When an asset is to be gifted, or is subject to an estate tax due to the death of a party in the ownership, the fair market value of the asset must be determined. Typically an appraisal is done as of the date of death, and identified as a retrospective appraisal. There are several definitions of market value regarding real property in the appraisal process. However, under our tax laws, fair market value is defined, in part, as the most probable price a willing buyer/willing seller would pay, both reasonably aware of the facts. You need a trusted estate and tax planning appraisal to protect you and your asset.

 Accurately valuing assets subject to tax by taking into account all factors that may limit or diminish value is an important element in prudent tax planning.


Estate Appraisals in San DiegoOne must also understand the potential for close scrutiny of asset values upon audit by the Internal Revenue Service. From various I.R.S. symposiums that our appraisal team has attended over the years, small percentages of individual income tax returns are reported as audited. However, if the estate appraisal uses the wrong definition of market value, the I.R.S reports they will immediately disregard the appraisal. Our experience indicates that few gift tax returns are subjected to a full audit.  The degree of review depends upon the size of an estate, and nature and extent of its assets. Comprehensive audits are common whenever an estate includes interests in family or closely held businesses, unusual assets, or total asset values exceeding $2 million. Penalties could be imposed when an asset is substantially under-valued. “Guessing” the value of an asset subject to estate or gift tax is not wise.

 It is important to select an appraiser who is experienced and skilled at valuing the type of asset(s) in question. The appraisers at ProWest Appraisal have performed hundreds of commercial and residential appraisals for estate and tax planning purposes. To our knowledge, not one has been challenged by the I.R.S. Our designated appraisers have extensive experience working with large multi-million dollar portfolios. The size and nature of your gift or estate, the relationship of the appraiser to you or your company, and the cost of the appraisal are all factors that should be considered.

When the appraisal involves multiple assets, a  large estate, or the gift or estate tax is dependent upon a new and not fully tested technique, such as family limited partnerships, the skill of the appraiser should match the circumstances.