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Valuation of Your Estate

By: Mike Watson - Updated: 7 Sep 2012 | comments*Discuss
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Valuation of your Estate is an essential part of planning ahead for Inheritance Tax and it is difficult to avoid paying tax (or a share of the total payable tax) if you are not aware how much you will owe. The tricky thing here lies in not knowing what your Estate will be worth when you are dead. To be sure, someone else will be responsible for valuing your Estate when you have passed away (either the Executor you have named in your will or someone else acting on their behalf). However, you may still want to accurately have some idea in advance so as you can make maximum use of Inheritance Tax relief (see related articles for various ways to reduce Inheritance Tax).

It must be noted that having a reasonably accurate valuation of your entire Estate at the time of your death will greatly help those who are left to look after your Estate and your Inheritance Tax liability.

Factors in Valuating Your Estate

Major factors affecting the valuation of your Estate and your Inheritance Tax liability include both the value of property at the time of your death and the nil rate band for the payment of Inheritance tax at the time of death. Other factors include the value of artworks, antiques (which can be prone to sudden rises and falls the same as the housing market) and the value of any shares you might own, together with other major assets.

The major concern you may have is that you may inadvertently cross the threshold for Inheritance Tax as elements of your Estate increase in value before you have a chance to take advantage of the law and offset your tax liability through any number of the legal ways available. Alternatively, you may fear that offsets that you have made in order to avoid Inheritance Tax in the past will not be enough in face of rising house prices (and so on) that increase the value of your Estate. In order to assess these issues you may wish to have your Estate evaluated on its own as part of wider services offered by financial experts who will aim to help you reduce your Inheritance Tax bill.

If you wish to value your Estate yourself make sure that you consider current costs for your Estate. In doing this it may help to take a look at market trends. Compare the costs of houses on your area, for example, and if you have artworks and antiques, look for similar items for sale at auction or in specialist shops. Remember to take into account savings counts you may not have touched for years, money owed to you and money that you owe to others. Also, if it is at all likely, try to project ahead for the eventuality that you yourself may inherit a windfall. It is good practice to value your Estate every few years, and again if markets have risen or fallen significantly. When doing so project 5 and ten years on the future just so you can plan for all eventualities. Remember – you may not be so sharp at making plans in a few years time!

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