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How to value your assets for estate planning

On Behalf of | May 5, 2021 | Will

Knowing the value of your assets is important when it comes to making your estate plan. You probably want to know the value of what you are leaving to each beneficiary. You will also know what the tax implications may be and if you need to strategize your planning around that. New Jersey does not have an estate tax, but it does have an inheritance tax. Most people are not affected by the federal estate tax since the exemption is currently more than $11 million for each individual, but this is set to change after 2025.

Why determining value is important

The net value of your estate is the one that is important for determining estate tax, which means the value of all your assets after all debts and taxes are paid. It is not uncommon for people to underestimate the value of their estate. However, bank accounts, retirement savings, a home and a vehicle can add up to be worth a substantial amount. You also need to include life insurance policies along with furniture, personal possessions and any collectibles. For some assets, such as collectibles or a business, you may want to get a professional involved in helping you determine the value.

Choosing the date of valuation

An estate might also need to be valuated when a person dies. According to the IRS, there are two dates that might be used, and the executor chooses which one. One is the date of a person’s death and the other is assets in the gross estate after six months. There are a number of different approaches to valuing assets. For example, to get a day-of-death valuation on publicly-traded stocks that are not in a brokerage account, the value of each share is averaged based on the stock’s highest and lowest value that day.

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