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Co-Executors’ Choice of Appraiser Upheld
Posted in Estate Planning

In Heisinger v. Cleary, 150 A.3d 1136 (2016), the Supreme Court of Connecticut upheld the Co-Executors’ engagement of Management Professional Planning, Inc. ("MPI") to appraise the decedent’s stock in a closely held business.

The valuation of the business by MPI was challenged by the decedent’s son, who asserted that the appraisal resulted in an excessive valuation and excessive estate taxes. The appraisal was performed in July 2008, and the son made no protest until more than four years later, when he filed suit in August 2012. Without any supporting evidence, expert opinion or sale of the stock, the son asserted that the appraised value of almost $4.9 million for the stock was almost $3 million too high.

There were prior valuations of the stock. Two months before the decedent’s death, the same stock had been valued for "business purposes" by the same appraisal firm, MPI, with the decedent’s knowledge, at just under $4.1 million. The shares had also been valued as of September 30, 2001 by another appraiser, in connection with the decedent’s divorce, at $2.1 million.

The Court noted that Connecticut statute gave the Co-Executors the power to hire an appraiser, and protected the Co-Executors from liability if they exercised due care in the selection process. The Court found that the plaintiff needed to show that there were deficiencies with MPI’s qualifications or integrity that no reasonable person, having ordinary knowledge, would have disregarded. The Supreme Court, affirming the trial court below, concluded that the jury could not have found that the defendants failed to exercise the care an ordinarily prudent person would have exercised under all attendant circumstances. In fact, MPI generally enjoys a reputation as one of the top appraisal firms in the country. The son failed to provide any expert testimony at trial in support of his position, nor provide any basis for valuing the stock lower than MPI had done, other than the appraisal in the divorce many years before the decedent’s death. The Court found that the Co-Executors had no duty to consult the divorce appraiser, so long as they retained a qualified appraiser.

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