When someone passes away, there is, unfortunately, a lot of paperwork that needs to be done in order to make sure that the deceased person’s house, possessions and money (their estate) are all shared out to the right people, whether there was a legally-valid will or not.
One of the main tasks involved consists of valuing each asset within the estate and submitting the correct probate and tax forms to HMRC so that the process of probate can begin and the inheritance can be distributed accordingly. To help make this as straightforward and affordable as possible though, it is worth putting plans in place to give you peace of mind for when the time comes.
In this guide, we help explain how to find out the value of someone’s estate, including that of their home, the contents inside the property and other assets for probate value.
When a person passes away, someone will need to be in charge of managing and distributing the remaining estate, which is made up of the deceased person’s assets, including (but not limited to) their:
The estate also consists of other financial commitments, such as businesses or debts, if any (see below).
To be able to administer the estate and share out all of the assets legally, someone will have to apply for probate, which will grant them the legal right to do this, and the person responsible for probate depends on whether or not there was a legally-binding will in place before the death.
If you are the partner of a deceased person and you were not married then unfortunately, you cannot apply for probate and you’re also unable to claim any share of inheritance from the estate.
Read more: Applying for Probate
A very important part of the probate process is valuing the deceased’s estate, which will need to be carried out by the executor of the will or the person who has applied to be the administrator of the estate if there is no will.
Duties involve working out the value of the deceased’s house, as well as any other properties that the deceased owned prior to their death. The value of the following assets will also need to be calculated if they exist:
As stated on the GOV.UK website, you do not have to value a deceased person’s estate straight after they pass away, but deadlines will apply if any inheritance tax (IHT) is owed on the estate.
If IHT needs to be paid, the person responsible will have to submit Inheritance Tax forms within one year of the person’s death, and they will need to begin paying the IHT by the end of the six months after the person passed away (this can also be done before the estate has finished being valued).
Learn more: Top 5 Ways to Cut Inheritance Tax
Valuing a house for probate can be done in a few different ways. You can estimate the value of the property yourself, contact your local estate agent or pay for a professional RICS (Royal Institution of Chartered Surveyors) property surveyor.
You may wish to find out how much the house is worth by using all three methods to get an accurate figure, but how you should do it generally depends on the following:
Read more: Leaving Gifts in Your Will
Also known as the nil rate band (NRB), the inheritance tax threshold is £325,000, and if an estate is valued at a figure higher than this amount, 40% tax will be owed on anything remaining after the first £325,000.
For example, if an estate comes to a total of £475,000, there will be 40% tax placed on £150,000 of the estate (£475,000 - £325,000), which will be £60,000.
For many people who know that the value of the property will not exceed the inheritance tax threshold, they tend to estimate it themselves, which can be done either by:
Depending on whether or not you have plans to sell the property, you may want to ask your local estate agents to help value it so that you have a more accurate estimation, and this won’t cost you anything.
If you receive a house valuation for probate which takes the entire estate value near the inheritance tax threshold of £325,000 or above it, you should get three valuations done to give you a more accurate average price, especially if you want to avoid having someone from HMRC dispute your probate and tax forms. If each valuation differs significantly from the other and you want to get a true value, you consider getting an RICS property surveyor.
While the above two options are free, you can pay to get a professional property valuation from an RICS property surveyor, which can cost anywhere from £300 up to £2,000 or more. The exact cost, however, will depend on the type of house and a number of other factors about the property which may need to be considered.
While this option will cost you, it is the best way to get a probate house valuation if you need a professional, accurate value and want to avoid having any problems with HMRC.
It is also the best option if you have tried doing a valuation yourself or with your local estate agent and both values are reaching close to the IHT threshold.
The benefit of getting an RICS surveyor is that if HMRC disputes the valuation displayed on the probate and tax forms, you can put them in touch with your RICS surveyor to confirm any information.
If HMRC feels that the value of the property has been underestimated, they will want to contact you to question this, especially if they can see that you are selling the property for more than the probate value listed on the forms you submitted (or if you have already sold it at a much higher price).
Additionally, if HMRC can see that the property was sold almost straight away after the owner’s death at a price that is much higher than the valuation received for probate, they may want to use the value it was sold for for tax purposes, rather than the valuation figure.
If, however, they can see that the valuation was carried out fairly and realistically, you shouldn’t experience any major problems.
When it comes to a probate valuation for house contents, it can be difficult to know where to begin, and a lot of items in the house may not be worth as much as they used to be, while other items may still hold a lot of value.
With this in mind, you’ll have to try and write down a list of all the valuable items in the property, such as any jewellery, furniture, vehicles or other valuable possessions. With some things, you may be able to find the price online, but you’ll need to factor in the age of the item and current fashion trends to determine if it is actually worth anything or not.
If there are items of higher value, such as expensive antiques, artwork or collectible items, it is recommended that you get a professional specialist valuation.
You can try to work out the value of the possessions yourself or you can pay a house contents valuation specialist if you’d prefer, depending on what is left in the home. If there isn’t anything of value, you may wish to contact a clearance company to get rid of everything so it can be put up for sale.
Learn more: How long does Probate take if there is a will?
As well as valuing the house and contents of the property for probate, you need to value the deceased’s other remaining assets, such as their bank accounts, savings, insurance policies, etc, but before you do this, the first step should be to make a list of all of their assets and outstanding debts.
If the person left a legally-binding will when they died then this should be a much easier process, as the testator (the person who wrote the will) should have included a list of assets in their estate inventory, which will inevitably help to speed up the process of applying for probate.
Learn more: Do I Need a Will?
However, if there was no legal will and you can’t find a list of assets anywhere, you will need to go through the deceased’s paperwork, documents and bank statements, and make a note of each one as well as the name of the provider.
Then, once you have compiled a list of everything, you can go through each one and contact the relevant insurance company, bank or lender to help you find out how much each asset or debt is worth so you can arrange how to pay it.
For a home that was jointly owned, it can be valued as usual - by estimating the value yourself, getting an estate agent to do it or an RICS property surveyor, if you want to pay for a more accurate valuation and particularly if you feel that the estate value is near or over the IHT threshold.
When completing the probate and tax forms for HMRC, you will need to work out the share of the estate that was owned by the person who died, and this is usually done by splitting the estate value in half, provided that the deceased owned the home jointly with another person.
For example, if a property worth £380,000 was owned by a married couple (joint tenants) and one person passed away, the surviving spouse would legally inherit the property. On the probate and tax forms, the deceased person’s share would be stated as £190,000 (50% of the property value).
In the event that the deceased person co-owned a property with another person as ‘tenants in common’, they each own a certain share of the home so the value for probate and tax form purposes would need to be worked out depending on the percentage of each share.
For example, if a property worth £380,000 is owned as tenants in common by a couple where one person owned 60% and the other person who passed away owned 40%, then their share would be listed as £152,000 (40% of £380,000).
Read more: A Guide to Mirror Wills for Couples
If you’re doing a valuation yourself then it all depends on how long it’ll take you to do your research online and find out prices of similar properties in your area. This is most likely the quickest way to value a house for probate, but it is not always the most accurate. As long as the value doesn’t reach or exceed £325,000, then this should be fine.
If you’ve asked your local estate agent to do a valuation for probate, you can expect it to take up to an hour (more or less), and then you’ll need to give them time to write it up, which usually takes a maximum of a couple of weeks, but this can differ between estate agents.
If you have decided to get it done by a professional RICS surveyor, it will take them between 45 minutes and a few hours, depending on the type of property, and they should also be able to write the report within two weeks.
You can value the probate house whichever way you like, but you should bear in mind that a valuation that comes from anyone other than an RICS surveyor, could be disputed by HMRC.
The whole process of valuing an estate can take between six and nine months, as stated on the GOV.UK website, but it largely depends on the size and complexity of the estate, such as those that owe inheritance tax or have trust funds.
Due to the complexities and challenges that can arise when applying for probate and sharing out the estate to loved ones, it is worth writing your own will as soon as possible to make sure that your personal wishes are carried out when you pass away, your estate is secure and the inheritance will only be shared amongst the people who matter the most to you.
It is also worth looking to arrange and secure your probate service and fees now, as this will give you peace of mind that your loved ones won’t be charged the earth for legal services when you pass away, and you know the whole process is already taken care of.
At Wills.Services, we offer a fixed-fee probate service that will cost just 0.75% of the total estate’s value. This does not have to be paid upfront, but it will be taken from the estate upon death.
Many solicitors and probate service providers offer variable fees which can change depending on the size and complexity of an estate, but with Wills.Services, you and your loved ones will always know where you stand.
Find out more about our probate service today by using the button below, or take a look at our related guides and services for further help and information.
Article reviewed 5th March 2021