How Much is Your Inheritance Worth?

A Guide to Determining How Much Your Inheritance in Probate is Worth

Knowing what your inheritance going through Probate is worth will help you prepare for how best to use your inheritance when you finally receive it. In this guide, we’ll take a look at how to determine the value of your inheritance and better prepare for the future.

Why Is the Fair Market Value of Probate Assets Important?

Knowing the fair market value of the estate assets going through Probate is helpful for executors, personal representatives, heirs and beneficiaries alike. An accurate valuation can even help determine if the estate owes federal or state tax and reveal a qualification for a small estate version of probate, making it easier to distribute assets to the heirs more quickly.

For heirs and beneficiaries, understanding the value of their share of the estate will help them determine which taxes they may be liable for, such as inheritance or capital gains taxes. That said, only a few states currently collect inheritance tax:

• Iowa
• Kentucky
• Maryland
• Nebraska
• New Jersey
• Pennsylvania

Capital gains taxes may come after you sell a piece of inherited property, so it’s essential to know fair market values for those tax estimations. As always, all inheritance tax situation (or any other tax situation for that matter) should be discussed with a tax expert.

How to Calculate the Value of an Inheritance in Probate

To estimate the fair market value of assets in probate, you first need to determine a valuation date. There are generally two different dates of importance:

• Value at death: Use the date of the decedent’s death to find the value of an estate asset.
• Value at disposition: Since estates often take months or years to settle, it can be important to determine an asset’s value at the time of the sale or distribution vs. when the decedent passed away. Its value may have changed significantly from the date of death. This calculation helps determine any state inheritance tax and appropriately values the asset with regard to the heirs.

Once you’ve established evaluation dates, start estimating the worth of each asset. Bank accounts and stocks are straightforward and you can easily estimate the value of a car by checking used car websites. While you can use public references when you can, if an asset is difficult to find or is unique in nature, you may need to hire a professional appraiser.

To determine the fair market value, consider what buyer would honestly and reasonably pay for an item. This price may be different from the replacement or insurance value.

What Is the Cost Basis?

Also known as the stepped-up basis, the cost basis is the fair market value for a piece of property at the date of the decedent’s death. When the new owner chooses to sell that property, taxes will be determined by the sale’s profit minus the date of the decedent’s death — the cost basis.

How to Calculate the Cost Basis

The stepped-up basis is the property’s fair market value when the decedent dies or, in some cases, when the assets were formally transferred. The easiest way to determine the new basis is to have the property professionally appraised as soon as possible.

Let us Help. Get a Free Estate Evaluation Today!

We will gladly walk you through a free estate evaluation. We’ll also help you access a portion of your inheritance now, when you need it the most, with an inheritance advance. It’s our mission to help heirs take back power over the inheritance process. Request a quote today and skip the probate delays. Why wait? Use a portion of your inheritance today!