[WSBAPT] What valuation date should be used?

[Eric Nelsen]

I agree with Amy, we’d usually use current value and not DOD value. Because your scenario is a voluntary non-pro-rata distribution, I don’t think there is an ironclad rule that could apply, but as a practical matter I think it’s inevitable they have to use current value.

In the case of a testamentary pecuniary bequest that can be satisfied with in-kind distribution, there is RCW 11.108.030<https://app.leg.wa.gov/RCW/default.aspx?cite=11.108&full=true#11.108.030>(1): “If a governing instrument authorizes the fiduciary to satisfy a pecuniary bequest in whole or in part by distribution of property other than money, the assets selected for that purpose shall be valued at their respective fair market values on the date or dates of distribution, unless the governing instrument expressly provides otherwise.”

But I’m assuming your case is intestate inheritance—I think you implied that but didn’t say so directly.

If it is intestacy, then the two heirs each immediately inherited 50% of each parcel of real estate at date of death via RCW 11.04.250. So that’s their starting point: they each own 50% of each parcel, and indeed have owned them since DOD even if they aren’t on record title. If they want to make a different arrangement, they need to agree on it; there’s no legal rule that gives them a right to anything other than inheriting each parcel together, in equal shares, as tenants in common.

If they can’t reach agreement, then the alternative is for the PR to deed equal interests in each parcel to each of them, and then let them sue each other in partition and see how that comes out. The partition court is definitely going to look at current value, not DOD value.

Hopefully, if you point this out to them, and emphasize that their desire for non-pro-rata distribution is a completely voluntary arrangement, they will recognize that they simply must use current value and not DOD value to figure out what is a fair swap. Neither of them should expect the other to agree to give away value they’ve already accumulated in the past six years.

Shannon’s point is a good one though—because tax bases will be different, they might agree to an adjustment to account for somebody getting a slightly higher unrealized capital gain built into their distribution (they receive the property with a lower DOD value tax basis).

Sincerely,

Eric

Eric C. Nelsen
Sayre Law Offices, PLLC
1417 31st Ave South
Seattle WA 98144-3909
206-625-0092
eric at sayrelawoffices.com<mailto:eric at sayrelawoffices.com>

From: wsbapt-bounces at lists.wsbarppt.com <wsbapt-bounces at lists.wsbarppt.com> On Behalf Of Lewis, Amy C.
Sent: Tuesday, August 29, 2023 2:04 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com>
Subject: Re: [WSBAPT] What valuation date should be used?

We typically use date of distribution values.



Amy Lewis, Attorney
Pronouns she/her/hers
[cid:image001.png at 01D9DA87.70387A90]
909 A Street, Suite 600 | Tacoma, WA 98402
phone 253.572.4500 | fax 253.272.5732 | www.eisenhowerlaw.com<http://www.eisenhowerlaw.com/>
From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Shannon Jones
Sent: Tuesday, August 29, 2023 1:54 PM
To: WSBA Probate & Trust Listserv <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: Re: [WSBAPT] What valuation date should be used?

I would think date of death as that will be the recipient’s tax basis in the property - Shannon

From: wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com> <wsbapt-bounces at lists.wsbarppt.com<mailto:wsbapt-bounces at lists.wsbarppt.com>> On Behalf Of Julie Martiniello
Sent: Tuesday, August 29, 2023 1:22 PM
To: Trust and Probate Section <wsbapt at lists.wsbarppt.com<mailto:wsbapt at lists.wsbarppt.com>>
Subject: [WSBAPT] What valuation date should be used?

Hello All,

I have a fact pattern where multiple pieces of real estate are to be distributed between siblings. Father died 6 years ago and nothing was done. Siblings are in agreement to divide assets 50/50, but want to divy up the properties vs own them together. However there is a disagreement on if the split should be based on date of death values vs current values. Is there a hardline rule on this I am unaware of if the parties cannot agree?

--

Respectfully,

Julie Martiniello, Partner
Dimension Law Group, PLLC
Office:  206-973-3500│Fax:  206-577-5090
Email: julie at dimensionlaw.com<mailto:synthia at dimensionlaw.com>
www.dimensionlaw.com<http://www.dimensionlaw.com/>

631 Strander Blvd, Bldg A, Suite G, Tukwila, WA 98188

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