Trust Asset Inventory and Date-of-Death Valuation: The Successor Trustee's Guide

One of the first and most consequential tasks a new successor trustee faces is one that no one prepares them for: locating everything in the trust, figuring out what's not in the trust, and establishing defensible values for all of it as of the date the settlor died. Get this wrong and the consequences follow you through the entire administration — misallocated basis, disputes with beneficiaries, and potential IRS scrutiny.

Step 1: Locate the trust document and all amendments

Before touching any asset, you need the governing instrument. The trust document controls everything — which assets are in trust, who the beneficiaries are, what your powers as trustee are, and what distribution standards apply. Without the complete trust agreement in hand, you cannot make a legally defensible decision about anything.

Common locations for original trust documents:

• The settlor's estate planning attorney — most attorneys keep originals or execute multiple original counterparts.
• A bank safe deposit box in the settlor's name — you may need the death certificate and letters of trusteeship to access it.
• A home fireproof safe or filing cabinet — look for a labeled legal-size folder or binder.
• A trust company or corporate trustee if one previously co-administered.

If you cannot locate an original, the estate attorney's copy is usually sufficient for financial institutions — they need to verify trustee identity and trust powers, not the original signature page. However, a trust recorded with a county recorder for real property purposes may be accessible through public records.

Read the trust completely before proceeding. Note: the trust term for which assets are included (usually titled "corpus," "trust estate," or "trust property"), the distribution standards (HEMS, full discretion, mandatory income), specific trustee powers, and any unusual provisions such as spendthrift clauses, special-needs provisions, or trust protector powers.

Step 2: Sort assets into three buckets

Not every asset a person owned passes through their revocable trust. Successor trustees are regularly surprised to discover that the estate is larger or more complex than the trust document suggests. Sorting assets at the outset prevents accounting errors and confusion with beneficiaries.

Step 3: Build the asset inventory list

Create a master spreadsheet or table covering every asset in bucket 1 (trust assets) and any assets that will eventually come through probate into the trust. For each asset, document:

• Asset description (account number, property address, policy number)
• How title is held (trust name as it appears on the account or deed)
• Financial institution or custodian and contact information
• Estimated or known date-of-death value (see Step 4 below)
• Whether a formal appraisal is required (see Step 5 below)
• Location of documentation (account statement, deed, appraisal)

Below are the most common asset categories for revocable living trusts:

Brokerage and investment accounts

Request a statement from each custodian (Fidelity, Schwab, Vanguard, a bank's trust department, etc.) showing account balances as of the date of death. Most custodians will provide a "date of death statement" upon request with the death certificate — this is the primary documentation for securities valuation. Keep originals, not just downloaded PDFs, as financial institutions may later request the originals.

Bank accounts

Request date-of-death balances from each bank. Cash and money market accounts are valued at face value — no appraisal needed. Include interest accrued but unpaid as of the date of death (accrued interest is income in respect of decedent if it was not credited to the account before death, though this is rare for standard bank savings accounts).

Real estate

Identify every parcel using the county recorder's records. The deed should name "John Smith and Mary Smith, Trustees of the Smith Family Trust, dated January 15, 2010" or similar. A quitclaim or grant deed without a trust reference means the property was not in the trust. Real estate requires a formal USPAP-compliant appraisal — see Step 5.

Business interests

LLC membership interests, partnership interests, and closely-held stock must be identified and valued. These typically require a qualified business appraiser — see Step 5.

Life insurance

Check whether the trust owns the policy (uncommon for standard revocable trusts — more typical of ILITs) or is merely a named beneficiary. Trust-owned policies have a date-of-death value equal to the death benefit proceeds receivable. File claims with each insurer promptly.

Personal property of significant value

Vehicles, jewelry, art, collectibles, and other personal property require appraisals if their value is material. Many families significantly underestimate the value of art, antiques, and jewelry. Have unusual items evaluated by a credentialed appraiser (ASA or AAA certification for personal property) before reaching agreement with beneficiaries about value.

Digital assets

Cryptocurrency, online brokerage accounts, and digital investment platforms may hold significant value and are frequently overlooked. Check the settlor's email history and financial software for account indicators. Many states have adopted the Revised Uniform Fiduciary Access to Digital Assets Act (RUFADAA) — your estate attorney can advise on accessing digital accounts if the trust document or separate directive does not address it.

Step 4: Establish date-of-death valuations for securities

Federal estate and gift tax regulations establish specific rules for how marketable securities are valued as of the date of death. Understanding these rules protects you from later disputes with beneficiaries or the IRS about asset values.¹

Publicly traded stocks: average of high and low

For stocks traded on a national securities exchange or over-the-counter, the date-of-death value is the average of the highest and lowest selling prices on the date of death.¹ If no sales occurred on the date of death (e.g., the settlor died on a weekend, holiday, or other non-trading day), the IRS uses a weighted average of the prices on the nearest trading dates before and after the date of death.

Example: A stock's high was $48.50 and its low was $47.10 on the date of death. The IRS valuation: ($48.50 + $47.10) ÷ 2 = $47.80 per share. This is also the stepped-up basis per share for capital gains purposes going forward.

Mutual funds: public redemption (bid) price

Open-end mutual funds are valued at the public redemption price (bid) as of the date of death — typically the NAV per share at the 4:00 p.m. close on that day.¹ If the death occurs on a non-business day, use the redemption price on the last business day before the date of death. Your brokerage or the fund company can provide historical NAV data.

Fixed income and bonds

Bonds are generally valued at their mean between the bid and asked prices on the date of death. U.S. Treasury securities are valued at the mean quoted price. Corporate bonds that are inactively traded may require a more detailed analysis using comparable yields.

Documentation to obtain and keep

Request and retain from each custodian:

• Official date-of-death account statement or a written confirmation of date-of-death values from the institution
• Cost basis information (original purchase cost and date, if available) — the step-up replaces this for assets held at death, but you need original basis for assets sold before death
• Any accrued income as of date of death (dividends declared but not paid, interest accrued)

Step 5: When formal appraisals are required

Marketable securities can be self-documented using exchange records. Most other asset classes require a formal appraisal by a qualified professional.

Real estate: USPAP-compliant appraisal

Real estate held in the trust requires a date-of-death appraisal by a state-certified real estate appraiser complying with the Uniform Standards of Professional Appraisal Practice (USPAP).² The appraiser must be qualified to appraise the specific property type (residential, commercial, agricultural) in the applicable state.

The appraisal establishes: (1) the date-of-death fair market value for the step-up in basis under IRC § 1014; (2) the value to report on Form 706 if an estate tax return is required; and (3) the opening trust accounting value you report to beneficiaries. Order the appraisal as soon as possible after death — waiting more than 6 months makes the retrospective analysis more difficult and expensive for the appraiser, and the IRS may scrutinize it more closely.

Do not rely on the county assessor's value or an online estimate (Zillow, Redfin). These are not qualified appraisals and are not acceptable to the IRS or to beneficiaries for accounting purposes.

Closely-held business interests

LLC membership interests, S-corporation shares, partnership interests, and sole proprietorship business assets require a qualified business valuation appraiser with a recognized credential (CVA, ABV, or ASA in business valuation).³ Business valuations are inherently complex and can be contentious — valuation discounts for lack of marketability (DLOM) and lack of control (DLOC) often apply to minority interests and can meaningfully reduce the taxable value.

Personal property of significant value

Art, jewelry, antiques, vehicles of collector value, wine cellars, and similar personal property require appraisers credentialed in their specific category (ASA or AAA for personal property). For items the family intends to distribute in-kind among beneficiaries, an independent appraisal prevents later disputes about whether one beneficiary received more value than another.

When an appraisal is legally required vs. practically required

For estates subject to federal estate tax (gross estate exceeding $15M in 2026 under OBBBA⁴), a qualified appraisal under IRS standards is mandatory for reporting non-cash assets on Form 706. For smaller estates, no estate tax return is required — but the practical reasons for appraisals remain: correct basis determination, defensible trustee accounting, and fair beneficiary distribution.

Step 6: The alternate valuation date — when to consider it

If the trust assets have significantly declined in value in the months following the settlor's death, the estate executor (for estates subject to estate tax) may elect to value the estate assets six months after the date of death rather than on the date of death under IRC § 2032.⁵

Critical constraints on this election:

• It only applies if the estate owes federal estate tax — i.e., the gross estate exceeds $15M in 2026. For the vast majority of trusts, this election is irrelevant.
• The election must reduce both the gross estate value AND the estate tax liability. If values have dropped but the estate tax would still be zero (below the $15M exemption), the election is unavailable.
• It is all-or-nothing — you cannot use alternate valuation for some assets and date-of-death for others.
• It is irrevocable once made.
• The lower alternate date values become the new tax basis — which means higher capital gains taxes when the assets are eventually sold. Whether the estate tax savings outweigh the future capital gains cost requires projections.
• Made by the estate executor on Form 706, not by the successor trustee independently. Trustee and executor (often the same person) should coordinate and run the projections with a CPA before electing.

For most successor trustees administering trusts under $15M, the alternate valuation date election is a non-issue. Focus your energy on accurate date-of-death valuations for basis purposes, not on the § 2032 election.

Step 7: Assets not in the trust — the pour-over will

When the settlor died with assets in their personal name (not the trust), those assets are probate assets. The estate must go through probate — an executor, appointed by the probate court, administers those assets. If there is a pour-over will (standard in most estate plans with a revocable trust), it instructs that the probate estate's residual assets pass to the trust after probate closes.

Practically, this means:

• You may serve as both executor (managing probate assets) and successor trustee (managing trust assets) — dual hats, dual EINs, dual Form 1041 filings if both have income above $600.
• Probate assets will not be available for trust investment or distribution until probate closes — which takes months in most states.
• Creditors of the estate have priority over trust beneficiaries for probate assets during probate administration.
• Date-of-death valuations for probate assets are reported on Form 706 (if applicable) and on the estate inventory filed with the probate court — not on the trust's inventory.

If the trust was well-funded during the settlor's lifetime (bank accounts, brokerage, real estate all retitled into the trust), there may be little or nothing in probate. If funding was incomplete, coordinate with the estate attorney to open probate promptly — delays add months to the overall administration.

Step 8: Create the formal trustee inventory document

After you have located all assets and obtained or ordered all valuations, compile the formal inventory — a dated written document listing every trust asset with its date-of-death value. This document serves several functions:

• Trustee accounting opening balance: Your first annual account to beneficiaries (required by UTC § 813) must show the trust principal on hand at the start of administration. The inventory establishes that opening balance.⁶
• Tax basis record: The inventory values are each asset's stepped-up basis for future capital gains reporting. Without this document, basis reconstruction later becomes expensive and contentious.
• Estate attorney reference: If a Form 706 is required (estates over $15M) or if Medicaid recovery claims are asserted, the attorney needs the inventory to prepare filings.
• Beneficiary notice: Many states require the trustee to provide beneficiaries with an inventory or at least a notice of trust assets within a defined period. The UTC § 813 initial notice (due within 60 days of trust becoming irrevocable) typically accompanies or references the inventory.⁶
• Liability protection: A dated, documented inventory showing you took your role seriously from day one is meaningful evidence if a beneficiary later challenges your administration.

Inventory format

No legally mandated format exists for trust inventories (unlike probate inventories, which follow state court rules). A practical format includes:

Date the inventory document and sign it as trustee. Attach the supporting valuations (account statements, appraisals) as exhibits. File the original in the permanent trust records file — not just electronically.

How a fee-only advisor helps with the inventory

Locating documents and ordering death certificates are administrative tasks you can handle yourself. Where a fee-only specialist advisor adds the most value in the inventory phase:

• Investment account consolidation: Most trusts hold accounts at multiple custodians. An advisor with institutional access can often facilitate retitling and consolidation faster than a trustee working independently, and can immediately evaluate the investment mix against UPIA prudent investor requirements.
• Basis documentation and future tax planning: Date-of-death values are the basis for all future trust capital gains. An advisor helps model the tax impact of selling assets vs. distributing in-kind to beneficiaries — decisions that flow directly from the inventory values you establish now.
• Concentrated position analysis: Many trusts hold a concentrated stock position (a long-held stock or employer shares) that the settlor never diversified. The step-up eliminates the embedded gain — meaning now is the lowest-tax-cost moment to diversify. An advisor can quantify the benefit and build an appropriate tax-aware portfolio.
• Income vs. principal classification: Under the Uniform Principal and Income Act (adopted in most states), some receipts (dividends, interest, rent) are trust income distributed to income beneficiaries; others (stock splits, capital gains) are principal belonging to remainder beneficiaries. Classifying each asset correctly at the inventory stage prevents accounting mistakes that create beneficiary disputes later.

Sources

1. 26 CFR § 20.2031-2 — Valuation of Stocks and Bonds. IRS regulation specifying that publicly traded stock is valued at the average of the highest and lowest selling prices on the date of death; mutual funds at bid/redemption price; weekend/holiday interpolation method.
2. Appraisal Foundation — Uniform Standards of Professional Appraisal Practice (USPAP). Governing standards for real estate appraisals submitted for IRS and estate purposes; compliance required for all estate and trust real property valuations.
3. IRS Publication 561 — Determining the Value of Donated Property. Qualified appraiser requirements for closely-held business interests and personal property; while focused on charitable deductions, the qualified appraiser standards apply equally to estate tax valuations.
4. IRS — About Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return. Filing threshold for 2026: $15,000,000 gross estate (OBBBA permanent exemption). Due date: 9 months from date of death, with 6-month extension available via Form 4768.
5. 26 U.S.C. § 2032 — Alternate Valuation. Election to value estate assets at 6 months post-death instead of date of death; available only if it reduces both gross estate value and estate tax; all-or-nothing and irrevocable.
6. Uniform Law Commission — Uniform Trust Code § 813. Trustee duty to inform and report: initial notice within 60 days, annual accountings, beneficiary right to request trust information. Basis for trustee inventory and accounting obligations in UTC-adopting states.

Securities valuation rules verified against 26 CFR § 20.2031-2. Estate tax threshold verified against IRS Form 706 guidance and OBBBA (Public Law 119-21, July 2025), which permanently set the federal estate tax exemption at $15M for decedents dying in 2026 and beyond. State inventory requirements and Uniform Principal and Income Act classification rules vary — consult your estate attorney for your state's specific rules.