Personal Property Valuation | 3-minute read
Appraisal of Estate | Valuation of household and personal effects | Estate Tax
The valuation of household and personal effects, i.e. Personal Property of the decedent, is governed by US Law.
Via the Cornell Law School’s Legal Information Institute, the section regarding “Valuation of household and personal effects” can be found in the Electronic Code of Federal Regulations…
Title 26—Internal Revenue >> CHAPTER I—INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY >> SUBCHAPTER B-ESTATE AND GIFT TAXES >> PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954 >> Gross Estate >>
Link: § 20.2031-6 Valuation of household and personal effects.
We don’t recommend interpreting this section of law unless you are an attorney, but a review of this section can be helpful as an executor. Discuss the section with your estate attorney and estate accountant and ask questions.
One important question is, “what is material to the estate?” In other words, “Are we counting and appraising paper clips?” What about Dad’s National Geographics? The Toaster??? Surely there is some point where an estate’s property (not real property) is not material. This is called “di minimus“, and speaks to property below the concern of the IRS.
Again we don’t suggest you interpret any code, state or federal, without the input of your estate attorney and/or estate accountant. A discussion with a certified appraiser would also be wise as you work to fulfill your obligations at the estate’s fiduciary in regard to the valuation of estate assets.
From section § 20.2031-6… Definition of Fair Market Value:
“The fair market value of the decedent’s household and personal effects is the price which a willing buyer would pay to a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.”
While you’re here, be aware of the larger code dealing with Estate Tax…
Link: PART 20—ESTATE TAX; ESTATES OF DECEDENTS DYING AFTER AUGUST 16, 1954 (§§ 20.0-1 – 20.7701-2)