Not sure where to begin with estate planning?
This post is all about knowing and understanding the value of your property when planning an estate.
Estate planning is extremely detailed and if you’re anything like me, you are focused on doing everything you possibly can to make sure you are including all the correct information.
I have a message that will resonate with anyone who struggles with estate planning.
Begin with knowing and understanding the value of your property.
This way you will be well-informed and prepared for making the necessary decisions when you sit down with your advisor.
This post is all about the 9 ways to use an appraiser for estate planning.
Where to begin with Estate Planning
Before you sit down with your advisor it’s a good idea to know the market value of your property.
I’m aware that many people will simply check Zillow for this information.
However, I would strongly advise against this because of the notorious inaccuracies related to their computer generated estimates causing almost a billion dollars in losses.
The most accurate way to know the market value is to have a real estate appraiser complete an appraisal report for you.
Here are the 9 ways in which appraisers assist in estate planning:
I will also show you the best way to find a real estate appraiser in your area in case your advisor does not have a recommendation.
1. Determining Fair Market Value
Appraisers assess the fair market value of real estate properties within an estate.
Fair market value is the price that a willing buyer and a willing seller would agree upon in an open and competitive market.
This valuation is essential for equitable distribution among heirs or beneficiaries.
2. Asset Valuation for Tax Purposes
The valuation provided by appraisers is often used for estate tax purposes.
The fair market value of real estate assets is necessary for calculating the taxable value of an estate, which can affect estate tax liabilities.
This information is crucial for compliance with tax laws and regulations.
3. Equitable Distribution among Heirs
Appraisals help ensure that the distribution of real estate assets is fair and equitable among heirs or beneficiaries.
This is particularly important when dividing the estate among multiple individuals who may have different interests or expectations.
4. Estate Administration
Appraisers assist estate executors and administrators in fulfilling their responsibilities by providing accurate property valuations.
This information helps in managing and distributing the estate in accordance with the deceased individual’s wishes and applicable laws.
RELATED POST: Inheritance Taxes / Settle an Estate: Here’s Where to Begin
5. Determining Basis for Capital Gains Taxes
The valuation provided by appraisers establishes the basis of the property for capital gains tax purposes.
Heirs may use the appraised value as the starting point for calculating any potential capital gains taxes when the property is later sold.
6. Gift and Donation Planning
Appraisals can also assist in situations where real estate assets are being gifted or donated as part of estate planning.
Knowing the fair market value of the property is essential for understanding the potential tax implications.
7. Insurance Purposes
Appraisals help ensure that real estate assets are adequately insured.
Accurate valuations provided by appraisers assist estate planners and beneficiaries in determining the appropriate amount of insurance coverage needed to protect the property.
8. Resolving Disputes among Heirs
In cases where disagreements arise among heirs regarding the value of real estate assets, appraisers provide an independent and objective assessment.
This can help resolve disputes by providing a neutral third-party evaluation.
9. Documenting Valuation for Legal Compliance
Appraisers follow professional standards and document their valuation methods and findings in a comprehensive report.
This documentation is crucial for legal compliance and can be used as evidence in case of any challenges or audits related to the estate.
*** When choosing an appraiser for estate planning be sure to work with someone who is familiar with the specific IRS guidelines for real estate appraisal reports ***
Once you know and understand the value of your property then you’ll be able to make well-informed decisions in your next steps to estate planning.
How to find a Real Estate Appraiser
TAP HERE to find all of the licensed and certified appraisers in the country.
Licensed Appraisers are for residential single family homes and multifamily homes up to 4 separate living units. Can also appraise certain types of vacant land. However, Licensed appraisers have limitations. The most important limitation is they are not permitted to appraise anything valued more than 1 million dollars. Not all states have Licensed Appraisers. Pennsylvania is one of those states that do not have Licensed Appraisers.
Certified Residential Appraisers are for residential single family homes and multifamily homes up to 4 separate living units. Can also appraise certain types of vacant land.
Certified General Appraisers are for residential properties, commercial properties, and vacant land. In the Philadelphia Metro area their fees are typically much higher than a Residential Appraiser and you will wait much longer for an appointment due to the shortage of General Appraisers in our area.
Once you narrow it down to the Appraisers in your area then you could cross-check it with their Google reviews.
This post is all about the 9 ways to use an appraiser for estate planning.
