This is one of the top questions an executor has to deal with when looking at furniture, vintage magazines, jewellery or other possessions in an estate. A dollar amount must be entered for the estate assets in order to calculate the estate tax owing. Arguments can ensue with and between beneficiaries who feel that something is valuable because it once cost a lot. But the original price of an item may not be relevant today.
Let’s look at two words with regard to possessions: value and worth. In everyday speech they’re used interchangeably. And, depending on who you are talking to, they can have different meanings.
“Value” often has an emotional connection. It’s personal. You value opinions, friendships and treasures from your childhood. Things that are useful or pleasurable have value to you. Value can also denote a sense of importance. “Worth”, when looking at “stuff”, is generally describes a dollar amount.
If you were thinking of selling an item, it’s “worth” (or price) would be based on how valuable you perceived it to be. Unfortunately, this can lead to something intrinsically valuable to be under-priced if you yourself don’t find it appealing or, alternatively, something fairly worthless to others being over-priced based on your perspective.
In estates, the term “fair market value” just adds to the confusion. It’s what the government is looking for on the estate forms. The definition that personal property appraisers use is:
“The price at which the property would change hands between a willing buyer and a willing seller, neither being under the compulsion to buy nor the compulsion to sell and both have reasonable knowledge of the relevant facts.”
Although an appraisal is really a speculation of the expected selling price, it’s worth it to you to have an appraiser look at estate items for a number of reasons:
1 – the estate forms require an accurate valuation of both personal and real property,
2 – equitable distribution of assets is based on fair market value – not perceived value, and
3 – as the executor, you don’t want to be guilty of disposing of something with value while holding on to something without.
Unfortunately, no matter how valuable you think something is, it’s only worth what someone is willing to pay for it.