Better Estate Appraisals
When estate property arrives at Heritage to be sold on behalf of heirs, it is not unusual for the executor to send us a copy of the estate appraisal report. If our Heritage specialists did not actually conduct the appraisal, they may disagree with some of the descriptions or values, but nevertheless the document can serve as a valuable tool, aiding in the cataloguing and inventory control process. We can even match up our in-house consignor listing with the order and numeration of the estate appraisal document to facilitate seamless cross-reference later by executors and heirs.
Sometimes the documents that reach us contain more problems from an appraisal practice point of view. One of the most common is when an appraiser itemizes virtually every object in the house, regardless of its value. I have seen appraisals that list with obsessive precision every pot and pan in the decedent's kitchen. Notwithstanding the remote possibility that the appraiser was instructed to do so by the executor, appraising in this manner is contrary to IRS regulations.
The IRS specifically instructs appraisers not to line-item such low value tangibles, but rather to organize and appraise them in groups. The cut-off value to itemize something is $100. While that may sound low, most household furnishings that have been used for years, sometimes decades, typically fall below it. Estate appraisers are allowed to, and should, focus on the better estate items where higher values lie, and not waste time counting spatulas, particularly since appraisers are paid at an hourly rate. A good appraiser will know and explain this to all parties, so clients have better ideas what to expect from a professional estate appraisal.
Another efficient and money-saving measure for certain estates is known as the Professional Opinion of Value (POV), a term chosen to clearly differentiate it from the more formal "appraisal." A POV is appropriate when the tangibles of a decedent in aggregate do not reach a high value, say a few thousand dollars. For instance, it is not unusual for even a very wealthy client to own very few tangibles, after multiple episodes of domestic downsizing and heirloom gifting to loved ones. Late in life, while his or her investment portfolio may still be very grand, a client might inhabit a room or two in managed care facility, where even the furniture is leased.
A POV is a good option. It is a text-based account from a qualified appraiser stating under oath that he has inspected the property and concluded that a formal appraisal is not appropriate, and has determined that the total value is X. This largely boiler-plate document is expeditious and cheap, usually requiring one hour of an appraiser's time. It demonstrates that the executor has been diligent in hiring a professional appraiser and accounting for all property. Moreover, when used appropriately, the POV, as an alternate to the more formal appraisal, is approved by the Appraisers Association of America.