DOD appraisal for estate -- what type of value?

[Tacoman]

Hello all,

I'm doing my first retrospective date of death (DOD) appraisal. Apologies in advance for over/understating anything.

The executor of the estate has asked for a retrospective appraisal. The State Division of Taxation (NJ) requires one in order to get a tax waiver. A tax waiver is required to transfer the property from the decedent to the beneficiaries (siblings in this case).

I found a pretty good article online but I just want to be clear on a couple things. I'm going to be using the general purpose restricted report form in A La Mode.

Who is the client? The executor or the estate? Or should I write "estate of XX, AX, executor"?

What type of value am I opining on? The form has the option "market value" and "other" -- I am stuck on this point.

There is a lawyer working on this. Is it necessary to loop them in? If the estate (executor) is the client, can they sign the engagement letter and then I just send them the report?

I think that's all that's holding me up at this point. Thanks!

 

[glenn walker]

IRS uses Fair market value (FMV) is 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. ( really just teh same as what you always do ) The Client is normally the ESTATE.

Don't get all twisted up about value definition its really just word salad. Your also doing a DOD and Not A Donation or a gift.

 

[George Hatch]

5-yr sales history

 

[glenn walker]

And a GP Form not A Fannie Mae Lender Form:

 

[shrubberyvaluation]

Hello all,

I'm doing my first retrospective date of death (DOD) appraisal. Apologies in advance for over/understating anything.

The executor of the estate has asked for a retrospective appraisal. The State Division of Taxation (NJ) requires one in order to get a tax waiver. A tax waiver is required to transfer the property from the decedent to the beneficiaries (siblings in this case).

I found a pretty good article online but I just want to be clear on a couple things. I'm going to be using the general purpose restricted report form in A La Mode.

Who is the client? The executor or the estate? Or should I write "estate of XX, AX, executor"?

What type of value am I opining on? The form has the option "market value" and "other" -- I am stuck on this point.

There is a lawyer working on this. Is it necessary to loop them in? If the estate (executor) is the client, can they sign the engagement letter and then I just send them the report?

I think that's all that's holding me up at this point. Thanks!

The client is who engages you, just like any other assignment.

Be careful that your intended does not sound like you are advocating. You are appraising the property for estate purposes.

I typically talk to the lawyer as they typically engage me to discuss specifics they need such as the effective date which a lot of the time is the date of death.

 

[Tacoman]

This is all very helpful, thanks everyone.

Be careful that your intended does not sound like you are advocating. You are appraising the property for estate purposes.

I typically talk to the lawyer as they typically engage me to discuss specifics they need such as the effective date which a lot of the time is the date of death.

This is the intended use I'm putting in the engagement letter: "to assist the Client in establishing value for tax purposes." Would you recommend being more general?

 

[Terrel L. Shields]

This is all very helpful, thanks everyone.

This is the intended use I'm putting in the engagement letter: "to assist the Client in establishing value for tax purposes." Would you recommend being more general?

" to determine Fair Market Value for Estate management purposes" is more general. Avoid the "restricted" moniker. GP form is OK. Definition is from IRS but, in this case, the IRS nor the state are an "intended user". The client and intended user is the executor of the estate. Retro to the Date of Death, hopefully comparatively recent - makes it easier. I actually had one several years ago that a trust had not been brought up since 1985 and I had to go to the courthouse and dig out old sales in a file cabinet.

 

[Mark K]

In my reports the individual that ordered the report is the client. The intended user can be the client or the client and the estate. I like to restrict the intended to the client and include a statement that 'it is understood that others might read or possess a copy of the report but that does not make them a client or intended user', something similar to this idea.

Terrel's intended use is excellent.

I try to contact the attorney to verify the proper effective date(s) and the correct ownership, i.e., John Smith Estate, The John Smith Revocable Trust, The John and Mary Smith Trust, etc. They will usually want a copy and I will send them one if the client approves.

Otherwise, its nothing to be worried about. Maybe explain a bit more than usual, put F/F guidelines and rules out of your mind, and in all cases, collect the fee up front.

 

[Surf Cat]

Make sure to go over USPAP AO-34 (Retrospective and Perspective Value Opinions). It'll go over on how to properly communicate the appraisal.

I didn't see this on the above recommendations and you probably already know this however, the effective date of the report is the date of demise. If it's 6 days, 6 weeks, 6 months and yes, even 6 years ago, that's the hard stop on your competitive sales. You're not supposed to go into what happened to the market "after" the date of demise, only up to it.

GP form is the way to go. Make sure to get paid at the time of inspection of the subject property.

 

[Mark K]

I didn't see this on the above recommendations and you probably already know this however, the effective date of the report is the date of demise. If it's 6 days, 6 weeks, 6 months and yes, even 6 years ago, that's the hard stop on your competitive sales. You're not supposed to go into what happened to the market "after" the date of demise, only up to it.

A couple of attorneys that I've done estate work for have told me that as long as the market is essentially the same, there's no problem going beyond the DOD by a reasonable amount of time. I've gone up to 30-60 days as long as the market was stable.

YMMV.