Valuing Estates as of Alternate Valuation Date

Been working with our associate attorney, Catherine Martinez, this morning on a federal estate tax return for someone who died in late 2009 when we had a federal estate tax for estates of decedents that died with an estate valued in excess of $3.5 million.

Since a large portion of the estate consisted of stock which depreciated in value after the date of death, we are using the alternate valuation date for purposes of valuing the estate for federal estate tax purposes. It will save a pretty good chunk of change in estate tax. The alternate valuation date is the date six months after the date of death.

A few points you should know about using the alterate valuation date for federal estate tax purposes:

• All of the assets must be valued as of the alternate valuation date. You can't pick and choose which assets get valued as of the alternate valuation date;
• You cannot use alternate valuation date unless the amount of tax will be reduced. So, a non-taxable estate cannot use the alternate valuation date;
• If the estate sells property during the six month period, then the sold property must be valued as of the date of sale;

Using the alternate valuation date for federal estate tax purposes can be complicated. Since there is no federal estate tax for estates of decedents dying in 2010, it appears the alternate valuation date will get a one year hiatus.

Paul

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