Why Trust Funding Requires Appraisals
When real property is transferred into a trust, the trustee assumes fiduciary responsibility for that asset. A defensible appraisal protects the trustee from beneficiary challenges, supports the estate planning attorney’s structure, and provides the CPA with the documentation needed for tax reporting. For revocable trusts during the grantor’s lifetime, the value matters less for tax purposes. For post-death sub-trust allocations and irrevocable trust funding, the value drives the entire downstream tax outcome.
Allocating Sub-Trusts (A/B Splits and Beyond)
After the first spouse dies in an A/B trust structure (or its variants), the trustee typically needs to allocate assets between the surviving spouse’s revocable trust (the Survivor’s or A Trust) and one or more irrevocable trusts (the Bypass or B Trust, and sometimes a QTIP or C Trust). The sub-trust allocations require defensible per-asset values as of the date of death of the first spouse. An accurate appraisal makes this allocation cleanly. An inaccurate one creates problems years later when the IRS audits or beneficiaries dispute.
Disclaimer Trust Valuations
When a surviving spouse considers a qualified disclaimer to direct assets into a bypass trust, the disclaimer decision often depends on the appraised value of the underlying property. A timely appraisal allows the surviving spouse and their attorney to make the disclaimer decision with accurate information about the financial implications. Because qualified disclaimers must be made within 9 months of the date of death, the appraisal needs to be available within that window.
Gift Tax Returns and Annual Valuation
When real property is gifted into a trust or transferred under structures like a QPRT or GRAT, a Form 709 gift tax return is typically required, and that return needs a supporting appraisal. The IRS specifically requires qualified appraisals for gift tax purposes when the gifted value exceeds certain thresholds. Some structures also require annual valuation of the underlying property to support ongoing reporting. We work with CPAs and estate planning attorneys to deliver appraisals on the schedule the structure requires.
Working with Estate Planning Attorneys and CPAs
The most useful trust funding appraisers are those who understand the legal and tax context that the report will support. Estate planning attorneys need clarity on intended use language. CPAs need values that integrate cleanly with their tax software and Form 706 or Form 709 workpapers. Trustees need confidence that the report will hold up if challenged. Home Point Appraisal regularly coordinates with estate planning attorneys and CPAs throughout Southern California to deliver trust funding appraisals that integrate with the broader planning context.
Our Trust Appraisal Process
Our Trust Appraisal Process
Trust funding is the moment when real property moves from individual ownership into the structure that the estate plan was designed around. It is also the moment when the trustee, the estate planning attorney, and the CPA all need to know what each asset is worth, with documentation strong enough to support sub-trust allocations, gift tax filings, and downstream tax reporting.
Trust funding appraisals serve a different audience and different purpose than purchase, refinance, or sale appraisals. The intended user is typically the trustee, the estate planning attorney, the CPA, and (eventually) the IRS. The intended use covers a specific set of estate and tax purposes that drive how the report needs to be structured. The methodology has to be defensible against IRS scrutiny, especially when the values support gift tax returns or generation-skipping transfer tax filings.
The most common trust funding scenarios involve the original funding of a revocable living trust, the post-death allocation of assets into sub-trusts under an A/B or A/B/C structure, the funding of irrevocable life insurance trusts (ILITs) with real estate, disclaimer trust calculations, and annual valuations supporting qualified personal residence trusts (QPRTs), grantor retained annuity trusts (GRATs), or other structured estate planning vehicles.
At Home Point Appraisal, we provide trust funding appraisals throughout Los Angeles, Orange, and Ventura Counties for estate planning attorneys, CPAs, trustees, family offices, and individual clients. Our reports are developed with the understanding that they may be reviewed by the IRS years after they are issued.
Why Choose Home Point Appraisal?
With over 25+ years of experience in the SoCal real estate industry, we have expertise and knowledge of your local market. Call us for fast response or click the button below to get an intant quote.
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