It can be confusing to try to navigate the estate valuation process. Whether you are someone who is currently planning their estate and you want to understand the entire process, or if you are a person that has recently lost a loved one, it is important to conduct adequate research so that you know how different assets are calculated.
The main necessity for an estate to be valued is so that it can be submitted to the federal tax office. There are two ways that this can be done as recognized by the Internal Revenue code. This is either by examining the value of the estate as it stood on the date of the estate owner’s death, or by evaluating the estate at another alternative date.
Date of death valuation
When the date of death is used as the time from which to evaluate the assets, this means that all bank account statements are to be taken from the date of death. Any stocks that the estate owner had will also be valued at the amount they were when the stock market closed on that day. Other assets that are more subjective should be valued by an appraiser.
Alternative date valuation
When you choose an alternative date valuation, it means that assets will be appraised six months after the date that the estate owner died.
Deciding which date to choose can have large implications on bigger estates, especially when stocks are involved. Only estates that are valued to be larger than $5.45 million are subject to federal taxes. It is important that enough research is done to establish which estate valuation date to choose.
Source: The Balance, “Do You Know How to Calculate the Value of Your Estate?,” accessed Feb. 27, 2018