Appraising an Estate


estate“I may as well enjoy myself now, because I can’t take it with me… and you would blow through it all in a day!”  Ever heard someone say that in jest, or when they were slightly annoyed with their children acting greedy?  Not that you or I would ever do that as a child (smile).  No matter what frame of mind the person may be in when they say it, it’s certainly the truth.  In my world, the world of legalese which drives everyone crazy (including myself at times), the possessions that people leave behind are known as the decedent’s “estate.”  Whether you have little or much, it’s wise if you have your house in order before you cross over.  For those of you who don’t, the rest of us get to experience the joy of sorting it all out.  Uhg.

If you have been named as an executor or trustee, you’ll need to assign a reasonable value to all the “stuff” for estate tax purposes. If we return to boring legalese, it’s important to know if the value of the decedent’s estate exceeds the estate tax exclusion amount.  If it falls under the mark declared by the state, you can breathe a sigh of relief.  No tax will be due.  If not, you’ll need to pay up!  You can quickly see why it’s important to value items properly.

Taxes are one reason for valuing an estate.  Another common situation is the decedent’s desire to split an estate between siblings using percentages.  To keep things simple for those of us who may be challenged with math, think of it like this.  Dad has passed.  Mom is loving and fair, so mom set up a trust that leaves half of the “stuff” to the son and half to the daughter.  She knows her children well, so she knows that they don’t need (or want) her actual “stuff”.  So, she stipulates that the trustee, or executor, of the estate should value everything and then sell it and split the proceeds equally between the two.  If that person happens to be YOU as the aunt or uncle or close family friend, you would be shirking your duty to the kids if you distributed money to them based off of your best guess.  Yikes!  Talk about a way to get happy, loving siblings riled up and into a family feud.  No, you must do your due diligence on their behalf.  To help you out, here are some items that are commonly left behind, and a few thoughts on how to determine their value.

1. A Home

A family home that is left behind is not just filled with priceless memories, it is typically the most valuable asset in a decedent’s estate – so it is critical that the home’s value is accurate. I usually recommend that you retain a licensed real estate appraiser in the state the home is located in.  When push comes to shove, people tend to look for a quick fix.  Stop!  Jumping on a website like Zillow to save time and money is very risky.  There’s no way that a piece of appraisal software (as good as it may be) can account for a roof that’s blown off from a hurricane, or a noisy middle school across the street, or a bathroom tub that’s about to land in the center of the kitchen from rotted wood.  It’s fine for a professional to use Zillow, but you’re not a pro.  You need a pair of trained eyes in the picture to avoid a valuation catastrophe.

2. A Bank Account

Truth be told, many people are checkbook challenged and haven’t balanced their own account in years – let alone someone else’s.  That said, monetary assets are the easiest asset to value in an estate, so go for it!  A little addition here and subtraction there, and patience in waiting for items to clear that may not be logged, and you’re all set.  You’ve got this.

3. A Car

Kelley’s Blue Book is the vehicle value bible.  If you spend a little time online, you’ll find that there are other resources out there; but KBB is by far the most popular guide for determining the value of a used car or truck.  I think you’ll be pleased with their process.

4.  Investment Accounts

You must use a stockbroker for all Investment Accounts.  You can’t simply pick a number from a statement.  You must average the high(s) and low(s), and if the final date falls on a weekend, a broker must review Friday and Monday.  That’s a simplified explanation, but you get the idea.  Investment Accounts are complicated to appraise.  Do not try to do so yourself.

So, there you have it.  These are certainly not the only assets to be appraised.  However, I hope that this basic review has helped.  As always, I’m at (408)741-3500 if you have questions or concerns.  Feel free to call on me anytime.

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