Most people facing a jewelry box, a wall of paintings or a parent's coin collection are doing it within weeks of the death. Often no will has been read yet, no executor has been appointed and no one is sure who is allowed to touch what. Brothers and sisters may already have strong feelings about a ring or a painting, and the person sorting through the house is often the one others look to for answers. This guide explains how California treats these belongings, why an appraisal usually comes first, how the federal tax basis rule works, and what choices a family has once the values are known.
What Inherited Personal Property Actually Includes
Personal property is everything a person owned that is not land or buildings. Real property is the house, the land and anything permanently attached to it. Jewelry, fine art, antiques, watches, coins, collectibles, silverware and family heirlooms are all personal property. California law sometimes treats the two kinds of property differently, so the rules for a ring or a painting are not always the same as the rules for a house. For the house itself, a family's questions usually turn to what to do with inherited property.
How these items reach heirs depends on the paperwork. A will may name who gets a particular item. A trust may direct the successor trustee, the person who takes over managing the trust after the person who made it dies, to hand items out. With no will or trust, California's intestate succession laws decide who inherits. The California Courts' guide to property after someone dies describes intestate succession as "the laws that say who inherits something if the person did not have a will or trust."
Families often face these items before any of that is settled. In the early weeks, the safest course is usually to keep items together, in a secure place, and not hand them out yet.
Why an Appraisal Usually Comes First
An appraisal sets a number that several later decisions depend on. For tax purposes, the figure that matters is fair market value on the date of death: what a willing buyer would pay a willing seller for the item on that day. That same number helps heirs divide items fairly and gives a seller a reference point.
In a California probate case, part of this work is done by a probate referee. The State Controller's Office page on probate referees says the Controller appoints them "to perform reliable, prompt, and low-cost appraisal of all types of estate assets," and that their service is required for court resolution of an estate and also available for non-probate trust administration. Under Probate Code section 8902, the personal representative generally delivers the inventory to the probate referee designated by the court, and the referee appraises all property other than what the personal representative appraises.
Outside that process, heirs often hire independent appraisers. Credentials people look for include training from the Gemological Institute of America (GIA) for gemologists and membership in the American Society of Appraisers (ASA) or the American Gem Society (AGS). These are credential types to ask about, not a guarantee of any appraiser's work.
Two kinds of appraisal give different numbers. A retail replacement value appraisal, used for insurance, estimates what it would cost to buy a similar item new at a store. A fair market value appraisal estimates what a buyer would actually pay. An old insurance appraisal can overstate what an item will sell for.
The Federal Tax Basis Rule for Inherited Property
Basis is the starting figure used to measure taxable gain when something is sold. For inherited property, federal law generally resets that starting figure. Under 26 U.S.C. § 1014(a), the basis of property acquired from a decedent is generally "the fair market value of the property at the date of the decedent's death," with exceptions, including an elected alternate valuation date. This reset is often called a step-up in basis, explained further in a guide to step-up in basis.
In practice, what the original owner paid for a necklace decades ago usually stops mattering. If an heir sells it for about what it was worth at death, there may be little or no gain. If it is worth more by the time it sells, the increase above the date-of-death value may be taxable. The IRS answer on selling inherited property puts it plainly: "If you sell the property for more than your basis, you have a taxable gain."
Holding time is treated differently too. IRS Publication 559 says that if inherited property that is a capital asset is sold, "the gain or loss is considered long term, regardless of how long you held the property." The publication also notes that receiving an inheritance is not itself included in income. More detail on this appears in a guide to capital gains on inherited property.
This is general information. A CPA, an enrolled agent or a tax attorney is the kind of professional who reviews how these rules apply to a particular sale.
Options for What to Do With the Items
Keeping an item is always one choice. Many heirs wear a parent's ring or hang a painting in their own home. Beyond knowing what it is and who owns it, keeping requires no formal step.
Selling happens through several kinds of channels, each with tradeoffs:
- Estate jewelers and auction houses can offer speed and convenience, though an offer from a dealer is usually below retail.
- Online marketplaces reach more buyers but take more effort, and prices vary more.
- Consignment means a seller offers the item on the heir's behalf and keeps a percentage when it sells.
- Estate sales are one way families handle many items at once.
No channel suits every family or every item. The price in any channel reflects what a buyer will pay, which is usually lower than an insurance replacement figure.
Donating to a qualifying charity is another option, and it may produce a charitable deduction. Federal rules on documenting non-cash gifts, including when a qualified appraisal is needed, depend on the item's value. A CPA or tax attorney advises on whether a deduction applies.
Redesigning is another path. Some families have a jeweler reset stones or remake a piece so it can be worn again while keeping its sentimental meaning.
Dividing among heirs often happens by agreement, by drawing lots, or by taking turns using appraised values to keep shares even. The executor or trustee manages that process under the will, the trust or California law.
When Probate or a Trust Affects What You Can Do
Who has authority over these items depends on how the estate passes. In probate, a judge appoints a personal representative. The California Courts' guide describes this person as "responsible for representing the estate in the probate process," who collects the property, pays bills and distributes what remains. An executor is the personal representative named in a will. An administrator is appointed when there is no will or the named executor cannot serve. The personal representative manages and may sell personal property, subject to the will and the Probate Code.
Probate Code section 8800 requires the personal representative to file an inventory and appraisal with the court clerk within four months after letters are first issued to a general personal representative, though the court may allow more time that is reasonable for the case. Partial inventories are allowed within that time.
With a trust, the successor trustee manages and distributes items according to the trust's terms. Where a will or trust leaves a particular item to a particular person, that gift is generally carried out as written. It is not sold or divided with everything else.
Smaller estates may use the affidavit for collection or transfer of personal property. Probate Code section 13100 generally allows a successor to collect or receive personal property without probate when at least 40 days have passed since the death and the estate's gross California value is under a limit that is adjusted periodically. Certain property is left out of that count, and the California Courts publish the current limit.
When heirs cannot agree about who gets what, the matter becomes a dispute. A contested matter is handled by an attorney who litigates trust and probate cases.
Practical Steps After the Appraisal
The time after the appraisal is when records start to matter. Small habits here can save the family trouble later at tax time or when items are divided.
- Photograph each item. Keep any older appraisals, certificates or provenance papers with the photos, because these can affect value and authenticity.
- Check a safe deposit box carefully. Under Probate Code section 331, a key holder who gives the bank proof of the death and reasonable proof of identity may open a box held in the decedent's sole name, before letters are issued and under the supervision of a bank officer or employee, to inventory it and remove burial instructions and, after the bank photocopies them, wills and trust instruments, but may not remove other contents, and any will must go to the clerk of the superior court, with a copy to the person named in it as executor or beneficiary.
- Arrange insurance coverage. An heir holding valuable pieces can ask an insurer about a rider or a separate policy for personal items.
- Gather more than one offer. The appraisal gives a reference point but does not bind any buyer to pay that amount.
- Keep the paperwork. The appraisal report, sale receipts and proof of date-of-death value support later tax reporting.
- Get the charity's written acknowledgment. A CPA or tax attorney can say whether a qualified appraisal is also needed for the donated item.
For the broader picture, a guide to taxes on inherited property may answer the next question.
