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Estate valuation affects taxation

Residents of Charleroi, Pennsylvania, often need to deal with matters of estate administration and probate. In consultation with experienced experts, the value of each gross estate needs to be determined at the beginning of the process. The gross estate is defined as the value of the estate before taxes and debts are paid. According to Internal Revenue Service (IRS) regulations, there are two ways to calculate that value. One is the "date of death" value and the other is the "alternate valuation date" value.

Date of death estate valuation is exactly what it sounds like, a determination of the value of the assets of the estate at the date of the decedent's death. When applied to any stocks that are a part of the account, the low price and the high price of each stock on the decedent's date of death is multiplied by the total number of shares that were owned by the decedent. If the stock market was closed on the decedent's date of death, the average values of each stock on the trading days right before and right after the decedent's date of death will be used. Other assets, like business interests, real estate and personal effects will be valued by appraisal based on what they were worth on the decedent's date of death.

Alternate valuation date, the other way to value estates, is also very simple. It is the fair market value of all assets of the decedent's gross estate as of six months after the decedent's death. The decision to use alternate valuation date of the date of death is made by the personal representative of the estate, as provided for by the Internal Revenue Code. Only estates with gross values over $5.45 million are taxed, and that provides the basis for the decision about using an alternate valuation date for calculating the value of the estate. If estate assets lose value after the decedent's death, using the alternate valuation date can protect the estate assets from taxation.

Source: The Balance, "Do You Know How to Calculate the Value of Your Estate?," Julie Garber, accessed April 12, 2018

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Bassi, Vreeland & Associates, P.C., has fully staffed offices in both Charleroi and Washington, and we serve clients throughout southwestern Pennsylvania. To discuss your legal needs with our experienced lawyers, call us at 724-705-0146. You can also send us an email.

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