Estate tax valuation is a critical process within the United States tax system that determines the fair market value of a deceased person’s assets. This valuation is used to calculate potential estate tax obligations and to ensure proper reporting to tax authorities. Assets commonly subject to estate tax valuation include real estate, business interests, investments, personal property, and intangible assets.

The principle behind estate tax valuation is fair market value, defined as the price an asset would sell for between willing parties under normal conditions. Valuation must reflect the asset’s worth at the date of death or, in some cases, an alternative valuation date permitted by law. Accurate estate tax valuation helps maintain consistency, transparency, and fairness in the administration of estate taxes.

In the United States, estate tax valuation requires careful analysis, as different asset types follow distinct valuation approaches. Real estate may rely on comparable sales, while closely held businesses often require income-based or market-based methods. Errors or inconsistencies in estate tax valuation can lead to disputes, audits, or penalties.

Beyond taxation, estate tax valuation also plays a role in asset distribution among heirs, providing a clear and standardized reference point. As estates grow more complex, estate tax valuation remains an essential component of effective estate administration and legal compliance.