Estate tax liability. Disposition of assets. Divorce. Probate. There are many situations -- none of them lacking stress and complexity -- where you might need an appraisal of property that states an opinion of what the property was worth on a date some time ago, rather than when the appraisal is ordered. For estate tax purposes or disposition of the assets of a decedent, a "date of death" valuation is often required.
A Date of Death appraisal is a retroactive or retrospective appraisal often used when settling an estate. In a Retrospective Appraisal, the value that is being determined is the value at a prior date (the Effective Date), regardless of the date the inspection takes place; the current value is not relevant, and any market changes that have occurred since the Effective Date are ignored.
When an estate has a transfer of ownership due to death, it is very common for a Retrospective Appraisal to be used for tax purposes or inheritance distribution using the date of death of the owner of the property as the Effective Date; hence the term “date of death” appraisal.
How it Works: Estate or probate appraisals are commonly ordered between 2-6 months of the death of a loved one (or inheritance of property), though sometimes the appraisal is ordered within weeks, while other times there is a much more substantial time period. Typically a family member or heir chooses an appraiser for the job at hand, or an attorney or accountant will order the appraisal. Sometimes, the executor of the estate may choose to have the Effective Date be six months after the date of death -- but the same principles apply.
In addition to needing a retrospective value during the estate planning or probate process, sometimes the ordering party will also request a current “as is” market value or value based upon the date the title transferred from the deceased to the heir (if the transfer was after the date of death). In these cases there are really two appraisals being done since there are two separate values issued. Most of the time only one appraisal is needed though, but every situation is unique and it all depends on the particular needs of the estate.
This is one of those things that many of us don’t know much about until we actually experience it personally. If you are in a situation where a loved one has passed or you recently inherited a property, I hope this information will help give you some insight into the process of estate planning as it pertains to real estate appraisals. Attorneys, accountants, executors and others rely on Hillside Real Estate Appraisal & Broker for "date of death" valuations because such appraisals require special expertise and training. They require a firm that's been in the area for some time and can effectively research comparable contemporaneous sales.