Executors may elect to value assets six months post-death, reducing federal estate tax if markets decline during the window.
Estates can reduce federal tax liability by electing to value assets six months after death under IRC Section 2032, a strategy that gains relevance during market downturns. The rule applies only to taxable estates, with the 2026 federal exclusion set at $15 million, limiting its use to high-net-worth families.
The alternate valuation date can lower estate tax but may also reduce heirs’ stepped-up cost basis, potentially increasing future capital gains tax. Market volatility this year, with the VIX surging from 13.47 on December 24, 2025, to 31.05 on March 27, 2026, underscores the rule’s practical impact.
Executors must weigh the immediate tax savings against long-term capital gains implications for beneficiaries. The election must be made within one year of the estate tax return filing deadline.