What Is Date of Death Value
Date of Death Value (sometimes called "FMV at death") is the fair market value of every asset the deceased person owned on the exact date they died. The IRS uses this valuation to calculate estate taxes, and it becomes the starting point for calculating capital gains taxes if you inherit the asset and later sell it.
This matters because it directly affects how much you'll owe in taxes on inherited property. For example, if your parent bought a house for $150,000 in 1990 and it's worth $450,000 when they die, the Date of Death Value is $450,000. If you inherit it and sell it two months later for $450,000, you owe zero capital gains tax because you inherited it at that value.
Why It Matters for Your Situation
Handling estate matters while grieving is exhausting. You're already managing emotional tasks, and Date of Death Value is one of the practical pieces that affects your finances directly. Many people discover months into the process that they needed this valuation earlier, which delays closing out the estate or creates confusion with the IRS.
Estate executors and trustees must report Date of Death Values on federal Form 706 (if the estate exceeds $12.92 million in 2023) or state inheritance tax forms if your state requires them. Banks, investment firms, and real estate assessors will ask for this information. Getting organized on this early, even while you're grieving, saves stress and prevents costly errors.
How to Establish Date of Death Value
- Bank accounts and cash: The balance on the date of death, shown on the last statement before death or requested directly from the bank.
- Stocks and mutual funds: The closing price on the date of death. Your broker will provide this automatically when you report the death.
- Real property (house, land): You'll need a professional appraisal or comparative market analysis. This typically costs $300 to $800 and takes 1 to 2 weeks.
- Vehicles: Use NADA Guides or Kelley Blue Book values for the specific date, or have a dealer provide a written valuation.
- Personal property (jewelry, art, furniture): For high-value items, hire a certified appraiser. Standard household items are usually valued at 20 to 40 percent of replacement cost.
Connecting Date of Death Value to Your Tasks
As you work through estate administration, Date of Death Value connects directly to other processes. Creating an estate inventory requires you to list every asset with its Date of Death Value. The stepped-up basis rule uses this value as your new starting point for capital gains taxes on inherited assets.
If you're working with a bereavement counselor or support group while managing these tasks, it's completely normal to feel overwhelmed by the financial logistics. Many grief counselors can refer you to estate attorneys or tax professionals who understand that bereaved people need clear, patient explanations.
Common Questions
- What if we can't agree on the value? The IRS accepts multiple valuation methods. If a property has a wide range of possible values, use the most reasonable fair market value figure. A professional appraiser or tax attorney can defend your numbers if the IRS questions them later.
- Do we need to value items like clothing and furniture? Yes, for estate tax purposes, everything is included. However, you can group "household furnishings" as a single line item valued conservatively. Keep receipts or photographs of high-value pieces like antiques.
- When do we need to complete this valuation? For federal Form 706, you have nine months from the date of death (with a possible six-month extension). State inheritance taxes may have different deadlines. Start collecting information within the first few weeks.