The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Valuation of mortgage asset for estate Date:  5/6/2013  6:51 PM
Author:  irasmilo Number:  118586 of 127549

I have an interesting situation.

I'm trying to put together the valuation for an estate. While there won't be any federal estate tax due, there will be tax owed at the state level. One of the assets was a first mortgage which the decedent held on child's house. The mortgage still had most of the payments to come. The question is how to value the mortgage for Estate Tax purposes. Do I just use the outstanding principal balance? Do I calculate a "present" value based on the scheduled payments? Can I apply a discount to account for the uncertainty that future payments will be made? (FWIW, the value of the property is far in excess of the mortgage principal.) If it matters, mortgage interest rate is more than current market rates and child is sole beneficiary, so mortgage will self-liquidate when estate settles (which pretty much eliminates any uncertainty of future payment during the estate administration period).

Any thoughts?

Copyright 1996-2018 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us