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Formal valuations of assets when dealing with Probate

19 December 2019

Whether you are taking on the task of dealing with a deceased’s estate yourself, or instructing an experienced solicitor to do so on your behalf, it will sometimes be necessary to instruct other professionals to value particular assets that the deceased owned at the date of death. These assets may be residential property owned by the deceased, high value jewellery, pottery, ornaments or items of clothing.

If the deceased owned several high value assets, and there is a possibility that their estate exceeds their nil rate band (NRB) which is currently £325,000, you may be required to complete a complex Inheritance Tax account. This account is known as form IHT400 and is accompanied by several schedules depending on the type of assets owned by the deceased. The Inland Revenue will require accurate values to be recorded to calculate whether any Inheritance Tax is due. Equally, as an Executor to an estate you have a responsibility to the beneficiaries to administer the estate and pay all debts due before making final distributions. If this is done incorrectly, angered beneficiaries may seek to hold you liable.

Our Probate solicitors have many connections with professional surveyors for all types of assets and can easily arrange for a valuation to be completed. For example, a valuation of a property must be performed by a RICS surveyor. Although this is an expense that may initially be payable by you as an executor, it can be reimbursed to you from the deceased’s estate once in funds.

What could happen if I don’t obtain a formal valuation?

If you do not wish to obtain formal valuations you leave yourself open to the risk of further delay in the issue of the Grant of Representation, and potentially penalties could be imposed. Where Inheritance tax is payable, or the estate falls very slightly below the threshold, there is a good chance that the values will be subject to the scrutiny of the District Valuer of HMRC. For example, if a simple estimate is used for a property valuation, and this figure is checked with the District Valuer to be incorrect, you may be required to explain how this figure was obtained and provide a formal valuation at a later date.

Often it is the high value estates where it will be imperative that formal valuations are obtained. If you are unsure how to proceed, or would like our assistance, please contact a member of our experienced Private Client team who will be happy to help.

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