Estate Valuation

The value of a testator’s possessions can and does cause conflict in the administration of many estates. However, there are steps that testators and executors can take to help ensure that valuations are completed carefully and accurately. Furthermore, there are a number of federal regulations with which property owners must comply when valuing their assets for estate planning purposes. To ensure that you are aware of and fulfill all of these requirements, please contact an experienced contested estates attorney who can help forestall any will contests at a later date.

Date of Death Estate Valuation

Assets can be valued under one of two different standards, both of which give beneficiaries an accurate assessment of inherited holdings. The first method is known as the date of death estate valuation. This standard of valuation requires the executor to calculate the fair market value of each of an estate’s assets at the time of the decedent’s date of death. For bank accounts, investment accounts, and retirement accounts this would require finding the statement values at the time of death. Publicly traded stocks, on the other hand, would require the executor to average the high and low prices on the date of the testator’s death and then multiply that price by the number of shares owned by the testator. Some assets will require appraisal by qualified professionals, such as:

  • Personal effects;
  • Business interests; and
  • Real estate holdings.

The Alternative Valuation Date

Rather than assessing the value of a testator’s assets at his or her death, this method allows the executor to have the testator’s property valued six months later. According to federal law, executors are given the discretion to wait six months to value the gross estate as long as:

  • The total value of the gross estate is lower on the alternate date than it was on the date of death;
  • The amount of estate tax owed is lower on the alternate date than it was on the date of death;
  • The decision is made within one year of the estate tax filing date; and
  • Only assets whose value have decreased due to market conditions and not due to the passage of time are evaluated using the alternative standard.

However, if the executor chooses this method and some of the decedent’s assets have been sold or distributed within the allotted six months, then the value will be determined based on the number that was assigned on the date of the sale.

Many executors use the alternative valuation method to reduce the amount of taxes owed by the estate. However, this will only occur if the gross estate depreciates during the six months after the testator’s death. This also means that when the recipient of the property receives it, the value could be substantially lower than it was at the time of death, which could have repercussions on his or her income tax at a later date.

Contact an Experienced Contested Estates Attorney Today

If you are interested in planning your estate and live in the Northbrook, Evanston, Skokie, Glenview, Glencoe, or Highland Park areas, let the experienced contested estates attorneys at Orlowsky & Wilson, Ltd. Attorneys at Law help. We are eager to assist you today.

Updated as of July 2019
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