Estate Planning and Inheritance

Caution. It took less than 5 minutes googling the web to discover it is full of misinformation on this very topic. We hope to provide accurate information to help you avoid inadvertently stumbling into a serious future possible tax problem.  If you are the executor (or Personal representative) of an estate you have a fiduciary responsibility to the estate and must avoid any financial penalties that could follow if the estate tax return were subject to an IRS or State estate tax audit.

As an example this article says, “As the executor of an estate, you must value the estate’s real estate holdings at the time of the decedent’s death. You may be able to use the real estate assessment as the value at the date of death… …If the assessed value doesn’t match the market value of the real estate, you can ask a property tax assessor to appraise the real estate.”

That is inaccurate! You cannot use the assessed value because it has no supportable correlation with the fair market value at the date of death. In United States tax law, the definition of fair market value is found in the United States Supreme Court decision in the Cartwright case: “The fair market value is 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.”

A tax assessment is not the same as an appraisal because the intended use of the assessed value is primarily reserved for property taxation purposes. Actual sales used in the assessment process lag at least six months behind.  Furthermore, a “property tax assessor” would not be the correct person to contact for an appraisal.

You need to hire the services of a professional real estate appraiser to estimate the fair market value of the property at the time of the decedent’s death. The appraisal should include a well-supported, professional appraisal report that is admissible and defensible in court.  And it must follow the IRS Real Property Valuation Guidelines.

Generally, the estate tax return is due nine months after the date of death. If the market has declined since the date of death, an alternate valuation date (6 months from the date of death) may be selected for valuation purposes (for all estate assets) if doing so will reduce the estate tax.

Retrospective appraisals are fairly common in estate settlement situations. These involve appraising a home based on a prior date which is typically the owner’s date of death; hence estate appraisals are often referred to as date of death appraisals.

Estate appraisals are commonly ordered between 2-6 months after the death of a loved one or inheritance of a property.  the time period may be as long as a year or more depending on the circumstances at hand. during the settlement process, you may need a second appraisal to determine the current market value for purposes of a sale or settlement between heirs.

Every situation is different and the type of appraised value required depends on the particular needs of the estate.  This is not something you need to worry about as a good attorney, CPA or accountant can help direct you toward the type of value needed for the estate. We are happy to speak with your attorney, CPA or accountant to clarify exactly what is required for your situation.

Our approach:

Dealing with an estate is often one of the most upsetting and difficult times in a person’s life.  We understand and appreciate the sensitive nature of going into the family home and handle these situations with the utmost care.  We are also bound by the ethical provisions within the Uniform Standards of Professional Appraisal Practice (USPAP) which guarantees our customers the highest level of confidentiality and discretion. In addition, we provide you with comprehensive appraisal reports that meet or exceed requirements of the IRS, courts and other various agencies.

Working with licensed real estate appraiser Aladdin Appraisal rest assured that you will get the best in professional service and courtesy, while also receiving the highest quality appraisal reports. Our team of exceptional appraisers will be discreet and respect and protect your family’s privacy.   And if necessary Aladdin Appraisal stands behinds its appraisals and value estimates should matters advance to a dispute, trial or IRS audit.

Our Senior Staff licensed real estate appraiser, Adam Wiener, CRA will complete or personally review your appraisal. Our extensive experience includes dealing with local and prestigious law firms in the Greater Boston area. We welcome your telephone inquiries and invite your questions about our process.