Date of Death Appraisals
Estate planning isn't typically at the top of someone's day-to-day to-do list. However, without proper planning and understanding of the process, it can make difficult circumstances even harder.
The date of death appraisal is a crucial part of the estate planning and settlement process. If you're in the process of obtaining one or wondering, "What does date of death valuation mean?" you're not alone.
Read on to learn more about the date of death appraisal process and tips for hiring the right appraiser.
What are date of death appraisals?
The date of death appraisal, also known as an estate appraisal or historical appraisal, is a retrospective appraisal of someone's estate as of their date of death. It includes statement values for the person's bank, investment and retirement accounts and helps determine the value of their real estate assets at the time of their passing.
Date of death appraisals are completed during the estate settlement process or within six months after the date of death. To do so, you must hire a state-licensed real estate appraiser qualified by the IRS to complete the appraisal.
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When do you need a date of death appraisal?
The IRS requires date of death appraisals when the ownership of an estate is transferred due to death or inheritance. This must be completed within six months of the decedent's passing.
Estate planning
Date of death appraisals can be used for estate planning purposes ahead of time.
An owner might want to set up their assets themselves so their loved ones will have a more manageable process once the time comes. This is typically used to plan for taxes and equitable distribution of assets.
Probate
Probate is the official legal procedure that acknowledges a will and designates the executor or estate administrator who is responsible for managing the estate and distributing the assets to the rightful beneficiaries.
After an owner's passing, a date of death appraisal must be conducted and provided to the probate court.
Estate taxes
The IRS will need the date of death valuation to determine whether taxes are owed on the property.
Capital gains tax
When you inherit real estate from a deceased individual, the property's basis is adjusted to its appraised value at the owner’s time of death.
If you decide to sell the inherited property, you might be liable to pay capital gains tax on any profit made.
Inheritance tax
In certain states, beneficiaries who receive property from a deceased individual may be responsible for inheritance taxes. Date of death appraisals are necessary to determine the inheritance tax.
Florida does not have an inheritance tax, but you may be subject to inheritance taxes in other states.
Who is involved in the date of death appraisal process?
A few people play vital roles in the date of death appraisal process. Anyone involved in the settlement process, including the executor, accountant, lawyer or another family member, can order a date of death appraisal.
You can find more about each person's role below:
Licensed real estate appraiser
State-licensed real estate appraisers qualified by the IRS are responsible for conducting a thorough evaluation of the property, considering factors such as location, condition and comparable sales at the time of the person's death.
The appraiser's report provides a foundation for the estate's valuation and is critical for tax purposes and equitable distribution among beneficiaries.
Decedent
The owner whose estates are being appraised is at the core of the process, even in their absence, since the appraisal assesses the value of their assets on the date of their passing.
Estate administrator or executor
The person appointed by a court or chosen by the deceased person before their passing oversees the appraisal process.
An estate administrator is anyone appointed to manage the deceased person's affairs if there is no will. An executor is a type of administrator named explicitly in the person's will to manage their estate after their death.
They make sure it serves the best interest of the estate and work closely with appraisers to gather necessary documents and information.
Beneficiaries
Those chosen to inherit from the owner play a more passive role. They have a vested interest in the appraisal outcome, as it directly affects the value of their inheritance.
Lawyers
Estate attorneys or probate lawyers guide executors and beneficiaries through the legal complexities of settling an estate, including interpreting wills, distributing assets and resolving disputes.
Legal professionals ensure that the date of death appraisal is used appropriately, establish the estate's tax obligations and assist in the fair division of property.
Tax professionals
Accountants or tax advisors specializing in estate taxes rely on the date of death appraisal to calculate any estate and inheritance taxes owed while ensuring compliance with federal and state tax laws.
A tax professional also helps minimize the estate's tax liability while adhering to IRS requirements.
Date of death appraisal responsibilities
The IRS outlines a few responsibilities of an estate administrator that your appraiser should be familiar with, including probate court and tax return requirements.
It's important to note that tax returns for the deceased person and their estate are separate filings.
A brief outline of the IRS date of death appraisal responsibilities:
- Probate Court
- Income Tax Returns of the Deceased
- Income Tax Returns of the Estate
- Federal Estate Tax Return Documents
A qualified appraiser will possess the reasonable knowledge required to guide you accurately through the entire estate settlement.
What information does a date of death appraiser need?
Your appraiser will use the information listed below, along with market conditions, sales records, construction data and cost-to-build information, to get an accurate valuation of the owner's estate at the time of their passing.
- Owner's date of death
- Your CPA & attorney information - Name and contact info
- Estate situation - This includes the condition of the property and if anything has been modified after the effective date of death (those modifications cannot be taken into account in the appraisal report)
- Date of death appraisal deadline - Usually within six months following the date of death
- Inspection date and time - They need to know when you are available for the inspection
- Additional records - Your appraiser might ask for additional records including deeds, property photos or inspection reports.
How much do estate appraisals cost?
The cost of a certified appraisal will depend on various factors, including the property type, which appraiser you choose, the complexities involved, the size of the estate and more.
However, some certified appraisal companies provide convenient appraisal services at a fixed cost.
Appreeze is an excellent example of a qualified appraiser that offers fixed rates. The company streamlines the real estate appraisal process with virtual walkthroughs conducted by local licensed appraisers.
To learn more about Appreeze or submit an appraisal request, follow the link below.
Tips for hiring the right appraiser
Finding the right appraiser is necessary to ensure a smooth and accurate process. Not only should you ensure the appraiser is certified, but you must also verify that they will complete the process on time and meet your personal preferences and schedule.
Here are a few tips to help you with the search:
- Verify that the appraiser you choose is a state-licensed real estate appraiser qualified by the IRS.
- Seek recommendations from a trusted real estate agent, bank or loan officer.
- Make sure the appraiser has notable experience conducting date of death appraisals.
- Find an appraiser with reasonable fees.
- Verify that the appraiser will deliver the appraisal report on time.
- If you prefer to save time and conduct the appraisal virtually, make sure the appraiser you choose provides a remote, desktop appraisal service.
Appreeze - A Better Appraisal Experience
Appreeze makes the appraisal process easier than ever with remote inspections conducted by qualified appraisers.
Appreeze connects you with experienced, qualified appraisers who have completed hundreds of appraisals and are ready to make the process fast and efficient.
This new, valuable tool utilizes new technology to conduct GPS-authenticated,
appraiser-directed video walkthroughs that meet all the requirements for official real estate appraisals.
Try Appreeze and find out how easy it is to order an appraisal in 2024.
