Estate Valuation: The First Step in Probate
Before probate begins, you must carry out an estate valuation to determine whether Inheritance Tax (IHT) applies. This process involves assessing the deceased’s money, property, and belongings. Even if you believe no tax is due, you still need to complete this step.
What to Include in an Estate Valuation
To complete an accurate estate valuation, you must account for all assets owned at the time of death. These include homes, bank accounts, vehicles, investments, and valuable personal items. You must also include gifts made within the seven years before death. If the deceased had a beneficial interest in any trusts, you must include those too.
Using Tools to Estimate Value
You can estimate values yourself or use HMRC’s Inheritance Tax Checker. This tool helps you understand whether IHT is likely to apply. However, it does not calculate the exact tax owed or notify HMRC. It’s a useful guide, especially for those unfamiliar with the process.
Estate Valuation and Tax Thresholds
There is usually no IHT to pay if the estate is valued under £325,000. If the deceased left anything above this threshold to a spouse, civil partner, charity, or amateur sports club, the estate may still be exempt. If the deceased was widowed or passed their home to children or grandchildren, the threshold may be higher.
Final Checks Before Reporting
When completing an estate valuation, you must also consider debts and liabilities. Include joint property, pensions, and overseas assets. Assess their market value on the date of death. For gifts, use the value at the time they were given, especially if the deceased still benefited from them.
