How does estate valuation provide asset protection?

On behalf of John J. Pembroke & Associates LLC posted in asset protection on Wednesday, March 22, 2017.

Do you know how to find out how much your estate is worth? If you want to optimize your asset protection in your estate plan, you need to understand the process of determining the value of your property in accordance with federal law. Two types of valuation exist to allow your beneficiaries the most accurate assessment of your property holdings. This could mean the difference between paying the estate taxation, which is triggered at $5.45 million as of 2016 legislation.

What will my beneficiaries need to value from my estate? Usually, asset valuation is required for bank holdings, investment, and retirement accounts. Additional assets that should be assessed include publicly traded stocks held outside a brokerage account, along with your personal effects, real estate, and any business holdings you might have as part of your estate.

So, what are the two types of asset valuation? There are two options for identifying the value of an estate for asset protection purposes. The first: date of death estate valuation. This describes the fair market value of all of a decedent’s assets on the date of death. Another method is called alternate valuation date. Only a personal representative from an estate can determine whether to use the alternate valuation date, which must fall within six months of the decedent’s passing.

Why would you want to use one over the other? The most obvious answer is that a lower estate valuation could help you avoid estate taxes if you are close to the threshold of $5.45 million. The estate tax bill can be reduced if your estate is valued at a lower amount during that six-month window, which is why an alternate date is often used. A qualified estate attorney can help you learn more about your estate value options to allow you to maximize benefits to your beneficiaries.

Source: The Balance, “Do You Know How to Calculate the Value of Your Estate?,” Julie Garber, accessed March 10, 2017