How to value an estate for probate or intestacy

20th FEBRUARY 2021

How to value an estate for probate or intestacy

When someone dies leaving a valid will, it is up to the named executor to divide up their estate in accordance with their wishes through the probate process. If someone dies without leaving a will, their estate must be divided and distributed according to the rules of intestacy. A crucial part of both processes is valuing the estate. This article will explain how to value an estate and why it is so important to be accurate in your valuation.

For free initial advice call our advisors or request a callback and we will contact you.

For probate, you will need an accurate valuation of the estate for the application and inheritance tax forms. If you make a mistake on these forms, your application will be significantly delayed, and you could be held financially liable by the registry office.

The rules of intestacy are followed when someone dies without leaving a will. Intestacy required an accurate valuation of the estate because the way it is divided and distributed amongst the beneficiaries will depend on how much it is worth. According to current intestacy laws, an estate valued under £270,000 will be left in its entirety to a spouse or civil partner (if there is one). If the estate is valued over £270,000, any living children or grandchildren might be entitled to a portion.

How to accurately value an estate

To make the process easier, you should start by making a list of every asset that your loved one owned. This includes bank accounts, shares, properties, life insurance policies, pension funds, vehicles, and expensive personal effects such as jewellery. On top of this, you should list all the liabilities included in your loved one’s estate. A liability is a debt, such as outstanding utility bills. You should include both assets and liabilities that are solely and jointly owned.

Next, you need to figure out which assets and liabilities are included in the estate. This means assets and liabilities that will be distributed to beneficiaries after you have your grant of probate or letters of administration. Any assets or liabilities that are jointly owned, such as bank accounts, utility bills, or property, will likely be passed on automatically to the other owner.

Finally, you can start valuing each asset and liability included in the estate. This should be done as soon as possible after the death of your loved one. For bank accounts, pension funds, life insurance, and other assets with a fixed value, this is as simple as contacting the relevant financial organisation and notifying them of the death to receive a final statement. Property and other non-monetary assets can be much more difficult to value, however.

To get an estimation for the value of a property, you can search for similar houses in the area to see how much they are selling for. If your property might be valued at only slightly below the current inheritance tax threshold of £325,000, the HMRC might suspect that you are trying to avoid taxation and may therefore challenge your valuation. Under these circumstances, you should hire a RICS qualified surveyor or an estate agent to value your property.

The net value of the estate will be the total value of all assets after the value of liabilities has been deducted. You will need to know the net value of the estate for probate and intestacy purposes, whether your loved one left a will or not.

If you are unsure about any part of this process or you simply don’t think you’ll have time to undertake such a strenuous role alongside all your other responsibilities, you might consider hiring a professional probate solicitor or online service such as Kwil to help you with your estate valuation and application to the probate registry.

For free initial advice call our advisors or request a callback and we will contact you.