Why the effective date is the entire assignment
In most appraisal work the effective date is the day of the inspection and nobody thinks about it. In an estate it is the point of the exercise.
The property is valued as of the date of death. Everything the market learned afterwards is excluded, including sales that closed later, changes in interest rates, and anything that happened to the property since. If the owner died two years ago and the market has moved since, the current value and the date-of-death value may be a long way apart, and only one of them is the number the estate needs.
Federal estate tax rules also allow an estate, in some circumstances, to elect an alternate valuation date rather than the date of death. Whether that election is available or advisable is a decision for the estate's attorney or CPA, not the appraiser. What matters here is that the date is settled in writing before the work starts, because it determines the entire data set.
Step-up in basis, described plainly
When real property passes at death, the beneficiary's cost basis is generally adjusted to the property's fair market value as of the date of death rather than carrying over what the deceased originally paid. Where a home was bought decades ago and has appreciated substantially, that adjustment can be the difference between a large taxable gain on a later sale and a small one.
What makes that adjustment defensible is documentation. A credible, independent appraisal with a stated effective date is evidence of the figure. An informal estimate, an agent's opinion or an online valuation is not, and the gap between those tends to matter years later, when the property is sold and someone asks where the number came from.
How any of this applies to a particular estate is a question for a CPA or an estate attorney. We supply the valuation and the support behind it. We do not advise on tax positions, and nothing here should be read as if we did.
Probate, estate tax, and basis are three different jobs
They get spoken about interchangeably and they are not the same:
- Probate administration. The court needs to know what the estate contains in order to administer it. Real property is usually the largest single item.
- Federal estate tax reporting. Where an estate is large enough to require Form 706, real property values are reported on it and are subject to examination. Form 709, by contrast, is the gift tax return and applies to transfers made during life.
- Basis documentation. Even where no estate tax is owed, the date-of-death value establishes the beneficiary's basis, and that matters whenever the property is eventually sold.
An estate can need one of these, or all three. They can usually be served by a single appraisal, provided the intended use is scoped correctly at the outset. That is a conversation worth having at intake rather than discovering later that the report was written for the wrong purpose.
What an executor should have ready
Estate assignments run more smoothly when the basics are gathered up front:
- The date of death, and confirmation of whether an alternate valuation date is being elected.
- Access to the property, or an explanation of why it is not available, so the scope of work can account for it.
- Anything documenting the property's condition at the effective date: photographs, insurance records, repair invoices, listing history.
- Details of work done since, so improvements made after the date of death are not accidentally reflected in a value that predates them.
- Who should receive the report: the executor, counsel, the accountant, or all three.
Where the property has already been cleared, renovated or sold, a retrospective appraisal is still possible. It leans harder on documentary evidence and the research burden is heavier, which usually means more time rather than a worse answer.
