ATA 0619

By Tom Helms and Jeff Pearson  

Most people would agree that attorneys and accountants are vital to proper handling of an estate. But we’d like to suggest that the team is incomplete without a third member – an appraiser – to ensure estate items are properly valued and distributed.

During a recent appraisal, we discovered an original bronze from a 19th century artist in the client’s storage room, valued at over $65,000. This find had the potential to present numerous challenges not only for the estate, but for the heirs. The trust attorney and accountant were troubled as there had been no preemptive planning done.

We have been in multiple estates that had collections of art, coins, jewelry, sterling and other high-end valuables, such as vintage cars, that the owners believed were a type of investment. When owning such an investment, it is prudent to also give consideration to how to distribute these assets at the time of death.

According to the IRS, “collectibles” include works of art, rugs, antiques, any metal or gem, any stamp or coin, vintage cars, valuable alcoholic beverages and several other items of tangible personal property as described under IRC Section 408(m).  

As professional appraisers, we must not only follow the multitude of IRS decrees, but value the items at fair market value if the estate is a tax form 706 (which helps figure out the estate tax imposed by the IRS) and/or for transferability. The items can be left to the heirs or donated. 

Disputes typically arise among heirs when decisions are not made in advance.

People often have differing opinions about the fair market value of an item, which results in delays in settlements and fuels disagreements among heirs. This can then lead to litigation. This is why it is a best practice to obtain an appraisal prior to death that lists all valuables with notations for future distribution. The report will be updated at the time of death for the most recent values, especially for equitable distribution purposes.  

Markets and the economy influence values and those values may significantly change over time. Just as the attorney and accountant are important, the services of a qualified and certified appraiser are also an important asset for the estate.  

When there have been no appraisals, numerous avoidable problems result that may be costly to the estate. This makes an appraiser an indispensable member of any estate team.   

— Contact Jeff with questions: damshill@yahoo.com or send your letter to 5525 N. 12th St., Phoenix, AZ 85014.