What are low-cost assets estate planning strategies?

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What are low-cost assets estate planning strategies?

An Estate of a person includes everything he owns. From one’s home to vehicles, bank accounts, insurance, financial investments, properties, and other personal belongings. So, let’s understand what low-cost assets are in estate planning strategies

The person who ends up with all things after death depends on who they are. If he had planned his estate differently, the state laws and the probate court would distribute his assets according to the laws and rules of that state.

An Estate plan includes various documents like Wills and Trusts. That outlines your wishes regarding how and with whom you should get your estate assets. Not only that, it enables you to give power of attorney regarding your health and Finances to any person you like or want. With an Estate plan, you can help your loved ones by ensuring they avoid financial and legal grief. Effective estate planning can maximize the estate’s Value with effective tax planning and other financial tools.

Role of estate planning to develop low-cost assets strategies

The cost basis calculation for inherited assets determines the taxes owed in states. These taxes include the inheritance tax in some states and the tax on the estate itself, known as the estate tax. Some states have both these taxes. Whether an inherited asset is taxed depends on a few factors, such as the Value of the support and your relationship with the deceased.

How to determine the cost basis of an inheritance 

Cost basis calculation for estates differs from the cost basis used for tax purposes. When the cost basis is used to calculate capital gains on the assets you own, it represents the asset’s original Value for tax purposes with a few minor tweaks.

Fair market value for low-cost assets strategies

The cost basis of assets you inherit is usually equal to the fair market value of the assets or properties at the time of death of the decedent or when the transfers of the assets happened.

The Fair market value of any property or asset is the price that the purchase or property would command in the market given that the buyers and sellers have known about the purchase or the property for a reasonable period. Also, it should be made available reasonably for any transactions.

The alternative valuation date for estate planning

Suppose the Value of assets has dropped or depreciated since the date of death or the transfer. In that case, the estate administrator can extend the valuation date by using an alternative. This would open the valuation date to six months after the decedent’s death. Such delay can help reduce the tax due to inheritance. 

For this to apply according to the estate law, the Value of the estate should have dropped. In Value in the last six months; otherwise, this option won’t apply, and a regular valuation date must be used. Furthermore, any capital gains taxes that need to be paid or not will need to be considered.

Capital gains taxes for estate planning to develop low-cost assets strategies

Any capital gains taxes will depend on whether the beneficiaries decide to sell the inherited assets. When the heirs sell these assets, they’re subject to more favorable treatment concerning capital gains.

It won’t matter how long the decedent or the inheriting party holds the property. However, these inherited properties will consider having a holding period greater than one year.

To reduce the burden of taxes through Estate planning.

You can ensure that you give your assets to your heirs during your lifetime. In such a way, small parts of your estate have been removed from your taxable estate every year. This could include assets you have given to charity or organizations. You are using an irrevocable trust to remove assets from your estate.

These trusts will help you to reduce various taxes on your estate. Working with an experienced Attorney and financial planner can help you set up a financially sound estate plan. In addition, they can help you find an optimal strategy for transferring your assets while minimizing taxes.


In this article, you will learn how estate planning helps develop a strategy for low-cost basis assets. In addition, an estate plan with the proper procedure would ensure your loved ones do not suffer from the burden of taxes on the help they have inherited.

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