Fair market value (FMV) is the price at which a willing buyer and willing seller, neither under compulsion and both informed, would transact an asset. FMV is a cornerstone standard in tax, estate, and business valuation. It differs from intrinsic or investment value, reflecting marketplace conditions and comparable data. Establishing FMV ensures transfers, gifts, and buy-sell agreements are priced fairly and withstand regulatory scrutiny.

Advisors rely on FMV for gifting, buy-sell funding, and charitable planning. They coordinate independent appraisals and ensure documents reference FMV consistently across agreements. FMV alignment avoids disputes among shareholders and withstands tax scrutiny when transferring interests, setting option prices, or sizing insurance for liquidity.