Estate Tax Appraisal

Q: What is an estate tax appraisal and when is it required?

A: An estate tax appraisal determines the fair market value of personal property, including fine art, antiques, jewelry, collectibles, significant household contents, and other tangible assets, as of the decedent’s date of death. It is a comprehensive report which provides substantiated and defensible value conclusions. It is required by the IRS when filing Form 706 (United States Estate Tax Return) and must be prepared by a Qualified Appraiser using IRS-required reporting and methodology standards.

Q: What qualifies as a ‘Qualified Appraiser’ for IRS purposes?

A: The IRS requires that estate appraisals be conducted by a Qualified Appraiser, defined as someone with verifiable education and experience in the relevant property types, who holds a recognized professional credential, and who has no disqualifying interest in the property. The ISA CAPP (Certified Appraiser of Personal Property) designation meets this standard. The Expert Appraisal Company is operated by an ISA CAPP holder, one of only 110 worldwide at the time this was written.

Q: What standard of value is used for estate tax appraisals?

A: Estate tax appraisals use Fair Market Value (FMV), defined by the IRS as the price at which property would change hands between a willing buyer and a willing seller, neither under compulsion, both having reasonable knowledge of the facts. This is typically lower than retail replacement value and is the only standard accepted for Form 706.

Q: What does the appraisal process look like?

A: The process begins with an on-site inspection of the property, during which each item is documented with photographs and condition notes.  Research is then conducted on comparable sales using auction records, dealer databases, and market data. This data is then analyzed, and conclusions are delivered via USPAP-compliant written appraisal report is delivered, suitable for submission with Form 706. Information related to the acquisition cost of significant property is also collected from the owner when available and included in the report. 

Q: How long after the date of death can the appraisal be completed?

A: The IRS requires that a Form 706 appraisal be conducted no earlier than 60 days before the estate tax return due date and no later than the extended filing deadline. In practice, the physical inspection can often occur months after the date of death, provided the property has not been sold, donated, or significantly altered. Prompt engagement is advisable to avoid complications.

Q: What types of personal property do you appraise for estate tax purposes?

A: The Expert Appraisal Company appraises fine art, antiques, furniture, decorative arts, jewelry, silver, ceramics, collectibles, books, rugs, significant household property, and other tangible assets of notable value. Items of uncertain authorship or attribution are researched and reported with appropriate qualifications and limiting conditions.

Q: Can you work with the estate attorney or CPA directly?

A: Yes. We can coordinate with estate attorneys, CPAs, trust officers, and financial advisors. The appraisal report is formatted to meet the documentation requirements they need for a smooth filing process.

Q: How is the appraisal fee structured?

A: Fees are based on an hourly rate rather than contingent on appraised value – a practice required under USPAP and IRS regulations. Establishing a fee schedule based on appraised value is an ethical violation and should be considered a red flag when evaluating appraisers. A fee estimate is provided after an initial consultation and review of the scope of work.