How to value an estate for probate in England and Wales

Your father has died and you are named executor. The solicitor's first question is straightforward enough: what is the estate worth? The answer, it turns out, requires considerably more than a glance at a bank statement. Probate in England and Wales cannot proceed until you have produced a defensible figure for every asset and every debt, satisfied HMRC on inheritance tax, and filed the correct paperwork with His Majesty's Courts and Tribunals Service. The process is methodical rather than difficult, but it rewards preparation.

Building the inventory: assets and liabilities

Start with a complete list of everything the deceased owned and everything they owed at the date of death. The two columns must be exhaustive before you can produce a net estate figure.

On the assets side, you are looking at: current and savings accounts, ISAs, Premium Bonds, shares and investment portfolios, the value of any businesses or partnership interests, life insurance policies that fall into the estate (rather than those written in trust, which pass outside it), pension lump sums payable to the estate, vehicles, jewellery and personal effects, and any money owed to the deceased. If the deceased owned property, each one requires its own valuation.

On the liabilities side: the outstanding mortgage balance at the date of death, credit cards, personal loans, utility arrears, any income tax or capital gains tax owed to HMRC for the period up to death, and funeral expenses. These reduce the gross estate to the net figure HMRC uses for inheritance tax.

Do not guess at figures. Banks and financial institutions will issue a date-of-death balance on request once you produce a death certificate. Premium Bonds and NS&I accounts can be confirmed directly through NS&I. Share portfolios are valued at the lower of the two prices shown in the Stock Exchange Daily Official List on the date of death, or at the quarter-up figure, whichever is lower. Your stockbroker or the registrar can provide this.

Personal possessions require a little more thought. Household contents of modest value can often be listed and estimated by the executor acting in good faith, but anything of potential significance, antiques, art, jewellery, watches, wine, should be assessed by a qualified valuer. HMRC has been known to query undervalued chattels, and an independent valuation protects the estate and the executor alike.

Property is almost always the largest single asset and the one HMRC scrutinises most carefully. You need a formal valuation from a member of the Royal Institution of Chartered Surveyors, not a high-street estate agent's appraisal letter. The valuer is assessing the open-market value on the date of death. If the property subsequently sells for more, there may be implications for the tax position, which is one reason to seek a realistic rather than conservative figure at the outset.

HMRC forms and the inheritance tax threshold

Once you have a net estate figure, you can determine which HMRC form applies. The two most common are IHT205 and IHT400, though the precise rules around when each applies are subject to change and your solicitor should confirm the current position.

In broad terms, IHT205 is a shorter return used when the estate is below the inheritance tax threshold, falls within certain other conditions (such as the deceased having been domiciled in the UK), and no inheritance tax is due. IHT400 is the full return required for larger or more complex estates where tax may be payable or where certain reliefs are being claimed.

The nil-rate band has been fixed at £325,000 for some years. The residence nil-rate band adds a further allowance when a main residence passes to direct descendants, subject to conditions. Unused nil-rate band from a deceased spouse or civil partner can be transferred, potentially doubling the threshold available to the surviving estate. These allowances interact in ways that depend heavily on the specific family circumstances, so the figures above are context rather than advice: a tax adviser or probate solicitor should confirm what applies to a given estate.

Where inheritance tax is due, it must generally be paid before HMRC will issue the certificate needed to obtain the grant of probate. This creates a practical problem because the estate's assets are frozen until the grant is in place. Banks will sometimes release funds directly to HMRC to break this circularity, and it is worth asking early.

What makes the whole process move faster is documentation gathered before death rather than after it. A well-ordered record of accounts, policies, property deeds, share certificates, outstanding loans, and the will itself compresses weeks of searching into a single afternoon. Executors who inherit a clear picture of the estate can file accurate returns promptly, reduce the risk of HMRC queries, and distribute the estate to beneficiaries considerably sooner.

If you are the kind of person who has just been through this for a parent, and resolved never to leave your own children in the same position, Glenvault is built for that purpose. You can begin organising your estate at glenvault.com/signup.