VALUING ASSETS AFTER DEATH

Senior businessman showing a document

After the death of a loved valuing assets is one of the first things that should be done. After death valuations serve three purposes. First, it forces an inventory of assets. You cannot value it until you are aware it exists. Second, it allows you to determine the estate tax due (if any) and maintain records if this is ever disputed. And third, it allows for you to determine the basis in the hands of the heirs to reduce or possibly eliminate any possible capital gains taxes on the sale of assets.

Valuation starts with knowing what assets the decedent owned or controlled. The better the inventory, the better chance your family has with achieving not only a good valuation, but a smooth estate administration.

Creating an inventory does not need to be costly. First, inventory the financial assets. List bank accounts and balances. Note who the signors on the accounts are and any joint owners. List investment assets and note balances, type of account and joint owners. Next, list real property by location and owners. Note the way the decedent held title. Finally, and no one likes this part, do a full inventory of all personal property. Yep. I wrote that. People fight over cook books and furniture. Jewelry tends to walk off and trinkets make their way to other houses. Take pictures of the assets. Note what you are planning on donating or selling in a garage sale.

As you create the inventory, secure the assets. Notify the banks and financial houses of the death. Provide them with a death certificate and advise them to not permit access to accounts. Change the locks on houses and garage cars. Notify the insurance carrier that the estate should be the beneficiary and insured on the house and cars etc. Buy a safe and put portable valuables in it. Note, do not comingle with your valuables. Make sure that firearms are only held by persons licensed to do so. If you do not have a license, notify the local police and have them take possession of the firearms.

Finally, it is time to value the assets. Generally speaking, valuation should reflect the value as of date of death. The Internal Revenue Code permits an optional valuation within six month after date of death. Depending on the market for assets, re-certifying value at the six month mark may provide a better valuation. Please note, that to elect this alternative valuation date you may be required to file a tax return.

With readily traded assets, valuation is relatively simple and means looking up values. With real property, a formal appraisal, and not a comparative market analysis is needed. With personal property, valuation may prove more problematic. In that event, you will have to weigh the cost of the valuation, the lack of certainty with the valuation and the problem with attaining a valuation. For art, jewelry, coin collections and other collections, take the time to secure valuations. Consider the upfront cost of a valuation as dramatically less than the cost of litigating value. Assets of assumed nominal value (pots and pans etc.) you may be able to skip the valuation altogether; but think before you do so. If you decide to not formally value an item, at a minimum have heirs agree to the value of the item.

Knowing what you have in an estate is vital to a good estate administration. Knowing what it is worth is just as important.Take the time to create and inventory and put together a valuation. You will not regret it!

Should you have any questions about valuing assets after death and or to schedule a no-charge initial consultation with one of our experienced estate planning attorneys, please contact Waltz, Palmer & Dawson, LLC at (847)253-8800.

Waltz, Palmer & Dawson, LLC is a full-service law firm with various areas of service to assist your business, including: Employment Law, Intellectual Property, Commercial Real Estate, Business Immigration, Litigation and general Business Law services.  Individual services include Estate Planning, Wills and Trusts, Probate, Guardianship, Divorce and Family Law.

This article constitutes attorney advertising. The material is for informational purposes only and does not constitute legal advice.

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