When it comes to a decedent’s personal property, a good appraisal may seem unnecessary, but failing to get personal property appraised could be a major mistake. Take a recent Arizona case, for example. 

Ms. Nelson died in 1996, and her estate representatives decided to hold an estate sale to liquidate her personal items, including various items of furniture and artwork. They had the items appraised, but the appraiser notified the estate’s representative that she was not qualified to appraise fine art. The estate decided not to have the art appraised by a qualified fine art appraiser.

Two of Ms. Nelson’s paintings were bought for $60 by Mr. Rice. Mr. Rice was not an educated purchaser of art, though he had bought and sold some pieces, never making more than $55 on any single piece. At home, Rice discovered that the signature on the paintings resembled that of Martin Johnson Heade. He sent pictures to Christie’s in New York, and Christie’s authenticated the paintings as Magnolia Blossoms on Blue Velvet and Cherokee Roses by Heade. Christie’s subsequently sold the paintings on consignment for $1,072,000. After subtracting commissions, Rice realized $911,780 from the sale, then paid $337,000 in income taxes.

When the estate’s representatives learned of the sale, they sued Rice on the grounds that both parties to the $60 sale had made a mutual mistake and that enforcing the sale "contract" would be unconscionable. A trial judge dismissed the suit, and the Arizona Court of Appeals upheld the dismissal.

The Court of Appeals determined that the sale was not a mutual mistake because the price was set by the estate and was not negotiated. As for the unconscionability of the sale, the Court of Appeals agreed with the lower court’s opinion that "while the results of the transaction may seem unconscionable to the [estate] in hindsight, the terms of the contract certainly were not."

For the Estate of Ms. Nelson, a professional fine art appraisal would have been the ultimate investment.