Before detailing the probate and inheritance tax valuation service provided by Crown Survey and Valuation it’s probably worth looking at the probate process in general in order to gain an understanding of just how important an accurate and independent valuation of a property which is part of the estate of a deceased person could be.

Probate explained

The simplest way to explain probate is as a term which covers the legal right to handle the estate of an individual after they have died. The estate in question will be made up of money and possessions, although in the vast majority of cases the most valuable part of any estate consists of property such as a family home. By obtaining probate, you’ll be given permission to act on any instructions left behind in the will of the deceased or, if no will was written, to ensure that the estate is divided up as set out by the rules of intestacy.

This is a set of guidelines for how an estate is to be divided when the deceased failed to write a will, and dictates which relatives specific percentages of the total value of the estate can be left to. Whether a will was written or not, probate involves coming up with a value for the estate left behind by the deceased, clearing any outstanding debts, dealing with issues such as any Inheritance Tax (IHT) which is due and dividing everything which is left over as set out in the will.

When probate is needed

Probate is generally not needed for estates which (at the time of writing) are valued at less than £5,000, or when the items in the estate were jointly owned and will be passed directly to the other owners. In order to be eligible to apply for probate you have to have been named as executor in the will, although if no will was written then the closest living relative to the deceased can apply. 

One of the key parts of working through the probate process involves dealing with the issue of Inheritance Tax, meaning whether it has to be paid and if so how much the IHT bill will be. Since property is likely to be the most valuable item in the average deceased person’s estate, knowing exactly how much the property in question was worth at the time the deceased died is vitally important, as is being able to produce a valuation which HMRC are likely to accept. That’s why it’s so important to have a probate and inheritance tax valuation drawn up by a RICS qualified surveyor such as those at Crown Survey and Valuation.

Why you need a probate and inheritance tax valuation

Dealing with the death of a loved one or close friend is always going to be a highly stressful experience, and is only made more so by the amount of administration which is involved in handling their estate. While you’d clearly prefer to be dealing with the emotional aspect of coming to terms with your loss you’re likely to find yourself handling complex and time consuming legal and administrative issues.

If something as vital as ascertaining the correct value of the property left behind by the deceased is in the hands of experienced professionals, it could lift a huge weight off your shoulders at a difficult time, as well as helping to speed up the overall process of administering the estate. Perhaps even more importantly, a fair and independent valuation could make all the difference when it comes to determining the amount of IHT, if any, which needs to be paid. A clear and easily explained valuation for probate and inheritance tax valuations could also help to minimise the risk of the kind of conflicts which can all too often occur when there is uncertainty about the value of a deceased person’s estate.

In simple terms, at the time of writing, if the overall value of the estate – including property – is more than £325,000, then the IHT requirements will need to be calculated. That’s why it’s so important that the part of the estate – the property – which will play the biggest role in determining whether this key figures is met or not is valued correctly. Some other parts of the estate, such as jewellery, artworks and motor vehicles, may also need to be independently valued by experts, but none will have as much impact on the overall result as the value of the property left behind.   

Not only will a value arrived at by the RICS qualified surveyors at Crown Survey and valuation be as accurate as possible, it will also be arrived at in line with strict regulatory requirements, making it much more likely that HMRC will accept the figures you provide them with. By having a probate and inheritance tax valuation in place as quickly as possible you’ll be able to enjoy the following advantages:

• Probate and the processes around it are likely to be completed much more quickly if you place the valuation in the hands of professional surveyors.
  
• As well as dealing with the legal aspect of probate a quick and accurate valuation should help you to finalise all the financial aspects, limiting any delay between the person dying and their wishes as set out in any will they left being complied with.
  
• An accurate valuation is likely to help prevent any familial disagreements over the value of the estate escalating into legal disputes and costly court cases.

The process of probate and inheritance tax valuations

The valuation has to be submitted to HMRC as part of the wider assessment of the estate, and if the total value is seen to exceed £325,000 on the day upon which the deceased died, then Inheritance Tax will have to be paid subject to a few exemptions. These include cases in which the deceased has left everything in their estate to a husband, wife or civil partner who lives permanently in the UK. The value of the property, as calculated via a probate and inheritance tax valuation, has to be based on the market value for Inheritance Tax purposes, as set out in Part VI section 160 of the Inheritance Tax Act 1984.

A RICS qualified chartered surveyor will also work within the rules and regulations set out in the Red Book, a publication which sets out the Global Standards upheld by the RICS. It is compliance with these complex rules and regulations which sets a probate and inheritance tax valuation drawn up by a RICS qualified surveyor apart from a valuation provided by someone like an estate agent, while also making it far less likely that HMRC will challenge the valuation you provide for them. If such a challenge does take place, the existence of a detailed valuation report should make it much easier for you to argue your case and negotiate in terms of the amount of Inheritance Tax that needs to be paid.   

The value of a property for probate and inheritance tax purposes

As far as probate is concerned, the value of a property is defined as its open market value. This means the amount which the property might reasonably fetch if it was sold on the open market to a willing buyer making the purchase without any external pressures (such as the need to complete quickly). In most cases, the date of valuation will be the date upon which the deceased died.  

The probate and inheritance tax valuation report produced by a RICS qualified surveyor will be based on both the property itself and in-depth knowledge of the local market.

When compiling a report of this kind the surveyor will undertake a  physical inspection of the property. They will include any details which are likely to increase or decrease the value of the property on the date the deceased died, and some of the more important aspects will include the following:

• Type – the market value of the property will depend, to a large degree, on whether it is a flat or a house. If it is a flat the value will vary depending upon whether the flat has other flats above or below it (or perhaps both), while the value of a house will be impacted by its status as an end or mid terrace, or a detached or semi-detached property. Other details likely to influence the value include the number and rooms and the layout of the rooms. The size of the property will also be a factor. For survey and valuation purposes, the surveyor will use the RICS standard code of practice when noting the measurements for a property. Under this code the Gross Internal Area (GIA) measured is used for a flat, and the Gross External Area (GEA) measured is used for a house.
  
• Description – the description of the property will cover basic information such as the year in which it was built, whether it is of standard construction and the number of storeys on the property. The valuation report will also detail how the property has been maintained, as any dilapidation is likely to bring the value down.
  
• Utilities – the presence or absence of basic utilities and services such as water, drainage, electricity and gas will be included in the report as it impacts on the value of any property.
  
• Condition – as well as the basic description of the property already set out, the valuation report will detail the condition of the property, and in particular aspects which might lead to structural deficiencies requiring work on the part of anyone purchasing the property on the open market.
  
• Tenure – whether the property is leasehold or freehold in nature will have an impact on tis value, and will be included in any valuation report.
  
• Market – as well as inspecting the property itself in detail, a RICS qualified surveyor will use their in-depth knowledge of the local market to ascertain the kind of prices being achieved by similar properties. 

Other aspects of the property which might impact on its value include poor maintenance, the condition of surrounding properties, the wider housing market and the impact of things such as interest rate levels and  any planned local developments. Approved plans for a local shopping centre, for example, could lift the value of the property through its proximity to improved local amenities.

If you’re in need of a probate and inheritance tax valuation of a property and are looking for an RICS Surveyor near you, contact us today for a free quote. We specialise in building surveys and valuations and can carry out a professional inspection, so you can rest assured that the Inheritance Tax valuation we arrive at is a realistic reflection of the value of the property.