Estate Appraisals: What Is The Role Of Appraisals In Estate Planning?

Many people assume that having an estate plan is as simple as creating a will and calling it done. However, this is not always the case. Depending on the size, value, and assets involved in an estate, an estate appraisal may be necessary. Estate appraisals help to ensure the correct value of assets before calculating taxes and distributing assets to beneficiaries. An effective and knowledgeable appraisal can help prevent familial conflict and ensure a smooth transition of assets.

For more information on estate appraisals, consider speaking with a skilled Arizona estate planning attorney from Harrison Law, PLLC. Schedule a consultation by calling the office at (480) 320-2310.

What Are Estate Appraisals?

Estate appraisals are professional evaluations of all assets possessed by someone recently deceased. This is generally done to determine the fair market value of the estate for the date of death of the owner. Understanding this value is what enables judges and negotiators to determine what dollar amount is owed to beneficiaries and what may belong to the government as taxes. The Arizona Codes also clarify that an appraisal must be independently and impartially compiled for the courts.

Undergoing estate appraisals is often a key factor in estate planning, as it allows for a more seamless transferral of assets between grantors and beneficiaries. Estate appraisers will take into account things like real estate, personal property, investments, and much more. This process also factors into the determination of probate taxes and other dues that are owed to the government.

The Importance of Estate Appraisals

In Arizona, estate appraisals are an important step in settling the accounts of the deceased and executing the will or trust that the testator or grantor has established. The majority of these legal documents have beneficiaries who will receive an inheritance, however, one must also consider the estate taxes that are owed to the government and the settling of debts.

By accurately valuing the estate, including real estate, property, and investments, an appraiser is able to provide an accurate figure that executors and courts can use to evenly distribute the estate between beneficiaries. An accurate valuation can help accurately pay out debts and prevent legal disputes among beneficiaries.

Factors That Influence Estate Value

Conducting an estate appraisal is much more complex than simply hiring a single appraiser and giving them a list of all one’s assets. Appraisers often have different specializations, such as in real estate, jewelry, art, or other categories. Depending on the size and value of the estate, multiple appraisers may be required to get an accurate assessment.

Some of the key factors that may influence the valuations of these various appraisers are the current market trends, the quality and condition of the items themselves, and the selling potential of such an item. The price that an asset was purchased for may no longer be accurate, as the market is constantly shifting and changing.

Key Arizona Real Estate Laws

Often, one of the most valuable assets that a person will own is their home. When it comes to real estate, there are several laws that may affect an estate plan. Arizona is a community property state, which means that property acquired during marriage is generally considered to be jointly owned by either spouse.

Arizona also protects part of the equity of real estate from creditors under the homestead exemption. In addition to this, the state also allows for beneficiary deeds, which can allow a grantor to avoid probate and bequeath the assets directly to a beneficiary.

For more information on estate appraisals, consider speaking with an experienced Arizona estate planning lawyer from Harrison Law, PLLC.

Types of Estate Appraisal

Each estate is different, and many will require unique estate appraisals to suit the needs of the individual. Understanding the various kinds of appraisals and the situations in which they are necessary can help prevent inaccurate valuations and conflict. Most appraisers will be subject to the standards set by the Uniform Standards of Professional Appraisal Practice (USPAP).

Estate Tax Appraisal

Generally, estate tax is levied on the net value of a deceased person’s assets. In order to properly calculate the tax, one must first understand the total value of the estate. An estate tax appraisal will calculate the total value of the deceased’s estate in order to produce the most accurate figure for taxes. An accurate estate appraisal can help avoid overpaying taxes.

Estate Trust Appraisal

However, not all estate plans involve wills that go through probate. Some people opt for trusts, which tend to move much faster due to avoiding probate. These trusts may require an appraisal either after death, or when the trust is being created. Understanding the value of these assets in a trust can help avoid confusion and conflict.

Donation Appraisal

However, some people don’t wish to sell off estates, because sometimes donating items from an estate can provide a beneficial tax break. In this case, a donation appraisal might be required. These appraisals can be for estates, but they may also be used by living individuals interested in the tax benefits for other reasons. In some circumstances, this appraisal may be required to receive the tax benefits.

Probate Estate Appraisal

In addition to these, if an individual dies intestate, their estate goes through probate court by default to determine who inherits what assets. In this case, the court would require an appraisal of assets in order to understand how to divide them equitably between those involved. However, the estate appraiser is not involved in the distribution of assets. Their only job is to give an accurate valuation of assets.

Frequently Asked Questions

Listed below are some of the frequently asked questions regarding estate appraisals.

Why Are Estate Appraisals Necessary?

Having an official, unbiased appraisal of assets is often required by the IRS or other government agencies in order to ensure that the proper taxes and dues are paid. Appropriate documentation can help avoid legal conflict.

What is USPAP?

The Uniform Standards of Professional Appraisal Practice are guidelines set forth by the Appraisal Foundation to ensure proper conduct from all estate appraisers.

Contact an Arizona Estate Planning Lawyer Today

Understanding estate appraisals can be difficult, but having an accurate valuation of an estate can help avoid familial conflict, ensure that taxes are paid correctly, and ultimately smooth out the rough patches in the process of sorting through an estate. Having confidence in proper documentation can also help relieve stress during the difficult process of distributing assets.

For more detailed and specific information on estate appraisals, how to find an appraiser, and more, consider speaking with an experienced estate planning attorney from Harrison Law, PLLC. Schedule a consultation and learn more about your legal rights by calling our dedicated legal team at (480) 320-2310.

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This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.