The immediate period following the death of a relative or close friend can be extremely upsetting. Rational thinking is necessary so that the deceased’s affairs can be resolved as quickly as possible and all the intended financial beneficiaries can receive their share.
Why Do I Need a Probate Valuation?
After a family member has passed away, their estate will need to be valued so that a Grant of Representation (the legal right to deal with the estate) can be obtained.
The purpose of carrying out a probate valuation is to:
- ascertain an accurate value of the estate left behind by the deceased
- enable the executor to assess whether there is sufficient value in the estate to cover any liabilities left by the deceased
- calculate how much (if any) Inheritance Tax is payable on the deceased’s estate
Inheritance Tax (IHT)
Inheritance Tax is only payable if the estate was worth more than £325,000 at the date of death. This is called the Inheritance Tax threshold or ‘nil rate band’, and is set by the Government.
Married couples and civil partners can make gifts of any value to each other during their lifetime that are not subject to Inheritance Tax. This is known as ‘spouse of civil partner exemption.’ An estate is also IHT exempt if the deceased left everything to their wife, husband or civil partner who is permanently a resident in the UK.
The executor of the Will or administrator of the estate typically has to pay any Inheritance Tax due by the end of the 6th month after the date of death, or interest will be charged on the outstanding amount.
Professional Probate Valuations
Since any estate can be subject to IHT, a RICS Chartered Surveyor will need to carry out a probate valuation, on an impartial basis. This type of report is usually referred to as a Red Book Valuation.
Estate Agents are not bound by the same rules and regulations as Surveyors, who will face recourse if their probate valuation turns out to be incorrect.
Even if it is your intention to sell the property, you will still be required to submit a Surveyor’s Report with a professional probate valuation in order to obtain probate. Probate will need to be granted so that the ownership of the asset can be transferred to the beneficiaries – no sale can take place without probate.
If the eventual sale price of the property is found to be noticeably different to that of any probate valuation, this is likely to be picked up by HMRC and the Surveyor will have to justify his valuation or revise the figure if necessary.