estate planning law firm, Baron Law LLC, Cleveland, Ohio, offers information for you to reflect upon while you are setting out looking for an estate planning attorney to help protect as much of your assets as you can. For more comprehensive information contact Baron Law Cleveland to draft your comprehensive estate plan to endeavor to keep more of your assets for your heirs and not hand them over to the government by way of taxes.
One of the primary concerns everyone has when planning an estate is preserving the value of an estate. That is why probate, an often length and expensive judicial process, is often avoided or reduced at every opportunity. Probate can last between 6 months to many years and during that time court costs are accruing, attorney fees are being racked up, and management costs such as administrative fees and taxes are growing on investment accounts and real estate. That is why comprehensive and proper estate planning is so crucial and must be undertaken as soon as possible. An experienced Ohio estate planning attorney can save you thousands of dollars down the line and hundreds of manhours.
Now, if probate does have to be undertaken, for whatever reason, a significant factor in time and expense is preparing the inventory for the estate. The inventory is an accounting of all the property, money, assets, and debts that a person possessed when they died. Inherent within this accounting processing is a need to appraise and valuate property. Failure to properly establish the value of assets can lead to expense will contests by heirs and beneficiaries, lost money via undervaluation, and family infighting. Often all manners go out the window when it comes to money, regardless of blood relation.
Under Ohio law, it is required that an asset without a readily ascertainable value must be appraised. “Readily ascertainable” is legal speak that means that the value of something is established and available or is a matter of common knowledge or experience where the expertise of an appraiser generally does not provide a significantly different value than that arrived at by a reasonably knowledgeable person. Examples of readily ascertainable property include bank accounts, vehicles and watercraft, ordinary household goods, and publicly traded stocks, bonds, and securities. All valuations for inventory purposes are based upon the value as of the date of death.
Common “Readily Ascertainable” assets are:
- Vehicles and Watercraft – valuations for most cars and boats can be found in reputable and recognized sources such as Kelley’s Blue Book or Edmunds. It is good practice to print out a listing for the vehicle or watercraft as soon as possible as obtaining a valuation on the precise date of death can be troublesome.
- Ordinary household goods and furnishings – usually a fiduciary can assess a reasonable value for this type of property, however, if family/beneficiary infighting or issues are anticipated, usually do to poor or lazy drafting of a last will and testament, it is probably wise to have these assets specifically appraised and remove the basis for conflict. Local court rules usually have rules on when formal appraisals of estate assets must be undertaken. An experienced Ohio probate attorney will know these rules and can guide you accordingly.
- Publicly traded stocks and bonds – there are numerous reputable and recognized sources for obtaining values for this type of property. Again, valuation isn’t usually the difficulty, finding the certificate or note can be troublesome and some investment instruments are no longer associated with a company or corporation in existence. Mergers, bankruptcy, or simple name changes are hurdles that must be addressed before these types of assets can be liquidated and distributed to the appropriate parties.
- Real estate – some probate courts will permit the county auditor’s valuation for the inventory rather than a formal appraisal. Again, consult your estate or probate attorney.
Always be aware, while families, heirs, and beneficiaries may wish to avoid the expense that comes along with professional appraisal, however, valuations shown on the inventory will become the new cost basis, i.e. recognized value of an asset by the probate court, for that asset. Thus, it may be worth the expense to obtain a concrete value. Especially, if it is anticipated that a certain asset may be sold or liquidated after distribution, then thoughtful consideration should be given to a formal appraisal to avoid any such conflict.
When do I need an Appraiser?
If an asset does not have a readily ascertainable value, then a formal appraisal by a qualified professional appraiser is needed. An experienced probate attorney will have the professional network in place to find whatever type of appraiser is required. Common examples include artwork, closely-held stock, real estate (in some jurisdictions), jewelry, antiques and collectables.
In all cases where a formal appraisal is required, the appraiser must be qualified, disinterested, and may not acquire, either directly or indirectly, any assets that they appraise. An appraiser valuating something for personal purchase looks shady to a probate judge and will lead to questions of whether an asset was truly valued or given a personal discount.
Appraisers may be appointed for classes of assets or for individual assets depending on the circumstances in order that the property to be appraised by a person with special knowledge, training, or experience related to the particular assets being appraised. It is not uncommon for large estates with a variety of assets for a multitude of appraisers to be retained. Either prior to filling the inventory, or more commonly in conjunction with the filing of the inventory, a fiduciary is required to execute and file a standardized probate form called the Notice of Appointment of Appraiser.
Per O.R.C. § 2115.06 – Appraiser – compensation, fee may be charged against the estate:
“The real property and personal property comprised in the inventory required by section 2115.02 of the Revised Code, unless an appraisement of that real property or personal property has been dispensed with by an order of the probate court, shall be appraised by one suitable disinterested person appointed by the executor or administrator, subject to the approval of the court and sworn to a faithful discharge of the trust. The executor or administrator, subject to the approval of the court, may appoint separate appraisers of property located in any other county and appoint separate appraisers for each asset.
In lieu of the appointment of an appraiser for real property, the executor or administrator may accept the valuation of the real property by the county auditor. If appraisers fail to attend to the performance of their duty, the executor or administrator, subject to the approval of the probate judge, may appoint others to supply the place of the delinquent appraisers.
Each appraiser shall be paid an amount for the appraiser’s services that is determined by the executor or administrator, subject to the approval of the probate judge, taking into consideration the appraiser’s training, qualifications, experience, time reasonably required, and the value of the property appraised. The amount of the fees may be charged against the estate as part of the cost of the proceeding.”
Of critical importance within the language of § 2115.06 is the entitlement of appraisers to be paid from the estate. It doesn’t take a stretch of the imagination to see how cataloging and valuing estate assets can rapidly turn into a significant estate cost that ultimately takes money take from heirs and beneficiaries. Heirs and beneficiaries, at the end of day, are primarily concerned with the bottom line, how much they ultimately receive. An experienced Cleveland probate attorney can advise on the wisest choice of action, albeit maybe not the most popular one, and protect heirs and beneficiaries from themselves while conserving estate funds and assets. Will contests are always more expense than appraiser fees and proper appraisal goes far in nipping will contests in the bud.
You don’t have to be rich to protect what you’ve spent a lifetime trying to build. To find out whether a trust is right for your family, take the one-minute questionnaire at www.DoIneedaTrust.com. There are a number of different trusts available and the choices are infinite. With every scenario, careful consideration of every trust planning strategy should be considered for the maximum asset protection and tax savings. For more information, you can contact Mike Benjamin of Baron Law LLC at 216-573-3723. Baron Law LLC is a Cleveland, Ohio area law firm focusing on estate planning and elder law. Mike can also be reached at firstname.lastname@example.org.
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About the author: Mike E. Benjamin, Esq.
Mike is a contracted attorney at Baron Law LLC who specializes in civil litigation, estate planning, and probate law. He is a member of the Westshore Bar Association, the Ohio State Bar Association, the Cleveland Metropolitan Bar Association, and the Federal Bar Association for the Northern District of Ohio. He can be reached at email@example.com.
The information contained herein is general in nature, is provided for informational and educational purposes only, and should not be construed as legal or tax advice. The author nor Baron Law LLC cannot and does not guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable in a given situation may impact the applicability, accuracy, or completeness of the preceding information. Further, federal and state laws and regulations are complex and subject to change. Changes in such laws often have material impact on estate planning and tax forecasts. As such, the author and Baron Law LLC make no warranties regarding the herein information or any results arising from its use. Furthermore, the author and Baron Law LLC disclaim any liability arising out of your use of, or any financial position taken in reliance on, such information. As always consult an attorney regarding your specific legal or tax situation.