After an individual in Maryland dies, one step that is commonly needed with regards to the deceased person's assets is obtaining a valuation of the property that makes up the estate. However, as one recent example shows, asset valuation can quickly become complicated.
After the death of Carl Pohlad, who had owned the Minnesota Twins baseball team during his lifetime, Pohlad's three sons found themselves at odds with the Internal Revenue Service. At issue was the valuation of Pohlad's ownership of the baseball team as of January 2009, the date he passed away. Pohlad's estate determined that the value of Pohlad's ownership stake in the team was $24 million, while the IRS deemed it to be $293 million. The IRS determined that Pohlad's estate owed additional federal estate taxes in the amount of $121 million in addition, and the estate should also be penalized $48 million for misstating the value of the team. However, Pohlad's children and the IRS were able to reach a settlement wherein the estate would be penalized only $1.8 million and would pay $28 million to make up for the deficient estate taxes. Pohlad's estate paid $36 million, including interest.
As this shows, it is important to properly value the assets that make up the deceased person's estate, in part so that the correct taxes can be paid. Estate valuation often necessitates the aid of professionals, to ensure the full worth of the assets that make up the estate are accounted for. While many estates will not be subject to the federal estate tax, there may be other types of taxes an estate or its heirs will need to pay.
The valuation of assets is one duty of the executor of an estate. It can be a daunting task, but the task is crucial to help ensure that the estate does not run afoul of the federal and state tax laws.