How to Calculate the Value of an Estate
The short of this article is that you may want a professional appraiser and a probate attorney to assist you with finding out how much the property is worth.
The long of this article is that there can be quite a few factors surrounding finding that out. This may come as to no surprise to you, but because of how much money can be lost because of what happens during probate, there might be at least two different values given to you for how much the total estate is worth and how much you’ll get. Keep in mind that value is a highly subjective thing in probate law.
This whole ordeal is far more than simply finding out what people will pay for a given asset. Timing is also a huge factor in all this and may greatly impact how much can be kept. Be prepared to play some money games.
Defining Cost Basis
Looking into an asset’s value may mean investigating into what its value was back to when it was gifted to you. If you’re reading this concerning inheritance that has yet to be inherited, getting all the assets evaluated may take time and you may be trying to figure that out. You will probably need to know both the current market value and the cost basis. T
he latter usually consists of how much money the asset cost originally along with fees as well as commissions associated with the asset’s acquisition. To break that down, all the money that was originally put into the asset will most likely dictate what is its cost basis.
While it’s true that your relationship to the deceased may also impact how and if your inheritance will be taxed, the cost basis is another big factor. What must be noted, however, is that the value of various assets may be lowered if the valuation happens at a later date. By waiting for a half year, the estate’s administrator can go ahead and pick which valuation of the estate that they want to submit. This later trick works for estates that have lost value since the deceased has passed on. Good things may come to those who wait.
Net Versus Gross | How to Calculate the Value of an Estate
You may only be interested in the amount of money that you’re getting out of an estate, but you might not know where to find out that information. That said, perhaps you will hear a lot of values and numbers thrown around amongst the chaos.
Two values, the gross estate and the net value of an estate, are what you should look out for. The total value of the estate, which includes everything before taxes, is found in the gross estate. That’s what you should check if you want to know anything that might get taxed.
The net value, on the other hand, is the end value that will remain after all of the taxes and other deductions have been taken into account. Think of the net value as the take home pay so to speak, the pay that you get after everything else has been subtracted from the original amount. Moreover, don’t be fooled into thinking that only taxes and unpaid bills are what need to be taken care of. There could be an outstanding mortgage which could eat away at the gross estate and leave little remaining for you in the form of a net value.
Value at Death
You might not be in a rush to do anything about the estate, but it’s wise to note that the value of an estate usually has to be submitted in about a one-to-three-month time frame. It’s important to mention, moreover, that this is for the date-of-death values, the values that the property was worth when the deceased passed on. This means doing paperwork and getting the exact numbers.
But before you do anything, get ready to contact all the financial institutions which the deceased had accounts with. Value of an estate is by no means limited to the value of the house and contents inside. There’s also the money in bank accounts, the property that was owned with someone else, the money in life insurance accounts, and so on. Be sure to also involve a professional appraiser in the matter when it comes to real estate, assets owned by businesses, and anything that might be of significant value.
Double Check Values
In a previous section, there was mention of how certain estates may have two different values if the value depreciates over six months. That’s true.
However, you must be aware that not every asset may have a lower value. It could even result in there being more to be paid because an asset suddenly became exceptionally valuable. You should definitely talk to an advisor before you even think about taking the chance of seeing if the value will go down over time.
Selling the property might not change things either. If you so decide to wait the six months to see if things go down and then realize that an asset has to be sold, that new value has to be reported. And that’s true even if the new value is higher than before. You may want to consider the reality that everything might need to be sold and weigh the cost of what that really means. Be careful about making a choice that you might not be able to go back on.
Contact a Minnesota Probate Lawyer
Outside of getting the assets appraised, you might need more help with all things probate. Having a Minnesota probate lawyer from Flanders Law Firm LLC can be how you get everything done. Simply call 612-424-0398 and get things moving forward.
Dealing with all of that paperwork might not be your thing. You may want an expert to help you deal with all of the issues that you can face throughout the probate process.
Besides, you might have to make a decision or two in a timely manner. Having another person working beside you means that you can get things done quicker. It’s not a matter of working with or without a will, it’s a matter of what needs to be done to keep everyone happy. Don’t let talking to the probate court scare you.
Get the assistance that you need.