Estate distribution: value at date of death or the value at date of distribution

[JohnG1]

I am executor for my mother’s estate in Texas. There were some specific gifts specified and those have been paid. The residue, mostly stock and mutual funds, will be divided 60% to me and 40% to my son. The stock and mutual funds have a basis established at my mother’s date of death. The stock market has declined, so the value of the stock/funds is down.

My question is how to make the division fairly. One could use asset values established at date of death; but values have changed since then, and the degree of change is not uniform. Another method is to use the actual value of an asset at the date of distribution.

If each of us wanted cash, the stock/funds could be sold and cash divided 60/40. That might simply things, but my son prefers cash, and I prefer stock.

What are the conventions in estate distribution, the value at date of death, or the value at date of distribution?

 

[Zigner]

I am executor for my mother’s estate in Texas. There were some specific gifts specified and those have been paid. The residue, mostly stock and mutual funds, will be divided 60% to me and 40% to my son. The stock and mutual funds have a basis established at my mother’s date of death. The stock market has declined, so the value of the stock/funds is down.

My question is how to make the division fairly. One could use asset values established at date of death; but values have changed since then, and the degree of change is not uniform. Another method is to use the actual value of an asset at the date of distribution.

If each of us wanted cash, the stock/funds could be sold and cash divided 60/40. That might simply things, but my son prefers cash, and I prefer stock.

What are the conventions in estate distribution, the value at date of death, or the value at date of distribution?

Take the cash and then reinvest your portion.

 

[FlyingRon]

I'm revising my post. I see you've already realized how basis works and have computed the value at the time of the death. You'll have to read just how the will states things to be handled, but frankly, unless there's a some real out of the norm investment, the ratio is probably the same in both cases. You'd have to check the wording of the will, but if there's nothing specific and just states that the remains will be divided, it's the value at the distribution date that determines how it is paid out.

The basis however, remains that at the time of death.

 

[LdiJ]

I'm revising my post. I see you've already realized how basis works and have computed the value at the time of the death. You'll have to read just how the will states things to be handled, but frankly, unless there's a some real out of the norm investment, the ratio is probably the same in both cases. You'd have to check the wording of the will, but if there's nothing specific and just states that the remains will be divided, it's the value at the distribution date that determines how it is paid out.

The basis however, remains that at the time of death.

I agree with Ron. The 60/40 ratio is going to remain the same either way. Personally, I would divide the shares and then let your son cash his out after they are distributed to him.