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Exploring the basics of estate valuation


When a loved one dies in Minnesota, a personal representative may engage in estate valuation for tax purposes and for its proper distribution. A person may also calculate the value of their estate when they are alive to help them determine the value of estate, make decisions about their will and calculate taxes for their heirs and estates.

It is important to select an underlying date for the calculation, because the value of certain assets, such as a house or a car, fluctuate over time. Calculations are usually based upon the fair market value of an item which is usually different than its original price. Any date may generally be used when calculating the value of a living person's estate.

For a person who died, the decedent, the date of death may be used. Otherwise, a date that is six months after death may also be utilized.

Next, the gross estate must be calculated. This is estate that exists before reductions are calculated for taxes or the taxable estate. The gross estate includes real estate, mortgages, jointly owned property, significant property interests, bank accounts, pensions and life insurance policies. The representative should also obtain all financial account statements existing on the date of calculation. These include checking accounts, annuities payable to the estate and heirs, stocks, bonds and mutual funds.

The valuation should only include annuities that are receivable by a beneficiary who survives the decedent under specified agreements or plans. A licensed appraiser should calculate real property values to comply with tax laws. Numerous other assets should be part of the calculation, such as household furnishings, artworks and annuities. The value of vehicles should be calculated according to the Kelly Blue Book.

The entire value of property should be attributed to the estate if it was owned solely by the decedent. Half of the value of property that is owned jointly with the decedent's spouse, with rights of survivorship, is credited to the estate.

Tax problems, delayed probate or litigation are the possible consequences of an inadequate evaluation. An attorney may assist families in preparing these evaluations.

Source: Wikihow.com, "How to calculate the value of an estate," Accessed May 21, 2017

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Mason & Helmers
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