death.
Compare Probate Solicitors Near You
Find a Funeral will soon help executors compare experienced probate solicitors who can advise on bond investments, Probate and estate administration.
Yes. Most bond investments form part of the deceased’s estate and need to be identified, valued and included when working out the estate’s total value for Probate and Inheritance Tax purposes.
Some bonds can be transferred directly rather than cashed in, depending on the provider’s own rules and what the will says, though this varies by provider so it is worth checking directly.
Where the estate includes valuable or complex investments, professional advice can help ensure everything is valued correctly and administered properly, particularly with government gilts or investment bonds involving accrued interest.
Most bonds are valued using the market price on the date of death, which for UK Government gilts can be checked directly through the Debt Management Office’s published price data.
HMRC offers a specific relief that can allow beneficiaries to be taxed on what the estate actually received when qualifying assets are eventually sold, rather than the higher value recorded on the date of death, provided they are sold within the qualifying period.
Related Resources
- Pensions After Death
- Life Insurance After Death
- What Is Probate and When Is It Needed?
- Investments After Death (coming soon)
- Shares After Death (coming soon)
- Premium Bonds After Death (coming soon)