Why an Estate Appraisal Matters After a Loved One Passes? (Part 1)

Losing someone you love is never easy, and the paperwork that follows can feel overwhelming. One of the most common questions I get from families settling an estate is, “Do we really need an appraisal?” The short answer is yes because it’s not just about putting a number on paper. It could potentially save the heirs tens of thousands of dollars.

When someone passes away, one of the first steps in settling their estate is determining the Fair Market Value of the property as of the date of death. This isn’t just a formality; it establishes what the IRS calls a “step-up in basis.” In simple terms, it resets the property’s taxable value to what it was worth at the time of passing, rather than what was originally paid for it. For example, if your parents bought their home for $150,000 about 25 years ago and it’s worth $500,000 on the date of death, that $500,000 becomes the new tax basis. If the heirs later sell the home, the capital gains will be calculated from the $500,000 appraised value to the actual sales price, rather than from the original purchase price which can potentially save tens of thousands of dollars in taxes.

Without a professional appraisal, it’s difficult (and sometimes impossible) to prove what that Fair Market Value was at the time of death. Online estimates or tax assessments usually won’t hold up with the IRS. An estate appraisal from a company that is familiar with retrospective reports and the market provides that documented support, helping attorneys and accountants report the value accurately and giving families peace of mind that the estate was handled fairly.

I know this part of the process can feel technical, but getting the value right from the start is one of the most important steps you can take to protect your family’s interests.

Next in the series: “Who Orders the Estate Appraisal and What to Expect.” (coming soon)