Blogpicture-dollarsign“My
husband and I own a law firm, and part of the appeal of our law firm is us,”
said Kelly Phillips Erb, a lawyer outside Philadelphia who has blogged on the
tax matters related to the Jackson estate. “If we’re not around the next day,
the value of the firm isn’t worth as much. The I.R.S. doesn’t care, and that
presents a challenge for small-business owners.”

How do you value assets unique
to “you” and even assets that, for all intents and purposes, are you?

From a human interest
perspective, if nothing else, you will want to read about the estates of
Michael Jackson and J.D. Salinger as reported in a recent article in The New York Times titled “Putting an Estate Value on the Assets Unique
to You
.

It seems there is a commonality
between Michael Jackson, the late king of pop, and J.D. Salinger, the late
author of The Catcher in the Rye. Beyond their fame and [relatively] recent
passing, the value of both estates has been a moving target with the IRS solely
as a result of their passing.

In the case of Jackson, his
estate was rather valuable at the time of his death. Nevertheless, the estate
value has continued to skyrocket with ongoing IRS scrutiny. The initial
valuation of the Jackson estate came to a mere $200 million. However, with the
benefit of several intervening years of high sales driven largely by an
improving image of the late Jackson (an image not driven by scandal, you might
say) the IRS has come to value the estate at $700 million. The estate was not
worth as much when he passed and only shot up in value because of his passing
(and an economic upswing). So, which value is fair?

If the estate value does not
come until well after, or well before the time of death, at which time should
it be valued and how do you plan for that?

The Jackson estate value is
newsworthy because of who he was, but the situation is not all that uncommon.

Intangible assets often face
radical valuation spikes. Think intellectual property and patents, as common
examples.

On the other side of the coin,
there can be plummeting estate values, such as when a business owner dies. The
sole-proprietorship may be valuable when the owner is alive, since the business
is them. However, that is hardly a
reasonable basis for valuation and taxation once they're gone.

Indeed, the valuation of many
estates can be more of an art than a science.

For more information and articles on
estate planning and elder law topics, please visit our website
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Reference: The New York
Times
(September 27, 2013) “Putting an Estate Value on the Assets Unique
to You