Probate valuations for Executors – how to value the past

Probate Valuations – Advice for Executors 

Probate valuations are one of the most challenging tasks faced by executors. When someone dies, their estate must be accurately valued for inheritance tax purposes, with HMRC requiring a clear account of everything from property to personal possessions. Antiques, collectables and items of potential value pose particular difficulties – undervalue them and you risk HMRC penalties; overvalue them and the estate might pay unnecessary tax. 

Many executors make costly mistakes when handling inherited antiques, often misunderstanding what constitutes “market value” or relying on outdated family assumptions about worth. This guidance aims to help those managing probate navigate the valuation process effectively, ensuring compliance with legal requirements while protecting the estate from unnecessary taxation. 

Understanding HMRC’s Probate Valuation Requirements 

HMRC requires probate valuations to reflect the “open market value” – the price an item would fetch if sold on the open market on the date of death. This is a crucial distinction from other valuation types. For antiques, open market value typically aligns with auction prices (what someone would actually pay) rather than retail replacement costs or insurance values. 

The valuation date must be the date of death, even if items are sold months later for different amounts. HMRC can challenge valuations they believe are inaccurate, potentially resulting in additional tax plus interest. In cases where they suspect deliberate undervaluation, penalties of up to 100% of the underpaid tax may apply. Proper documentation of how values were determined is your best defence against such challenges. 

Beware of Family Valuation Myths 

“This belonged to your great-grandmother – it must be worth thousands!” Family lore frequently inflates the value of heirlooms, creating expectations that can be painfully dispelled by current market realities. The antiques market has undergone dramatic shifts in recent decades, with tastes and demand constantly evolving. 

A prime example is traditional Georgian and Victorian furniture. Once commanding premium prices in auction rooms, many such pieces now sell for a fraction of their former value. Meanwhile, mid-century modern furniture from the 1950s and 60s – once considered merely second-hand – has soared in popularity and price. While period furniture still holds value, it’s often harder to sell and fetches significantly less than in its heyday. 

Always base probate valuations on current market conditions rather than historical value or family sentiment. What matters is what a buyer would pay today, not what an item was worth a generation ago. 

Don’t Rely on Insurance Valuations 

Insurance valuations and probate valuations serve fundamentally different purposes – a distinction that could cost an estate thousands in unnecessary tax if confused. Insurance values typically reflect replacement costs at retail prices, accounting for the expense of finding equivalent items in a hurry. These figures can be substantially higher than what the same items would achieve if sold. 

For instance, a Georgian mahogany sideboard insured for £4,000 (its retail replacement value) might realistically sell at auction for just £300-500 in today’s market. Using the insurance figure for probate would artificially inflate the estate’s value, potentially pushing it into a higher tax bracket or unnecessarily increasing the inheritance tax bill. 

HMRC specifically requires open market values, not insurance values, and using the wrong figures could lead to overpayment that is difficult to reclaim once settled. 

When to Call in Professional Valuers 

For estates approaching or exceeding the inheritance tax threshold, professional valuations provide crucial protection. Even for estates under the threshold, HMRC expects executors to demonstrate “reasonable care” in their valuations – a professional assessment helps fulfil this obligation. 

Experienced valuers understand current market conditions and, critically, can identify valuable items executors might never recognise. That innocuous-looking vase in the attic or vintage watch in a drawer could be worth thousands, while family “treasures” might be worth very little. This expertise is particularly valuable for specialist collections, jewellery, art, and antiques. 

Professional valuations make financial sense when the potential tax savings outweigh the cost or when the estate includes numerous potentially valuable items. Swift Values offers accessible options including online item valuations from just £25 and comprehensive house contents valuations from £99, all conducted by professionals with decades of experience. 

Probate Valuations – Last words 

Accurate probate valuations are an essential part of estate administration, not merely a box-ticking exercise. By understanding HMRC’s requirements, disregarding family myths, using appropriate valuation methods and seeking professional help when needed, executors can ensure they fulfil their legal obligations while protecting the estate from unnecessary taxation. 

The consequences of getting valuations wrong can be significant – from potential HMRC investigations to missed tax savings or unfair distribution among beneficiaries. Taking time to approach this process thoughtfully represents good stewardship of the deceased’s estate. For more detailed guidance on specific valuation challenges, Swift Values offers helpful resources through their regularly updated blog and valuation advice service. 

Mark Littler is a seasoned valuation expert who began his career as an auctioneer at Tennants Auctioneers before founding Mark Littler LTD in 2016. In 2024, he established Swift Values, a specialist probate valuation service helping solicitors and private executors manage estate administration efficiently through both in-person and online valuation services. He offers some probate advice on how to value possessions