“Death is not the end. There remains the litigation over the estate.” — Ambrose Bierce.
If you are tasked with obtaining an Estate Appraisal, it probably happens at a difficult time in your life. If you have lost a beloved family member, we extend our sincere condolences.
We have experience with Estate Appraisals, or Date of Death (DoD) appraisals, as they are also commonly called. We work with attorneys, trusts, LLCs and private entities throughout the Pikes Peak Region to provide them with residential real property appraisal services for estate settlement.
An Estate Appraisal usually centers around an appraised value that is retrospective, meaning that the effective date of the appraisal is a date in the past, the date of the estate owner’s passing. Contrary to this, most appraisals are based on a current effective date, current to the time that the appraisal is being formed and the value opinion calculated.
The IRS’ definition for Fair Market Value states:
“The price at which the property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts. The fair market value of a particular item of property includible in the decedent’s gross estate is not to be determined by a forced sale price. Nor is the fair market value of an item of property to be determined by the sale price of the item in a market other than that in which such item is most commonly sold to the public, taking into account the location of the item wherever appropriate.”
The Estate Appraisal is needed to establish a “basis” to measure estate taxes when the property of the deceased is transferred to a new owner. Hence, the DoD Appraisal made by a licensed appraiser for estate settlement is used by the client, his tax advisor or accountant and the IRS to calculate estate taxes.
Not every heir has to pay estate taxes on his or her just inherited properties. For 2022, the federal estate exemption is $12.06 million, and it will increase to $12.92 million in 2023. Estates smaller than this amount are not subject to federal taxes, though individual states have their own rules. Additionally, tax codes are complicated and there are a plethora of requirements and exemptions.
Disputes within the family or a group or heirs related to the value of real estate property often surmounts at some point, and getting an appraisal on the property is a good way to handle such a dispute.
Dealing with estate taxes several years after the passing of the estate’s previous owner can be much more costly as appraisals with an effective date many years in the past are often more difficult, especially if the property has been substantially altered since the date of the previous owner’s passing.
Therefore, it is of greatest importance to consult with an attorney or tax professional before dismissing the need of an estate appraisal.
If you need a DoD/ Estate Appraisal of residential real estate, please contact us for a fee quote and our turn around time. Please include the date of passing in the comments section. We are also glad to answer any questions you maybe have about this appraisal process.
