Which value is used to determine the date-of-death valuation for individual assets in estate administration?

Which value is used to determine the date-of-death valuation for individual assets in estate administration?

• A. Date of death value of the taxable estate
• B. Date of death value of each asset
• C. Decedent's cost basis on assets
• D. Current market value

Answer: (B)

Valuing each asset at its fair market value on the date of death is the standard approach in estate administration. This per-asset date-of-death valuation provides an objective snapshot that is used to determine the gross estate and to establish the basis for heirs (often a stepped-up basis to that date's FMV). By summing these individual asset values, you arrive at the total value of the estate for tax calculations. Using the decedent’s original cost basis or the current market value today would mix different tax treatments and timelines, so they’re not used for the date-of-death valuation of each asset.

Valuing each asset at its fair market value on the date of death is the standard approach in estate administration. This per-asset date-of-death valuation provides an objective snapshot that is used to determine the gross estate and to establish the basis for heirs (often a stepped-up basis to that date's FMV). By summing these individual asset values, you arrive at the total value of the estate for tax calculations. Using the decedent’s original cost basis or the current market value today would mix different tax treatments and timelines, so they’re not used for the date-of-death valuation of each asset.