The personal representative, or estate administrator, is named in the will or appointed by the probate court and charged with the responsibility of administering the estate. The personal representative is a fiduciary; therefore, she must manage the deceased's affairs in the best interest of the estate. In most cases, she is required to locate the deceased's debts and assets and file an estate inventory and appraisement with the court, which provides an assessment of the estate's value.
In general, any asset that does not have a readily apparent value must be appraised. State laws vary, but the personal representative usually can provide appraisals for assets that have a set value, such as cash, stocks, bonds and bank accounts. Items that would require an independent appraisal include real estate, collectible vehicles, boats, antique furniture and just about any item of significant worth that has an unknown value. Appraisals should reflect the fair market value as of the date of death. Some states, such as California and Texas, require the fair market value of the appraised asset to reflect whether the property was the separate property of the decedent or the decedent's one-half interest in community property shared with his surviving spouse.
States vary widely regarding who is qualified to be an appraiser for probate court purposes. Most states specify that the appraiser must be a certified professional who is a disinterested person. Other states, such as California, require appraisers, called probate referees, to pass stringent education and testing requirements. The California State Controller's Office designates a probate referee for an estate once the personal representative is appointed.
Even when a formal appraisal is deemed unnecessary, there can be good reasons to have one conducted. For example, an appraisal that reflects the current, higher value of an asset that has appreciated since it is was originally acquired can help minimize any capital gains tax a beneficiary may be assessed upon inheriting the asset. What's more, the IRS might be less likely to question valuations in a taxable estate when appraisals are attached.