The deceased owned a flat which burnt down along with the entire block in May 2025. The flat was valued at £250,000 prior to the fire. He died in June 2025. The will appoints two executors who have been asked to obtain the Grant of Probate. The insurance company is not paying out any monies under the insurance policy but is planning to rebuild the block which is ongoing. Can anyone advise on what value we should use for the flat in the probate application?
You may need a RICS valuation to determine this to ensure that the right value is applied for Inheritance Tax purposes, especially as the Insurance company is planning to rebuild. The other issue is then when the flat is eventually sold, there will likely be capital gains tax because there will be more value in the flat than there was when he died.
I suspect there is no perfect answer to this but, based on the actual assets at death, I would think the value would be something of a guestimate based on the restored value, significantly discounted for the loss of use/rent while it is rebuilt and the risks inherent in the process (major delays, poor rebuilding, disputes with the insurer). That discounting may give you some leeway depending on whether the estate would benefit from a high or low probate value.
I suggest that you also consider the terms of the lease and the insurance policy which should/may address valuation in this type of circumstance.