North Carolina Estate Planning Blog

How to Determine Date of Death Values

When administering an estate, determining the date of death values of the decedent’s assets is essential. Filing federal and state estate tax returns and paying any taxes due can only be done when the value of all the decedent’s property is known.  In addition, the date of death values establish the new cost basis for capital assets. Delays in probate may stem from valuation complications since the methods to determine date of death values is different for each asset.

Bank Accounts

Cash accounts are easily valued by reviewing the statement for the month that includes that date of death, or requesting a date of death value from the bank.

Business and Real Estate Values

For the value of business entities, real estate and personal items, the appraised fair market values on the date of death are used. 

Securities

When it comes to probate and tax requirements, determining date of death values for publicly traded securities is somewhat more complex. For publicly traded stocks, this requires research of historical prices, and then calculating the average of the highest and lowest stock values on the day of the decedent’s death. These may seem like simple enough tasks; however there are variables like mergers and dividends that might call for the use of a professional valuation service.

Bonds are also best valued by a professional. Mutual funds are valued at the closing price on the date of death.

Life Insurance

How much is life insurance valued? The IRS uses Form 712 as a statement that provides policy values as of the date of the policy holder’s death. This form will determine gift or estate tax liabilities for the value of the life insurance policy. Recent policy transfers, dividends, and status of policy premium payments are all factors that affect the value calculated on IRS Form 712.

Alternate Valuation

Sometimes, in order to calculate estate taxes, an alternate valuation date is used. The alternate valuation date is the fair market value of all assets in the benefactor’s estate six months after the date of death, and can only be used if it results in a lesser amount of tax. If some of these assets were sold during the six months following the date of death, the sale price of each asset is used.

 
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