When planning your estate, reality remains that the worth of your assets changes with time. By the time you are done with the estate plan, the value might have shifted up or down.
This is the reason you need business valuation services.
When you handle business valuation using an expert, you are sure that the assessment will be based on facts and figures to tell you how much the asset costs.
As a person interested in setting up the perfect estate plan for your property, you need to have the services of a valuation expert at all times.
So, what are the benefits of using these services when you come up with an estate plan?
Helps You Understand What You Own
When you have assets spread all over the state, you end up forgetting that some exist. And while the market fluctuates, the value of the assets also changes.
Without the right information regarding the assets, you won’t be able to determine how much each asset is worth in a given timeframe.
An accurate valuation of the assets will give you specific numbers that you can use to plan for later.
It Limits the IRS’s Ability to Reassess Your Assets
When you use an expert valuation expert to determine how much your assets are worth, the IRS won’t have to go through the process again when trying to determine the amount of tax that they need to charge on the assets.
When you submit your tax return, you can include the appraisal to make sure the IRS handles the process faster.
Allows the Executor to Distribute the Assets Accordingly
When you understand the value of your estate, you can distribute the assets better than if you are guessing the value. Unless you have a true reflection of how much your assets are worth, you won’t have a sure way of knowing how to distribute the wealth.
You might end up giving a beneficiary more wealth than you planned, which might bring issues with the other family members.
How to Compute the Worth of Your Assets
While you can take some steps to lessen the total amount of taxes on your estate, you will still need to have a plan to forge ahead. Here are the ways to estimate the worth of your property.
Determine the Net vs. Gross Estate
The term gross estate refers simply to the worth of the estate before you deduct the taxes that relate to it. The good thing is that the value of tax that you are liable to pay is based on the net value of the estate.
However, you need to know that the deductions that are placed on your estate differ according to the states.
Other liabilities that you need to pay include loans, mortgages, credit card balances and more.
When we talk about your assets, we mean the property that you own in full, as well as the ones that you hold in part.
Date of Death Valuation
The date of death valuation is what your assets are worth at the time of your demise. This will be the amount you hold in your bank, retirement account sand investments.
This value needs to be handled by a professional evaluator.
Alternate Valuation Date
This is the worth of your properties counted in your gross estate list six months after your demise.
When time comes to compute the taxes that you need to pay, the administrator of the estate decides the date that can be adopted. They can use the alternate date or the date of death.
If the worth of the property is expected to reduce in the six months after your passing, then the executor can adopt the alternate valuation date to compute the taxes. This will result in a lower tax burden.
Opting for the alternate date of valuation is a bit tricky at times, especially when you have different asset classes across the state. When you use this method of valuation, you will have to analyze all the properties, and not just those whose value has dropped over the past six months.
Enlist the services of a qualified estate planning lawyer to guide you on the best method to use. You can insert a clause into your will declaring the executor to use one of the two methods in calculating taxes.
For you to understand what your estate is worth, and to distribute your assets fairly, it is ideal that you work with a professional valuation expert to know what your estate is worth.