When an individual dies, his/her estate must be assessed for tax purposes. When a individual inherits assets from a deceased individual, an estate tax is placed on the property that he/she acquires. In many instances, an estate will only be subject to estate tax if the asset valuation finds that the estate is worth a certain amount. In some cases, an individual may be entitled to an estate tax return from a federal government.
An asset inventory will be taken following an individual’s death, regardless of the size of his/her estate. The procedure will be conducted by the state in which an individual lived, following guidelines listed in the Internal Revenue Code. This evaluation is an essential aspect of estate distribution, and must be completed before the assets are distributed.
When asset valuation occurs, all of the assets owned by a deceased individual will be valued at their market price, or fair market value. The market value that is used is the fair market price of these assets on the date that the owner died. All of an individual’s assets will be subject to asset inventory, regardless of their location. Therefore, even if property is located in another state or another country, it will be subject to asset inventory and valuation.
The precision that is used when determining the value of an individual’s estate will vary depending upon the state in which he/she lived. All assets are included in this inventory, including real estate, motor vehicles, jewlery, furniture, retirement funds, securities, life insurance, and income tax refunds, just to name a few.