What Is a Date-of-Death Appraisal and Do I Need One?

It's the market value of the home on the date your loved one passed away, not today's value and not what they paid for it.

I'm Jeanette Nelson, a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas. When a family is settling a trust, the date-of-death value is one of the first numbers their CPA or attorney asks about. Getting it documented early saves stress later.

Because it usually sets the starting point for figuring gain when the home is sold. The IRS says the basis of property inherited from a decedent is generally the fair market value of the property on the date of death. The IRS also says to contact the executor of the estate for that figure.

In plain words, if Mom's home was worth much more on the day she died than when she bought it, the family's basis generally steps up to that higher value. When the trust or the heirs sell, gain is generally measured from that date-of-death value. My article on capital gains on an inherited house explains more.

A few points from IRS Publication 551 to raise with your CPA:

• An alternate valuation date may be elected in some estates.
• Community property can be treated differently. The IRS explains that in community property states, the total fair market value of the community property can become the basis of the entire property, including the surviving spouse's half.
• Estate tax filings. If a federal estate tax return is filed, IRS instructions for Form 8971 explain that a beneficiary can't use a basis higher than the value reported to them on Schedule A.

Often, yes. The Board of Equalization's change in ownership form for a death, filed with the Orange County Assessor, is generally due within 150 days after the date of death.

If a child inherits a parent's home, the Orange County Assessor explains that it may qualify for the parent-child exclusion if requirements are met, including the child making it their principal residence. In that case, the new taxable value is the greater of the market value at transfer minus an exclusion amount, which the Assessor describes as $1,000,000, or the parent's Prop 13 value. That's another place where the value at transfer matters. My article on gifting versus inheriting a home covers related property tax questions.

Not quite. In probate, California Probate Code section 8802 requires the inventory and appraisal to state each item's fair market value at the time of the decedent's death, and a probate referee appraises many assets. My article on what a probate referee does explains that process.

When a home is held in a living trust and passes without probate, there's usually no referee. The successor trustee typically orders a private date-of-death appraisal instead. My article on what a successor trustee has to do covers the trustee's other duties.

1. Hire a licensed appraiser. California's Bureau of Real Estate Appraisers has an online search to confirm an appraiser's license.
2. Ask for a retrospective appraisal. Tell the appraiser the exact date of death so the report values the home as of that day.
3. Share what you know about the home's condition then. Photos, repair records and notes on updates help.
4. Keep the report with the trust records. Your CPA will want it when the home sells.

Many trustees order the appraisal soon after a death, yet it can also be done months later because the appraiser looks back to the date of death.

If your family is settling a trust and wondering where to start with the house, I'd love to have a private planning conversation with you and your family about your options and timeline. You can also visit our trust sales page. Call or text me at 714.366.8575 | DRE: 01397168, or contact me. Jeanette Nelson is a REALTOR® with Jeanette Nelson Real Estate, Keller Williams Realty, serving Orange County, Huntington Beach, Costa Mesa, Fountain Valley, and surrounding areas.