Date-of-death valuations for Montana estates.

Why the date of death matters

When someone inherits real estate, their tax basis generally becomes the property's fair market value on the date of death. That's the stepped-up basis under Section 1014 of the Internal Revenue Code. When heirs later sell, gain is measured from that value, not from what the decedent paid decades ago.

On a Montana ranch or a long-held commercial building, the difference can be enormous. A credible, well-documented date-of-death value is often the single most important number in the estate file.

Appraisal or evaluation?

Federal tax law requires fair market value, not a particular type of report. For many estates that don't need to file a federal estate tax return, a retrospective evaluation effective the date of death is a practical, cost-effective way to document basis.

We recommend a full USPAP appraisal when:

• A federal estate tax return (Form 706) will be filed, including a return filed to elect portability.
• Heirs may disagree about value, or a buyout or partition is likely.
• The property is large, complex, or thinly traded, such as a ranch, a special-purpose building, or a portfolio.
• Real estate is being donated. The IRS requires a qualified appraisal for noncash charitable contributions over $5,000.

Homes and residential property

We value homes, cabins, and rural residential property in estates by evaluation, retrospective to the date of death. For many families that is exactly what the CPA needs. When an estate needs a full appraisal on a residence instead, we do those too.

Looking back with today’s discipline

A retrospective valuation answers a simple question: what was this property worth on that date? We research the sales, listings, leases, and market conditions that existed as of the effective date, and document why each one supports the conclusion.

The work can happen months or years after the death. Families often call us when they are ready to sell, refinance, or settle the estate, and the report is prepared as of the original date.

The alternate valuation date

If an estate tax return is filed, the executor may be able to elect to value the estate six months after death instead (Section 2032). The election is only available when it lowers both the gross estate and the tax. When it may apply, we can report values as of both dates so your CPA can compare.

When a return is required, heirs’ basis generally must be consistent with the values finally determined for estate tax purposes. That makes a well-supported appraisal on the front end especially valuable.

Estates with many properties

Montana estates rarely hold just one property. Ranch ground in one county, a commercial building in another, a cabin, a home in town. We value each parcel individually, with a summary schedule for the whole estate, and someone local walks each property.

When real estate is held in an LLC, partnership, or trust, we value the underlying real estate. Discounts for fractional or entity interests are a separate business-valuation question, and we are glad to coordinate with the specialist your advisors choose.

Montana specifics

Montana does not impose its own estate or inheritance tax, so federal rules drive most estate valuation work here. What Montana adds is complexity on the ground: water rights, grazing leases, access, and agricultural land that the Department of Revenue assesses on productive capacity rather than market value. The assessed value on a tax bill is not a date-of-death value, and for ag land it can be a small fraction of it.