Personal belongings need proper valuation when someone dies. It’s not just about financial accounts and real estate. Everything from jewelry to furniture requires assessment for estate tax purposes. This matters more than you might think. Get the valuations wrong, and you’re looking at potential tax penalties or family disputes down the road.
What Counts As Personal Property
Personal property is basically everything you own except land and buildings. We’re talking about household furnishings, vehicles, jewelry, artwork, antiques, books, clothing, and collections of all kinds. Some items have obvious market values. Others? Not so much. The IRS wants fair market value as of the date of death. That means the price a willing buyer would pay a willing seller when neither person is under any pressure to make the deal happen.
Washington Estate Tax Thresholds
Washington has its own estate tax that’s separate from federal requirements. For 2024, if an estate exceeds $2.193 million, you’ll need to file a Washington estate tax return. This threshold adjusts every year, which is why working with a Bellevue estate tax lawyer makes sense. Federal estate taxes kick in at $13.61 million for individuals in 2024. Most families only deal with Washington state taxes. But high-value estates can face both levels of taxation.
Methods For Valuing Different Items
How you value something depends entirely on what it is. A dining room table gets treated differently than a Rolex. Standard household items like furniture and appliances typically use replacement value or what they’d bring at a garage sale. These don’t usually amount to much unless you’re dealing with antiques or high-end designer pieces. Vehicles are straightforward. Use Kelley Blue Book or NADA guides. Document the make, model, year, mileage, and condition. Done.
Jewelry and precious metals need certified gemologists or precious metal dealers. Don’t rely on insurance appraisals. Those often inflate values because they’re meant for replacement purposes, not estate taxation. Artwork and collectibles require specialists who know those specific markets. A general appraiser can’t accurately value fine art or rare collections. You need someone who lives and breathes that world. Business interests demand formal valuations from professionals who understand your particular industry.
When Professional Appraisals Are Necessary
The IRS requires qualified appraisals for any non-cash property valued over $5,000. This includes individual items and collections. Claiming charitable deductions for donated property? You’ll need professional documentation for that, too.
Qualified appraisers must have legitimate education, experience, and credentials. They can’t be family members or anyone who benefits from the estate. Eastside Estate Planning works with reputable appraisers who understand what estate valuation actually requires.
Documentation Requirements
Good documentation protects everyone involved. Executors need it. Beneficiaries need it. And if the IRS comes knocking, you’ll definitely need it. Keep these records organized and accessible:
- Purchase receipts and invoices when you have them
- Prior insurance appraisals
- Professional appraisal reports
- Clear photographs of valuable items
- Authentication certificates for collectibles
- Recent sales data for comparable items
Many executors create spreadsheets listing each item with its value and supporting documentation. It’s tedious work, but it pays off.
Common Valuation Mistakes
People overvalue items all the time. Sentimental value isn’t market value, even though we’d like it to be. Those insurance appraisals from ten years ago? They’re probably useless now, and they likely reflected replacement cost anyway, not fair market value.
Undervaluing creates problems, too. The IRS doesn’t appreciate lowball estimates, especially during audits. Some executors make an even bigger mistake. They ignore personal property entirely, focusing only on real estate and financial accounts. That’s a compliance nightmare waiting to happen.
Getting Help With Estate Valuations
Personal property valuation takes real attention to detail and current market knowledge. A Bellevue estate tax lawyer can walk you through the entire process, connect you with qualified appraisers, and make sure your estate return meets all federal and Washington state requirements. Proper valuation now protects your family from unnecessary tax liability later and provides the clear documentation you’ll want if questions come up.
