Need a valuation for probate purposes?
When it comes to dealing with a loved one passing away, getting a valuation for probate purposes might not be at the top of your list of priorities.
After all, there are probably more pressing things to take care of, such as funeral arrangements and caring for the rest of your family. However, once the dust settles and the time comes to execute the will, getting a probate valuation of any property the deceased owned is an essential part of the process.
You’ll need one to not only gain an accurate value of a home or other property for Inheritance Tax purposes but also for the legal process known as probate.
Here, we take a closed look at what probate is and why it’s important to get a valuation from a RICS regulated chartered surveyor.
What is probate?
Probate is the legal process of dealing with the assets and estate of a person who has died. It allows the next of kin or the executor named in their will to claim, transfer or distribute any of the deceased’s assets. It is usually needed in England or Wales when the person who died owned houses, buildings or land, or where a bank or other financial institution requires a Grant of Probate or Grant of Letters of Administration (also known as a Grant of Representation). When probate has been granted, the executor or next of kin can deal with the deceased person’s estate according to the wishes set out in their will. If the person died without a will, the estate will be divided up according to the Rules of Intestacy.
The probate process can involve lots of legal, tax and financial work before an estate can be divided or distributed. It is usually split into five stages. At stage one, the estate’s administrator – usually a solicitor – will identify all the deceased’s assets, such as their property, investments and possessions, and all their debts and liabilities, to determine the value of the estate. If there is a will, it will identify and verify its beneficiaries. If there isn’t a will, it will determine how the estate will be divided under the Rules of Intestacy. It’s during this stage that you might need to instruct a probate valuation, if there are any properties owned by the deceased that need to be valued.
During stage two, the administrator will pay Inheritance Tax from the estate to HMRC and apply to the Probate Registry for a Grant of Representation. This is the legal document that confirms authority to administer the estate. Once the Grant of Representation has been issued, stage three sees the administrator liquidate (sell) the deceased’s assets, settle their liabilities and pay any final estate administration expenses or taxes to HMRC. At stage four, accounts documenting all payments into and out of the estate are prepared, which will show the balance remaining distribution to the beneficiaries. These are shared with the next of kin, executor of the will or other beneficiaries for approval. Provided there are no challenges to the accounts or other issues, the final stage sees the estate and assets transferred to the relevant beneficiaries and the process closed from a legal perspective.
Why do I need a valuation for probate purposes?
As property usually forms the biggest big part of anyone’s estate, getting an accurate picture of its value is essential. Where a property is likely to be subject to Inheritance Tax, getting a valuation from a RICS regulated chartered surveyor is advisable to help calculate the correct amount of tax due. As we explained above, a valuation for probate purposes must be submitted to HMRC as part of the assessment of an estate. The value of any property owned is a significant element of probate. Probate valuations are often retrospective and can date back several years. They differ from a standard valuation because they need to reflect the property’s value at the date of death, not at the current market value. Issues may arise here, as the general condition of a property can mean that the current market rate might not be achievable.
It’s also important to remember that a probate valuation will not extend to identifying defects within the property. It is for valuation purposes only so that the will can be executed. If the property is in disrepair and you want a fuller understanding of the extent of any defects, an additional Home Survey Level Three will give you an in-depth understanding of the construction and structural integrity of a property. Ideally, executors or administrators should value the property for inheritance tax purposes as soon as possible after death. But, with everything that losing a loved one entails, including funeral arrangements and the grieving process, several months can pass before the valuation is instructed.
It’s essential to use a RICS regulated chartered surveyor to get a valuation for probate purposes. They work to the professional standards set out in the RICS valuation red book and are indemnified to provide probate valuations. They will usually have knowledge, insight, and experience of the local property market. Because they are impartial and independent, they will be unrelated to the property in question and have no financial interest in it. In some instances, where the executor of the will has relied on estate agent valuations, HMRC has made additional enquiries to establish if the correct amount of Inheritance Tax duty has been calculated. If HMRC believes the property’s actual value is greater than the figure presented, it can impose financial penalties against the estate and its beneficiaries. HMRC is more likely to accept a valuation that has been provided by a RICS-accredited professional.
Let GB Home Surveys help
At GB Home Surveys, we offer a different approach to getting a valuation. Our service is convenient, hassle-free and will provide you with all the information you need to make the right choices. We’re an independent, RICS regulated chartered surveyors and have been providing trusted services for almost 30 years. All our surveyors are RICS registered valuers and have vast local expertise and specialist knowledge, so you can be sure you’re getting the best advice.
For a free initial consultation and a no-obligation quote, give our friendly team a call today to discuss your requirements.