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replacement of the vintage structure and to pay decedent’s living
expenses during the interim. The insurance company’s agreement
to pay, however, was contingent upon decedent’s pursuit and
completion of restoration and unique to decedent. Ultimately,
that agreement resulted in the insurance company’s paying almost
$2.8 million in connection with the restoration of a house that
was insured for coverage of $283,000 on the dwelling and only 50
percent of $283,000, if the insured chose to rebuild. Of the
$2.8 million paid, less than $200,000 was paid for living
expenses and removal of the debris caused by the fire. The
remainder of the $2.8 million was reimbursement for restoring the
residence, landscaping, and building contents.
We cannot rely on these expenditures for purposes of
valuation. Considering the fact that about 3 years after
decedent’s death, the residence was sold at arm’s length for
slightly over $1 million, the expenditures have no rational
relationship to the value. In a similar vein, at the time of
decedent’s death the estimated “completed value” of the residence
was an amount approaching $1 million, whereas at the time of
death, a willing buyer would not have offered the completed
price.
Conventional approaches to valuation, inclusion of assets,
and reduction of the estate for decedent’s obligations do not
accurately address these peculiar circumstances. The estate’s
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