Executors can elect to value estate assets six months after death under IRC Section 2032, slashing the federal estate tax bill when markets drop. Only taxable estates qualify, and with the 2026 federal exclusion at $15 million, most families never trigger estate tax at all. A lower alternate valuation shrinks heirs' stepped-up cost basis, potentially creating a larger capital gains tax bill when they eventually sell.
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Federal law lets you value everything the decedent owned as of the date of death, or six months later. That single choice, called the alternate valuation date election, can slice the federal estate tax bill when markets tumble in the months after a death. Given that the VIX ripped from a low of 13.47 on December 24, 2025 to a peak of 31.05 on March 27, 2026, the six-month window is not a theoretical concern this year.
When someone dies, the default is to value every asset in the estate at its fair market value on the date of death. But the executor can instead elect to value the entire estate as of six months after the date of death. If a concentrated stock position cratered, a private business lost a key contract, or the broader market rolled over during that window, the estate can lock in the lower number and pay tax on the smaller figure.
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