Crack the Estate Valuation Code: Prevent Disputes & Protect Your Wealth

Building wealth is no small feat. You've dedicated time and effort to grow your financial legacy, and protecting it is crucial. At the heart of this protection lies understanding the true value of your assets.

So, what exactly is estate valuation, and how does it influence your taxes and broader estate plan? Let’s demystify it with insights drawn from frequently asked questions by high-net-worth individuals.

What is Estate Valuation?
Estate valuation is determining the value of your assets, whether it’s a real estate portfolio, stock holdings, business stakes or collectibles like art and jewelry. The aim is to establish a value that holds up under the scrutiny of the IRS, creditors, probate courts and your heirs.

Why Is Estate Valuation Essential?
Accurate valuations are the linchpin of your estate plan. They significantly affect your financial planning and wealth strategies and impact the taxes your heirs might face. A well-substantiated valuation ensures your assets are properly categorized, minimizes estate taxes and prevents potential disputes.

How Do I Navigate Valuation Tax Implications?
Estate planning can feel like a minefield of tax implications. An accurate valuation helps you sidestep potential pitfalls. Underestimating your estate's value can lead to IRS disputes, while overestimating may burden your heirs with excessive taxes. Proper valuation also influences other transactions, like gifts or sales, potentially triggering tax consequences.

How Do I Select the Right Professional for My Valuation?
Engage a professional who can confidently defend their valuation(s) in front of the IRS. Each asset type demands specific expertise, so hire appraisers with knowledge in valuing your unique assets. For business valuations, look for experts with credentials like Certified Valuation Analyst (CVA), Accredited in Business Valuation (ABV) or Accredited Senior Appraiser (ASA).

What Do I Need to Know About Valuation Timelines and Costs?
Typically, estate valuations take about four to six weeks after the appraiser gathers necessary information. Valuation services can start at around $10,000 and vary with asset complexity. However, the peace of mind from minimizing taxes and staying compliant is invaluable.

How Do I Address Valuation Discrepancies?
If you disagree with a valuation report, scrutinize it thoroughly. Appraisers strive to capture all relevant details, but your input can be critical. Share your insights to ensure the valuation is as accurate and defensible as possible.

Is Your Estate Plan on Solid Ground?
Avoid leaving your heirs with disputes over asset values. Knowing and proving your estate's worth is essential for safeguarding your wealth. For reliable peace of mind, consult with our business and asset valuation experts to see how a thorough appraisal can reinforce your estate plan.

If you have any questions regarding this resource, please feel free to contact Geoffrey Mesko, Partner at Armanino Advisory LLC.