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Estate Planning and Administration Services
Estate tax liability. Disposition of assets under a will or in probate. There are many situations -- none of them lacking stress and complexity -- where you might need an appraisal of property that states an opinion of what the property was worth on a date some time ago, rather than when the appraisal is ordered. For estate tax purposes or disposition of the assets of a decedent, a "date of death" valuation is often required. (Sometimes, the executor of the estate may choose to have the date be six months after the date of death -- but the same principles apply.) These types of appraisal represent one of the more common types of valuation assignments completed for a CPA, and for an attorney. The unusual element in property valuations to be used as part of estate tax determinations is that the value estimates are most often made as of the date of the death of the owner. These are sometimes called Date of Death, or DOD, assignments. Attorneys, accountants, executors and others rely on Home Analytics for "date of death" valuations because such appraisals require special expertise and training. They require a firm that's been in the area for some time and can effectively research comparable contemporaneous sales. Real property isn't like publicly traded stock or other items which don't fluctuate in value very much or for which historical public data is available. You need a professional real estate appraiser, bound by the Uniform Standards of Professional Appraisal Practice (USPAP) for a high degree of confidentiality and professionalism, and you need the kind of quality report and work product taxing authorities and courts need and expect.
Estate Planning and Valuation Services for Estate and Trustee Administration
Gifts of Real Estate
Another common subject of an appraisal prepared for a CPA or attorney is when the appraisal is to be used as support for the value a gift of real estate to a family member rather than as a charitable contribution. Gifting, for IRS purposes, is different than a charitable contribution. Gifts and other transfers of property by an individual to another under certain circumstances are subject to a gift tax. Appraisals are often used to help determine the value of the real estate which is being gifted.
The IRS website states that a gift is "Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return." There is a good IRS Q & A on the subject found at this link on the IRS website.
See this page for more information regarding charitable contributions of Real Estate.
Assets, specifically real estate assets, are placed in trusts for a variety of reasons. Perhaps an individual is not able to handle his or her own affairs due to competency or health issues. We know people in certain positions may be required to place their assets in a trust to prevent conflict of interest. Or perhaps, individuals are seeking to avoid certain taxes.
Trusts may be a way of managing assets, protecting assets, or transferring assets. Whatever the reason, trusts are often owners of real property.
When dealing with trusts, it helps to know the structure of a trust. There are three elements in a trust: the Grantor, the Trustee, and the Beneficiary. When undertaking an appraisal assignment for a trust, it is essential for the appraiser to have a clear understanding of which party to the trust is engaging the appraiser and the extent to which your assignment communication, including reporting, extends to the other parties in the trust. When working with an appraiser on behalf of a client in preparing a trust, or when acting as a trustee for a client, be sure that the appraiser is versed in these types of assignments. These valuation assignments are complex and generally require special training and experience that most appraisers who typically only do lender-type appraisals do not have.
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