Disclaimer: This article provides general information about Massachusetts probate law. It does not constitute legal advice. Consult a qualified attorney for your specific situation.
Detailed Answer
In Massachusetts probate proceedings, the personal representative must determine the fair market value (FMV) of the decedent’s personal property as of the date of death. The FMV is the price a willing buyer would pay a willing seller in an arm’s-length transaction. Below is an overview of the key steps and statutory requirements.
1. Statutory Requirements for Inventory and Appraisals
Under Massachusetts General Laws Chapter 190B, Section 3-505, the personal representative must file an inventory with the Probate and Family Court within 90 days of receiving letters of appointment. That inventory must list all assets—real and personal—with their value as of the date of death. Failure to comply can expose the personal representative to liability.
Statute link: M.G.L. c.190B § 3-505.
2. Defining Fair Market Value
Massachusetts law does not define FMV in the probate code, but courts and practitioners rely on the common definition: the price at which property would change hands between a willing buyer and a willing seller, both having reasonable knowledge of relevant facts and neither under compulsion to buy or sell.
3. Methods for Calculating Fair Market Value
- Independent Appraisals: Hire a licensed appraiser for items such as jewelry, antiques, artwork, and collectibles. An appraiser provides a written report stating FMV as of the date of death.
- Comparative Sales: For common items (electronics, furniture, vehicles), research recent sales of similar condition items in your area—online marketplaces, auction results, or dealership quotes.
- Professional Valuation Guides: Use industry-standard guides (e.g., Kelley Blue Book for vehicles, NADA Guides, or specialty catalogs) to estimate value.
- Receipts and Statements: When reliable recent receipts or brokerage statements exist, they can support your valuation if adjusted for wear and market changes.
4. Documentation and Court Review
Massachusetts Probate and Family Court may review the inventory and request additional proof if values seem unreasonable. Keep the following on file:
- Appraisal reports with the appraiser’s qualifications
- Copies of comparable sales data or auction results
- Receipts, invoices, and brokerage statements
- Notes explaining valuation methods used
Helpful Hints
- Obtain at least two independent appraisals for high-value or unique items.
- Track every valuation source and date to demonstrate diligence to the court.
- Contact a probate clerk’s office for local filing requirements and deadlines.
- Consider IRS Publication 561 (Determining the Value of Donated Property) for guidance on FMV methodology.
- Review M.G.L. c.65C if you must file an estate tax return, as that statute also uses FMV at date of death.