Probate is a critical part of the management of the estate of a deceased individual, as decreed by law. Any and all personal possessions, including but not limited to collections of art, jewellery and antiques, must be valued. As this will have an impact on inheritance tax implications, a thorough and professional valuation process is critical.
Thankfully, ITG Probate Valuations have many years of experience in this line of work. We complete our duties in a timely, sensitive and discrete manner, all while demonstrating an understanding of the difficult circumstances that surround a bereavement.
(I.T.G. probate valuations of house contents will be pleased to guide you through the entire house contents valuation process from start to finish. We will provide you with a professional typed probate valuation report (Estate Valuation Report), produced on headed note paper, which confirms to HMRC the value of the goods and chattels of the estate for probate or confirmation purposes, in accordance with the Inheritance Tax Act (1984).
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As inheritance tax will be due alongside a grant of probate, but until the estate has been valued, there is no way of knowing how high HMRC’s bill will be. A full and comprehensive inventory of assets belonging to the deceased must be supplied, alongside details of any unsettled debts. This responsibility falls on the shoulders of an executor.
This is a great deal of work for an executor. If a legal professional is conducting this service, it can be difficult for a bereaved family. If the duty falls to a family member, it can be challenging to separate sentiment and emotion from true valuation. Bringing in an experienced external provider of probate valuations services makes life easier for all parties.
The best time to contact ITG Probate Valuations is ahead of application for a probate grant, and after any family members have removed items they consider themselves entitled to. This would only apply to gifts presented prior to the deceased passing away. Anything left to a beneficiary as part of a last will and testament should be recorded in the inventory, which needs to be recorded in full – and by full, we do mean a comprehensive list.
An inventory ahead of granting probate is not a top-line document, only listing items with obvious value. It should cover everything the deceased owned – or even part-owned. Property or motor vehicles, for example, may be registered under joint ownership with a spouse of other family member. The share belonging to the deceased must be listed on an inventory, whether this was 5% or 50%.
Once the inventory is completed, a valuation follows. Professional assistance will be required here, and ITG Probate Valuations have many years of experience with probate valuations. It is important to note that the idea of a ‘true’ value of any item is a misnomer. An ornament in the home may be considered priceless to a family member but may attract little to no interest at auction.
Before the probate valuation begins, check any letter of intent or instructs left in the will of the deceased. Specific instructions may have been supplied as to how items should be valued. If this is not the case, the probate valuation will be completed with a view to providing fair and balanced estimates. The aim is to benefit both the bereaved family and satisfy HMRC. This is a delicate tightrope to walk, which is why it is best left to experienced specialists.
We mentioned auction previously, and it is important to note that an inheritance tax valuation will typically outweigh that of auction prices. This is because auctions are unpredictable by their very nature. A Roll’s Royce could sell for £30,000 at a car auction, but if the vehicle was valued by a collector or trader, the asking price would be well over this sum. The truth is, an item’s value is determined by what it sells for. Until that happens, there is no way of knowing what to expect.
This is the purpose of a professional probate valuation service. A middle ground and compromise will be reached. If you wish, you are entitled to seek a second opinion. Ultimately, the executor has final say as to whether they consider a valuation to be reasonable.
In addition, a professional probate valuation will prevent you from falling foul of any pitfalls. You may have been told that a work of art was worth millions of pounds by an insurance broker, for example. On the one hand, that’s great news – you have a valuable asset on your hands that will reach a tidy sum if sold.
Try to look from another perceptive, though. HMRC will see an extremely valuable asset too, which means they can levy a substantial inheritance tax sum against it. A professional probate valuation can strike the middle ground, preventing you from paying unnecessary sums in tax at an already difficult time. Professionals also know how to describe items and avoid arousing suspicion.
Let’s take our work of art as an example. If you list a particular artist, the year of the painting’s creation and a certificate of authenticity on an inventory, HMRC will easily be able to learn the expected price. If work by the same artist has been shown to fetch tens of millions of pounds at auction, a valuation of £1m will immediately raise suspicion. An invasive full audit will likely follow.
As with all things pertaining to tax, you must avoid outright dishonesty. HMRC will find out, and it will not end well. With professional help, however, you can reduce your liability, if only by a little.
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