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ILLMAS

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I prefer to have some basis for the FMV at date of death.  If it was real estate, I have used tax assessment as long as I know that the locality assesses at 100% of FMV.  In some cases, if an inventory was filed listing the asset and the FMV that can be used.  For stocks, the date of death value is normally obtainable.  If it is something where the FMV is not readily available, or at least a close approximation, then I would say some kind of evaluation or appraisal would be in order.

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Short of getting a formal appraisal, you can get real estate agents to make an informal appraisal.  They use nearly the same methods as alicensed appraisers and know the local market better.  The will do it for free in the hope of getting a listing.

Zillow.com provides estimates, but I have found that they are often unreliable.  

There are a lot of things that appraisals might not detect, such as, cracked foundations, mold, dry rot, termites, violations of building codes, etc., so any appraisal you get could be overestimating the FMV.

 

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1 hour ago, Max W said:

Zillow.com provides estimates, but I have found that they are often unreliable.

True, but I have on occasion used Zillow with a caveat.  I find a same-vintage "comp", see what Zillow said it was worth, see what it actually sold for, and apply a percentage correction factor.  Document everything (screen shots, etc) and detail your reasoning.  Sometimes it's the best that can be done.

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If an asset is sold within 6-9 months after the date of death, the IRS will use the selling price as FMV because it's obviously what a "willing buyer" was willing to pay.  If an estate return 706 was filed (unlikely), the valuations on that return must be used.  The problem with Probate filings is the inherent conflict of interest--the attorney will undervalue assets to lessen Probate fees, while heirs need a higher valuation to minimize cap gains when they sell.  I have a client who inherited a home on the ocean in the Hamptons that shows a FMV of less than $300k in the court filings.  I think the patch of grass between the walk and mailbox is worth more than that.  She did buy out the other beneficiary for $1.8m, so at least she'll have some basis to show.

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1 hour ago, michaelmars said:

 

get the appraisal, $300 well spent money.

 

Always great if it can be done.  If it wasn't done at the time, "the time" was several years ago, and the property was not sold, then it gets very messy and alternative measures may be needed.  And some clients won't spring for it as a separate item; little knowing they spend nearly that much to *us* for the research we have to do to come up with something reasonable that we can defend using.

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