Do I need an appraisal when funding a sub-trust?

An important aspect of funding a sub-trust is deciding which assets are best suited for which sub-trust. As part of this process, it is often recommended that an appraisal be done of the party to establish a definitive value. The Internal Revenue Service (IRS) will often honor these values based upon the report of a licensed appraiser. This may be valuable information both during the sub-trust funding and later on in the trust administration process.

Four Reasons to Order an Appraisal When Funding a Sub-Trust

While it may be tempting to skip over the appraisal when facing extensive tasks during a trust administration, it is important review these important reasons why you should go ahead with the appraisal:

1. An appraisal done by a qualified appraiser is the best defense that you can have if you are later attacked by unhappy beneficiaries of the trust.
2. The established values of the assets can help make determinations about which assets should be placed in which sub-trust.
3. An appraisal calculates the income tax basis for computing taxable gains when a capital asset is sold.
4. An appraisal done by a qualified appraiser is the best defense that you can have if you are later attacked by the IRS.

If you need guidance finding a good local appraiser, your attorney can likely offer you a referral. The benefits of ordering an appraisal will often far outweigh any reason for withholding, such as cost. Fortunately, you do not have to navigate this process alone. We encourage you to reach out for further guidance.

Related Links: Six Steps to Take Before Funding Sub-Trusts Why Trustees Must Fund Sub-Trusts