Why do most estate lawyers require all assets to be appraised and fair market value determined when someone dies?
A. There is a huge advantage to have assets appraised when someone passes. The Surviving Spouse is entitled to a “stepped up” cost basis in all of the assets. The cost basis in an asset is usually the purchase price. However, when someone dies, the IRS allows the surviving heirs to receive a new cost basis equal to the fair market value of the asset at the time of the death of the decedent. Second, there is also a need to determine the fair market value of the entire estate to see if Federal Estate Taxes will be an issue. Because of a rising Estate Tax Exemption, in most cases the estate will be well below these thresholds and an estate tax return will not be required.
