IRA Valuation for Estate Tax
My father passed away on a Saturday. The Custodian of his profit sharing plan reports the value of his holdings on weekdays. Is the value, for estate tax purposes, the value of the Friday before he passed or the value on the Monday after?
Permalink Submitted by mk foss on Wed, 2009-12-30 19:02
If an individual passes away on a Saturday with a stock portfolio – the assets are valued based on the average of the hi and lo prices on Friday and Monday. With an IRA, you generally use the value provided by the custodian – the Friday value in this case. The IRA gets no step up in basis so determining the value is only necessary to see if (a) a Form 706 is required and (b) the net estate exceeds $3.5 million so that some tax must be paid.
Permalink Submitted by Bruce Steiner on Wed, 2009-12-30 23:18
When I first started, we would send someone to the library to check the prices in the New York Times or the Wall Street Journal. We’d have to adjust for stocks that were trading ex-dividend. Now it’s all done electronically. We, and many other law firms, subscribe to a pricing service that automatically does the prorations for deaths on weekends and holidays, or other days when the stock market is closed, and (less common now but more common many years ago) stocks that didn’t trade on the valuation date.
While the Federal estate tax exempt amount is $3.5 million, some states have state estate taxes with lower exempt amounts.
Permalink Submitted by mk foss on Thu, 2009-12-31 02:07
Bruce, you’re showing your age. The Wall Street Journal stopped giving the hi and lo values for stocks many years ago – at least 10. Now everyone knows you’re over 35.