LAKE COUNTY, Calif. — The inventory and appraisal is the first milestone to be passed in settling a decedent’s estate.

An inventory and appraisal is relevant whether a decedent’s assets are held in the decedent’s name and/or held in the decedent’s living trust.

The inventory serves more than one purpose. Let us discuss the relevance and preparation of the inventory and appraisal when settling a decedent’s estate.

Prior to opening a possible probate it is necessary to know whether the total gross value of the assets in the decedent’s probate estate qualifies as a small estate — presently less than $184,500. If so, then no probate is required to transfer title to the decedent’s beneficiaries or heirs from the small estate.

In California, if a decedent’s estate owns real property, however, then an inventory and appraisal is required, even in a small estate. The inventory is either attached to the affidavit of small estate or, in a probate, filed with the court.

In a probate the inventory and appraisal is always required. It serves various purposes, including, to adjust the size of the personal representative’s probate bond (unless waived), to begin a probate accounting, and to determine the statutory fees owed to the personal representative and to his or her attorney.

The appraised values of assets listed on an inventory of a decedent’s estate are established by the local court appointed probate referee (a special appraiser).

Real property, vehicles and household contents, including firearms, are assets routinely appraised by a probate referee. However, valuable items of personal property — such as paintings, antiques, jewelry, valuable stamps and coins — require a private personal property appraiser.

That additional appraisal is incorporated by reference into the inventory and appraisal. The inventory is then submitted to the court (in a probate) or is attached to a small estate affidavit, as relevant.

In California, there is a Judicial Council inventory and appraisal form that is used in court proceedings. It has two attached schedules, that is, schedule one, lists bank accounts and date of death balances, and schedule two, lists real and personal property (including vehicles) where values are determined by the probate referee.

With trust administrations, the trustee still needs to prepare an inventory and appraisal, but is not limited to using the services of a probate referee or the Judicial Council form.

However, if the probate referee is utilized, then a different Judicial Council form called an Appraisal Report of California Probate Referee is then used.

The appraisal report has three different schedules that may be attached, as relevant, schedule one for real property, schedule two for stocks and bonds, and schedule three for personal property and miscellaneous other items.

The appraised date of death values listed on an Inventory and Appraisal or Appraisal Report sets the income tax basis of the appraised decedent’s assets. Basis is used to compute capital gains or losses on sales or exchanges of assets. That is, when assets are sold or exchanged for more than their income tax basis then there may be a capital gains tax owed on that transaction.

An inventory and appraisal can be modified by the filing of a corrected inventory (to correct mistakes on an already filed inventory) and a supplemental inventory (to add additional assets).

The total value of all assets under management, taking into consideration all inventories, becomes part of the Fee Base for computing statutory fees owed to the personal representative and his or her attorney.

The foregoing discussion is not legal advice. Consult a qualified attorney for guidance.

Dennis A. Fordham, attorney, is a State Bar-Certified Specialist in estate planning, probate and trust law. His office is at 870 S. Main St., Lakeport, Calif. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it. and 707-263-3235.