Determining the Value of Your Estate

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An important part of every personal representative’s job in administering a deceased person’s estate is determining the value of that estate. Putting dollar amounts on everything from heirlooms to land can be difficult, but there are professionals that can help complete the asset valuation accurately and on time to get your loved one’s probate estate resolved quickly.

Why Does Asset Valuation Matter in Estate Administration?

Asset valuation is involved in almost every stage of estate administration, from filing the original petition to distributing the final assets. When your estate goes through probate, your personal representative will need to determine the value of your assets to:

The net asset value in your estate determines whether it is eligible for summary probate administration. In rare cases, where a person’s final expenses exceed their non-exempt assets, Florida law allows for disposition of that person’s personal property without any administration. Summary administration, which is shorter and faster than full, formal probate administration, is available if the probate estate is less than $75,000 and the deceased person had no creditors or the personal representative can show they will be paid. It is also available if the decedent passed away more than two years ago, as unsecured creditor claims are then barred. Formal estate administration applies to estates with a net probate value of more than $75,000 where the decedent passed away less than two years ago.

To know whether to open a summary or formal probate estate, your personal representative will need to determine the value of the probate estate. Notably, this does not include non-probate assets such as the following:

It also does not include assets exempt from creditor claims, such as the following:

  • Homestead properties
  • Exempt property for the benefit of surviving spouse or children under section 732.402, Florida Statutes, including household furniture, up to two motor vehicles in the decedent’s name which were regularly used by the decedent or members of the family, and qualified tuition plans

When Are Asset Values Set During the Estate Administration Process?

The value of estate assets change over time. That is one reason why some items are passed down: because they are rare and you expect their value will increase the longer they remain in the family. Sometimes, this change happens slowly, but certain assets’ values can change significantly, even during the process of probating your estate. In those cases, knowing when values are set can be important to determining the net value of the estate and each heir’s inheritance.

Estate Taxes and Value at Death

If your estate is large enough to trigger federal estate taxes, your personal representative will generally need to determine the value of the estate as of the date of death. In some cases, you can choose to value the entire estate as of six months after the date of death instead. Once the value at death is determined, any changes in the value of those assets (increases or decreases in value) can result in additional tax consequences, either to the estate or the heirs who inherit those assets.

Value at Distribution

The probate process can take months to complete. The value of certain assets, especially real property or cryptocurrency, can change significantly during that time. Your personal representative will also need to determine the asset value at the time each piece of property is sold or distributed. This amount is used to calculate estate income taxes. Florida does not charge beneficiaries an inheritance tax, but when other states do, they use the value at distribution to determine the amount.

How Properties’ Net Asset Values are Determined

Some assets are easy to set a value on. Bank accounts, retirement accounts, investments, and even cryptocurrency can often have their value established simply by looking at the most recent account statements. Debts, too, generally have a set value that is easily determined. However, other types of property can require the help of an expert appraiser to establish the net value used in the probate estate.

Determining the Net Value of Real Property

Real estate appraisers or realtors are often used to establish the fair market value of a person’s real property after they die. Realtors can provide a list price if the property will be sold. If it will be passed down, an appraiser may need to establish how much it is worth. This gross value is then reduced by the mortgage, any equity loans, property taxes, and liens on the property to set its net asset value.

Establishing the Value of Business Interests

If you own business interests, including stocks or shares in a company when you die, your personal representative will also need to establish the value of that business. Stocks contained in an investment portfolio often have a publicly traded value, but small business interests create bigger problems. There are professional business valuation experts who can establish the company’s worth as a going business or as the sum of its parts (depending on whether the company can continue without you). If you are a partial owner, that value will then be multiplied by your percentage share to determine the probate valuation of the business interests within your estate.

Setting Personal Property Values

Estates usually contain a certain amount of personal property, including cars, collectibles, and other things you own at the time of your death. Antiques, collectibles, guns, coins, jewelry, and cars can all require professional valuation and sometimes can be worth more than you expect. However, other items, like furniture, clothing, and personal items are generally valued at “garage sale” prices, rather than the cost to buy or replace them.

Determining Intangible Assets’ Value

Sometimes even an appraisal isn’t enough to provide an accurate value. Intangible assets like royalties, copyrights, patents, trademarks, and legal causes of action can create conflict between beneficiaries, and even raise questions for the IRS about the size of a person’s estate. If there is a dispute over the value of these intangible assets, your personal representative will need to work with an expert to establish the property’s value.

Get Help Determining the Net Value of Your Estate

Getting prompt and accurate probate values for your estate can be intimidating, and sometimes challenging. This is why working with an experienced estate administration attorney is so important. At Harrison Estate Law, P.A., our experienced estate and probate team are here to help you determine the values of each asset within the estate, and make sure your loved one’s wishes are honored through prompt and compassionate estate administration. Contact us here or call 352-559-9828 to get help today.

Categories: Estate Planning, Probate