What is probate?
Probate is the name given to the legal process of managing a deceased person’s estate. Part of this process often includes dealing with property and paying any tax due, and a probate house valuation is necessary at this stage.
Most people don’t know much about the probate valuation process until the death of someone close to them. At this point they understandably have lots of questions so today we’re addressing the top ten common questions about probate valuation.
What is a probate house valuation?
When someone dies, Inheritance Tax must be paid to the government. The amount owed is calculated as a percentage of the estate’s value (the estate includes property, possessions and money). A probate house valuation gives an accurate indication of what a property is worth on the date of death and can be used to help calculate any tax owed in a way that’s accepted by HMRC.
When do you need probate?
Probate is needed when someone dies, and any of the following apply:
- They had property solely in their name
- They owned property as tenants in common
- They had £30,000+ in banks/building societies solely in their name
- They had shares/investments worth £10,000+
- They had business assets or interests
- They had Premium Bonds/NS&I products worth £5000+
- Their pension/life insurance policy will pay a lump sum to the estate
How long does the probate process take?
The whole probate process can be very quick or last more than a year. Securing the grant of representation and completing probate administration usually takes 9-12 months.
Wat is the difference between probate value and market appraisal?
A market value is usually carried out by an estate agent and is their opinion of what the property could fetch on the open market. Probate value is a formal, accurately calculated assessment of a property’s worth, typically undertaken by an RICS Registered Valuer in strict accordance with the RICS Valuation – Global Standards (often known as ‘The Red Book’) and acceptable to the HMRC for tax purposes.
What is to be valued?
For probate, the value on the day the person died should be calculated for the following assets:
- Properties
- Money, e.g. cash, bank accounts, savings, etc.
- Stocks and shares
- Belongings including electrical goods, furniture, art, jewellery
- Vehicles
- Foreign assets, e.g. a holiday home
- Any money they were owed e.g. wages
- Payments upon death e.g. life insurance lump sum
Why do I need a RICS valuation for probate?
It’s important that probate valuations are accurate to ensure the correct amount of tax is paid. Disputes with HMRC down the line can be costly and upsetting and a formal valuation by an RICS Registered Valuer carries significant weight.
Can I use an estate agent?
Estate agents are not usually RICS certified and are unable to provide formal valuations. They can offer market appraisals which is the amount they think the property might fetch on the open market, but this is not considered accurate enough for probate.
What makes a probate valuation complex?
Probate valuations are complex because they must be accurate and based on the day the person died. When it comes to property valuation, your RICS Registered Valuer will consider the property’s size and condition, location, any planning/construction concerns, the value of similar properties and any environmental concerns to meet ‘Red Book’ standards.
Can the valuation be challenged?
Yes, the valuation can be challenged by HMRC is they think the incorrect amount of tax has been paid. It can be frustrating, upsetting and costly when this happens, so it’s worth ensuring you submit accurate figures backed by a RICS professional.
What if I sell the property for more or less that the valuation in the report?
If the property is sold for less than probate value, you may be able to reclaim some tax. However, if it sells for more, you may have to pay capital gains tax.
Get in touch
If you are currently going through a probate process, we hope our answers to the ten common questions about valuation have helped. It is often a confusing and difficult time and we’re here to lend our support.
Our team of experienced RICS Chartered Surveyors compassionately provide accurate probate property valuations. Please get in touch with any questions or to discuss how we can help.