How to Determine the Value of Your Estate

How to Determine the Value of Your Estate

When you meet with an Orange County estate planning attorney, one of the tasks involved in the discussion s determining the value of your estate. This could be to better plan your own estate or to place value on the estate of a loved one after they’ve passed on.

Doing so can help determine potential tax obligations or assist in making distribution systems. Determining the value of your estate is not an easy task, but an experienced probate lawyer in Orange County can make sure you get an accurate evaluation.

Here’s what you need to know about determining your estate’s value.

Determine the Date of Calculation

The value of different aspects of your estate can change daily. Things like stocks, savings accounts, and commodities investments can even change multiple times throughout a single day. 

Some assets, like motor vehicles, depreciate over time. That means your estate could have items that are worthless in the future than what they’re worth right now.

If you’re evaluating the value of the estate of a living person, you can really pick any date that you want. You must understand that the amount you determine on the selected date most likely won’t be the actual value at the time of death. A rough idea, however, will be helpful when working with your will and trust attorney in Orange County.

If you are determining the value of the estate of someone who has passed, you can either use the date of death or a date six months after the date of death. This second option is called the alternate valuation date.

If you use this later date, any asset that is sold or distributed during the first six months after the person’s death should be valued as of the date of sale or distribution.

Determine the Assets that Make Up the Estate

In simple terms, an estate is made up of all of the stuff someone owns. An estate consists of tangible things like cars, real estate property, and furniture. It also includes non-tangible things like stocks, copyrights, and intellectual property.

Here are some of the most common things people often include as parts of their estate:

  • Cash, checking, and savings accounts.
  • CDs (certificates of deposits)
  • Stocks, bonds, and mutual funds
  • Retirement savings in an IRA, 401(k), etc.
  • Household Furniture and antiques
  • Clothes
  • Vehicles
  • Life insurance policies
  • Annuities
  • Business interests
  • Collectables like baseball cards, first edition books, Beanie Babies, etc.

Make sure you include items that you expect, but don’t have possession of yet. That means things like future payments from insurance settlements, lottery jackpots, retirement accounts, future known inheritances, etc.

Each of these items should be assigned a value. Asset valuation includes determining a fair market or present value of assets. Some things have a definite value, such as the amount of money in a savings account.

The value of other items can be determined by comparing them to a similar object. Other things, like intellectual property, must go through a subjective determination because it is difficult to measure.

If something is owned by a single person, the entire value can be calculated for the estate. If an asset is owned jointly with someone who has the rights of survivorship, then only 50% of the value should be included.

Calculate Deductions

Your estate isn’t just made up of things that hold positive values. Your estate all includes debt and outstanding balances. These negative balances include any balances on a mortgage or car loan, student or personal loans, medical bills, outstanding utilities, and more.

If you’re not sure about what should be included, your Orange County estate planning lawyer can point you in the right direction.

What Happens to a Person’s Debt When They Die?

When you’re considering the value of your estate, a common question people ask their Orange County wills and trusts lawyers includes the matter of debts after they die. In general, when someone dies, their assets and liabilities (their estate) will pass on according to their estate plan.

Before the executor of the estate can distribute assets to the appropriate beneficiaries, the liabilities must be paid with whatever funds are available. That could mean selling assets to be able to satisfy debts.

The executor must first deal with secured debts. These are debts that are attached to one or more assets. For example, a mortgage is tied to the home. If someone wants to pass on secured debt to a beneficiary, the beneficiary will bear the burden of any debt that is attached to that asset.

Of course, if you want to ensure that your secured assets are passed on without placing a strain on your loved one, work with an Orange County estate planning attorney to create the right plan.

Unsecured debts, or debts that aren’t attached to a specific asset, are paid from money out of the state. If, after assets are sold, there isn’t enough money to pay all of the debts, the executor must notify the creditors.

In some cases, the creditors will simply write off the debt. In other cases, the creditors might apply to the court. This could result in a bankruptcy trustee being appointed to the estate to help oversee how everything is dispersed. Working with an Orange County probate attorney is the best way to navigate this tricky situation.

Know Your Estate Value

You can simply add up the value of all of your assets and then subtract the total deductions. The final number is the estimated value of your estate. A precise value may not be possible, but getting a close estimation should work for your probate attorney in Orange County.

Whether you’re trying to determine the value of your own estate to better plan your final wishes or you need to find the value of a loved one’s estate to help the distribution, things can get complicated.

By working with a skilled and experienced Orange County estate planning lawyer, you will be able to explore all of your options while gaining a more precise evaluation.

Maria Parker assists her clients plan for their end of life health care wishes and the ultimate distribution of their wealth after death. She personally experienced the importance of planning at the time her father passed away.

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