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How is the value of an estate calculated?


When a Minnesotan dies, their estate is an important legacy that they leave behind. For tax purposes, the value of the estate needs to be calculated. There are two ways for an estate valuation to take place.

One valuation that is made of an estate is the date of death value. The date of death value is the fair market value of each asset of the deceased individual on the date of their death. The assets may include bank and retirement accounts, stocks, and personal property. Bank and retirement account amounts are the value on the day of death. Stock value is the average of the high and low prices for the day multiplied by the number of shares the deceased owned. Personal property, real estate and business property value is usually determined by an appraisal.

The other valuation of an estate that can be made is called an alternative valuation date. This is when the decedent's estate receives a value six months after their death. The personal representative of the estate can choose to either use the date of death value or the alternative valuation date when figuring out estate taxes. An estate that is worth more than $5.45 million is subject to estate taxes. A personal representative may choose to use the alternative valuation date if an asset has lost significant value since the date of death. That may affect the estate tax bill.

Obtaining an estate value is a necessary step after a loved one dies. It is important for a family to have an estate plan to preserve their assets and ensure their legacy continues after their death, but matters like estate tax can linger long after death. An attorney who specializes in estate planning can help a family prepare the proper documents for their estate plan, give them a sense of peace, and handle any issues that may arise after an individual's passing.

Source: The Balance, "Do you know how to calculate the value of your estate?" Julie Garber, June 14, 2016

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Mason & Helmers
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