A number of possibilities exist where it may be necessary to determine the value of property in order to expedite a property settlement. Those that occur most frequently are probably related to divorce or estate settlement.
Divorce may result in circumstances where the marital property is to be split between the two parties. It may be necessary to determine the value of the property in order to arrive at an equitable division. One party may elect to purchase the property share of the other or may accept other value in exchange for the property rights.
Estate Settlement results in a need to determine property value even if the property is transferred to one individual. If there is more than one person that inherits the property the need is even more apparent, particularly if the property is not being sold but retained by one of the participants who purchases shares from the others. Estate taxes, if necessary, will in part be determined by the value of the property. Even if no estate taxes are due, it is important to document the value of the property at the time of death of the former owner. The "value" of the property to the person inheriting the property is the value as of the date of death. Any capital gains tax due ultimately will be determined by this value and not the price at which the original owner acquired the property. This could be a considerable savings if it has been owned for a period of time.