7 Common Queries About Probate
Monday, 18th January 2021
Valuation
1. What is Probate?
The definition of Probate is ‘proving’ which entails proving that the deceased’s will in possession of the Executor is their last. Probate is granted by the Court which determines that the Executor has the power to administer the estate.
Once Probate has been granted the Executor is able to sell the decease’s property.
2. What is to be Valued?
In order for HMRC to calculate the amount of Inheritance Tax (IHT), the value of the deceased’s assets and liabilities will need to be calculated to establish if the estate will be charged and if so, how much.
3. Why do I need an RICS Valuation?
A lay person such as the Executor is unlikely to be experienced enough to accurately determine the value of the property so will look need to instruct an RICS Chartered Surveyor who is also a Registered Valuer used to working under Red Book Regulations.
Local knowledge and experience is key when selecting a surveyor as the process of valuing a property for Probate typically involves certain nuances.
4. Can I use an Estate Agent?
A valuation from an Agent serves only as a tool to convince you to market the property with them. Unlike an RICS valuation, there is no requirement for the valuation to be unbiased, which typically results in an overpromising value, which would see you paying too much IHT.
5. What makes a Probate Valuation Complex?
The property will need to be valued under the RICS definition of Market Value which is:
“The estimated amount for which an asset or liability should. exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction after proper marketing where the parties had each acted knowledgeably, prudently and without compulsion.”
The date of passing is the date of valuation so the Valuer will ideally obtain comparable sales evidence close to that date, or adjust more recent sales using price indexes.
What Valuers more commonly find is that Probate properties are far more likely to be dated and un-modernised when compared against others in the locality, often sporting more valuable kitchens, bathrooms, and extensions. Deducting what these improvements are worth will require all the skill and knowledge of the Valuer of how buyers in the market treat them.
6. Can the Valuation be Challenged?
If HMRC believe that the submitted value is too low, the surveyor will be contacted by the District Valuer and be required to justify their conclusion. Our surveyors have experience of this and all past situations have been resolved by supplying the District Valuer more detailed information on the comparable sales evidence.
7. What if I sell the property for more of less that the valuation in the Report?
You can make a claim to HMRC for a rebate if the property is sold within 4 years of the date of the valuation date. This may not be all that straight forward, especially if market conditions have changed.
Peter Barry Surveyors regularly undertake Probate Valuations of residential property, from small studio flats to grand houses to buy-to-let portfolios. Please call us on 020 7183 2578 and one of our team will be happy to talk.
