New York Times: Putting an Estate Value on the Assets Unique to You, by Paul Sullivan:
Michael Jackson and J. D. Salinger would seem to have had little in common beyond being famous, reclusive (to different degrees) and the subject of much speculation about their personal lives. But in death the King of Pop and the author of “The Catcher in the Rye” have become sources of fascination and speculation among estate lawyers and the people charged with putting a price on hard-to-value assets, like royalties that continue paying after they are gone.
Mr. Jackson, who died in June 2009, had revenue from his songs and his share in a music catalog; Mr. Salinger, who died in January 2010, had the royalty income from his books, which continue to be read and taught in schools.
But the speculation arises over what may not have been known or calculated at the time of their deaths. Mr. Jackson’s death was good for his earning potential — his estate now receives hundreds of millions of dollars a year, according to an analysis by Forbes. As for Mr. Salinger, a new documentary film claims that he had five finished manuscripts that will be published starting in 2015 and are likely to sell well.
In both instances, it would have been hard to know the value of those assets when their creators died, particularly in Mr. Jackson’s case. He had not had a successful record in many years, and the value of the record catalog was lower at the end of the recession than it is today. But trying to divine such values, however difficult, is an important part of settling any estate and avoiding the ire of the IRS. It also applies more broadly than many people think. ...
Property like a privately held small business, a big art collection, a share in rental properties or intellectual property like television or movie credits, patents or even Web site domain names are not as easy to value as, say, a stock portfolio.
Executors of estates for people who owned small businesses, particularly in service areas like law, accounting or medicine, where the revenue is reliant upon the owner, often face the opposite problem of the Salinger and Jackson estates: the values plummet when their owners are gone, but the I.R.S. still assesses a tax on the value at the date of death.