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Posted on : February 9, 2017, By:  Christopher Hildebrand
Arizona Estate Valuation

Arizona Estate Valuation

An executor generally receives as compensation a percentage of the total estate value as listed in the inventory. Sometimes there is a dispute over whether a certain asset should be included in the estate value. Should assets be included if they are already in the hands of the beneficiaries?

The Arizona Court of Appeals discussed this and other estate issues in Feffer v. Newman, 497 P.2d 389 (1972).

Facts of the Case

Mrs. Herman was the surviving spouse of R. Feffer. He left all his stock in three corporations to his two sons from an earlier marriage, R. Feffer and Mr. Feffer. The stock in two of these corporations was the separate property of the decedent. The third he held with Mrs. Herman as community property.

Arizona Estate Valuation.

Arizona Estate Valuation.

The matter went to probate and Mrs. Herman was appointed executrix. She probated the estate but did not file a final inventory. R. Feffer and Mr. Feffer opposed Mrs. Herman’s request for compensation. They disputed the valuation of the estate and raised other issues.

The probate court ruled in Mrs. Herman’s favor. This appeal followed.

Estate Valuation

The probate court awarded Mrs. Herman the statutory fee statutory in the amount of $12,461.93. This amount was based upon an estate appraisal included the valuation of the corporate stock.

R. Feffer and Mr. Feffer argued that the value of their stock should not have been included in the estate valuation. They already had possession of the stock certificates.

They relied on Wiswall’s Estate, 464 P.2d 634. In that case, the court refused to include in the estate valuation assets that were never actually a physical part of the estate.

The Court of Appeals rejected this argument. Mrs. Herman’s acts of presenting the will and filing an inventory all helped to “probate” these stock interests. The Court distinguished Wiswall as follows:

The fact situation thus presented can be readily distinguished from …Wiswall, supra, where the claimed commission was based upon assets which were not only not in the possession of the executor, but in addition were not even subject to the jurisdiction of the Arizona court.

Apportionment of Executrix Fee

R. Feffer and Mr. Feffer also contest the apportionment of the administratrix’s fee. The will provided that proportionate estate taxes and administrative costs were to be borne by the stocks his sons received. Therefore, the court apportioned part of the administratrix’s fee as a charge against the stock shares. It did not attribute any of the fees to Mrs. Herman’s community property interest.

R. Feffer and Mr. Feffer argued that this had the effect of increasing their share of the administrative expenses improperly. The Court of Appeals agreed. It said that if Mrs. Herman’s one-half of the community property is probated, then it had to bear its share of administration expenses. The regular statutory fees for an administrator fall are for services of benefit to the entire probate estate. Therefore, a part of the administratrix’s fee must be apportioned against Mrs. Herman’s one-half of the community property.

Similarly, the attorney fees for the general probate were $5,000. Mrs. Herman, R. Feffer and Mr. Feffer must each bear their proportionate share of these fees.

However, the probate court awarded the attorney an extra $7,461.93. This was for all of the legal problems arising from R. Feffer and Mr. Feffer’s actions against the estate. The Court ruled that these extraordinary fees should not be apportioned in part to Mrs. Herman’s share of the estate.

Decedent’s Real Property

The Court found that, under the terms of the will, all property not specially bequeathed was to go to Mrs. Herman. Since the real property was not mentioned in the specific bequests, it found that the lower court correctly awarded it to Mrs. Herman.

Disposition

The Arizona Court of Appeals reversed the judgment below. It remanded to the probate court for modification of the judgment in accordance with this opinion

Contact our experienced Arizona Estate Planning Attorneys at (480)947-4339.