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By: Scott Grossman on March 7th, 2018

When Appraisals Are Used During Estate Administration

When a loved one passes and the estate administration process begins, the tasks that lay ahead may seem endless. Taking the process one step at a time can help to make it feel less overwhelming. One aspect of some estate administrations that must be addressed is to appraise certain property in the estate. If you have never had the property professionally appraised in the past, seeking assistance from an experienced estate administration attorney can provide you with much-needed guidance. If you do need appraisals, it is a relatively common practice and one that your attorney can easily assist you with handling.

Who Needs Appraisals?

During the estate administration process, the question of whether to obtain an appraisal may be addressed by any of the following parties:

  • Attorneys administering estates or trusts
  • Accountants or enrolled IRS agents
  • Executors, personal representatives, and administrators of estates
  • Trustees of trusts

Common Situations Calling for Appraisals of Property

While an appraisal is part of many estate administrations, it is not always necessary. Your attorney will assist you in determining whether an appraisal is needed for any of the property in your loved one’s estate. Generally, however, an appraisal is necessary under the following circumstances:

  • If the property is sold to a relative of the decedent.
  • When real estate needs to be partitioned among the heirs or beneficiaries of an estate.
  • If a tax basis for the asset needs to be established in order to determine capital gains tax on the sale of the property.
  • In cases where gifts were made.
  • When a sale is made to a third-party buyer.
  • Before listing real estate of the estate for sale on the open market.
  • When a state is large enough to necessitate federal or state estate tax returns.

What Value Is Used by the Appraiser?

In most situations in California, an appraisal is needed to determine the fair market value of the property. The definition of fair market value is determined by IRS Treasury Regulations. According to this Regulation, “fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither being under compulsion to buy or sell and both having reasonable knowledge of relevant facts.”

How Is Property Appraised During the Probate Process?

In California, a Probate Referee is appointed for each county. These Referees are considered officers of the court. He or she appraises all of the property in the estate, with the exception of “cash” items, such as bank accounts. The Probate Referee works from the list of property provided by the personal representative of the estate. The appraised value is the value of the property as of the date of death of the decedent. Once the Referee completes the appraisal of the property, the personal representative files the Inventory and Appraisal with the appropriate court.

If you are ready to start your case, then please give us a call or fill out our Get Help Now form. A comprehensive overview of California Probate is available here. Should you have additional questions about trust litigation, you will find plenty of useful information in our Learning Center.