Date of death appraisal

[Laughing Heir]

For the intended use of this type of narrative report, can I get some advice on how to word this. Does stating "...the intended use of this report is for estate tax determination, this report is not intended for any other purpose..." suffice or am I missing the point? Should I parse it out more? Is my terminology correct - it doesn't feel complete.

Thanks in advance for any and all opinions.

 

[Jim Onderisin]

What does your supervisor say?

 

[PropertyEconomics]

Laughing .. that may be enough but the real key is in identifying the intended users of your report ... who are they?

 

[Laughing Heir]

Jim,

That is the terminology my supervisor uses. It was the same language used by my father, a CG, since 1992. The wording of it just seemed awkward as the cursor sat there blinking.

PE,

Again, toeing the company line - the intended user for our retroactive estate appraisals explicitly names the executor (executrix), attorney that opened probate, and the IRS. Our engagement letter boilerplate for these types of assignments has the IRS as a constant but specifically asks the client to fill in the person(s) handling the estate and their attorney.

I am extremely open to making this more complete (and correct). Good point PE.

 

[PropertyEconomics]

Heir .. another user is most probably the accountant for the estate. Heirs should not be listed separately as they are covered by the executor.

The purpose is for estimating Fair Market Value in accordance with the definition as establishe by the Internal Revenue Service in the estate of Mr/Mrs Blank Bland as of their date of death on ...................... .

Remember Estate Taxes are only a portion of the reason for doing the appraisal, probate could be at issue, distribution to the heirs in accordance with a will ... etc.. I dont think Id be that specific honestly but rather use a simple statement as above and let the professional parties to the estate do what they need to do based upon the information you give them.

 

[Laughing Heir]

Thank you Property. Your opinion carries a lot of weight and I appreciate you taking the time to help me.

I can finally put this one (and myself) to bed.

 

[PropertyEconomics]

Thank you Property. Your opinion carries a lot of weight and I appreciate you taking the time to help me.

I can finally put this one (and myself) to bed.

Glad to help and hope I did. Get some sleep.

 

[DWiley]

I have also seen appraisers state that the intended user was "the estate of ...." and the intended use was, "to assist in estate settlement."

I particularly like the statement that no other use or user is intended by the appraisers. I personally do not name the IRS as an intended user.

Also, did you use the pre-printed definition of market value, or did you use the IRS definition. This is what I used in a recent report. The intended use probably indicates use of the IRS definition (or maybe a definition provided by the state, if that applies).

Definition of Fair Market Value: The IRS defines Fair Market Value as: The price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. This definition is from the IRS web site.

 

[PropertyEconomics]

I have also seen appraisers state that the intended user was "the estate of ...." and the intended use was, "to assist in estate settlement."

I particularly like the statement that no other use or user is intended by the appraisers. I personally do not name the IRS as an intended user.

Also, did you use the pre-printed definition of market value, or did you use the IRS definition. This is what I used in a recent report. The intended use probably indicates use of the IRS definition (or maybe a definition provided by the state, if that applies).

One comment and one question Mr Wiley ....

1) .. It appears there may be more than one definition of Fair Market Value from the IRS website ... the one I have used speaks of the decedents gross estate ... I would suggest to the poster that you get the definition from the attorney or accountant for the estate.

2) ... this is more curiosity .. why do you not list the IRS as a user of the report knowing there is a strong chance they may in fact get the appraisal as part of the estate tax filing OR at the very least knowing they may request the appraisal as part of their analysis.

Im just curious as to your thoughts on this issue. If there is a good reason to limit the users of the appraisal I am all for it ... I have just always been instructed by the attorney / accountant to include the IRS as a user.
I would really appreciate your thoughts.

 

[DWiley]

PE,

For any report, USPAP requires that the contents be meaningful and not msleading to the users that I intend. If I identify multiple intended users, I am obligated to meet the needs of all of them. I prefer to meet the needs of a few, especally if it doesn't change the fee

If the heirs are the only intended users, then I can interview the heirs and get a sense of their level of knowledge and familiarity with the property, and customize the report content to match their knowledge level.

For example, I recently did an estate appraisal for a property in Nashville. The only heir grew up in the subject property and stilll lived a few blocks away. So, in the report I summarized the neighborhood description, but did not include the kind of detail I might have if the heir lived out of town.

Of course, none of this changes the fact that I still have to consider the intended use, and I think that neighborhood description was sufficient for the intended use.

The fewer the intended users, the less my obligation and the less likely I am to inadvertently not address something I need to address. I seldom name anyone other than the client as an intended user. Call it a matter of risk management.

Danny