How to Value Your Estate

When you start writing your Will, one question that will inevitably pop up is, ‘what is the value of my estate?’ Knowing the value of your estate can help you make informed decisions about how to distribute your assets after you pass away and can also help you plan for your financial future while you’re still alive. Calculating the value of your estate can seem like a daunting task, but it’s important to carefully consider all of your assets and liabilities. 

Why Value Your Estate? 

A Will allows you to leave your assets to your loved ones and family. However, if you don’t know what you own or its value, you won’t be able to leave specific gifts.

Understanding how much your estate is worth helps you decide how your estate is divided and what gifts you want to leave to loved ones. It also gives you an idea of how much Inheritance Tax (IHT) you may need to pay, which can help you plan to reduce it. 

The executors of your estate will value it fully to start the probate process and begin sending gifts to your beneficiaries. You can still write a comprehensive Will if you know roughly how much your total assets are worth. 

To help with the probate process without thoroughly evaluating your estate, you can inventory your estate and list all your assets and liabilities. Therefore, your loved ones won’t miss anything when they start the evaluation. 

Calculating the Value of Your Estate

A rough way to determine the value of your estate is to work out the value of all your assets minus your liabilities. The result is the total estate that you can leave to your loved ones. 

Your assets include the following:

  • Bank accounts 
  • ISAs
  • Stocks 
  • Pensions 
  • Investments 

Once you have a list of possessions, you can assess each one to get the gross value of the estate. Any possessions worth over £500 should be valued by a professional to get the most accurate total. 

Valuing Your House

Your house is likely your biggest asset, so it is an excellent place to start when working out the value of your estate. There are several ways to do this, which can depend on your estate’s total value and IHT allowance. 

If your property is worth close to or above £325,000, it is recommended to have your property valued by a Royal Institute of Chartered Surveyors (RICS) professional. You have an IHT-free allowance of £325,000, and an additional £175,000 if you leave your property to your child or grandchild. For tax planning purposes it is, therefore, vital to know if your home falls above or below this threshold. If HMRC tries to dispute the house’s value, you can refer them to RICS. You would have to pay for this option, but it could be worthwhile for greater peace of mind. 

Alternatively, you could get a free property assessment from your local estate agent. This would be more accurate than estimating the price yourself, and you can also get several opinions to get an average value. 

If you own your property jointly with your partner or spouse, you will calculate the total value of the share of the property that you own. For example, if you both owned 50%, you would divide the total value by 50%. The same rules apply if you own different shares of your property, such as 30% and 70%.  


Gifts you make in the years before your death can be counted as part of your estate. Carefully planning and keeping a record of any gifts you make can help your loved ones when they apply for probate and lower the amount of IHT to pay in the future. 

A gift of any amount can be exempt from IHT, provided you live for more than seven years after you make it. These gifts are Potentially Exempt Transfers; if you pass away within seven years, it is a Chargeable Transfer. 

However, taper relief also applies to Potentially Exempt Transfers. If you pass away three years after making the gift, the IHT rate will be reduced:

  • 0-3 years – full IHT payable at 40%. 
  • 3-4 years – IHT payable at 32%.
  • 4-5 years – IHT payable at 24%.
  • 5-6 years – IHT payable at 16%.
  • 6-7 years – IHT payable at 8%. 

There are several ways to give gifts completely tax-free, including:

  • Your annual gift allowance – you have a gift allowance of £3,000 per year that you can give away tax-free. It stacks for one year, so you can give a total of £6,000 away tax-free. However, after two years, it resets to £3,000, so use it wisely!
  • Gifts worth less than £250 – you can give away as many gifts as you like as long as they are worth less than £250. You also cannot give one of these gifts to someone who has received your £3,000 annual exemption. 
  • Gifts to help with living costs – you can give a gift to pay the living costs of a child under eighteen or an elderly relative without worrying about tax implications. 
  • Wedding gifts – for wedding gifts to be IHT-free, they must be made before the wedding, and the wedding has to happen. You can give up to £5,000 to a child, £2,500 to a grandchild, and £1,000 to friends and other relatives tax-free. 

You can also make gifts of your surplus income if you have enough to maintain your usual standard of living. However, to use this exemption, you must keep good records, or they may be classed as part of your estate when you pass away. 

Knowing the total value of your estate is essential for writing a good Will. Although you don’t need to know all the details (as your executors will assess your estate fully once you pass away), having an outline and keeping track of any gifts you make can help you lower any IHT payable and plan for your beneficiaries in advance. 

This can be a complicated area of estate planning to handle alone, so get in touch with The Planning Bee for help. Our team is here to help you create a bespoke estate plan tailored to your needs so you can take care of your loved ones in the future.

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