Planning for death is always a touchy topic, but it’s best not to avoid it. Before you can finalize your estate plan, there are many things that have to happen. Valuing your assets is one of those things.
Estate valuation is an important process. This valuation calculates the value of the things you own for the purposes of federal estate taxes. The Internal Revenue Code allows for two values to be submitted. One is the alternative valuation date that takes place at one point and the date of death, which is the valuation at the date of the decedent’s death.
The gross estate is the total value of the assets and property within the estate prior to debts or taxes being taken out.
Which valuation is best?
Depending on the information available, the date of death valuation may be easier to obtain. This takes place on the date of the decedent’s death and provides a fair market value for each asset within the estate.
The alternate valuation date is six months following the decedent’s death. It’s up to the personal representative to choose the valuation date that works best for the estate. For instance, if the estate is worth more on the alternate date, then he or she may choose the date of death valuation for tax purposes.
Most estates are not subject to estate taxes. The 2016 limits stated that only estates worth more than $5.45 million were subject to estate taxes. Your attorney can help you determine if your estate is subject to taxes and, if so, what you can do to help avoid them.
Source: The Balance, “Do You Know How to Calculate the Value of Your Estate?,” Julie Garber, accessed Oct. 31, 2017