Estimating Property Values For PA1A Probate/LOA Application?

woodbine66

Would be grateful for thoughts on estimating property values for an estate.

My father passed away recently without making a will. He is married to my mother and I have one brother. He owns a house with my mother as joint tenants (value of his half of house - £225,000) and owned a rental property in his sole name (value £475,000). Apart from that he had savings of approx £125,000.

I'm completing the PA1A to apply for letters of administration myself. I rang the HMRC IHT advice line and one of the things I asked them about was declaring property values - they said that they would accept an estimated value of the properties my father owned.

Is it advisable to estimate the property values for my father's LOA application? Do we submit proper probate valuations for my mother's estate when she passes away? Or will HMRC accept estimates for both estates?

Basically I want to know what the pitfalls or benefits of estimating values on either or both estates are? Will it make it complicated if I getting the values very wrong for my father's estate, when it comes time to declare my mother's estate? Thanks in advance for any advice.

Keep_pedalling

The value of their home is not really that important as it automatically passes to your mother and is covered by spousal exemption as does his chattels. As the rental property and his saving excede £322k that part of his estate does not all pass to your mother under intestacy rules so it is important that you get a professional valuation for that property unless you and your brother decide to let that pass to your mother in its entirety.

Under intestacy rules the £600k needs to be split as follows £322k + 50% to your mother and the remainder £139k) to be split between you and your brother. In your situation I would consider a deed of variation so that the rental property goes to her which will make things far simpler than owning 3 ways with unequal ownership.

Apart from her home what sole assets does your mother own.

RAS

Please see the previous thread.

It may be easier to combine them rather than ask queries that have already been answered? Amongst the derailment

woodbine66

https://forums.moneysavingexpert.com/discussion/comment/81941330#Comment_81941330

Yes, thanks - good point. This is my earlier original thread.

https://forums.moneysavingexpert.com/discussion/6642037/intestacy-joint-tenants-iht-liabilities/p1

woodbine66

https://forums.moneysavingexpert.com/discussion/comment/81941257#Comment_81941257

Thanks for your reply, your advice is really appreciated. If we did a D O Variation for the £475,000 (very approx value) rental property we would pass it in it's enirety to our mother and divide the remaining savings between me and my brother.I like this for it's simplicity. So if we did this, you wouldn't advise doing a proper probate valuation now? Suppose this would save the cost of doing it twice, ie. one valuation for father's estate and another for mother's future estate.

Would this make things reasonably straightforward for mother's estate in the future? How would it work for her future estate?

The only reason I can think of having a proper probate valuation on the rental property now is it would give a proper, accurate valuation of my father's estate now for an accurate division of estate between my brother and myself. But I don't suppose this is really important as eventually the end result is the same.

Keep_pedalling

If you did the DoV you still need a reasonably accurate valuation for the rental property to cover the event that it could be sold in your mother’s lifetime for CGT purposes. I would do that with 3 EA valuation and go with the highest.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81942978#Comment_81942978

If you varied the estate to give your mother the rental property in its entirety, a reasonable estimate of value ( as indicated by @Keep_pedalling ) would suffice since it is a wholly IHT exempt transfer in her favour .

Since the other investments you and your brother will take in satisfaction of your voluntarily reduced intestacy entitlements are the only element that would impact on your father's transferable nil rate bands, you will have simplified dealings with your mother's estate on her eventual passing, and have an easily ascertained figure for your father's transferable nil rate bands going forward.

Hopefully you will be obtaining professional assistance in drafting the DOV for execution by yourself and your brother, since that is not a suitable DIY excercise in your family circumstances and I note it was your original intention to prepare and submit the PA1A yourself.

If you therefore proceed as planned It is only on your mother's death will you then require accruate valuations for both properties based on their market value at that time. The historic values for the properties at your father's death would be irrelevant in ascertaining your mother's IHT exposure ( if any) when the time comes.

Whilst your post is focused on IHT efficient reorganisation of your father's intestate estate, I would remind you of the estate income tax liabilities which are currently accruing pending the completion of the estate administration - please note the following link in this regard -

https://www.gov.uk/probate-estate/reporting-the-estate

woodbine66

https://forums.moneysavingexpert.com/discussion/comment/81942995#Comment_81942995

Thanks. Yes, I suppose there is always that possibility. Unfortunately my mother is frail, she suffers from dementia and is 90 years old. She has substantial savings of her own. If these were used up, presumably for care, my brother and I would lend her money to be repaid on her death. It's very unlikely that the rental property would need to be sold in her lifetime.

Also, please correct me if this is wrong, but wouldn't a RICS surveyor be able to give a retrospective red book value of a property? I doubt it would need to be backdated any more than a few years.

woodbine66

https://forums.moneysavingexpert.com/discussion/comment/81943051#Comment_81943051

Thanks for your advice. You mentioned drawing up the DOV. I did draft one myself several years ago for an intestacy and it was accepted by HMRC.

In this case I would draft one to say that my late father's estate is to be varied that -

*The rental property passes in it's entirety to my mother

*The residue after estate debts (mainly savings/cash in bank) of £XYZ pass to myself and my brother to be divided between us in equal shares

I should also mention that the marital home and chattels automatically pass to my mother as it is owned in joint names

I could also include the standard phrase about this DOV being for tax purposes, though I don't think this applies in this case - but it's good to cover all angles.

Or are there other aspects I should be considering?

Yendor52

Hi

We were just about to complete the will then HMRC pulled the file for value enquirers it’s been 4 Months since it was pulled what is the time scale on this please solicitor said 4 to 6 weeks but not heard anything

Cubicsrube

https://forums.moneysavingexpert.com/discussion/comment/82053179#Comment_82053179

Suggest you create your own thread and repost this, providing full context, for a helpful response.