The worth of an estate is the difference between the value of an estate’s assets and the value of an estate’s liabilities. There are a number of steps for calculating the value of your estate.

First, calculate the gross value of the estate: This is the combined value of all estate assets, including pensions, investments, and any real property or personal property. The gross value also includes life insurance proceeds payable to your estate, or, if you own the policy, proceeds payable to your heirs; the value of certain annuities payable to your estate or heirs; and the value of certain properties that you have transferred within three years of your death. The government still counts in your estate assets gifted to others in the last three years of your life.

Second, calculate the taxable estate: This is equal to the gross value of the estate minus estimated funeral and administrative expenses, debts, liabilities, taxes, and any marital or charitable deductions.

Third, calculate the gift-adjusted taxable estate: This is equal to your taxable estate plus any taxable lifetime gifts (the cumulative total of all gifts over the annual limit). This will be discussed later. The adjusted taxable gifts are the total amount of the taxable gifts you made after 1976 that are not included in your gross estate.

 

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