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“overbuilt” in that restoration costs exceeded the completed
home’s fair market value. The insurance companies’ unilateral
agreement to reimburse policyholders for restoration of
residences, even though the costs exceeded their policy
obligations, was, in great part, responsible for restoration
costs that exceeded the completed market value of the residences.
On August 22, 1996, the coexecutors petitioned the probate
court for and received a waiver to permit distribution of the
rebuilt residence to Thomas at the previously agreed value of
$750,000. Thomas, on December 17, 1996, entered into an
exclusive listing with a real estate agent to place the residence
on the market for an asking price of $995,000. Ultimately, the
residence was sold for $1,030,000 on March 18, 1997.
OPINION
Decedent’s home was destroyed by fire and was being restored
at the time of her death. Her estate, relying on an appraisal,
included $612,000 in the gross estate as the fair market value of
the residence, which was 57 percent complete. Also included in
the gross estate was an amount exceeding $700,000 that the estate
estimated would be due from the insurance carrier for future
reimbursement upon completion of the restoration of the
residence. Finally, the gross estate was reduced by an amount
exceeding $800,000 that the estate estimated would be due to the
contractor, if the construction of the residence was completed.
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