Readers in Miami-Dade are likely aware that assessing the value of a person’s assets is a large part of settling their estate after they die. Not only does the valuation process, in many cases, help to determine specific inheritance amounts, it also is the basis for deciding the estate tax liability.
After the death of a loved one, many people may find themselves in hot water with the Internal Revenue Service (IRS) based on discrepancies in the valuation of an estate’s property and assets. This can lead to an IRS audit and, in some cases, even result in the IRS taking legal action. Unlike resources such as bank accounts or stock portfolios, personal holdings, like art collections, a privately owned small business, patents, and acting or musical credits can be difficult to assess a value to. In other cases, their death itself could also affect, in one way or the other, the value of a person’ estate.
While there is no certain way to predict what their estate will be worth at the time of a person’s death, experts do have some advice for how people can help to ease the process of determining their gross estate worth. In situations where a business’ total value is drastically reduced by the death of the owner, it is possible for the estate administrator to request an alternate valuation date, typically six months after the date of death, with the IRS. This allows consideration for such a loss. Maintaining current, detailed records can also be of great assistance when it comes time to assess an estate’s net worth.
Not all probate and valuation problems are avoidable, but with careful estate planning, a person can help to minimalize the potential issues and make the process of administrating their estate easier for all involved.
Source: New York Times, “Putting an Estate Value on the Assets Unique to You”, Paul Sullivan, Sep. 27, 2013