Estate planning involves asset valuation for purposes of taxation, financial and investment planning, and future distribution to heirs and beneficiaries of record. New York Department of Taxation and Finance (“DTF”) guidelines for ad valorem real property taxation of estates is defined by the standards of the Office of Real Property Tax Services (“ORPTS”). The Uniform Standards of Professional Appraisal Practice (“USPAP”) is basis to New York guidelines for property valuation, including the statistical techniques and professional appraisal practices. The USPAP is informed by both federal and state laws; as well as precedent setting case record; and rules and regulations of the ORPTS. Estate planners should be aware of the rules to ethical best practice when working with an appraiser during the valuation process.
Ethical Standards of Valuation
The New York ethical standards of valuation as described by the USPAP, are divided into four (4) four categories best practices:
1) Conduct
An appraiser is an independent, licensed third-party contractor hired to perform valuation of real property and other assets. Valuation is an objective task, that should be performed without bias or other personal knowledge that would inhibit impartiality in estimation. No contract terms, conditions, performance, record keeping, or compensatory matters should be considered misleading or fraudulent as part of an appraisal services agreement. Any unsupported claims relating to the personal characteristics or legal status (i.e. marital status, national origin, etc.) should be acknowledged as part of the valuation process unless relevant to future lawful transfer of those assets.
2) Compensation
The acceptance of compensation on contract should be contingent on performance as it is expressly stated within an appraisal services agreement. Appraisers are generally compensated on delivery of promised valuation reporting.
3) Confidentiality
Licensed appraisers are sworn to confidentiality when working with clients. Adherence to non-disclosure clauses within appraisal services agreements affirm confidentiality of appraiser activities.
4) Record Keeping
The customary result of an appraisal agreement, estimates are included in written records. Depending on the asset class, New York guidelines for asset appraisal record keeping may differ. Generally, in addition to valuation, record keeping by an appraiser will include data analysis and supporting materials like market indices, and other official sources of information about an asset or asset class. Records are to be kept for a minimum of five (5) years post-preparation; or two (2) years or more after the final disposition of any court proceeding citing those documents, or after the latest expiration date.
Probate Ordered Assessment of Value
New York provides that where a probate court has determined that an estate’s real property or other assets require reassessment by a third-party appraiser, the final value assigned to property by the court is accepted as binding by ORPTS. Pursuant to NY. RPTL 727, values are effectively “frozen” for three (3) years by ORPTS assessing units with exception of the country jurisdictions of Nassau and New York. Court ordered assessment values may in some circumstances be accepted after probate litigation has been followed by “notice of appeal.” Values from settlements, or by default due to dismissals or procedural technicalities are not considered binding by the ORPTS.
Estate Law Attorney Practice
Probate proceedings can be lengthy, extending distribution of assets for a prolonged period. Protect your estate and its heirs from incorrect appraisal of property assets by contacting a licensed attorney experienced in estate planning valuation. Ettinger Law Firm is a licensed New York attorney practice specializing in estate planning and probate litigation. Contact Ettinger Law Firm to schedule a consultation about an estate law matter.
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