Estate Read Time: 3 min

Four Steps to Valuing an Estate

Determining the value of an estate is a fundamental first step in estate management and a critical requirement for settling a decedent’s estate.1

How to Assess the Value of an Estate

  1. Select the date of calculation. Because values move up and down, you need to set a specific date for a valuation. For a living person, you are free to pick any date. If you’re assessing the value of a decedent’s estate, you may choose either the date of death or the date six months after their death (the “Alternate Valuation Date”). If you use the Alternate Valuation Date, any asset sold or distributed during the first six months following the death must be valued as of the date of sale or distribution.2
  2. Determine the assets comprising the estate. This asset list should include everything an individual owns or has ownership interests in.
  3. Gather all financial statements as of the date of calculation. If an account is owned individually, the entire value should be calculated in the estate. If owned jointly with a spouse who has rights of survivorship, then 50 percent of the value should be included.
    Remember to:
    -Deduct any outstanding mortgage balance.3
    -Include life insurance when the policy owner is the deceased individual or the beneficiary is the decedent’s estate.3
  4. Calculate deductions. Subtract any debts from the total value of assets. For the decedent, this may also include any regular bills that may be due (e.g., utilities, medical expenses, etc.), charitable gifts, and state tax obligations.

Assessing the precise value of an estate can be complicated, especially when settling an estate. Please consult a professional with estate expertise regarding your individual situation.

1. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.
2. The article assumes the deceased has a valid will and has named an executor who is responsible for carrying out the directions of the will. If a person dies intestate, it means that a valid will has not been executed. Without a valid will, a person’s property will be distributed to the heirs as defined by the state law.
3. Several factors will affect the cost and availability of life insurance, including age, health, and the type and amount of insurance purchased. Life insurance policies have expenses, including mortality and other charges. If a policy is surrendered prematurely, the policyholder also may pay surrender charges and have income tax implications. You should consider determining whether you are insurable before implementing a strategy involving life insurance. Any guarantees associated with a policy are dependent on the ability of the issuing insurance company to continue making claim payments.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

12 Financial Hacks for Millennials: Budgeting, Investing and

12 Financial Hacks for Millennials: Budgeting, Investing and

Millennials bear substantial potential, but they are also facing a world of great financial uncertainty and opportunity. This e-book presents 12 Financial Hacks for Millennials to guide them through....

Mortgages in Retirement

Mortgages in Retirement

Explore the benefits and drawbacks to paying off your mortgage prior to retirement with this article.

An Arm and a Leg

An Arm and a Leg

A visit to the hospital can be painful, for both your body and your wallet. Don’t let it be more painful than it has to be.

 

Have A Question About This Topic?







Thank you! Oops!

Can Group, Private Disability Policies Work Together?

Loss of income from disability has the potential to cause financial hardship. Disability insurance can help.

Tax-Advantaged Health Care Planning for Retirement

Heading into retirement with confidence is easier if your planning includes steps to minimize taxes, especially as it relates to health care planning.

A Penny Saved is Two Pennies Earned

Here are some simple and inexpensive energy-saving tips that may help you save money.

View all articles

Impact of Taxes and Inflation

Estimate the potential impact taxes and inflation can have on the purchasing power of an investment.

How Much Home Can I Afford?

With a few simple inputs you can estimate how much of a mortgage you may be able to obtain.

What Is the Dividend Yield?

This calculator helps determine your pre-tax and after-tax dividend yield on a particular stock.

View all calculators

5 Smart Investing Strategies

There are some smart strategies that may help you pursue your investment objectives

Long-Term-Care Protection Strategies

The chances of needing long-term care, its cost, and strategies for covering that cost.

Principles of Preserving Wealth

How federal estate taxes work, plus estate management documents and tactics.

View all presentations

Once Upon a Goal

Do you know how to set up your financial goals for success? This knight does.

Retirement Redefined

Around the country, attitudes about retirement are shifting.

Estate Management 101

A will may be only one of the documents you need—and one factor to consider—when it comes to managing your estate.

View all videos