Appraisal

What it means

An appraisal states a value, the basis for it, the date it applies to, and who prepared it. That last part is what makes it usable: a tax authority or a court will weigh a qualified appraiser's opinion and not a family's estimate.

The relevant date is almost always the date of death, because that is what fixes both the estate's inventory and the new tax basis for whoever inherits.

Not everything needs one. A publicly traded share has a price of record; a house, a business interest, a collection or an unusual vehicle does not.

Why it matters

It sets the number the tax on a later sale is measured against. Without one, a beneficiary selling an inherited house years later may have to justify a value nobody recorded.

It also settles disputes before they start. Where several people want the same item, an independent figure is the only basis anybody will accept.

When you are likely to meet it

• Before anything valuable leaves the house.
• When an inventory of the estate has to be filed.
• When an inherited asset is sold and the gain has to be worked out.

How this varies by state

Whether a court requires a formal appraisement, and who may prepare one, are set by state law.

Related terms

• Alternate valuation dateAn election to value an estate six months after death instead of on the day of it.
• Assessed valueWhat a taxing authority says a property is worth, which is rarely what it would sell for.
• Date-of-death valueWhat something was worth on the day the person died. It is the number the estate, and often the tax, is measured by.
• Estate saleA sale of the contents of a house, usually run by a company on commission. It is one of several ways to clear a home, and rarely the only one worth considering.
• Estate taxA tax on the value of what somebody left, paid by the estate before anything is distributed.
• Fair market valueWhat a willing buyer would pay a willing seller, neither under pressure and both knowing the facts.
• Inventory and appraisementA list of everything in the estate with a value against each item, filed with the court or given to the beneficiaries.
• Step-up in basisThe tax rule that resets an inherited asset's value to what it was worth on the date of death.
• Tangible personal propertyThings you can touch and move — furniture, jewellery, tools, a car, the contents of a house. Not land, and not accounts or shares.

Sahvelo guidance that uses this

• Personal property
• Taxes after a death