Is a written Inventory required ?

For all estates, an inventory or valuation may be useful, for several reasons. One of the most important functions that must be completed during estate administration, both for a Living Trust Estate and a Will / Probate Estate, is to establish valuation of property and assets. There are a variety of purposes -- this helps determine if written appraisals are required.

For any estate that is being settled by the probate process, a complete Inventory must filed with the court. The attorney will guide the personal representative. For example, real estate is reported by sale price (if sold by the estate), or by obtaining an appraisal. Bank and brokerage account’s values are also reported. Household furnishings can be lumped together.

For a taxable estate (total gross estate exceeds amount excluded from estate taxes; applies even when the marital deduction means that no taxes will be due) - formal documentation will be required because a federal estate tax return must precisely report all assets.

For the beneficiaries of a large or small estate, it is necessary to obtain a written valuation of all real estate and securities in order to determine a new cost basis for these assets and to take advantage of stepped-up valuation, thus minimizing the taxable gain when the assets are eventually sold by the beneficiaries. The written valuation provides a valid and documented justification of the assets’ current market value determining stepped-up valuation. If the estate liquidates these assets and then distributes the inheritance in the form of cash (checks) then, of course, the beneficiary will not need the documentation.