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Important Things to Know About Real Estate Appraisal and Estate Planning

Jan 10, 2023

Estate planning is critical to secure your loved one's financial future after you are gone. With an estate plan, you can manage the distribution of your assets and finances and mitigate taxes.

A huge part of estate planning is knowing the value of the assets you're planning to leave behind. That's where real estate appraisal comes in. A professional real estate appraiser can accurately assess and estimate the market value of your property, which is essential for an effective estate plan.

What Is Real Estate Appraisal?

A real estate appraisal is a process by which an appraiser determines the approximate market value of a property. A certified and licensed appraiser will evaluate your property based on several factors. These aspects include location, condition, and age. Through this methodical approach, the specialist can give their expert opinion on what the property is worth in today's market.

The Benefits of Real Estate Appraisal for Estate Planning

Estate planning primarily aims to manage the distribution of your assets and finances after you are gone. Knowing the exact value of your estate can help you make informed decisions on how to divide it among beneficiaries. Some other benefits of real estate appraisal during estate planning include the following.

Accurate Estimation of Assets

Getting a professional to assess your property is the most accurate way to determine its worth. Appraisers use industry-approved techniques, such as the cost approach and market comparison method, to come up with an exact or near-exact value estimate. This way, you can know exactly how much your estate is worth and plan accordingly.

Plan for Creditors

Real estate appraisals can help you plan for creditors in the event of your death.

Knowing the exact worth of your assets can give you an idea of how much to have set aside as debt payments. This way, your creditors will not interfere with the beneficiaries' inheritance.

Mitigate Estate Taxes

Real estate makes up a huge part of estates. With reliable real estate appraisal reports, you can accurately determine how much to pay in estate taxes for federal and state governments.

For example, in 2021, the federal estate tax exemption cap was approximately $11.7 million , and anything over that will be taxed heavily. With an accurate appraisal report, you can make sure you stay within that threshold when distributing your estate. This way, you can prevent your beneficiaries from paying costly taxes.

Where Else Is Estate Planning Appraisal Necessary?

Besides estate planning, there are several other situations where a reliable appraisal report is necessary.

A Beneficiary Wishes to Buy Out the Other Beneficiaries

In some cases, one of the beneficiaries may want to buy out the others so they can inherit the entire estate. With a detailed appraisal report, they'll know exactly how much they need to offer other beneficiaries.

You Wish to Partition the Estate

If your estate comprises more than one property, consider partitioning it before distributing it. This step helps you decide how to divide the estate among beneficiaries, so everyone gets a fair share. In addition, by knowing your assets' exact value, you can make better decisions during asset division.

Now that you understand the importance of real estate appraisal during estate planning, you can consult a qualified appraiser to help you create an effective plan. Then, with the right information, you'll be able to make the best decisions for your beneficiaries.

You can trust us at East Coast Appraisal Service to help you accurately determine the value of your estate. We have certified, industry-recognized appraisers with decades of experience to offer you expert guidance and quality appraisal services. Contact us today for more information.

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