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Estate planning is an integral part of financial planning, yet it’s often ignored as well as misunderstood. Here are some of the major reasons why you should obtain appraisals as a part of your estate planning, exactly how to hire an appraiser, along with what you can expect during the appraisal process.
5 Reasons to obtain an appraisal with estate planning
- Appraisals of privately held business interests (partnership units, stock, etc.) are required by the IRS to determine values stated on an estate as well as on gift tax returns.
- A professional appraisal offers the individual protection in the event of an audit by the IRS, as well as professional assistance with such an audit.
- Appraisal fees are generally deductible as an expense on estate tax returns, and sometimes within estate planning (e.g., family limited partnerships) as well.
- Have a complete appraisal completed on the important items in your collection. A certified appraiser will help you to figure out which items need a complete report. They can also help with listing as well as identifying the collection.
- In most cases, the appraiser will assist an attorney in constructing an estate plan which will maximize the tax benefits for the client by giving the attorney a strictly “value” viewpoint.
The appraisal can offer a standard of value on a collection or asset to ensure that subsequent appraisals will illustrate the development (or decline) in value.
HIRING AN APPRAISER
It is important to hire only accredited appraisers who adhere to a code of ethics as well as the Uniform Standards of Professional Appraisal Practice (USPAP). The experience, independence, and expertise of the appraiser are essential to generating a trustworthy value in an appraisal, and the IRS knows the difference.
Request that the appraiser will provide you with a written report that indicates the fair market value of your collection and complies with the most recent IRS specifications. (The replacement value for insurance coverage is not a suitable value to use for estate planning purposes, as it may deliver a significantly different value.) Employing an accredited appraiser will help to ensure that you receive the appropriate value of your estate or assets.