CFP

AAA

Postmortem Estate Planning Techniques - Special Use Valuation

Special Use Valuation
Farms and closely-held businesses can be given a special use valuation estate tax break if they meet certain requirements. As a general rule, a property's fair market value (FMV) at death is the highest and best use value. However, for farm and small business owners, they can have their property valued according to its current actual use value versus the highest and best use.


Three requirements for Special Valuation Property:
  • The net value of the business property must be at least 50% of the decedent's gross estate, and the net value of the business real property must be at least 25% of the decedent's adjusted gross estate (the gross estate reduced by certain deductible debts, expenses, claims and losses).
  • The decedent must have transferred the business to a qualified heir or heirs (i.e., close family relatives).
  • The business must have been owned and operated by the decedent or a close family relative for five out of the last eight years before the death, disability or retirement of the decedent.

10-year Rule:
If your heirs sell or otherwise dispose of the property to outsiders within 10 years of death or they begin using the property for another purpose, then the estate saving could be lost.

Sample Questions 1 - 3
comments powered by Disqus
Related Articles
  1. Hypothesis Testing in Finance: Concept ...
    Active Trading Fundamentals

    Hypothesis Testing in Finance: Concept ...

  2. Top 6 Ways To Recession-Proof Your Job
    Personal Finance

    Top 6 Ways To Recession-Proof Your Job

  3. The Illusion Of Diversification: The ...
    Fundamental Analysis

    The Illusion Of Diversification: The ...

  4. Solutions For Concentrated Positions
    Investing Basics

    Solutions For Concentrated Positions

  5. Introduction To The Portfolio Dedicated ...
    Investing Basics

    Introduction To The Portfolio Dedicated ...

Trading Center