Why to Include an Appraisal in the Estate Planning Process

1. Appraisals of privately held business interests (stock, partnership units, etc.) are required by IRS regulations to support values claimed on estate or gift tax returns.
2. The costs of appraisals are deductible expenses on estate tax returns and sometimes in estate planning (e.g., family limited partnerships)
3. From the client’s perspective, a good appraisal provides the client some insurance against an IRS audit and professional support in case of audit.
4. The independence, expertise and experience of the appraiser are critical to establishing a credible value in an appraisal (and the IRS knows the difference).
5. Often the appraiser can assist the attorney in structuring an estate plan that will maximize the tax benefits for the client by providing the attorney with strictly a “value” point of view.
6. Often an appraisal provides the client with a benchmark of value for his or her asset so that subsequent appraisals will illustrate the growth in value.