Probate Code §§ 1061(a) & 1063(a) Technical Standard
Carry Value vs. Fair Market Value in California Probate Accounting
The #1 structural misunderstanding in fiduciary ledger preparation is mixing current market prices into a historical Carry Value balance sheet. Here is exactly how California courts separate the two numbers.
Carry Value vs. Estimated Fair Market Value Side-by-Side
Both figures appear in a compliant California Schedules A–F & Form GC-400 packet, but they govern completely different schedules:
| Accounting Attribute | Historical Carry Value | Estimated Fair Market Value (FMV) |
|---|---|---|
| Governing Probate Code | Prob. Code § 1061(a)(1), § 1061(a)(6), § 1062(d) | Prob. Code § 1063(a) (Supplemental Market Value Schedule) |
| Initial Estate Value Source | Inventory & Appraisal (Form DE-160 / DE-161) or court-ordered beginning carry balance | Brokerage month-end statements, real estate appraisals, or current ticker pricing |
| Does It Change With Stock Market Swings? | No — remains static during holding period until sold, exchanged, or distributed | Yes — updates daily/monthly and reflects unrealized gains or losses at period close |
| Role in Summary of Account Balancing | Mandatory — Charges equal Credits strictly at Carry Value ($0.00 variance) | Never used in the Summary of Account balancing column (informational disclosure only) |
| Role in Statutory Fee Base (§§ 10800/10810) | Establishes the DE-160 starting base and basis for Schedule B gains / Schedule D losses | Does not increase or decrease statutory executor or attorney fees unless actually sold |
| Valuation of In-Kind Distributions (Schedule E) | Recorded strictly at Carry Value so ending Charges = Credits | Disclosed separately if equalization among heirs requires market-value comparison |
Worked Example: How Carry Value Bridges DE-160 to Schedules B, D & Ending Property on Hand
Suppose an estate's DE-160 Inventory & Appraisal values 500 shares of Stock X at $100.00/share = $50,000.00 Carry Value on Date of Death:
- Scenario 1 (Held to Close, Market Rises): At accounting close, Stock X trades at $145.00/share ($72,500.00 FMV). On Ending Property on Hand, it remains carried at $50,000.00 Carry Value on the Summary of Account, while $72,500.00 is reported strictly in the supplemental Prob. Code § 1063(a) Market Value column. Statutory fee base remains anchored to $50,000.00.
- Scenario 2 (Sold Half for $32,000 Net Proceeds): 250 shares have an allocated Carry Value of $25,000.00. Selling them for $32,000.00 net proceeds creates a $7,000.00 Schedule B Gain on Sale (added to Charges and the §§ 10800/10810 statutory fee base), removes $25,000.00 from remaining stock Carry Value (leaving $25,000.00 Carry Value for 250 unsold shares), and adds $32,000.00 to ending Cash on Hand.
- Scenario 3 (Distributed In Kind to Heir): Transferring the remaining 250 shares directly to a beneficiary records a $25,000.00 Schedule E Distribution (Carry Value), eliminating the holding from Ending Property on Hand with $0.00 gain/loss on the Summary of Account.
Real California Practice Finding: Form 706 vs. DE-160 Stock Valuation Mismatches
Across our California fiduciary practice benchmarks (see full 2026 Practice & Caseload Benchmark Hub), estates that include both a federal Form 706 Estate Tax Return and a California DE-160 Inventory & Appraisal are a recurring source of opening carry-value breaks — specifically around stock share-count valuations, accrued dividends, and dividend reinvestment timing.
Our pre-accounting verification protocol reconciles every brokerage unit count against DE-160/DE-161 and Form 706 before entering transactions into the ledger, eliminating mid-project continuances and ending-balance breaks.
Frequently Asked Questions
Why must ending Property on Hand stay at Carry Value instead of updated brokerage market value?
Under California Probate Code § 1061, the Summary of Account tracks historical stewardship of the original Inventory & Appraisal assets plus actual realized cash flows and realized sales gains or losses. Injecting unrealized market value into the Summary of Account would break the Charges = Credits mathematical balance unless unrealized appreciation were improperly recorded as a Charge.
How is Carry Value adjusted when a stock splits, spins off, or returns capital?
Stock splits increase share count while preserving total Carry Value (adjusting per-share basis). Non-dividend return-of-capital distributions reduce the asset’s Carry Value dollar-for-dollar rather than sitting solely as ordinary income on Schedule A, and corporate spin-offs allocate Carry Value across both securities based on post-distribution IRS cost-basis allocation ratios.
What causes Form 706 vs. Form DE-160 / DE-161 carry-value discrepancies?
When an estate files both a federal Form 706 Estate Tax Return and a California Probate DE-160 Inventory & Appraisal, stock unit counts or date-of-death alternate valuation figures sometimes diverge due to unsettled trades, dividend reinvestment timing, or accrued interest conventions. Reconciling unit counts and exact valuations up front prevents ending Property on Hand imbalances.
Does a Schedule B gain or Schedule D loss use Carry Value or tax basis?
Probate accounting Schedule B gains and Schedule D losses always compare Net Sales Proceeds against fiduciary Carry Value (DE-160 date-of-death value for initial estate holdings, or purchase cost for post-death acquisitions). In an ongoing administrative trust where assets held prior stepped-up basis or carryover basis, Schedule B/D still compares proceeds strictly against the trust’s opening accounting Carry Value.