Estate valuation for probate: A comprehensive guide

Valuing an estate for probate

If you have been named as the executor of a will (or have been appointed as the administrator of an estate without a will), one of the first things you will need to do is calculate the value of the estate.

You will not be able to obtain a grant of probate (or letters of administration) – meaning you won’t be able to gain the authority to manage and distribute the estate to beneficiaries – without an estate valuation.

This is because a probate application requires completed Inheritance Tax forms, for which the total value of the estate must be known to determine whether Inheritance Tax is due, and, if so, how much.

Why do I need to get an estate valuation for probate?

Valuing an estate is a critical step to completing an application for a grant of probate. These valuations must include all assets within the estate, including financial assets, property, and high-value possessions.

There are several reasons for this:

• the total value of the estate will be used to determine if Inheritance Tax is due and, if so, how much
• the value of individual assets is used to calculate any Capital Gains Tax due on assets that have increased in value since the deceased’s death
• having a valuation of the estate ensures it is possible to pay any outstanding debts or liabilities before the remaining estate is distributed among beneficiaries

The valuation will produce two sums; the gross value of the estate (the value before liabilities such as debts, mortgages, and funeral expenses are deducted) and the net estate value (the value after liabilities are deducted, but before Inheritance Tax exemptions have been applied).

What does an estate valuation for probate involve?

As the name might suggest, an estate valuation for probate means calculating the total value of every asset the deceased owned, minus any debts or other liabilities. They should be valued at their open market value, which is the price for which they could be reasonably expected to be sold, rather than an insurance or replacement value.

Any assets there were owned solely by the deceased, or where the deceased had a distinct share (such as 50% ownership of a house or business assets), should be included in the estate valuation. Anything owed to the deceased, such as unpaid wages, must also be included.

Common assets included in an estate valuation include:

• Financial assets, including money in current accounts, savings, shares, and pension funds
• Property and land
• Personal possessions
• Any business assets

It is worth noting that while jointly owned assets should be included in the estate valuation, they may not be treated the same as other assets when it comes to Inheritance Tax, depending upon the ownership terms.

How to value an estate for probate

While it may sound straightforward on the face of it, calculating an estate’s total value can be quite challenging.

To start an estate valuation for probate, you will need a full list of all the deceased’s assets, liabilities, and any non-tax-exempt gifts made within the seven years before their death. This can sometimes present an early barrier; finding all the necessary information can often require time-consuming research, though working with a specialist probate solicitor can simplify the process.

Once you have the list of assets, you’ll need to identify how much each asset is worth. This may involve writing to the organisations holding the assets, such as banks, life insurance providers, past employers, or organisations holding assets in a trust, so you’ll need proof that you have the authority to receive this information. You should also include a copy of the death certificate with your letter.

Obtaining a valuation of some assets may require a professional valuation, such as property or land valuations, or unique or high-value items like jewellery or artwork.

The next step will be to identify and value any outstanding debts and liabilities. This could include mortgages, loans or credit cards, utility bills, council bills, care costs, and funeral expenses. You’ll need to get in touch with the organisations these liabilities relate to and arrange a repayment figure. Often, organisations will calculate this based on the date the deceased passed away, but some may continue to accumulate interest until they have been entirely paid off.

Valuing a house for probate

For many, the largest and most valuable asset they own will be their home, particularly if you include everything inside of it (which a full estate valuation should). It’s important to ensure that any property valuation is as accurate as possible to reduce the risk of HM Revenue & Customs (HMRC) disputing the figure you provide.

To do this, you will need a professional valuation of the property as a starting point. While a local estate agent may be able to provide a good insight, it can often be a good idea to speak to a chartered surveyor where you believe Inheritance Tax could be owed (it is worth noting that Inheritance Tax is only due where the total value of the estate – not just the property – is over the Nil Band Rate threshold, currently sat at £325,000 in the UK).

Seeking a valuation from a chartered surveyor – who will have the experience necessary to provide a valuation specifically for Inheritance Tax purposes – means the figure is more likely to be accepted by HMRC.

Determining the value of the property’s contents can be slightly more challenging, depending upon what possessions the deceased owned. Start by assessing any items you think may hold value – for instance, any vehicles, jewellery or furniture. Unique items, like antiques, collectibles or artwork, will usually require a professional valuation.

It’s important to remember when valuing the contents of a house that the insurance value will likely not reflect the open market value; instead, it will reflect the value of the item when new.

Speak to our industry-leading solicitors about estate valuation for probate

Estate valuation for probate is a time-consuming and complex process, which can be difficult to manage, particularly in the wake of losing a loved one.

As part of our full administration probate service, our dedicated probate solicitors can take care of the estate valuation on your behalf, as well as handling probate applications, communicating with organisations such as banks and building societies, collecting the deceased’s assets, paying debts, handling tax matters such as Inheritance Tax, and distributing assets according to the instructions of the will.

Our compassionate and experienced team has successfully supported countless clients throughout the probate process, and we’re incredibly proud to be members of Society of Trust and Estate Practitioners (STEP), showcasing our team’s dedication and commitment to providing the highest quality legal services in the field.

With straightforward, practical advice and holistic, compassionate care, our probate solicitors are here to support you when you need us most.