What is a Probate Valuation?

Probate Valuations - Trinity Sales Wakefield

A probate valuation is required to value the estate of a person who has died and to work out whether any inheritance tax is due. The estate is made up of the property, possessions and money of that person. Even if it is obvious no inheritance tax is due a probate valuation calculation must still be made so any assets can be counted and divided amongst those designated in the will.

In many cases, the person's property will be the major asset in their estate. Families or whoever is the beneficiary of the estate, when getting a probate valuation on a property they have inherited may be hoping for a low valuation. While this may seem odd - after all a higher valuation indicates you will get more money for the property which most people would want - there will be most likely be more inheritance tax due on highly valued properties, if the person's estate as a whole is valued at over £325,000. So a low valuation will mean less inheritance tax is due on those estates.

However, HMRC have clamped down on beneficiaries seeking out low valuations for this reason and they face fines of up to 100% of the extra tax liability, plus the cost of the extra tax.

The valuation of a property for probate purposes will be based on its open market value, using sound local comparable sales evidence, on the date of transfer - usually the date the deceased died. If the deceased gifted the property to the beneficiary in the seven years prior to this date then the date the property was gifted is the date of transfer.

If there is any inheritance tax due this needs to be paid from the end of 6 months after the death of the person whose estate is being valued. Therefore the beneficiary may need to sell the property quickly to release some funds to pay the required tax.

It is a good idea to seek the advice of a tax advisor.

At Trinity we offer formal written property valuations for probate purposes for just £50 inclusive of vat. Standard property valuations may not stand up to scrutiny if challenged. General estate agent valuations are based on today's valuation which could be significantly different compared to the date of death (it's not uncommon for probate to take over 12 months for instance). Additionally a general property valuation by estate agents could be a valuation for winning the business (naughty but very common). This could by 5-10% above the property's true value and lead to unnecessary tax or just misleading beneficiaries of the true value of any property in the estate.

If you are an executor or helping an executor of the will we have lots of experience of dealing with such matters, from giving general advice such as arranging unoccupied homes insurance if the property is empty, to giving formal property valuations for the purposes of valuation right the way through to selling or letting any property on behalf of the executor or beneficiaries.

Please contact us for more information on these services.

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Published on 24 September 2015

Source Trinity Sales Wakefield

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