Not surprisingly, some people attempt to choose appraisers who will give a low value to reduce the estate tax on the items. In the end, as the New York Times explains in an article entitled “Revaluing Family Treasures for the Taxman,” that is not always the best idea.
The IRS has its own process for appraising art and other high-ticket items.
The Art Advisory Panel is a group of experts employed by the IRS. Every year the panel reviews hundreds of items to determine their value and make sure taxpayers are not undervaluing them for estate tax purposes. In other words, if something is undervalued by an appraiser, it is not a good idea to assume the IRS will not find out about it. Of course, the IRS’s valuation can be challenged, but that does require a long and lengthy process.
An estate planning attorney could be helpful in avoiding a long, drawn-out struggle.
