Intended use drives the appraisal process.
Assets held in joint tenancy may not be subject to probate or trust administration, but they may still have to be valued for estate tax purposes or to establish a basis for later IRS tax purposes (a step up). The IRS can require an itemized list and valuation of person property.
Equitable Distribution and Divorce
Personal property often has more than one party with an ownership interest. Frequently value is in dispute and the parties need expert valuation. During the dissolution of marriage personal property marital assets that are community property must be equitably distributed based upon a determination of fair market value. This may require the services of a personal property appraiser when the dispute cannot be resolved between the parties.
Frequently in trust or estate management situations there are multiple beneficiaries of the personal property and the property requires a fair market valuation in order to be distributed equitably.
Part or all of the appraisal process can be conducted without a written report (when a written report is not required for legal purposes). An oral valuation report can be requested by a party or parties with an interest in the value of the subject property. An oral valuation report can substantially reduce appraisal costs. For Novotny to provide an oral report, all parties must agree to retain Novotny, and to be present during Novotny's inspection and valuation.
If the parties accept the stated value then no further appraisal service is needed. If a party contests the stated value, and If a computer is available onsite, Novotny can, if requested, quickly demonstrate the range of published sales of comparable objects. He can also do this, if requested, later at his office and report back to the clients and, as directed, to intended users.
If, on the other hand, a party(s) requires a written report, at increased cost, Novotny will prepare a written report. He creates formally written appraisal reports nearly every day of his life for various intended uses. Written and oral reports must meet USPAP requirements.
IRS Tax Appraisals
Require a Qualified Appraiser and Qualified Appraisal
As of August 2006 the Internal Revenue Service (IRS) began reviewing and changing the rules. Notice 2006-96 was issued providing guidance for defining a qualified appraiser. When the appraiser can fulfill these requirements it will be a good indication that an appraisal for estate tax reporting or charitable contributions will be reviewed positively. Recent changes in the law (Pension Protection Act, 2006) affect the process of charitable contribution.
The IRS recognized the need to better define a qualified appraisal. Proposed regulations (§1.170A-17(a) will establish that a qualified appraisal means an appraisal document that is prepared by a qualified appraiser in accordance with generally accepted appraisal standards such as the Uniform Standards of Professional Appraisal Practice (USPAP).
USPAP will set the benchmarks going forward. The general antique and personal property appraiser must have the knowledge and experience to identify, understand and manage the requirements established by law, IRS regulations and USPAP.
There are many specific requirements relating to non-cash charitable donation and estate tax (decedent 706 estate tax returns) of the IRS that an appraiser must be familiar with and capable of fulfilling. For instance, for tax returns after August 2006 the appraiser must:
• have earned an appraisal designation from a recognized professional appraiser organization,
• regularly perform appraisals for compensation, and
• have verifiable education and experience in valuing the type of property being appraised
Novotny has prepared many IRS tax appraisal reports in compliance with IRS regulations and USPAP. Novotny is a qualified IRS appraiser able to perform IRS tax appraisals for most residential contents appraisals and for many property types.
An appraisal may be needed for trust or probate purposes, estate planning, equitable distribution and informed decision making. The client may need either a formally written report or an oral report.
There are two types of replacement or repair coverage that apply to personal property. Clients may need to obtain insurance or to settle a damage or loss claim. Insurance companies and the moving and storage industry each provide a different type of coverage. Each is governed by different federal laws.
The insurance industry provides home-owner's and renter's insurance for personal property. There are also endorsement and floaters available when property is specifically scheduled independently of the home-owners policy.
Within a homeowner's insurance policy some personal property items are subject to limits such as antiques, jewelry, fine art, collector items and rare objects. Personal property floaters are used to insure personal property objects which have limited coverage under a standard policy. This can also be accomplished through an endorsement, a provision that changes the original policy coverage. These options offer expanded coverage for individual items or item types that are not otherwise covered. The expanded coverage establishes an agreed value that reflects replacement cost without depreciation. Personal property that is frequently scheduled to expand coverage include:
• Jewelry and antiques
• Furs: real fur garments and garments trimmed with real fur
• Cameras: digital, still, movie, video and equipment
• Musical instruments: professional and non-professional
• Silverware, antique silver and sterling objects and rare decorative art
• Fine Arts: paintings, etchings, bronzes and sculptures
• Manuscripts and books, and antique furniture
• Golfer's equipment: matched sets of golf clubs and clothing
• Sports equipment: fishing gear, archery and hunting gear
• Stamp or coin collections
• Hand tools and power tools owned for business purposes
When your personal property or antiques need to be scheduled, or when insured object(s) are damaged or lost, an appraisal is often required to establish value. Novotny serves private parties, insurance adjusters and litigators with personal property insurance valuation problems. Novotny has the experience to solve client's insurance valuation problems regarding personal property, antiques and collectibles. Novotny can help you in the following manner:
• Acquire insurance and establish object identification for recovery
• Value an insured loss or a moving and storage damage claim
• Act as an appraiser on an appraisal panel under the insurance appraisal clause
• Serve as an expert appraiser in the mediation and litigation of a disputed insured loss
Protect yourself now. To properly document your personal property assets you should:
• Gather and keep all sales receipts of major purchases.
• Take a video inventory or photographic inventory of your personal property.
• Develop a list of important personal property.
• Keep your documentation in a safe place.
If you need personal property inventory documentation or insurance valuation contact Novotny.
Shipping and Storage Damage or Loss Claims
When property is damaged while shipping, either by improper packing or
careless handling, an appraisal is frequently required. Moving and
storage claims, while similar in some respects, are considerably different from insurance claims.
Novotny has handled many high value moving and storage claims. Sometimes a damaged object of lesser value also requires a formally written
appraisal. Written appraisals are considerably more expensive than oral appraisals, and they must comply with the reporting
requirements of the Uniform Standards of Professional Appraisal Practice
(USPAP). Failure to do so properly results in a USPAP
violation which is not acceptable.
Novotny developed an abbreviated, low cost, formally written, single page appraisal report template. This
template allows Novotny to selectively appraise, and properly report, the value of single damaged objects at a reduced cost.
Contact Novotny Now to properly value your shipping damage or loss claim.
What is the value of your personal property? How do you want to distribute your personal property? There are federal and state laws governing estates. Careful estate planning allows you to communicate and establish your intentions, priorities, concerns and preferences should you be unable to manage your affairs or unexpectedly pass away.
Estate planning can include establishing your trust, will, living will, health-care-proxy and assignment of power of attorney. Should you die without a trust or will the state will distribute your assets based on arbitrary formula that may not be congruent with your intentions. Family conflict could occur and increased legal or administrative costs accrue.
To determine value, or to be equitable, sometimes an appraisal is necessary. When you have antiques, fine art, oriental rugs, collectibles and fine jewelry etc., an inventory and valuation of your important personal property assets should be considered.
Novotny can assist you in preparing an inventory and valuation of important personal property by means of a formal inventory or appraisal report.
Many clients request Novotny to assist them in preparing an inventory that identifies and lists the market value of their personal property. When Novotny provides an oral valuation the appraisal will include sufficient signed paperwork to identify the appraisal problem and important disclosures so users can always meaningfully understand the appraisal. The client is provided with a CV and signed appraiser's certification. Since the inventory and valuation is oral, clients typically document a Novotny oral report by means of
• taking an audio or video tape of Novotny's oral appraisal report,
• taking handwritten notes that documents and values the objects,
• preparing an excel spreadsheet
• and taking digital photos
All of the above, whether done orally or by means of a formally prepared report should be retained off site in a safe or safety deposit box.
Additional information relevant to this service follows below.
Oral Valuation to Assist in Decision Making and Other Intended Uses
Apart from estate planning clients often ask Novotny to help them make decisions whether to insure, sell, dispose or distribute selected personal property. Clients request an oral report to become properly informed to make such decisions without the additional cost that applies to a written formal report which is not required, needed or wanted. Oral
appraisals are cost effective
and affordable, while still being credible or worthy of belief (relevant to intended use). For oral appraisal reports Novotny requires that intended users be present.
When an oral appraisal report is provided, the client (or the client's agent) must document Novotny's object identifications, value opinions, as well as his analyses and conclusions communicated on site. The client may document the oral appraisal by means of an audio or visual tape, or by written documentation. Novotny
usually retains a digital audio recording that documents his onsite
relevant narrative including his limiting conditions, assumptions,
opinions, analyses and conclusions. He retains his recording and does not release it. He does not take photographs unless
specifically requested as part of the contract.
The client can attach their documentations of the oral appraisal report and to the documents that Novotny brings to his inspection. The assembled documents help ensure that his opinions, analyses and conclusion are meaningful to the client and properly understood. The client is encouraged to take and retain some photographic evidence of the subject property as part of that documentation.
Novotny provides clients with a signed formal contract with identifies the relevant assignment elements including intended use, intended users, the appropriate value definition, the effective date, assignment conditions and his scope or work. He also provides his CV and a signed USPAP Certification below a brief one page statement that repeats the assignment elements identified in his one page contract and adds brief statements regarding scope of work, value definition, value approach, relevant market, exposure time, limiting conditions, assumptions and hypothetical conditions.
The client can opt to prepare an inventory prior to Novotny's onsite inspection and oral appraisal report. The subject properties can be numbered for cross referencing. The client can write the object identification and value opinion for each object as the oral appraisal proceeds. Upon completion of the oral report the summary or aggregate value total for all of the objects valued can be imbedded in the single page that Novotny brings with him to the assignment. The single page provides important oral report disclosures and an appraisers certification which Novotny will sign upon conclusion of the assignment.
Since the summary or aggregate value totals the value of each object identified and valued on the onsite inventory it authenticates the attached inventory and valuation. The single page also notes that the inventory is attached as an addendum item, along with Novotny's CV, and thereby come very close to meeting the requirements for a written report. Such single page written oral report disclosures allows Novotny to more meaningfully communicate his oral valuation report and to make it more relevant to the client regarding intended use.
requested and appropriate, Novotny may suggest the client, based on
their audio/visual documentation of his onsite statements of
identification and value, later prepare a more formal and typed inventory and estimated value
worksheet or spreadsheet. They can attach it to an email for Novotny to review, edit and amend. Novotny will then return the document as an attachment to his oral report that documents to objects and their value. An addition cost applies to this expanded scope of work. Novotny retains a copy of the amended work or spreadsheet in his work file.
As part of Novotny's oral appraisal services he will often communicate demand factors relevant to a subject object. For some objects he will opine regarding competing and alternative markets and market acceptability, Knowing the demand factors and liquidation options allows clients to become sufficiently informed to negotiate with potential buyers based upon their urgency to sell and their willingness to retain a property. Novotny often offers to provide clients with access, for free, to the two most important internet sites he uses to become informed regarding market factors. He explains how to properly use these sites after he has gone.
Find out more. Visit Novotny's Oral Appraisal page now. See Novotny's background, education and experience on his professional profile that allows his to provide credible object identifications and valuations. See the types of properties that Novotny can value during an oral appraisal.
Clients frequently need assistance in identifying objects that may require a specialized market to achieve the highest value and with pricing ordinary objects for onsite sale. Clients frequently request Novotny to provide an oral (Antiques Roadshow type) appraisal report only. During the oral valuation Novotny will identify the property and provide a price range. When the client intends to personally manage the liquidation of the personal property, Novotny will provide advice, as requested, about how to properly organize, produce and conduct an onsite estate, tag or garage sale. Such advice often covers issues such as advertising, security and traffic flow. An oral appraisal report is a cost effective way to become informed regarding the price range at which property will probably sell with time restraints.
If Novotny is requested to conduct an estate sale, rather than price the property for his standard fee, Novotny will decline the appraisal assignment and offer his services as an estate sale agent or broker.
Appraisers should comply with USPAP, a minimum standard, as well as the standards of their professional society. If their work is faulty, as can happen, a client can be harmed. In most cases money distribution is impacted. The appraiser should be held accountable. The public has a right to expect ethical and competent performance of appraisers. The primary purpose of USPAP is to protect the public.
Novotny's expertise in USPAP, and his certification as an AQB Certified USPAP instructor, has resulted in occasional requests for him to review the quality of the work of another appraiser. Novotny's background in personal property valuation, in appraisal course development, as an AQB Certified USPAP instructor and as an instructor of appraisal theory, methods and practice works together to help him perform appraisal reviews.
Appraisal Reviews focus on the quality of the work of another appraiser based on USPAP and relevant standards of care. Some appraisal review assignments also require the appraiser to give his or her opinion as the the value of the subject property.
The Appraiser's Task
Whether or not a personal property appraisal report is credible,
or worthy of belief,
must be judged
based upon relevancy to the
client's intended use of the report.
The appraiser must determine the scope of work necessary to solve the appraisal problem. This determination is based on a proper understanding of the client's valuation problem.
The appraiser must identify all assignment elements including the client, intended users, intended use, the definition of value, effective date, relevant property characteristics and assignment conditions such as limiting conditions and assumptions. But most importantly intended use. The intended use will cause a client to make decisions or take an action based upon reliance upon the appraisal. Once the appraiser understands the appraisal problem, especially intended use, he or she is able to determine the relevant market to research and make other scope of work decisions. Whether or not a report is credible is established relevant to intended use.
Only after the appraiser has identified the client's problem can he or she determine whether or not they possess the competency to accept the assignment.
Once the assignment is accepted the appraiser must do whatever is necessary to develop credible assignment results.
Before concluding an assignment the appraiser must ask him or herself:
- Was the problem properly identified? Did my report provide a credible answer the questions asked? Is it worthy of belief?
Should my client feel comfortable placing his or her reliance on my opinions, analyses and conclusions?
- Does the report have proper disclosures, is it logical, complete, relevant, easy to follow, meaningful and not misleading?
Signing the USPAP certification statement, is, in effect, attesting that the answer to these questions is “Yes! My report is credible”, thereby providing the client with a reason to put his or her confidence in the appraisal report. Find out more about how USPAP protects public trust in appraisers by establishing the minimum standards for appraisers.
- Have I complied with USPAP?
will comply with USPAP, as well as the ANA and ISA Code of Ethics and
Conduct and the ISA Report Writing Standard in all appraisal
To find out more about Novotny's Appraisal Services visit his HOME PAGE now.
To find out how Novotny acquired 30+ years of appraisal experience see ABOUT US
To find out more about the types of personal property appraised visit PROPERTY TYPES
If you need a generalist antiques and personal property appraiser CONTACT NOVOTNY
Copyright 2009-2012 - all rights reserved - William M. Novotny