Estate planning is an important part of financial planning, but it is very often overlooked and sometimes misunderstood. Below we discuss why to get appraisals in conjunction with estate planning whether talking about real estate or personal property of significant value, and what to expect in the appraisal process.
Why get appraisals during estate planning?
- Appraisals of privately held business interests (stock, partnership units, etc.) are required by IRS regulations to support values claimed on estate or gift tax returns.
- A professional appraisal provides the client some insurance against an IRS audit and professional support in case of audit.
- The costs of appraisals are deductible expenses on estate tax returns and sometimes in estate planning (e.g., family limited partnerships).
- Have a full appraisal report done on the most important assets. An accredited appraiser can help determine which pieces require a full report.
- Often the appraiser can assist an attorney in structuring an estate plan that will maximize the tax benefits for the client by providing the attorney with strictly a “value” point of view.
- The appraisal can provide a benchmark of value for an asset so that subsequent appraisals will illustrate the growth (or decline) in value.
Hiring an appraiser
Hire only accredited appraisers like those from the American Society of Appraisers who abide by a code of ethics and the Uniform Standards of Professional Appraisal Practice (USPAP). The independence, expertise and experience of the appraiser are critical to establishing a credible value in an appraisal (and the IRS knows the difference). Consumers can take advantage of ASA’s Find an Appraiser Referral System to find an appraiser in the area or nearby.
Question whether the appraiser will provide a report that gives a market value of the property that complies with the latest Internal Revenue Service requirements. (Replacement value or Cost for insurance is not appropriate for estate planning purposes and can yield a considerably different value.) Hiring a Certified Appraiser will ensure that you get a credible value for the estate.
If you have any questions about the process or our services please reach out via our contact us section or by phone.