The term ‘Probate Valuation’ means the value of the assets as at the date of death. A ubiquitous term used throughout an Estate administration but do you really know why these valuations are so significant? It is integral you have each asset of the Estate valued for probate purposes. An asset can mean anything from watches to real estate but for the purposes of this article we will focus on real estate. More often than not only one probate valuation is required for each asset. However, when an estate has residential or commercial property it is important that the Personal Representatives (either the executor where the deceased has left a Will or the administrator where the deceased died intestate) obtain at least 2 or, ideally, 3 probate valuations by professional valuers, like Estate Agents or Surveyor, depending on the type of property to be valued. This way the Personal Representatives can use an average of the 3 valuations for the probate papers.
Perhaps you are about to instruct an Estate Agent to put the property on the open market for sale. You may even be so far on in the administration process that the property has already been sold. So, where do you go from here? If an Estate is subject to Inheritance Tax (or bordering on the Inheritance Tax threshold) then you could be getting a phone call from the District Valuers Office Agency (‘VOA’) – an executive agency sponsored by HM Revenue & Customs who gives the government the valuations and property advice needed to support taxation and benefits. They are particularly quick to get involved in Estates where properties are sold for a price that is higher than their probate value disclosed in the Inheritance Tax Forms. HM Revenue & Customs certainly don’t let these properties slip through the net! Why would they when there is a chance they can request an Estate to pay even more Inheritance Tax?
You need to seek legal advice from someone who not only understands the Inheritance Tax rules but someone who also has experience in negotiating with the VOA in order to revise the probate valuation or maintain the initial probate valuation. The latter could mean a huge tax saving for most estates as the difference between the probate value and the sale price could be treated as a Capital Gain within the estate – a more favourable outcome since Capital Gains Tax is currently charged at a lower rate than Inheritance Tax.
If you need this pivotal legal advice then you can contact me directly at our Hove office on 01273 722532 or email me – Emily.Wardrope@coolebevisllp.com We do have offices in Worthing and Horsham as well so if either of those are your preferred location please do let me know and I will direct you to a colleague of mine.