When someone passes away, for legal purposes, all their property is considered to be their estate. The estate is made up of assets such as: homes and other real property; checking and saving accounts; stocks and other investments; retirement accounts; vehicles; collectables and many other types of assets.
Debts are part of the estate as well. The estate may include mortgages, car loans, credit card debt, medical bills and other debts. All of these assets and debts must be dealt with through estate administration after a person dies.
Typically, the deceased person’s will appoints a personal representative. This person is responsible for gathering and distributing the assets and paying off the debts of the deceased. This will involve determining the gross and net value of the estate for estate tax purposes, as well as figuring out how to potentially equally distribute the assets among multiple beneficiaries. The personal representative must also determine what debts remain to be paid, and figure out how to pay them out of the estate. For this, they often need professional help from an attorney with experience in estate administration.
In order to value the property, the first step is determining the “valuation date,” which can be either the date of death or an alternate date six months after the death. After that date is selected, determining the value of bank accounts can be fairly easy, but other property may not. Personal representatives may need appraisals of real property and collectables. They may also have to determine the value of stock, which can be complicated. Then, once this is all completed, they will need to complete the calculations to determine the value of the estate.