Estate tax due based on high appraisal

[sgnelson]

What is the name of your state? Oregon

Hello, my brother and I were fortunate enough to be the beneficiaries of my grandfather's estate, inheriting 2 pieces of ranch/farm/timber land as specified in his will. My grandfather had gone through extensive estate planning in the years prior to his death and had greatly reduced the estate's value through gifting, trusts, etc. He believed his estate to be either below or near the 1M limit for Oregon estate taxes, so it would pass to us nearly tax-free.

So, here's the issue. He and his accountant had estimated the land to be worth approx. $665,000 in their estate planning. I assume their estimated values were reached by looking at the property tax RMV's ($625,500) and comparable land sales in the area (he had bought/sold many pieces of land over the years). Well, now with the estate in probate and having had a formal appraisal done, the land came back as being valued at $1,132,000. This of course, along with the other assets, puts the estate at well over 1M. Now being faced with coming up with tens of thousands of dollars in estate taxes, my brother and I are wondering what our options are regarding the appraisal. Although I'm aware that RMV's are rarely accurate and typically under-value property, I'm having a hard time accepting the appraisal being that far off what was expected (almost double).

Questions: Can the appraisal be contested or amended? Can we request a second appraisal? Can the property value be discounted in any other way?

Any advice would be very much appreciated. Thank you.

[davew128]

What did the appraiser say when you asked him?

[sgnelson]

Sorry...forgot to mention that. When we expressed our surprise at the appraisal value, he got kind of puffed up and defensive, saying he would look it over again, but probably couldn't justify lowering it more than $80,000-100,000 max. It's been a week and we have yet to hear back. In the meantime, I'm trying to educate myself a little bit to prepare for our next move. I also plan on talking to the accountant who is handling the probate to see if he has suggestions, but he is out of town until Wed.

[davew128]

The accountant is handling probate? Is he also an attorney?

[sgnelson]

The attorney handling the probate was not involved with the estate planning (my grandfather's attorney is retired). The accountant involved was also my grandfather's accountant and was involved with the estate planning. He was quite surprised the appraisal came back so high.

[LdiJ]

Originally Posted by sgnelson

The attorney handling the probate was not involved with the estate planning (my grandfather's attorney is retired). The accountant involved was also my grandfather's accountant and was involved with the estate planning. He was quite surprised the appraisal came back so high.

It certainly wouldn't hurt to get another appraisal done, and perhaps even a third one.

[tranquility]

The EXECUTOR (adminstrator, trustee) may get as many appraisals done as he desires as long as the cost does not reach the point of breaching his fiduciary duties. In this case, a second appraisal seems worthwhile as the cost can easily be justified by the potential savings in taxes.

But, the real answer is to look at the appraisal itself to see where the error lies and not at the dollar figure. My guess is that the income stream portion is going to raise the value. Most land has value on resale, this land may have value in producing income.

[sgnelson]

Thanks tranquility...good information (on both posts). I hadn't thought about it before, but you're probably right on the income generating potention of the properties affecting the appraisal.