Estate of Paul C. Gribauskas - Page 37




                                       - 37 -                                         
               Third, as a practical matter, we observe that an annuity,              
          the value of which consists solely in a promised stream of fixed            
          payments, is distinct in nature from those interests to which a             
          marketability discount is typically applied.  As the estate                 
          acknowledges, discounts for lack of marketability are most                  
          prevalent in valuation of closely held stock or fractional                  
          interests in property.  Such is appropriate in that capital                 
          appreciation, which can usually be accessed only through                    
          disposition, is a significant component of value.  The value of             
          an annuity, in contrast, exists solely in the anticipated                   
          payments, and inability to prematurely liquidate those                      
          installments does not lessen the value of an enforceable right to           
          $X annually for X number of years.                                          
               In connection with the foregoing, we further note that any             
          attempted comparison to the “small market of those willing to               
          purchase unassignable lottery winnings”, which the parties                  
          stipulated to exist, would be inapposite.  Decedent died owning             
          an enforceable right to a series of payments.  Yet any purchaser            
          buys only an unenforceable right and so is necessarily valuing a            
          different species of interest.  What a LOTTO prize might be worth           
          to such a speculator hardly reflects its value in the hands of a            
          legitimate owner.  Hence, because there is no market for the                
          precise interest held by decedent, the need for a standardized              
          approach becomes even more apparent.                                        






Page:  Previous  20  21  22  23  24  25  26  27  28  29  30  31  32  33  34  35  36  37  38  39  Next

Last modified: May 25, 2011