One of the things I hope to get taken care of this week while I am out at The Ranch is an assessment of the property. I am both eager to get it done and concerned to have it done, as a great deal of the future rides on it.
My parents' estate, currently in a trust, is at its most basic level, divided into two groups: the 90 acres or so with house, outbuildings, etc. that constitute The Ranch, and all other assets. If one goes purely by the tax records, these things are more or less roughly equal. That said, tax records are often poor reflections of current value (if my home in New Home is any example).
This has been a sort of open question over the last two years and has real impacts on the future. Simply put, if the assessment is miles away from the cash value of the estate, there is (keeping it real) minimal chance that on my side I would be able to make of the difference and thus, the most likely outcome in that situation would be a sale.
Ironic - although I have that thought multiple times over the past month or so as I worked to find an assessor, this is the first time I have written it out.
There are at least two factors that are currently working in favor of a lesser value. The first, of course, is simply the fact that with rising interests rates and a declining economy, the market is dropping - and for here, where there are literally always homes for sale, I would imagine the drop to be more pronounced (in short, people from "The City" always envision moving out to The Wild as a dream, until they get here and realize that, well, one is out in The Wild and a coffee treat or even grocery shopping is a half an hour drive. It weeds out a lot of folk). The second is that with our recent fire, both the value has dropped even more and more people will be looking to get out (as well, of course, as the inevitable increase in fire insurance).
But still, that is an unknown. The whole thing is an unknown.
There are only four possible outcomes:
1) Value of the property and value of the estate are approximately the same.
2) Value of the property is less than value of the estate (highly unlikely, but technically possible)
3) Value of the property is slightly higher than the value of the estate
4) Value of the property greatly exceeds (beyond reason) the value of the estate
Of the options, the only non-bridgeable one is option 4. Option 1 means active monitoring of the value and option 3 means looking to see if there is a mechanism to start buying at least one parcel now (and cut down on the overall value.
I have thought through option 4. I have steeled myself against the possibility that this is the outcome and if so, what my next steps will be (one of them, of course, is that moving back no longer becomes an option - after all, if the property will need to be sold, why go through the hassle of moving and then moving again?). And, at least in theory, I am coming up with a Plan B.
The not knowing is the worst. But hopefully, that at least can so be resolved.
Gosh, but I hope this works out well for you. Do they need a tax value assessment or a real estate value assessment? I really don't know much about such things, but I know that the real estate value is always much higher than the tax value of a property.
ReplyDeleteLeigh, I am frankly not sure. While I did real estate in the past and am very familiar with property assessments, this is the first time I have been involved in what is an "estate assessment".
DeleteReal estate value will likely always be higher - but it is also the one far more influenced by the market. It also does not account for things like cost of sale, taxes, and the fact that cash is liquid and property is not. There are a lot of factors.
My hope is that this at least gets the conversation started and considerations going now, while we have time to talk and plan, rather than later, when the estate must be settled and there is time pressure.
In the past, I've taken pains to begin saving for the paying of property taxes by early Fall, so that I am covered by the time I pay the taxes in January. Circumstances do come into play (usually car repair, but house and health sometimes change that a bit) and I have to dip into savings to finish the cost.
ReplyDeleteHere is to hoping you receive good news.
This is something we did for a couple of years when I was doing real estate until things changed and it just became easier to do it through the mortgage.
DeleteNew Home makes this hard, as the assessed value seems to skyrocket every year and almost every years we get a notice from our mortgage holder saying "Would you like to increase your monthly payment or pay a lump sum on the difference?" To date, we just pay the lump sum.
Hoping you get that assessment quick TB, not knowing can play havoc with the stomach.
ReplyDeleteEd, ever since the thought was brought out into the open, I have had nothing but anxiety about it. At least we will now have an answer to the question.
DeleteHaving underwent something similar four years ago, you have my sympathies. In our case, much of the land was assessed way under the value it probably should have. It benefits us in the immediate term but will come back to haunt us at some point in the future. The piper always gets paid.
ReplyDeleteThanks Ed. If this were just a house, I could be pretty confident in a back of the hand assessment. For this kind of property, it is much harder and there are a lot of factors - not just the actual value, but the actual net value, ability to sell, etc. I suspect the next visit after we get this assessment will be to the lawyer.
DeleteAssessor-Not sure what your meaning is of this word. Tax assessor=NO. Have handled 3 estates and 1st if parents have an attorney consult with them as to their recommendation of State requirement. Back in the dark ages by law I had to have 3 licensed appraiser give a written appraisal of the real property. It appears most states require 2 appraisals. You would have to present these to your parents lawyers anyway unless you have been given a full power of attorney by your father upon his death that you may dispose of his property in any way you like. So many things goes with this as your mother is still alive and if she is on the deed then that becomes an 'encumbrance' to title passing. See An Attorney - prior to doing anything. And never call anyone from a local or state office about the property. If your fathers will left everything to your mom then selling without consent cannot be done as mom is still living. So many angles because you also have a sibling.
ReplyDeleteGood Luck and a great attorney will be able to guide you every step of the way.
GL - This is not a tax assessment. This is a value assessment of what the property is worth at a particular point is time and space. This is not going to any state or local anything and is not leading to a sale (and if I am able, it will not be sold at all). The point is to get an idea of the value to help us with future planning, both now for my mother's benefit and beyond and - frankly - to help with my planning about what my next steps can or should be.
DeleteActually, just be starting this process we have already found one error (wrong parcel number), so likely we will be talking to a lawyer shortly.
The complexity of living is unnatural to me. I have never understood the "why" of inheritance law. May God bless you as you dig into this and I trust He will make your way clear. My hope is you keep the old home place.
ReplyDeleteWhen dad passed, we had to walk away from everything he owned. He'd made decisions towards the end that resulted in more knots than a backlashed bait reel. I do miss the place I grew up.
Thanks STxAR. It may very well be, in the end, the outcome is different from what I might like or desire. But knowing, we can at least plan accordingly. And we owe it to my mother to have an accurate idea of value to manage the whole thing on her behalf.
DeleteTis what it is. Don't worry about any of it.
ReplyDeleteIt is, John. To be honest, I feel better knowing it will be done if the outcome makes a change in plans. At least we will know.
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