Last week's post discussed how the value of an estate may be a hot point of contention in a probate dispute. After all, how property is valued can dramatically affect a person's inheritance, enough that it may be worth the legal costs of pursuing a lawsuit.
However, while most Minnesotans could readily figure out how to put a value on items that are easily "countable," like cash or a retirement plan, it may be a little bit more difficult to figure out how to put a value on other items.
The general rule, and the one adopted by the IRS when calculating estate taxes, is that the value of the estate or an item thereof is the amount it would capture on the open market. This hypothetical "open market" is one in which a buyer would buy and a seller would sell the property without feeling any force or outside pressure, including financial pressure, to do so.
Complying with this "fair market value" standard is relatively simple for items like houses and cars, both items in which there seem to be an abundance of pricing guides, listings and other information on what a reasonable sales price would be. However, for businesses, family farms and other items that do not regular sell, getting an accurate value is difficult.
In such cases, a person will probably have to hire an expert to give an opinion on the item's value, including its appreciation or depreciation over time. Getting the expert's opinion, though, is just the first step. During probate litigation, that opinion must be able to withstand the scrutiny of the taxing authorities, the judge and, if there is one, an opposing party. Getting qualified legal assistance may prove very important in this respect.