How and Why to Value Assets Left in Your Estate Plan

Other than things that we tend to collect specifically for their value, or perhaps with real estate that we own, we often don’t give much thought to how much the things that we own are actually worth. But when it comes to estate planning and probate, the value of what you are leaving to others, becomes pretty important.

That not only means that your executor or personal representative will need to value whatever you leave in your estate plan, but that you, now, when making your estate plan, should start working on evaluating the worth and value of your property as well.

Why Does it Matter?

The value of your estate matters for a number of reasons. One is for tax purposes, but unless you have an extraordinarily high value estate, you don’t have to worry about your estate being taxed (at least not now—the threshold for paying estate taxes can change regularly).

It also matters because smaller estates may not even have to go through the probate process. So smart valuation can save a lot of money in the probate legal system.

Value can matter when it comes to your beneficiaries understanding and appreciating the value of what they are inheriting, and for the purpose of trying to equalize property left to multiple beneficiaries. It can also matter to creditors who may want to make claims on property that has value.

How is Property Valued?

As a general rule, your assets are valued at what they are worth at the time of your passing (your executor also has the option of valuing the items at what they are worth six months after your passing). With items that can fluctuate over time, that can lead to some uncertainty; an estate plan made when you are, say, 40, may leave a lot of time for those assets to change in value.

Some items may need to be valued twice, such as real estate—once for the value at the time of passing, and again, at the time the property is listed for sale, to make sure it is selling for a fair price that maximizes return for your beneficiaries.

Different Kinds of Assets

Some property is easy to value—think of a bank account—but others, such as a business, valuable collections, or real estate, may need the help of expert appraisers. And should family members who jointly inherit property differ on the value of the property, multiple appraisers may need to be called in to settle what the property is actually worth.

Any valuation of any property needs to take into account any liens or encumbrances on property—it’s only the net value of property that counts.

Valuing more common personal property is generally valued at the price the items would sell on the open market, such as through eBay or other online sales marketplaces.

Have an estate planning or probate law issue?  Call the West Palm Beach estate planning lawyers at The Law Offices of Larry E. Bray today for help with your estate plan.

Sources:

businessappraisalflorida.com/blog/business-valuations-for-estate-planning-wealth-transfer-irs-gifting/

floridabar.org/public/consumer/pamphlet026/