Getting Estate Assets Appraised
Executors need to know what everything (personal property, real estate, investments, business interests) in the estate is worth--here's where to start.
You’ll need date-of-death values for all the property in an estate or trust, even if only one person inherits everything. If you sell assets shortly after the death, you’ll be able to use the sale value as the date-of-death value. Otherwise you’ll have to get assets appraised by an expert.
Why the Date-of-Death Value Is Important
There are several different reasons to get accurate date-of-death values:
- Splitting the estate. Many wills call for beneficiaries to share assets equally, often among the will-maker's children. If you need to split the property equally among siblings, you need to know what everything’s worth.
- "Small estate" status. If the value of the probate assets is under a certain amount, the estate will probably qualify for special probate shortcuts—potentially saving you, the executor, lots of work and making it easier for the inheritors to get their property.
- Tax basis. Inherited assets get a new tax basis: the date-of-death value. The beneficiaries need to know this value because it will be necessary for to calculate capital gains tax later, when beneficiaries sell assets.
- Estate taxes. You need to know the total value of the assets to determine whether or not the estate will be subject to federal or state estate tax.
Every piece of real estate is unique, which means that there are special concerns when it comes to putting a value on houses, undeveloped land, or commercial real estate. If you sell the property on the open market within a year after the death, the IRS and others will accept the sales price as its fair market value as of the date of death.
For more detail, see Estimating the Value of Inherited Real Estate.
All the information you need should be on the account statement that covers the date of death. If there’s an entry for each day, just use the amount as of the date of death. If the statement doesn’t give a daily value, look at deposits and withdrawals to calculate the account’s value at the date of death.
If the account earned interest, you need to figure in the interest that accrued up to the date of death. To calculate how much of the monthly interest was earned before the death, figure out how many days the statement covers (usually 30 or 31), and how many days the deceased person lived during the statement period. For example, if someone lived 10 days into the period covered by the statement, and the statement covered 31 days, the accrued interest would be about 10/31 of the total interest paid. It’s not completely correct because interest is compounded daily (meaning the amount of interest earned each day in the month is not the same), it’s accurate enough for valuation purposes unless the account contains an enormous amount of money. In that case, ask the bank for a date-of-death value.
Brokerage accounts are more complicated, because many people reinvest the dividends they earn—in other words, they don’t take dividends in cash but instead automatically use them to buy more shares of a stock or fund. That means that the number of shares they own changes every month (or however often dividends are paid). You’ll need to figure out how many shares the person owned on the date of death.
Look at the brokerage statement to determine when the last dividend was issued and reinvested, and note the exact number of shares as of the date of death.
Then determine the price of the shares. You’ll need to multiply the price by the number of shares to get the total value you need.
If the price changes from day to day, determining the price on the date of death can be a complicated task—so the first thing to do is ask the brokerage company for the date-of-death value. They will probably help you unless the company is a discount brokerage that just doesn’t provide this service.
If you’re on your own, look online for records of the stock price as of the date of death. If it’s a stock, take the average of the high and low values for the date of death. If it’s a mutual fund, use the closing price of the mutual fund—the final price that the fund traded for on that day. You can find this at www.cnnmoney.com, www.Bloomberg.com, and other sites. You can also get the value of a stock from Estate Valuation and Pricing Systems, www.evpsys.com, for a small fee.
You’ll want to get a professional to appraise the value of a small business. Contact someone who knows how to value both the tangible assets (building, inventory, equipment) and the intangible ones, such as goodwill.
If you suspect that the estate contains especially valuable art, antiques, vehicles or collections, get a professional to weigh in on their value. To find someone, try:
- American Society of Appraisers, www.appraisers.org
- Appraisers Association of America, www.appraisersassoc.org
When to Get Help
If the estate is unusually valuable, or there are complicated valuable assets, you'll probably want to hire a probate lawyer to make sure everything is valued and managed correctly. For more, see Choosing a Good Probate Lawyer.