One of the more unfortunate types of valuations that need to be undertaken by a Chartered Surveyor is for probate purposes. After a family member has passed away you will need to value their money, property and possessions (also known as their estate) in order to get a ‘grant of representation’ (the legal right to deal with the estate).
Inheritance Tax is paid if the estate was worth more than £325,000 when they died. This is called the ‘Inheritance Tax threshold’. This is set and often varied by the Government so there are different thresholds for previous years. The valuation date is the date of death.
Because the estate can be subject to Inheritance Tax a qualified Chartered Surveyor who is also an RICS Registered Valuer will need to undertake a valuation and be instructed on a clearly impartial basis. This type of report is often referred to as a Red Book Valuation.
The distinction needs to be drawn at this stage between a surveyor’s valuation and that of an estate agent. An estate agent is simply not bound by the same rules and regulations as the surveyor and often only wishes to value the property in order for it to be taken on by his/her agency. The surveyor on the other hand will have to face recourse should his valuation transpire to be incorrect.
You will still require a surveyor’s report even if the intention is to sell the property as probate will need to be granted to enable the ownership of the asset to be transferred to the beneficiaries. If the resulting sale is noticeably different to that of the valuation it is likely to be picked up by HMRC and the surveyor will either have to justify his figure or revise if necessary.
Whilst your solicitor will advise you on the detail the executor of a will or administrator of an estate typically has to pay Inheritance Tax by the end of the sixth month after the person died otherwise you will have to pay interest. An estate is also exempt from Inheritance Tax if the deceased left everything to their husband, wife or civil partner, who lives permanently in the UK.
Married couples and civil partners can give any value in the form of gifts to each other during their lifetime without Inheritance Tax being due. This is known as ‘spouse or civil partner exemption’.
Peter Barry regularly undertakes probate valuations to assist with probate. If you would like to discuss any matters with us or arrange a valuation of your property you are welcome to give us a call on 020 7183 2578 or drop us an email.