There are benefits to using probate valuation to administering property. For one, it has a clear set of guidelines, whether there is a will intact or not.
Another is, the Executor of the estate can be a neutral person whose sole purpose is to ensure the assets are valued and distributed according to the Will.
However, the process does take time and money. That eventually may not result in much value for the beneficiaries. Therefore, before deciding to use this process, factor both the good and the bad.
But First, What Is Probate Valuation?
Probate valuation is a legal process that grants a person the right to execute the Will of a deceased person. In the absence of a will, the probate valuation process can still apply.
During the process, the Executor acts on behalf of the beneficiaries.
Now that settled, let’s weigh in on the things that can make or break the probate property valuation process.
Benefits to the Probate Process
You Can Appoint a Solicitor as the Executor
There is a misconception that probate valuation is complex. That’s an oversimplification of the concept.
It is a process that does require some basic understanding of the legal process in carrying out the valuation. However, you can also appoint a solicitor as an Executor.
A solicitor can:
- Identify the beneficiaries and dispel any legal complication from the claims;
- Help when the estate exceeds the minimum threshold for inheritance tax;
- Work with other property professionals to get an accurate valuation of the property and assets.
Protection Against Creditor’s Claims
The process of probate enforces strict rules to claims by creditors. Once the process of probate starts, the creditors have a time limit to file a formal claim.
This period is called ‘statute of limitations’. It stipulates the amount of time the creditor has to begin legal proceedings. If they fail to do so during this period, then they lose all claim in future.
Another advantage is you can always challenge the validity of the creditors’ claim in court. It’s harder to do so outside the probate process.
The Right Process Is Used to Handle Disputes
Distributing assets among beneficiaries can cause problems. Even with a will, disagreements can arise.
Within the probate process, you can settle disputes among beneficiaries in court. The court acts as a neutral party without any bias towards either party.
Disadvantages to the Probate Process
The Process Can Be Time Consuming
It takes about 6 – 9 months to complete the property valuation process. If the will is not clear or there are disputes, it can take longer.
For beneficiaries who need access to the assets immediately, the waiting can be frustrating. Particularly for those who want to sell the property.
Unfortunately, very little help quicken the process aside from when the estate owes inheritance tax.
It Can Be Expensive
The costs of probate valuation can add up, which can significantly lower the size you’ll receive. Some of the costs of probate include:
- Court fees
- Appraisal fees
- Solicitor’s fees
- Probate application fees
The costs need to be paid before distributing the assets. Gains in the sale would result in an income tax liability which further decreases the amount shared by the beneficiaries.
The Lack of Privacy
In the process of probate, details of the estate become public knowledge. Information including, the inventory of the assets and their value is no longer private.
Probate valuation has the advantage of a system that makes provisions for the circumstances that would arise during the execution of the probate will. However, also bear in mind the constraints of the system.