I oftentimes get the question from clients as to whether their household goods and personal property are going to be an issue for estate tax purposes. My general response is “no,” especially when we’re not really worried about a taxable estate in the first place. Due to recent changes in the estate tax laws, every individual can leave up to $5.25 million worth of assets to whomever they please and their estate should not incur a federal estate tax (though state laws vary widely upon their own state estate taxes). So, normally personal property should not create a taxable estate. However, if you already have a concern over the potential for estate tax upon your death, the value of your personal property most certainly could create an issue.
Take for instance, Stan Musial, the beloved St. Louis Cardinals outfielder, who passed away earlier this year, shortly after his wife’s death. When his Estate decided to arrange an online auction for some of his memorabilia, St. Louis Cardinals fans drove up the price of auction items not previously considered. All in all, the value of the items sold at auction were more than double what had been projected . . . bringing in nearly $1.2 million. This may sound great for the heirs of his estate, but that sentiment could quickly change, depending upon whether the auction house valuation or the valuation of the assets as includable in his estate may be applied and whether the application of this valuation results in a taxable estate.
To learn more about how the valuation of personal property may affect the taxability of an estate, click here.