Filling Gaps in Step-Up Basis Documentation for Inherited Assets

Real estate appraisals and business valuations are common gaps in documentation. Prioritize by asset value and address gaps soon—retroactive appraisals become less defensible over time. The further from the death date, the more expensive and imprecise valuations become.

Where the gaps usually are: Brokerage accounts tend to be covered. The most common missing piece is a real estate appraisal dated as of the date of death. If your spouse owned a business interest, that's another frequent gap.

How to prioritize: Focus on the undocumented assets with the highest value first. A missed step-up on a $50,000 stock position matters far less than a missed step-up on a $400,000 house. Rank what's missing by dollar amount and start there.

What a retroactive appraisal involves: A licensed appraiser can estimate a property's value as of a past date. It's a standard practice, but the further out from the death date you get, the more it costs and the less precise it becomes.

The tradeoff: You're in decent shape for what's already documented, but the undocumented assets represent real tax risk. Every month that passes makes certain types of retroactive valuation harder and more expensive. This is worth addressing soon, not eventually.