The value of property for estate tax


1-The value of property for estate tax purposes is generally the fair market value at the date of death or, if elected, six months after the date of death (the so-called alternate valuation date).

2-The Generation Skipping Transfer (GST) tax is separate from, and in addition to, any estate or gift tax applicable to the property transferred to the skip person.

3-Real estate used in business or for farming purposes may be valued on the basis of its business or farming use, if the executor so elects. This technique is referred to as the special use valuation.

4-Death benefits paid under a contract of life insurance by reason of the death of the insured can only be excluded from the gross income of the designated beneficiary if the policy owner was the insured.

5-If a decedent possesses a general power of appointment at the date of death, the value of the property subject to the power is included in his or her gross estate.


6-If property is sold to a family member for less than full consideration in money or in monies' worth, the excess of the property value over the value of the consideration (in money or monies worth) received by the seller is a gift for gift tax purposes.

7-The unlimited gift tax exclusions for direct payment of school tuition and medical expenses also operate with respect to the GST tax.

8-Under Internal Revenue Code §2042 (the Code section that governs the estate taxation of life insurance), if the insurance proceeds are payable to a beneficiary other than decedent's estate, they may still be includable in the decedent's gross estate if the decedent possessed "incidents of ownership" in the policy when he died.

9-Under the 3-year bring back rule, if an insured person transfers (for no consideration in money or monies worth) an insurance policy to an irrevocable trust, even though the insured may no longer retain any incidents of ownership, if he dies with the 3-year period following the transfer, the entire policy proceeds will still be includable in the insured's gross estate.

10-If a deceased taxpayer was a party to a financial arrangement providing that income which he earned (for example, insurance renewal commissions) is to be paid after his death to his estate or his heirs, such income is referred to as "income in respect to a decedent" (IRD") and is received income tax-free by his estate or heirs.

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Finance Basics: The value of property for estate tax
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