Q: In one of your recent columns you referred to a supposed legal theory of "stingy old man vs. cute, hard working kid." Oh please!! Give me a statutory citation.
A: Maybe the best way to respond is to do a little background review. Our entire jurisprudence (legal system) is broken down into two branches – criminal and civil.
The civil side originally was composed of two separate but overlapping venues (places to hear disputes) – courts of law (interested in the legal rules) and courts of equity (what is fair and just).
Over the centuries, the civil side merged the two into one common situs, so whether in small claims court, or county court or district court sitting on civil matters, there is one legal forum with two family histories and traditions.
Picture a judge with a little legal menehune sitting on the judge's shoulder whispering in the judge's ear phrases like logic, legal rules, past precedent, consistency, etc. while on the other shoulder another little legal menehune is whispering things like common sense, fairness, what is the rule really trying to do, etc. Tough job being a judge and balancing both mandates.
Now back to your "question." Remember we are focusing on the civil side, not the criminal side. There is no legal citation I can give you but the "theory" not only recognizes that judges are human and are influenced at some level by natural emotions (would you really want it any other way?) but will use the "equity" side to chart a course toward a particular island of legal rules and then use "equity" to be certain of the "correctness" of the destination after arrival.
I have taught legal philosophy courses at the law school level and recognize that there is (or was in the 70's) a school of thought stating equity is dead and a "computer judge" is the best. But the court room reality shows equity is still part of the process.
Q: I like both your column and Mr. Bruss' column. One of his readers asked a question about valuation which he seemed to answer in a very general and vague way. Since you are local, would you take a stab at it? I need to know.
A: The question asked Mr. Bruss concerned how to establish the value of real estate at date of death and what the alternative valuation date is.
Valuation is needed in any number of circumstances such as death, gifting, determining a selling price, evaluating a new tax assessment, putting together a net worth statement, etc.
Basically there are three choices. First, although we all like to moan and groan about it, I have developed a good deal of respect for the county assessor's fair market figure. But it may have to be adjusted if the evaluation was not done within the last few months.
Secondly, I have never had the IRS challenge the estimate made by a realtor who was experienced in the kind of property in question and who based his or her opinion upon three recent equivalent sales.
Finally, you could spend several thousand dollars and have a formal appraisal done by a licensed appraiser.
As for the alternative valuation date, for estate purposes, the valuation can be established at the date of death or the day six months after the date of death. It has to be at either date, not an average during the six months nor anchored to a date during that period. The actual work of the estimator does not have to be done exactly on that date but information to support the determination for each date must tie back to the exact date used.