There is an old saying that goes: What is the best way to eat an elephant? One bite at a time!
Personal property is the elephant of a farm. It is the responsibility that can occupy the most of your time and provides the estate with the least amount of money for the effort involved. But you can’t avoid dealing with personal property. The property must be inventoried, valued, distributed or sold. Let’s start our analysis by looking at what property we have (inventory); then we will determine its value (valuation). In a future post, we will determine what to do with it (distribution / sale).
When you go to court, the clerk will provide you with the form to complete for the inventory. The form will ask you to provide general categories and a value for each category that you have listed. For example, you would list: furniture, $ 1500; office equipment, $ 300, etc. You won’t have to list items separately, like sofa, $ 100; meat, $ 5; typewriter, $ 25. However, I suggest you keep a list of individual items. Although you won’t have to go into much detail for the court, you will likely want a more detailed inventory for yourself. You’ll want this for two reasons: to keep track of the sale of real estate, and to protect against claims from heirs and / or creditors.
You don’t have to get really fancy with inventory; pencil and paper will do. If you want, there are home inventory log books available at office supply stores, or you can purchase software online. There are also companies that specialize in bringing inventory home.
You will need a helper. One person classifies and counts while the other writes. Start inside the house and work from the top of the house to the bottom. Go from room to room in a consistent pattern so you don’t miss a thing – always clockwise or counterclockwise around the room. Also write down what’s on the walls, not just what’s on the floor. For small items, write identifiable groups of items such as 200 hardcover books, 100 paperbacks, 42 nick-knacks, etc. On your list, put a star next to any item you think may be valuable. If the nick-knacks are porcelain and the books are first editions, they are valuable items. When you’re done, follow the same procedure for outbuildings – garage, shed, workshop, or whatever. If there is a storage unit, vacation home, RV, or rented boat, they will need to inventory them as well.
When you present the inventory to the court, you must indicate the value of the personal property. For common household items, a good resource for determining value is the software program. It is deductible that comes bundled with the Turbo Tax income tax program. It is deductible can also be purchased separately. The software lists the thrift store value for most household items and is easy to use.
For items that you have identified as valuable, It is deductible it won’t work. There are several ways to determine the value of individual items or collections. A good place to start is eBay (http://www.ebay.com). To use eBay to help you set your values, you must be a registered user. Signing up for eBay is free; just follow the instructions when you get to the website. Once registered, type in the item you are researching and eBay will search for the item. When the search results appear, scroll down and look on the left side of the page where it says Search Options, click on the completed listings, then scroll down and click Show Items. The search results displayed will be for completed auctions, not for auctions in progress. The prices shown in green are the items that were actually sold; prices in red are for unsold items. If you find your item on the list and the price is green, it is a good value. Compare the item details you found on eBay with the item details you own. Use the closest match as your value.
If you can’t find your item on eBay, it’s time to go to the library or bookstore. There you will find a variety of price guides for all types of antiques or collectibles. You will also find blue books for cars and equipment.
If you have a lot of articles and don’t have time to do your research, then it’s time to call in an expert. In your local telephone directory you will find jewelers, antique dealers, auctioneers, appraisers and other professionals who will tell you the value of the property. What they will offer you is a value opinion, not an appraisal. An appraisal is based on actual sales data, not opinion. I’ll cover appraisals below; For now, keep in mind that there is a difference. For probate valuation purposes, the value placed must be the fair market value at the time of the decedent’s death. This is the value that you should ask your expert.
In my home state of Virginia, individual items or collections worth more than $ 500 must be appraised. Personal property appraisers are not licensed as real estate appraisers, but the content of their reports is regulated. For a personal property appraisal to be valid and accepted for tax purposes, it must be performed by a qualified expert and follow federal guidelines in the Uniform Standards of Professional Appraisal Practice. Most real estate appraisers do not appraise personal property. You can find a personal property appraiser online by checking the websites of the Certified Appraisers Guild of America, the National Association of Auctioneers, or the American Society of Appraisers.
Estate executors will find that inventory and valuation of estate personal property is the most time consuming task, but there are resources available to help.