Valuation of Life Interests

Calculation of the value of a Life Interest

A life interest is an entitlement to an asset for the term of the beneficiary’s life. For example a life interest in a property would involve an entitlement to live in a property for life; a life interest in an investment portfolio may involve receipt of income generated by the portfolio for life.

On the death of the life beneficiary, the asset which had been subject to the life interest may be liquidated, and the proceeds distributed to the nominated capital beneficiaries. This interest in an asset, subject to the death of the life beneficiary, is the remainder or residual interest.

Assets are often required to undergo valuation – for example when the life beneficiary wished to sell his/her life interest. Another example is in divorce proceedings when one spouse has a life or remainder interest – such an interest may be deemed to be relevant in the distribution of assets, in which case a value needs to be placed on it.

Haintz Actuarial can prepare valuations of any form of life interest.