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Executor reviewing estate paperwork and house keys before ordering a date of death appraisal
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Estate Planning
What Was the House Worth the Day They Died?

A date of death appraisal is the number an estate rests on. It is also, usually, the last thing anyone orders. Consider a hypothetical. Your father died in March, and the will named you executor. The house in Park Ridge is the largest thing he owned. Now the attorney has asked one question: what was it worth on the day he died? Not what it would list for today, and not what the assessor carries it at. So here is what that appraisal establishes and where it fits in settling the estate. Then, what to put in writing before the appraiser starts.

By the end of this article, you’ll know:

  • What the date-of-death value is used for, and why an assessment cannot stand in for it.
  • Where the appraisal fits in the settlement timeline, from the inventory to the returns to the distribution.
  • What the executor and the estate attorney should settle with the appraiser before the work begins.

What a Date of Death Appraisal Establishes

The report fixes one figure: the fair market value of the property on the day the owner died. Federal estate tax regulations, at 26 CFR 20.2031-1, define that value as the price a willing buyer and a willing seller would agree on, neither under pressure. Both know the relevant facts. A forced-sale price does not qualify, though. Nor does the county’s assessed value, unless that number happens to equal fair market value. In Cook County it rarely does. Assessments come out of a mass appraisal model, not a look at one house.

That single figure then does several jobs. It is the value the executor reports if the estate owes a tax return. It also becomes the tax basis the heirs carry when they eventually sell, under the IRS rules on inherited property. And when one heir keeps the house while the others take cash, it is the number the buyout starts from. One report, prepared once, serves every one of those uses.

Because the effective date sits in the past, the assignment is retrospective by definition. The appraiser inspects the property now, then values it as it stood on the date of death. Only sales a buyer could have seen at the time count. USPAP, the standards published by The Appraisal Foundation, requires the report to state that effective date and hold the analysis to it. Our article on appraisals for inherited property walks through how that reconstruction works. This piece stays on the process around it instead.

Where the Appraisal Fits in Estate Settlement

For an Illinois estate that goes through probate, the sequence runs like this. Whether a given estate needs probate at all, or passes through a trust instead, is a question for the family’s attorney.

  • Letters issue. Once the court appoints the representative, a clock starts. Under section 14-1 of the Illinois Probate Act, the representative files an inventory within 60 days. It has to describe the real estate, its improvements, and any mortgage or lien against it. In Cook County, those cases run through the Probate Division at the Daley Center.
  • Nine months. Both the federal and the Illinois estate tax returns come due nine months after death. The federal return, Form 706, only applies to a 2026 death above $15,000,000. That figure counts the gross estate plus adjusted taxable gifts, according to the IRS instructions. Illinois, though, sets a lower bar. The Illinois Attorney General puts the state threshold at $4,000,000. The Illinois return, Form 700, goes to the Attorney General’s office with a Form 706 and the appraisals attached. Whether an estate below the federal threshold still prepares a 706 for that purpose is a question for counsel. A paid-off house, a retirement account, and a life insurance policy can cross that line.
  • Distribution. Then the estate accounts to the heirs and distributes. If one sibling buys out the others, the date-of-death value anchors the price. If the house sells, the closing price answers to it.
  • The later sale. Years on, an heir sells and the basis question comes back. If the estate filed Form 706, it may also have issued Form 8971. That form ties each heir’s basis to the estate tax value.

No Estate Tax Due? The Value Still Comes First

Notice which step needs the value first. Even if no estate tax will be due, the basis and the distribution still depend on it. So the appraisal belongs at the front of the timeline, ordered when the letters issue. Waiting for a buyer’s offer puts it in the wrong place.

Alternate Valuation and Why the Date Can Move

An executor who files Form 706 can elect to value the estate as of six months after death instead. The IRS instructions set the conditions. First, the election has to lower both the gross estate and the tax. It applies to everything in the estate, not just the house. Property that sells or passes to heirs inside those six months takes its value on the day it left the estate. And the election, once made, is final. Illinois allows the same election on Form 700 for estates that are taxable in Illinois but not federally.

Consider a hypothetical Wilmette house worth $1,400,000 on the date of death in a softening market. Six months later, comparable sales might support $1,330,000, a drop of $70,000, or about 5 percent. If the rest of the estate also declined, counsel might weigh the election. But the lower value becomes the heirs’ basis too. So a smaller estate tax bill now can mean a larger capital gain later. That trade-off belongs to the attorney and the CPA. The appraiser’s job is to supply both numbers. If the election is even a possibility, say so before counsel writes the engagement letter. Then the assignment carries two effective dates from the start.

What the Appraiser Needs From the Executor

In practice, a retrospective assignment lives or dies on what the executor can document. Four things speed the work and make the report easier to defend.

First, the date. The death certificate sets the effective date, so send a copy at engagement. Second, condition on that date. Photos from the funeral week, the last listing, and repair invoices all help. If the basement flooded in June after a March death, the appraisal has to describe the dry basement. Third, how the decedent held title. A house owned outright is one assignment; a half interest held with a sibling is a different scope. So say which before the appraiser quotes a fee. Fourth, who will rely on the report. Naming the attorney and the CPA as intended users lets everyone work from one document without a second engagement. Our residential appraisal team asks for all four before scheduling the inspection.

Then keep the report. The heirs may not sell for a decade, and the basis question will be waiting when they do.

For Estate Attorneys: Scoping the Engagement

Most weak estate appraisals trace back to an engagement letter that never named the assignment. Four lines fix that.

State the effective date, and add the six-month alternate date if the election is live. Name the intended use as estate tax reporting, basis determination, and probate accounting. List the executor, counsel, and the CPA as intended users. Specify the definition of value as fair market value under 26 CFR 20.2031-1(b), quoted in the report. A lender’s market value definition carried over from a refinance form is the wrong one. And scope each parcel separately, with any fractional interest identified up front.

Why it matters on the return: the Form 706 instructions carry a 20 percent penalty when a reported value is 65 percent or less of the actual value. The Illinois return, meanwhile, goes to the Attorney General’s estate tax section with the appraisals attached. A report that follows the regulation’s definition answers the reviewer’s first question before anyone asks it. A lender form, by contrast, leaves it open.

Order the Appraisal When the Letters Issue, Not When the House Sells

The sequence is simple once the timeline is visible. Letters issue, and the executor orders the appraisal. Then the inventory goes in, the returns go out on time, and the distribution follows a number everyone has seen. Families who reverse it end up backing into a value after the sale. That is harder to defend and costlier to fix. So get the date-of-death value first. Everything else in the estate settles around it.

Settling an Estate With a House in It?

PahRoo prepares date-of-death and alternate-valuation appraisals for executors, estate attorneys, and CPAs across Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples.

Order a Date-of-Death Appraisal

Frequently Asked Questions

What is a date-of-death appraisal?

It is a real estate appraisal with an effective date equal to the day the owner died. It states the property’s fair market value on that date, using evidence available at the time, even if the report comes later. Executors use it for the returns and the distribution, and heirs use it as their tax basis.

How do you value a house for probate?

A licensed appraiser inspects the property, documents its condition as of the date of death, and analyzes comparable sales from around that date. The report ties a fair market value to that effective date and explains the data cutoff. An assessor’s figure or an online estimate is not a substitute.

Who orders a date-of-death appraisal?

Usually the executor or administrator, often at the attorney’s request. A trustee orders it when the property sits in a trust, and a CPA may ask for it for the estate return or the heir’s basis. Name the attorney and the CPA as intended users so all can rely on one report.

How long after death can you get an appraisal?

There is no fixed deadline, but the estate needs the number early. Illinois probate inventories are due 60 days after letters issue, and estate tax returns nine months after death. Appraisers routinely prepare retrospective reports months or years later, though condition documentation gets harder with time.

What is the alternate valuation date?

It is the date six months after death that a Form 706 executor can elect instead. The election must lower both the gross estate and the tax, covers every asset, and is final once made. Property that sells inside the six months takes its value on the sale date. If the election is possible, tell the appraiser at engagement.

Retrospective Estate Work Across Five Markets

PahRoo Appraisal & Consultancy prepares date-of-death, alternate-valuation, and buyout appraisals for executors, trustees, estate attorneys, and CPAs in Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. The same retrospective discipline runs our January 1 valuations for property tax appeals. See the full list of appraisal services, or contact the team with the date of death and the property address.

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Adult daughter in the kitchen of an inherited Chicago home before ordering an appraisal for inherited property
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Estate Planning
Appraisal for Inherited Property Before You Sell or Split

A call we get more often than you would think might run like this. A daughter has just buried her mother. The house in Skokie is paid off. Her brother wants to sell, and the listing agent has already named a price. Nobody has ordered an appraisal for inherited property, and nobody thinks they need one. Then the CPA asks a simple question: what was the house worth on the day Mom died? Silence.

By the end of this article, you’ll know:

  • Why the value on the date of death, not the sale price, drives your tax picture
  • How an appraiser reconstructs value for a date that has already passed
  • What to hand your CPA so the number holds up if anyone asks

Why an Appraisal for Inherited Property Comes First

When you inherit real estate, the tax code does something generous. It resets your cost basis. Under the IRS rules on basis of inherited property, your starting point is the fair market value on the date the owner died. Not what they paid in 1978. Not the assessor’s number. The market value on that one day.

Say the house was worth $650,000 when your mother died. You sell it six months later for $655,000. Your taxable gain is roughly $5,000, less selling costs. Without a defensible date-of-death value, you have no clean way to prove that. And the burden of proof sits with you, not the IRS.

That is why the appraisal comes first. Before the listing agreement. Before a sibling buyout. Before the return gets filed. An appraisal for inherited property is not paperwork for its own sake. It is the document that every later decision leans on. We prepare these as part of our estate planning appraisal work across Cook County every month. The families who order early spend far less time arguing later.

What a Date-of-Death Appraisal Actually Establishes

The appraisal fixes one number: market value as of the date of death. That number does a lot of work at once.

For income tax, it becomes the basis your CPA uses when the property is eventually sold. In a rising market, the reset usually wipes out decades of appreciation. In a falling market, the basis can step down instead of up, which is worth knowing before you plan around a loss.

For estate tax, the same value goes on the return if one is required. Federal estate tax reaches only very large estates, well above what most families own. Illinois is a different story. The Illinois Attorney General’s estate tax fact sheet sets the state exclusion amount at $4,000,000. It works as a threshold rather than a credit. A North Shore home, a retirement account, and a life insurance policy can cross that line faster than people expect. If they do, Form 700 is due nine months after death, and the state wants the appraisals attached.

There is one wrinkle. Under the IRS instructions for Form 706, an executor who files that return can elect alternate valuation. That values estate property as of six months after death instead. The election has to lower both the gross estate and the tax. It also applies to everything in the estate, not just the house. If your CPA is weighing that election, the appraiser needs to know, because it changes the effective date of the whole assignment.

How a Retrospective Appraisal Works When Months Have Passed

Most families call us after the fact. The death was in March, the probate case opened in June, and the CPA asked for a value in September. That is normal, and it is exactly what a retrospective appraisal is for.

A retrospective appraisal has an effective date in the past. The appraiser inspects the property today, then values it as it stood on the date of death. Only the market evidence a buyer could have seen at that time comes into play. Sales that closed after the effective date do not drive the value opinion. Under the standards published by The Appraisal Foundation, the appraiser has to state that effective date clearly and hold the analysis to it. That discipline matters, because the appraiser already knows what the market did afterward.

Condition matters too. If the kitchen was gutted after the funeral, the appraisal has to describe the kitchen that existed on the date of death. Old photos, the listing from a prior sale, permits, and family accounts all help. The more a property has changed since the death, the more this documentation earns its keep.

In practice, a retrospective assignment costs about the same as a current one. The difference is the research. A year-old effective date in a fast-moving Chicago submarket takes real care, so ask any appraiser you interview how they handle the data cutoff.

Where the Date-of-Death Number Gets Tested

The value gets tested in three places, and each one has a different audience.

The first is the sale. When you list, the appraisal tells you whether the agent’s price is realistic and what the gain will look like at closing. A pre-listing opinion of value also gives you cover if a buyer’s lender appraises low and you need to hold your ground.

The second is the split. When one sibling keeps the house and buys out the others, the buyout price should start from an independent number. Not the assessor’s figure, and not a Zestimate. We have watched families lose a year and a relationship over a $40,000 gap that a single report would have settled. Our residential appraisal team handles these buyout assignments with both sides named as intended users.

The third is the courthouse. If the estate goes through the Probate Division of the Circuit Court of Cook County at the Daley Center, the inventory will show a value for the real estate. A USPAP-compliant report backs that figure in a way an online estimate cannot. Whether a particular estate needs probate at all is a question for the family’s attorney, not the appraiser.

For the CPA: What to Ask For Before the Return Is Filed

Accountants call us about inherited property more than any other professional group. The same problems come up every time. So here is what to specify when you or your client orders the report.

First, put the effective date in the engagement. State the date of death, or the alternate valuation date if the executor is electing it on Form 706. An appraisal dated to the inspection is the wrong answer.

Second, name the intended use. Ask for a report prepared for tax basis and estate reporting purposes. That scope tells the appraiser to document market conditions as of the effective date, describe the property’s condition at that time, and explain the data cutoff. A lending form will not do that.

Third, check consistency. If the estate files Form 706, the value reported there controls the heir’s basis. The executor may also have to issue Schedule A of Form 8971 to the beneficiaries. The IRS FAQ linked above notes that a penalty can apply when a beneficiary claims a basis above the estate tax value. One appraisal, used on both the estate return and the heir’s eventual Schedule D, avoids that mismatch.

Finally, keep the report in the permanent file. The property may not sell for a decade. When it does, the basis question comes right back, and the report is the answer. Our earlier piece on qualified appraisals for donated real estate covers the related IRS rules if the heir plans to donate the property instead.

Order the Appraisal Before the Listing Agreement or the Return

Sequence is everything here. Get the date-of-death value first. Then price the listing, negotiate the buyout, or file the return with a number behind it. Families who reverse that order end up backing into a value after the sale. That is harder to defend and more expensive to fix.

Our lane is the value and the report. How the basis is claimed, whether alternate valuation makes sense, and what the return should say are properly the CPA’s work. When both sides do their part early, the number that reaches the IRS is one that holds.

Inherited a Home and Not Sure What It Was Worth?

PahRoo prepares date-of-death and retrospective appraisals that give heirs, executors, and their CPAs one defensible number to build on.

Request an Estate Appraisal

Frequently Asked Questions

Do you need an appraisal for an inherited house?

In most cases, yes. Your tax basis in inherited real estate is its fair market value on the date of death. An independent appraisal is the standard way to document that value. It also settles the number for sibling buyouts, probate inventories, and any state estate tax return.

What is a date-of-death appraisal?

It is an appraisal with an effective date equal to the day the owner died. The appraiser values the property as it stood on that date using market evidence available at the time. The inspection and report can happen months later.

How do you determine the value of an inherited property?

A licensed appraiser inspects the property and reconstructs its condition as of the date of death. Then the appraiser analyzes comparable sales that closed around that date. The report explains the data cutoff and states a market value opinion tied to that effective date.

What is a stepped-up basis?

It is the reset of an inherited asset’s cost basis to its fair market value at the date of death. If the property has appreciated, the heir’s basis steps up, which reduces the taxable gain on a later sale. If the value fell, the basis can step down instead.

Can I get an appraisal months after the death?

Yes. This is called a retrospective appraisal. The appraiser sets the effective date to the date of death. The analysis then uses only information a buyer could have known at that time. It is routine work for appraisers who handle estate assignments.

Estate Valuation Support Across Cook County

PahRoo Appraisal & Consultancy prepares date-of-death, retrospective, and buyout appraisals for heirs, executors, attorneys, and CPAs. We serve Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. Every report is developed to USPAP and written so a reviewer can follow the effective date and the evidence behind it. See our full range of real estate appraisal services, or contact our team before the listing agreement or the return goes out.

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Qualified appraisal report for a charitable donation of Chicago commercial real estate.
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Estate PlanningFor Attorneys & Professionals
Qualified Appraisal for Charitable Donation of Real Estate

A CPA called me last spring about a deduction under audit. Her client had donated a piece of Chicago commercial real estate to a nonprofit and deducted $850,000, the appraised value. A charitable donation of real estate rests on a qualified appraisal that meets the IRS definition. This one missed it three ways.

The appraiser was licensed but did not meet the federal definition of a qualified appraiser. The report lacked the required declarations. And the effective date fell three months after the donation. Any one of those flaws can sink the deduction on its own. Together, they put the full $850,000 at risk, plus possible accuracy-related penalties on top.

By the end of this article, you’ll know:

  • What the IRS requires from the report and the appraiser under Treas. Reg. 1.170A-17
  • How the 60-day window and the valuation effective date actually work
  • The Form 8283 steps that protect the deduction if the IRS examines it

What Counts as a Qualified Appraisal for a Charitable Donation of Real Estate

The rules live in one regulation. Under Treas. Reg. 1.170A-17, a qualified appraisal is a document prepared by a qualified appraiser in accordance with generally accepted appraisal standards. The regulation defines those standards as the substance and principles of USPAP, so a report that ignores USPAP fails at the starting line.

The report itself must carry specific content. It needs a detailed description of the property and its condition, the valuation effective date, and the fair market value as of that date. It also needs the appraiser’s identity, qualifications, signature, and date, along with a statement that the appraisal was prepared for income tax purposes.

Then come the declarations. The appraiser must state that they hold themselves out to the public as an appraiser and are qualified to value this type of property. They must also acknowledge that a substantial or gross valuation misstatement can trigger a civil penalty. Because the declarations are mandatory, a report without them can be rejected even when the value itself is defensible. So the engagement should specify a tax-purpose report from the start. We scope our own appraisal assignments around the intended use for exactly this reason.

Who Meets the Qualified Appraiser Definition

A state license is not enough. Neither is experience alone. The appraiser must have verifiable education and experience in valuing the specific type of property being donated, and the report has to document it.

There are two paths. The first is a designation from a recognized professional appraiser organization, earned for demonstrated competency in the relevant property type. For real estate, that includes the MAI, the SRA, and the ASA designations. The second path combines successful coursework in valuing that property type with at least two years of experience doing so.

The appraiser must also regularly perform appraisals for compensation. They cannot have been prohibited from practicing before the IRS during the three years before the appraisal date. Finally, the appraiser cannot be the donor, the donee, or a party to the transaction. So a broker who arranged the gift, however credentialed, is out.

The 60-Day Window and the Valuation Effective Date

Timing trips up more donations than valuation does. The appraisal must be dated no earlier than 60 days before the contribution and no later than the return’s due date, including extensions. The donor must receive it before that due date too.

The effective date follows its own rule. For a report dated before the donation, the effective date must fall within 60 days before the contribution. It cannot fall later than the contribution itself. If the report is dated after the donation, the effective date must be the contribution date exactly. My caller’s file failed here: the value spoke as of a date three months after the gift, which answers the wrong question.

Real estate values move, so this rule has teeth. The fix is usually straightforward. A qualified appraiser can prepare a retrospective appraisal with an effective date matching the donation. The analysis relies only on market evidence available as of that date. That is routine work for firms that handle tax assignments, but it has to be ordered, not assumed.

Form 8283 Is Where the Deduction Survives or Dies

The paperwork converges on one form. For real estate deductions over $5,000, Section B of Form 8283 must be fully completed and filed with the return. The qualified appraiser signs it, the donee organization acknowledges the gift on it, and an incomplete section can void the deduction by itself.

The threshold rises again at $500,000. Above that figure, the full qualified appraisal must be attached to the return, not merely retained in the file. And because the IRS is never required to accept an appraised value, high-dollar gifts draw closer review. Property recently purchased for far less than the claimed value, conservation easements, and unusual property types all invite scrutiny. The government’s own valuation guidance in IRS Publication 561 is worth reading before the return goes out, because examiners certainly have.

One more detail catches people. The appraisal fee cannot be based on the appraised value in any way. A contingent fee arrangement disqualifies the report outright.

Sequence the Appraisal Before the Deed Records

The protective timeline starts before the gift, not at tax time. First, verify the appraiser meets the qualified appraiser definition and will prepare the report to Treas. Reg. 1.170A-17 and USPAP. Then schedule the work so the report date lands inside the 60-day window, with the effective date tied to the planned donation date.

At the donation, document the contribution date clearly through the deed recording or transfer letter. When preparing the return, check the report against the regulation and complete Form 8283 Section B with the appraiser’s signature. Attach the full appraisal for deductions over $500,000. Then retain everything, because the burden in an examination sits with the taxpayer.

Our lane in this process is the value and the compliant report. How the deduction is claimed, timed, and defended on the return is properly the CPA’s work. When both sides do their part at the front end, the deduction that reaches the IRS is one that can hold.

Advising a Client on a Real Estate Donation?

PahRoo prepares qualified appraisals built to Treas. Reg. 1.170A-17 and USPAP, with the declarations, timing, and effective date the IRS expects.

Order a Qualified Appraisal

Frequently Asked Questions

What is a qualified appraisal for a charitable donation?

It is an appraisal prepared by a qualified appraiser under Treas. Reg. 1.170A-17, following USPAP, with required content and declarations. It must state fair market value as of the proper effective date and be timed to the donation and the return.

Who counts as a qualified appraiser under IRS rules?

An appraiser with verifiable education and experience valuing that property type. That is shown through a recognized designation such as MAI, SRA, or ASA, or through coursework plus two years of experience. They must regularly appraise for compensation and cannot be the donor, donee, or a party to the transaction.

When must the appraisal be dated for a real estate donation?

No earlier than 60 days before the contribution and no later than the return’s due date, including extensions. If the report is prepared after the gift, its effective date must be the contribution date, which usually means a retrospective appraisal.

When does Form 8283 require the full appraisal attached?

Real estate deductions over $5,000 require a completed Form 8283 Section B with the appraiser’s signature and the donee’s acknowledgment. Once the deduction exceeds $500,000, the entire qualified appraisal must be attached to the return itself.

Can the IRS reject a deduction even if the value is accurate?

Yes. Missing declarations, a wrong effective date, an unqualified appraiser, an incomplete Form 8283, or a value-based appraisal fee can each disallow the deduction. It does not matter whether the number was right. The rules are procedural, and they are enforced that way.

Appraisal Support for Charitable Gifts of Real Estate

PahRoo Appraisal & Consultancy prepares USPAP-compliant, tax-purpose appraisals for CPAs, attorneys, and property owners across Chicago and Cook County, Dallas-Fort Worth, Philadelphia, Phoenix, and Naples. Our team handles donated residential and commercial property, along with related estate planning valuations. Have a donation on the calendar? Contact our team or call 773-388-0003 before the deed records.


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Real estate appraisal supporting family wealth transfer and estate planning decisions
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Estate PlanningReal Estate
Superadequacy in Estate Planning, When Cost Is Not Value

The kitchen cost $180,000. The market paid for about a third of it. That gap has a name in appraisal practice: superadequacy. It is the over-improvement, the feature built to a level the neighborhood does not support. In estate planning it shows up constantly, because families improve homes for themselves over thirty years. Then they value them by what was spent. The estate tax regulations, the trust documents, and the siblings at the table all need a different number.

By the end of this article, you’ll know:

  • What superadequacy actually means, and why long-held family homes are full of it
  • Why contractor invoices, insurance replacement cost, and the tax assessment are not fair market value, and which regulation says so
  • How an appraiser treats an over-improved property, and what executors should gather before the inspection

What Superadequacy Means, and Why Estate Files Are Full of It

The Dictionary of Real Estate Appraisal defines superadequacy as an excess in the capacity or quality of a structure or component, judged by market standards. So it is a form of functional obsolescence, not a bonus. The classic examples are the twelve-car garage in a market of three-car garages, or a 5,000 square foot house on a block of mid-century ranches.

The principle behind it is contribution. An improvement is worth what it adds to the value of the whole property, not what it cost to build. But that is not how families remember it. A $180,000 kitchen in a neighborhood where houses sell between $450,000 and $550,000 does not add $180,000. Buyers at that price point will not pay for it. So the market discounts it.

Estate files attract this problem for a simple reason. People who live in one house for decades improve it for their own use. The addition for the grandchildren, the elevator, the commercial-grade range, the finished basement with a second kitchen. None of it was built with a resale buyer in mind. Then the owner dies, and the family remembers every invoice.

Cost Is Not Value, and the Estate Tax Regulations Say So

For federal estate tax, property is included at fair market value on the date of death (or the alternate valuation date if the executor elects it). The regulation at 26 CFR 20.2031-1(b) defines that as the price a willing buyer would pay a willing seller, neither under compulsion, both reasonably informed. It adds that value is not a forced-sale price. It also says property may not be returned at its local tax-assessed value unless that figure happens to equal fair market value.

Read that against the records most estates hand over. Contractor invoices measure cost. The homeowner’s insurance policy carries replacement cost. That is what it would take to rebuild, not what a buyer would pay. The Cook County assessment is a mass-appraisal estimate the regulation specifically declines to accept on its own. None of these is the number the return asks for.

The same willing-buyer standard governs lifetime gifts. So when a parent deeds the over-improved lake house to one child, the gift value is what the market would pay for it, superadequacy and all. Whether that produces a reportable gift, and how basis carries, are questions for the CPA and the attorney. The appraiser’s job is to get the value right so those questions have a sound starting point.

Where the Over-Improvement Bites

Beneficiary equalization is where it hurts first. Suppose a will leaves the house to one sibling and cash to the other two. The intent is that everyone receives roughly equal value. If the estate carries the house at cost, the sibling taking the house is shortchanged. They receive an asset the market would not buy at that number. If the estate carries it at an old assessment, the reverse happens. Either way, someone has a grievance, and the executor is holding the pen.

Trust funding has the same exposure. A trust funded with real estate at an inflated number looks better on paper than it performs when the trustee eventually sells. Charitable planning is stricter still. A donation of real estate needs a qualified appraisal, and the appraiser must sign the form.

Then there is the return itself. An estate that reports a high value on an over-improved property is paying tax on value the market does not recognize. But the opposite error is worse. One that reports the assessment is inviting a question the regulation already answered. A supported appraisal, prepared for the estate and tied to the date of death, closes both doors. Our estate appraisal work is built for exactly that use.

How an Appraiser Handles a Superadequate Property

Two approaches do most of the work. In the cost approach, the appraiser estimates what it would cost to reproduce the improvements today. Then depreciation comes off, including a specific deduction for the superadequacy. The report shows the over-improvement, names it, and explains why it does not carry its cost into value.

In the sales comparison approach, the appraiser looks for what buyers actually paid for similar houses in the same market. If comparable sales with high-end kitchens sold for only modestly more than sales without them, then that difference is the adjustment, not the invoice. Often the honest answer is that the feature earns a small premium or none at all.

Chicago makes this vivid. A house in Lincolnwood or Skokie with a $400,000 renovation competes with other Lincolnwood and Skokie houses, not with Winnetka. The Cook County Assessor values residential property by statistical model at 10% of estimated market value, working from recorded characteristics. A renovation the model never saw does not move the assessment, and even when it does, the assessment is still not the estate’s number.

The report should say all of this in plain language. Counsel should be able to hand it to a skeptical beneficiary or an examiner, and the reasoning should hold without a phone call.

What Executors and Heirs Should Gather Before the Appraisal

If you are the executor or the child who ended up with the keys, three things help the appraiser and protect you. First, collect the improvement history: permits, invoices, and dates for anything major in the last fifteen years. But do not add them up and call the total value. Hand them over as a record of what was done and when.

Second, pull the current insurance declarations page and the most recent Cook County assessment notice. Both are useful context. Neither is the value, so do not average them with the invoices to get one. The appraiser reconciles the evidence; that is the service you are paying for.

Third, confirm the effective date with the attorney before ordering. Date of death, the alternate valuation date, or a gift date each produce a different report, so the date comes first. An appraisal to the wrong date is a document you pay for twice.

The Number That Keeps Siblings Speaking

Consider a hypothetical: a Wilmette house held for 34 years, with a two-story addition, a home elevator, and a kitchen the owner loved. The invoices total $610,000 over the years. The insurance replacement cost is higher still. The Assessor’s model, working from an older record, implies something lower than either. But none of those is what a buyer would pay in the current Wilmette market for that house with those features.

Order the appraisal early. Tie it to the date the attorney specifies, with the intended use stated as estate administration or gifting. Ask the appraiser to address the over-improvements directly rather than bury them in an adjustment grid. Then give the report to the CPA before the return is drafted, not after. The value question is the one that goes to the market. The tax and legal questions stay with the professionals who own them.

Is the Family Home Worth What Was Spent on It?

PahRoo prepares estate, trust, and gift appraisals across Chicago and the North Shore, tied to the date your matter requires and written to explain an over-improved property to a beneficiary or an examiner. Michael Hobbs, MAI, SRA, signs every report.

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Frequently Asked Questions

What is superadequacy in an appraisal?

Superadequacy is an excess in the capacity or quality of a structure or component relative to what the market expects, as defined in the Dictionary of Real Estate Appraisal. It is a type of functional obsolescence. The improvement cost more than it contributes to market value.

Does an estate have to value the house at what the family spent on it?

No. For federal estate tax, 26 CFR 20.2031-1(b) requires fair market value on the applicable date: the price between a willing buyer and willing seller. Construction cost, insurance replacement cost, and the tax assessment are not that number.

Can the Cook County assessment be used on the estate tax return?

Only if it happens to equal fair market value on the valuation date. The regulation says property may not be returned at its local tax-assessed value otherwise. In Cook County the assessment is a mass-appraisal estimate, so an estate-purpose appraisal is the supported route.

How does an appraiser account for an over-improvement?

In the cost approach, by deducting functional depreciation for the superadequacy. In the sales comparison approach, by adjusting only for what comparable buyers actually paid for the feature, which is often much less than it cost. The report should explain both.

What should an executor give the appraiser?

The improvement history with permits, invoices, and dates; the insurance declarations page; the latest assessment notice; and the effective date confirmed by the attorney. Provide them as records, not as a value estimate.

Estate and Trust Appraisals From the North Side and the North Shore

From our Lincolnwood office, PahRoo appraises family homes, two-flats, and small commercial holdings for estate attorneys and CPAs throughout Chicago and Cook County. Our residential appraisals are written for estate administration, gifting, and trust funding, with the effective date and the treatment of any over-improvement stated plainly. When the estate includes income property, our commercial appraisal team handles it from the same office.

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