Appraisals For Probate

[Larry Lyke]

Barb --

Maybe I'm just not computing, but I can't see why an inflated value on the home would reduce the tax on the estate. Just the opposite would occur.

The absolute solution is the appraisal is what it is.

Do your thing. Just because othe people don't know what they are doing, doesn't mean you have to fall in line with them.

They'll still have to sell the property for the inflated value if they are looking to cash in, or out as the case may be. That'll bring reality around.

L- MN

 

[xm39hnu]

I see a different scenario. They inflate the value of the real estate enough so that the total estate doesn't exceed the $600,000 estate tax threshold, or does so only minimally. Their basis in the property is $568,000. No reasonable person would deliberately inflate the value of the home in order to pay estate taxes, would they?

They then sell the property at market (which Barbara indicates is around $370,000), and have a whopping big (nearly $200,000) loss to declare on their income tax. If they wait a reasonable amount of time, the IRS isn't likely to question the deduction given the substatiation of the basis by a court. But it ain't gonna work if Barbara's appraisal is well-supported by her market data, and becomes part of the probate record.

 

[Travis McGee]

My understanding is that heirs of a trust do NOT pay inheritance tax, which is why the property is put into a trust in the first place. It's just that a new tax basis is set when the Will is probated. In this case, since the heirs intended to sell the property immediately, any gain from the value set at Probate would be taxed. Of course there will be no gain, since the property is already worth so much less than the Probate value.

One of the troubling aspects is that the appraiser in the Tax Assessor's Office said he based his assessment on that Probate value, which is why I'm wondering where the Probate value originates. Remember, he didn't call it "probate value". He said "Sale Price", but the property has never been sold, so I'm assuming he meant "Probate value".

But you're right, I have to do what I have to do. The comps are the comps. The numbers are the numbers. In the days before licensure, which many of you here must remember, it must have been much harder because you didn't have the confidence of USPAP to back you up.

Thanks much. your responses have really helped my thinking. I'm grateful for this place to bring "sticky wickets".
Barb

 

[Walter Kirk]

In my experience the value on the deed from the estate to the heirs is determined by the executor of the estate as grantor.

 

[Larry Lyke]

Barbara –

The "grantor" usually has professional help in handling an estate. Unless the executor is quit claiming the real estate. But in closing a trust, reducing taxes is the purpose of life and death!

Having trust may complicate the probate for others, but not for you. I would guess that the request to you to appraise the real estate is to do what appraisers do, come up with the value of the real estate as of a date certain.

It’s probable that we’re talking about a trust containing things other than the real estate. They usually do. And that the value of the whole trust was part of the filing and the assessor’s uninitiated clerk is performing his first screw-up, recording the whole amount against the real estate, which may have some sort or remainderman arrangement, too.

Regardless of the machinations that seem to appear to you from nowhere, your job is pretty straightforward.

Don’t let the assessor impinge on your job. They’ll see the light eventually. When the CVR comes in after the sale settlement.

I hear you. You’re going to have to defend your appraisal. So?

L- MN

 

[Travis McGee]

Phew, I got off the hook because the property was withdrawn from the market..

Obviously I wasn't the only one who found the gap between asking-price and value way too huge. How it got that way is still a mystery. The house is vacant, so I assume it will be returned to the market one fine day, hopefully with a realistic asking price.

Meantime, I still don't know who sets the value at Probate around here, but years of experience might answer such questions.

Cheers,
Barbara

 

[Kevin A. Spellman]

When a trust is being canceled through probate, the beneficiaries of the trust must have a base value for when the trust was created. This may or may not be an appraised value. The trust must have a value as the date of death to establish whether there is a taxable event. There are always two values when a trust is being dissolved. Remember confidentiality is important.

 

[Mike Boyd]

In California we have Public Aministrators. This is a political appointment. The one case I am familiar with the PA just happened to be an appraiser. A similar situation occurred where the estate was valued significantly higher than I thought it should be. So, I called the guy and asked him WHY. He feigned ingnorance and said my estimate of value was probably more accurate. Kind of like, "So what?"

The valuation had nothing to do with the assessor's office.

Mike

 

[Roger R. Patzold]

Question.

I have been involved with a few probate appraisals but I have a tax/legal question.

Would it be possible to inflate a value to just below the cap for probate taxes which would not trigger any additional taxes on the estate?

Then when the subsquent, planned, and hidden future sale takes place the profit from that second sale would be reduced on paper?

The result would be less taxes paid.

This or something like it is the only reason I can see for an heir to want the probate value to be inflated.

I know there are limits, minimums, and maximums that trigger different taxes, court requirements, etc.

Additionally, state law might have different limits, minimums, and maximums than federal and other states.

Just thinking out loud here and trying to gain a little insight.

 

[Otis Key]

Okay Roger - first question that comes to mind is:

Why would you want to risk your license and possible jail time to commit a frau?

Next question:

Then when the subsquent, planned, and hidden future sale takes place the profit from that second sale would be reduced on paper?

HIDDEN SALE?

Where have you been? There's no such thing as a hidden sale. All sales are recorded and if you don't think the IRS is not watching those, then you're mistaken.

Now, there are times when it can be "pushed up" to the upper limit but most probate officers and/or judges are from a legal aspect and have seen enough paper work on appraisals to knock off a fraud report in a very short time span.