Why formal appraisals are needed:
Laws can be very specific about taxes and donations. Insurance companies have practices that must be followed for claims. Court orders also have certain requirements. An appraiser must understand why a valuation is needed to know which particulars to fulfill, and must provide sufficient documentation for all conclusions.
Some instances requiring formal written appraisals:
- Estate taxes – For individual items valued at more than $3,000 or $10,000 for a collection.
- Donation – To claim tax deduction for items valued at more than $5,000 or for $500 or more in household goods in poor condition.
- Insurance claim – To provide proof of property, a description and replacement cost.
- Insurance coverage – For individual items or collections.
- Gift tax – To substantiate value because taxes are due if exceeds $13,000.
- Property distribution – To equitably divide in death or divorce.
Making sure your valuations are done accurately and comprehensively can save you time and money, spare you the headaches of an audit and reassure others that an estate or settlement is being handled fairly.
Who are professional appraisers?
They are trained in valuation methods and techniques. They adhere to ethics laid out in the Uniform Standards of Professional Appraisal Practice (USPAP), recognized by Congress as acceptable protection for the public. They are accountable to professional organizations for the quality of their work, and they are required to continually update their knowledge through courses and peer reviews.
These requirements help to ensure that an appraiser’s work is free of conflicts of interest, is thoroughly researched, and is presented with clarity and confidence.
Elements of a professional appraisal
- Every appraisal contains a valuation, arrived at impartially through accepted methodology.
- All relevant information will be disclosed to support conclusions and foster understanding.
- Confidentiality is maintained as stipulated by the client.
- Compensation is based on experience and time, not the results of the appraisal.
How to get started
- If you think you may need an appraisal, call me at 847.409.7275 or submit the contact form. We’ll discuss your objectives and the intended use of the appraisal. If a more informal valuation – a verbal rather than a written report — would suffice, we’ll make those arrangements. If a more extensive appraisal is warranted, we’ll discuss fees and set up an on-site appointment.
- In-person inspection of the items to be appraised is crucial to the process. Photographs are taken. Labels or hallmarks or inscriptions are noted. An inventory is compiled. Condition is documented. Any history of purchases (receipts) or other documentation should be copied and made available. This step is possible using only photographs of items, if just a few are to be appraised, but is not as desirable.
- Items are researched to establish valuation. Photos and descriptions of comparable items are attached to reports that are written in an easy-to-understand format that informs the client, meets USPAP and International Society of Appraisers writing standards, and complies with any applicable Internal Revenue Service requirements.
- The report is delivered and explained, with any follow-up clearly indicated. By law, reports are kept for a period of time in case questions arise later.