My mom left a very specific will as to what goes to which child. Her estate does need to go through a formal probate (>$1000000). There are basically no creditors other than a small mortgage on the house which the estate can pay. All the children are willing to waive an appraisal. Is such a waiver possible or still does some type of appraisal need to be done? (this is a detailed follow up to a previous question)
If the home is the asset to be probated, and it apparently is, then yes the appraisal by the appointed probate referee is most likely required pursuant to Probate Code Section 8901(b). You can move for a Waiver under Probate Code 8903, but the requirments appear a bit onerous. A probate referee apraisal is not such a bad thing as the cost is nominal- per Probate Code Section 8961, 1/10th of 1% of value (there is a minimum charge) with costs added - and (for most cases) the home will recieve a 'step-up' in its tax basis to its date of death value as determined by the referee so long as the total estate has a value of less than 1.3 million (a special rule applicable for deaths in 2010 only).
I might note that a child inheriting the family home can keep the parent's property tax assessment rate under propostion 58. A proper exclusion form must be timely filed with the county assessor. Based on your facts, I am assuming the will leaves the property to one child. If you are planning to deviate from the distribution pattern outlined in the will you are apt to run afoul of the Propostion 58 exclusion from reassessment. Be careful here. You can get a lot of information on Proposition 58 from the assessor's web site. Bob Vale
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In the event of a probate, an appraisal by the probate referee is required, but this is not a bad thing, since it will give the beneficiaries their new cost basis on the house. By this I mean that if the house is sold during the probate, and the house was purchased quite a while ago, there is a lot of gain in value and the beneficiaries would be reponsible for paying the capital gains tax. By having the house appraised at date of death, only the gain from the date of death to the time of sale would be taxable to the beneficiaries, cutting down the taxes to be paid.
This appraisal value is also the beneficiaries' new cost basis - so if they keep the house for a number of years, and then sell, they pay capital gains only from the date of death to the time it is sold.
Without the written appraisal, you don't have proof as to the value of the house at the time of death and may end up paying quite a bit more in capital gains taxes, since the IRS may give a value to the house, which would most likely be to your disadvantage.
The appraisal by the Probate Referee is quite reasonable - normally a lot less than an independent certified appraiser.
