Understanding Date of Death Appraisal: A Crucial Step in Estate Planning

When a loved one passes away, there are numerous legal and financial matters to settle. One essential component of estate administration is the Date of Death (DOD) appraisal. This valuation serves as the official market value of a deceased person’s property or assets on the exact date of their death. Whether you’re a family member, executor, or legal professional, understanding DOD appraisals is crucial for estate planning and tax purposes.

What is a Date of Death Appraisal?

A Date of Death appraisal determines the fair market value (FMV) of assets—such as real estate, personal property, or business interests—on the decedent’s date of passing. This valuation is used by:

• Executors or administrators to file an estate tax return (Form 706) with the IRS (for estates exceeding federal and state exemption limits).
• Beneficiaries to establish a stepped-up basis for inherited assets, potentially reducing future capital gains taxes.
• Probate courts to ensure an accurate and fair accounting of the estate’s value.

Why is it Important?

1. Tax Reporting:  The IRS requires the accurate valuation of a decedent’s assets to determine estate taxes. Overvaluation or undervaluation could result in penalties or disputes.
2. Stepped-Up Basis: Beneficiaries typically receive a stepped-up basis, meaning inherited property is valued at its FMV on the date of death, not the original purchase price. This can significantly reduce capital gains taxes if the property is later sold.
3. Fair Distribution:  Proper valuation ensures that heirs and beneficiaries receive a fair and equitable share of the estate.

When Should a Date of Death Appraisal Be Conducted?

Typically, the appraisal should be done as soon as possible after the decedent’s death to capture an accurate market snapshot. In some cases, if the market was volatile at the time of death, an alternate valuation date (up to six months after death) may be used, provided it results in a lower overall estate value.

Who Performs a DOD Appraisal?

• Real Estate Appraiser: For residential or commercial properties, a licensed appraiser familiar with estate valuations will conduct the appraisal.
• Personal Property Appraiser: For valuables like art, jewelry, or collectibles, a qualified appraiser in that specialty is required.
• Business Valuator: For closely held businesses, a valuation expert may be needed.

Tips for Executors and Heirs

✅ Hire a Qualified Appraiser: Look for professionals experienced in DOD appraisals.

✅ Gather Documentation: Deeds, titles, prior appraisals, and purchase records help provide context.

✅ Consider Alternate Valuation Dates: Discuss with your tax advisor whether this option benefits the estate.

✅ Plan for Taxes: Work with estate attorneys and CPAs to anticipate tax obligations.

Final Thoughts

A Date of Death appraisal isn’t just a formality—it’s a vital tool for accurate tax reporting, fair distribution, and sound estate planning. Understanding its purpose and process allows you to navigate estate administration with greater confidence and clarity.

The Angst Real Estate Team

Looking for an experienced Real Estate Team in Reno/Sparks and Northern Nevada? Look no further than Ken Angst and his team! With a demonstrated history of success working with buyers, sellers, and investors, we are the top authority in the area. Stay up-to-date on the latest trends and topics in the Reno/Sparks real estate market with our YouTube Channel featuring our weekly podcast, designed to provide you with the information you need to make informed decisions. Whether you're looking to buy, sell, or invest in property, we have the expertise you need to achieve your goals. Contact us today to learn more! 775-525-0309

S.168655

#AngstRealEstateTeam #LivingInSouthReno #HautePropertiesNV #RenoRealEstate #SparksRealEstate #EstatePlanning #DateOfDeathAppraisal #EstateValuation #Probate #Inheritance #RealEstateAppraisal #TaxPlanning #CapitalGainsTax #EstateTax