How Do I Value an Estate for Probate?

Valuing an estate is the foundation of probate: it establishes what the person owned, whether any inheritance tax is due, and which forms the personal representatives must submit. The principle is simple, a snapshot of assets minus liabilities at the date of death, but the detail rewards care, because HMRC can question figures that look optimistic and beneficiaries rely on you getting it right. The good news is that the task is largely a matter of being thorough and organised rather than technically difficult. Here is how to work through it methodically.

A step-by-step approach

• 1

  List every asset at date-of-death value

  Property, bank and savings accounts, ISAs and investments, National Savings, vehicles, valuable possessions, business interests and any life insurance not written in trust. Value each as at the day the person died.

• 2

  Get proper property valuations

  Obtain estate-agent appraisals for a simple estate, or a qualified surveyor’s open-market valuation where tax is likely, to withstand HMRC scrutiny.

• 3

  Contact each institution

  Banks, pension providers and investment platforms will confirm exact balances and any interest accrued to the date of death when you notify them.

• 4

  Account for jointly owned assets

  Include the deceased’s share, usually half of a jointly held home or account, though the ownership type (joint tenants vs tenants in common) affects how it passes.

• 5

  Deduct debts and liabilities

  Subtract the mortgage, loans, credit cards, outstanding bills and reasonable funeral costs to reach the net estate.

• 6

  Add back qualifying gifts

  Include gifts made in the seven years before death, as covered in the complete guide to inheritance tax planning.

Turning the figure into tax and forms

Once you have a net figure, compare it with the available allowances, the £325,000 nil-rate band, the £175,000 residence nil-rate band where a home passes to descendants, and any allowances transferred from a late spouse. If the estate falls below the thresholds (an “excepted estate”), the process is lighter; if inheritance tax is due, you complete the fuller account and, importantly, the tax generally has to be dealt with before the grant of probate is issued. Our guide to valuing an estate for inheritance tax details which forms apply.

Getting property and possessions right

Property is usually the largest single figure and the one HMRC scrutinises most, so it pays to value it defensibly. For an estate comfortably below the tax thresholds, a couple of estate-agent appraisals will normally suffice. Where inheritance tax is in play, a formal open-market valuation from a RICS-qualified surveyor is the safer route, because HMRC’s District Valuer can challenge an under-valuation and charge tax plus, in careless cases, penalties. Household and personal possessions, the “chattels”, are valued at what they would realistically fetch on the open market, not their insured or sentimental value, so a whole houseful of ordinary furniture is often worth surprisingly little.

Investments and savings are more clear-cut: providers will confirm balances and accrued interest to the date of death, and quoted shares are valued using the price on that day. Don’t forget the assets that are easy to overlook, premium bonds, share-save schemes, small workplace pots, foreign property, and any money owed to the person, all of which belong in the total.

Excepted estates and when tax is due

Many estates qualify as excepted estates, meaning no full inheritance tax account is needed because the value falls below the thresholds, everything passes to a spouse or charity, or the estate is otherwise low-value. In those cases the personal representatives report only limited information as part of the probate application. Where tax is due, the fuller account must be completed and, as a rule, the tax paid before the grant is issued, a timing wrinkle that catches many executors, since the estate’s cash is often frozen until probate is granted. The threshold rules for qualifying as an excepted estate were simplified in recent years, but they still turn on the value and make-up of the estate, so it is worth confirming which category yours falls into before choosing a form.

Because an executor can be personally liable for tax underpaid through a careless valuation, taking reasonable care, and keeping evidence of how each figure was reached, is not merely good practice but self-protection.

Accuracy protects you personally: as an executor you can be liable for tax underpaid because of a careless valuation. Where an estate is large, includes a business or farm, holds foreign assets, or involves significant lifetime gifts, professional help usually pays for itself, and you can see typical costs in our answer on what inheritance tax planning costs. This is information, not personal advice. Vetted Wealth can match you, free, with independently vetted, FCA-regulated advisers who work alongside solicitors on complex estates via our inheritance tax planning service.

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