What Do I Need to Value During Probate?
20 June 2019
After someone dies, everything they own (collectively called their Estate) will need to be valued. This valuation is used to calculate Inheritance Tax and may also be needed to work out how much residuary beneficiaries are entitled to.
So where do you start? Valuing everything a person owned can seem like a daunting task, but there are systems you can follow and it's not necessary to go through and value every individual possession in their home. This article explains what exactly should be included in an Estate valuation, and how to go about getting certain items valued.
How to Value an Estate
You'll need to make a complete list of all of their assets, including any properties they owned, the contents of their bank accounts, their vehicles, shares they held, and anything else of significant value such as jewellery, artwork or antiques. General household items along with furniture and clothing usually won't be worth much to sell on.
Depending on how organised the deceased was, this could involve a significant amount of detective work. You can either choose to take this on yourself or you can instruct a Probate Specialist to help you.
Banks Accounts, Shares and Premium Bonds
The first step that you should take when valuing an Estate is to look through the deceased's paperwork. This could help you to find out which banks they held accounts with, as well as details of any stocks, shares or premium bonds that they owned. You'll also need to establish whether the deceased held a life insurance policy and who their pension provider was.
Speak to friends and family members to see if they can provide any more information to help you. Also get in touch with any professionals that the deceased may have dealt with, such as Solicitors or Accountants, as they could have these details on file.
Once you've identified all of the relevant organisations, get in contact with them to notify them of the death and ask them to confirm the value of the assets held with them.
They will not release the deceased's assets until you can prove that you have legal authority to deal with the Estate. Depending on the value of the assets, you may require a legal document from the Probate Registry for this purpose. This document is normally called a Grant of Probate if the deceased left a Will or a Grant of Letters of Administration if they didn't.
For more information, see Bank Limits for Probate.
If you suspect that there may be other assets owned by the deceased that you have not been able to locate, see our article Locating Hidden Assets during Probate.
The Property and its Contents
The most significant asset in many Estates will be the deceased's property (if they owned this in their sole name). In order to get a property valued for Probate, you may wish to speak to a Chartered Surveyor. A Surveyor should be able to calculate a specialised valuation for Inheritance Tax purposes, meaning the valuation can be more likely to be accepted by HMRC.
They will take into account factors such as repairs or renovations that are needed on the property as well as any development opportunities.
Calculating the value of the house's contents is a little more complicated. In many cases, the contents of a house may not be worth as much as expected. Items which were expensive new may not be worth much at all anymore. However, some items could surprise you and be worth more than you think.
The first step to take is to list out all of the items that might hold value. This list might include vehicles, antiques, collectibles, high quality jewellery, and relatively new furniture or appliances.
For the more common items, look online to see how much similar second hand items are being sold for. This should give you a good indication of their worth. Bear in mind, some jewellery may be worth more as scrap gold or silver, rather than being sold as jewellery.
For antiques and collectibles, it's worth seeking advice from a specialist who can provide you with a professional valuation. They may also be able to arrange to sell the items on your behalf.
Once you have calculated the value of the deceased's assets, you need to also calculate the value of the debts. This value will then be deducted from the value of the assets to leave you with the overall value of the Estate.
Debts (or liabilities as they are commonly referred to in Probate) will include anything that was owed by the deceased at the time of their death.
Examples might include:
- Outstanding mortgage on their property
- Credit card bills
- Outstanding loans
- Care fees
- Utility bills
- Tax bills
Again, you will need to find out which companies the deceased dealt with in order to establish how much money is owed from the Estate. You can apply the same methods as above to do this, such as looking through their paperwork and speaking to friends and family members.
It's also advisable to place a Statutory Advertisement in the Gazette and a newspaper local to the deceased, which gives any creditors of the deceased an opportunity to come forward and can protect you from personal liability for unknown debts.
Calculating Inheritance Tax
Once you've calculated the total value of the Estate, you'll need to provide this figure to HM Revenue & Customs and calculate whether any Inheritance Tax is due (and how much if so).
When calculating the Estate's Inheritance Tax liability, it's important to note that there is more to factor in than just the Estate value. For example, if the deceased has made any gifts during the seven years leading up to their death then these may also need to be taken into account for Inheritance Tax purposes. For more information, see Are Lifetime Gifts Subject to Inheritance Tax?
Another factor that can affect the Estate's Inheritance Tax liability is who the beneficiaries are. This is because gifts to exempt beneficiaries will not be liable for Inheritance Tax, and if over 10% of the Estate is being gifted to charity then this will further reduce the Inheritance Tax liability.
If Inheritance Tax is payable, then if you are the Executor or Administrator of the Estate, you will be responsible for paying this from the Estate. If you make a mistake in the Estate valuation or Inheritance Tax calculation then it's important to note that you could be held personally liable for these mistakes.
With our Probate Complete Service, we can take care of the Estate valuation for you, along with the administrative, legal and tax work associated with the Estate.