The main reason is taxes. When you inherit property, your tax basis becomes its fair market value on the date of death, known as the stepped-up basis. If you sell later, capital gains tax is calculated on the difference between your sale price and that basis. Without documentation of the date of death value, you may have trouble proving your basis to the IRS, and an unsupported number can cost you money or invite scrutiny. An appraisal also serves practical purposes during estate administration. Probate courts require asset values for the estate inventory. Trustees need values to fulfill their duties and report to beneficiaries. Families splitting an estate need a neutral number to divide things fairly or structure a buyout. Estate attorneys and CPAs almost always recommend getting the appraisal done during administration, while records are fresh, rather than years later when you sell and suddenly need to reconstruct a past value.
