Settling an estate is one of those things that many of us don’t know much about until we actually experience personally. If you are in a situation where a loved one has passed or you recently inherited a property, I hope this information will help give you some insight into the process of estate planning as it pertains to real estate appraisals.
How it Works: When an estate has a transfer of ownership due to death or inheritance, it is very common for a real estate appraisal to be needed for tax purposes. Typically a family member or heir chooses an appraiser for the job at hand, or an attorney or accountant will order the appraisal.
Estate or probate appraisals are commonly ordered between 2-6 months of the death of a loved one (or inheritance of property). Sometimes the appraisal is ordered right away within two weeks, while other times there is a much more substantial time period.
Retrospective Value: In estate planning situations it is common for the appraiser to perform a ”retrospective appraisal”, meaning that even though the property might be inspected today, it isn’t valued off of today’s date, but instead based upon a previous date (usually the date of death of the owner of the property, hence the term “date of death” appraisal). For example, if an owner of a property passed away on October 12, 2010 and the current date is March 23, 2011, the appraiser would inspect the property today, but the value conclusion would be based on what the market was doing on October 12, 2010. For example, the two estate appraisals on my desk right now were inspected very recently and their respective value dates are 4-6 months ago.
Other Types of Value: In addition to needing a retrospective value during the estate planning or probate process, sometimes the ordering party will also request a current “as is” market value or value based upon the date the title transferred from the deceased to the heir (if the transfer was after the date of death). In these cases there are really two appraisals being done since there are two separate values issued. Most of the time only one appraisal is needed though, but every situation is unique and it all depends on the particular needs of the estate.
The Good News: If you are in a situation like this or expect to be soon, take assurance that the type of value is not something you have to spend time worrying about. There is no cause for alarm or worry at all. A good attorney or accountant can help direct you toward the type of value needed for your estate, and a company like mine already knows what questions to ask you. Your circumstances may be very difficult understandably, so the hope is that at least the professionals around you can help to smooth over some of the details like this so you don’t have to think too much about them.
If you have any questions about the estate or probate process in the Greater Sacramento Region, feel free to contact me at 916.595.3735, ryan@LundquistCompany.com or visit our appraisal or estate settlement website.
Alison Shuman Masis says
Ryan – one of the best posts I’ve seen on this topic! Your writing style makes the information very accessible, which is what consumers need when they’re looking for appraisal information!
Ryan Lundquist says
Alison, that’s very kind of you to say. I hope the post will be helpful to anyone local (or not so local). Take care. Thank you again.
Commercial Appraiser says
I would also suggest that you:
1. Address the alternate date which can be used in declining markets.
2. Give your appraiser plenty of time I suggest one month. Appraisers have a tendency to get busy around tax time.
3. Make sure the appraiser is an IRS Qualified Appraiser.
4. Check for the IRS Certificatin in the Report
Ryan Lundquist says
Thanks for the tips. If you notice, I mentioned the Alternative Valuation Date at the bottom of the article. I agree with you that it’s important to keep this in mind. I think you’re right that having more time is always better where possible. I find many owners or heirs are not in a rush, but sometimes they are.
For any onlookers, I have a Date of Death appraisal on my desk today, so they’re not always done during tax time. It all depends on when the heir or co-owner orders the appraisal. Sometimes it’s a matter of weeks or months after the death of the owner, but other times it can be much longer. I had an owner contact me recently with a need for a valuation for 1991. Apparently her situation fell through the cracks, so she may be needing a much older retrospective appraisal.
Ryan Lundquist says
Opps, I responded to this comment in my wordpress dashboard. I should’ve looked at which article you commented on as I assumed you were commenting on one I wrote today on “Date of Death”. My mistake. I didn’t mention Alternative Valuation in this one, but I have other articles that mention the importance of it.