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But aren't dead millionaires usually older than live ones ? And don't older people usually have smaller mortgage balances than younger people ?

Besides, does the estate tax return specifically list mortgage balance ?

The IRS points out a few limitations in their method.

1. The mortality rate multiplier may be somewhat flawed. In general, wealthy people live longer primarily because of access to better health care. So applying a rate to the general living population is difficult. But the attempt is paint a picture as accurately as possible of the living population. So adjustments are made for things like age, time in workforce, sex (a lot of widow millionaires), self employment status, etc.

The IRS I'm sure collects figures on specific debts. But in the report that I viewed, and the one Stanley mentions, debts were considered as one item. So the debt thing is probably worked in on an aggregate level.

2. Before wealthy people die, they generally try to lessen the tax burden on their estate. So they may take actions that reduce their wealth. Their wealth at the time of death is probably lower than it was at some point during their lives.

3. The wealthier one becomes the more in hard to value assets one is likely to possess. Thus the tendency is to be conservative in the valuation of these assets.
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