Tax Tip of the Week
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Some estates benefit by the drop in the stock market
For the week of
December 10, 2001
Normally, an estate's valuation is determined on the day the owner dies. However,
the Tax Code allows an alternate valuation date of six months after the date of death. The estate administrator
can use the date that is most advantageous to the estate. A lower valuation means lower estate taxes.
What does this mean in a time of declining stock values? The market peaked in early 2000, and we have seen substantial
declines since then. Assume that Charlie's estate was made up in large part of stocks worth three million dollars
when he died. However, due to a decline in the stock market, six months after his death, those same stocks were
listed at two million dollars. Due to the high estate tax rates, any decrease in estate valuation can create big
savings to the estate and, ultimately, to the heirs.
The use of the alternate valuation date is not limited to listed stocks. It is available for determining the valuation
of all assets in the estate.
If we can be of assistance to you or your attorney in gift and estate planning
matters, please give us a call.
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