Estate Administrators Must Understand the Need for Property Appraisals
When your loved one passes away, the work of administering his or her estate begins. There are a great deal of responsibilities that come with an estate administration. One aspect of your duties is to determine the value of the property in the estate. In order to do so, property appraisals may be necessary.
Why Use an Appraisal?
Property appraisals are important during an estate administration for many reasons. The personal representative of the estate needs to determine the actual value of the estate as a whole in order to complete the probate process. This includes having the appraisal value to file any necessary tax returns for the estate. Property appraisals are also important when the estate is going to be divided among more than one heir or beneficiary. In order to make these divisions in the proportions directed by the decedent—or by law, if he or she died without a will or trust—the personal representative needs to know the cash value of the individual assets as well as the assets as a whole. In addition, appraisals of individual items of property are necessary for tax purposes in order to determine whether tax owed and to set a tax basis for the beneficiaries or heirs that receive the property.
What Type of Property Needs Appraisal?
Many assets of the estate use their cash value as of the date of death of your loved one for appraisal. For example, the value of your loved one’s checking account is its balance on the date that he or she died. Other items may require a professional appraisal to determine their value.
These items include the following:
- Real estate
- Coin collections
- Art collections
- Jewelry
- Motor vehicles
There are some instances, however, where an appraisal may not be necessary.
For example, if real estate belonging to an estate is sold shortly after your loved one’s death, the sale price can sometimes be used as the value of the property. Some assets, such as household goods like furniture and clothing, can be appraised just by using their fair market value. It is important to seek the guidance of a knowledgeable estate attorney when making decisions relating to appraisals.
How Is an Appraisal Performed?
Generally, the person in charge of administering the estate is responsible for conducting an inventory of all of the estate’s assets. This includes both cash and non-cash assets. For cash assets, the “appraised” value is their value as of the date of the death. For non-cash assets, the estate administrator may seek to hire a professional appraiser. A professional appraiser conducts an appraisal of real estate, vehicles, antiques, and other property by conducting an in-depth evaluation. He or she will inspect the property and appraise it based upon a list of criteria that are specific to the item’s particular industry.
For example, the appraisal of real estate will involve comparisons of similar sold properties in the area. It will also involve an assessment of the property’s condition, calculations based on the size of the lot, the number of rooms in the home, amenities, location, and the current housing market conditions.
Probate requires more than just completing an appraisal.
Appraising the value of property in an estate is just one aspect of the overall estate administration process. Unless you have administered an estate in the past, you will likely require assistance during this process if you find yourself in charge of carrying out this important responsibility. Fortunately, we can help. We encourage you to start by learning more about the process as a whole. Check out our free guide that will help you understand what to expect during the California estate administration process.
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