Qualified Appraisals And Who Can Perform Them

Estates holding property without a published market price need a supported value. Who prepares that appraisal, and how, matters as much as the number it produces.

Why an opinion has to be independent

Values reported for estate purposes are subject to review, and a figure supplied by an interested party carries little weight if it is examined.

Appraisal requirements exist so that the value rests on an identifiable methodology applied by someone with no stake in the outcome.

An estimate from a family member, a local agent's informal opinion, or a figure taken from an online valuation tool generally does not satisfy that standard.

What the appraiser is expected to be

Federal rules describe characteristics an appraiser should have, including relevant qualifications or experience, regular practice in performing appraisals, and independence from the transaction.

The specifics are technical and have been revised over time, so whether a particular person qualifies for a particular asset is a question for the estate's tax professional.

Different asset classes need different expertise, and a real estate appraiser is not interchangeable with someone valuing artwork or a closely held business.

The report matters as much as the number

An appraisal that will withstand review generally describes the property, the effective date, the methodology used, the data relied on and the appraiser's qualifications.

The effective date is important because estates report values as of a particular date rather than at the time the appraisal happens to be performed.

A short letter stating a figure with no supporting reasoning is common and is the version most likely to be questioned.

Business interests are the difficult category

Closely held business valuations involve judgment about earnings, comparability and the effect of holding an interest that cannot be readily sold.

Those judgments can move the reported value substantially, which is why this category attracts particular attention on review.

Specialists in business valuation are ordinarily engaged for this rather than general appraisers, and their reports are correspondingly detailed.

Where appraisals matter beyond tax

The same valuation often supports the estate inventory, the division among beneficiaries and any later sale, so a weak appraisal creates problems in several places.

It also establishes the starting point for how gain is later measured, which is a question with consequences long after the estate closes.

Because requirements and thresholds are set by rules that change, the estate's attorney and tax professional should confirm what is needed before an appraiser is engaged.