Opinion ID: 427074
Heading Depth: 1
Heading Rank: 2

Heading: Valuation of Spousal Support Obligation

Text: 7 The general principle that a claim against a decedent's estate is to be valued at the time of the decedent's death, and that events subsequent to death do not alter this valuation, was first announced by the Supreme Court in Ithaca Trust Co. v. United States, 279 U.S. 151, 49 S.Ct. 291, 73 L.Ed. 647 (1929). We recently reaffirmed this principle in Propstra v. United States, 680 F.2d 1248 (9th Cir.1982). In Propstra, the petitioner's estate included two parcels of real estate which were encumbered by liens for past dues and penalties owing to a local water users' association. The Government contested petitioner's claim that the liens were to be valued at the time of decedent's death. Because the amount of the liens was reduced by the association prior to the time the tax return was filed, the Government argued that their actual value rather than their value as of the date of death, should be deducted for estate tax purposes. We held that because the claims were certain and enforceable, we would not consider post-death events. Rather, as a matter of law, when claims are for sums certain, and are legally enforceable as of the date of death, post-death events are not relevant in computing the permissible deduction. Id. at 1254. 8 The government argues both that Propstra was wrongly decided and that it is distinguishable on the ground that petitioner's spousal support obligation was not a sum certain and is therefore outside the rationale of Propstra. It contends that [h]ere the spousal support obligation amounted in effect to a series of monthly claims each of which was contingent upon James' survival to a particular date. 9 In deciding Propstra, we carefully considered and rejected many of the arguments which the Government sets forth here. We said that Congress clearly intended that post-death events be disregarded when valuing legally recognized and enforceable claims against an estate. 1 We see no reason to reconsider Propstra or to distinguish spousal support obligations from other allowable claims. 2 10 The fact that it is necessary to refer to an actuarial table in order to value a support obligation does not justify our reaching a different result here than we did in Propstra. A claim that is actuarialy valued is not uncertain for estate tax purposes. We have recently approved the use of actuarial tables to value assets for purposes of estate tax deduction in Bank of California v. U.S., 672 F.2d 758 (9th Cir.1982). After reexamining this method of valuation we concluded that actuarial tables provide a needed degree of certainty and administrative convenience in ascertaining property values. Id. at 760. 11 Moreover, the charitable trust at issue in Ithaca Trust Co. also required actuarial valuation. Justice Holmes, writing for the Court, specifically considered whether post-death events are relevant when lifetime interests are at issue, and concluded that they are not: 12 The first impression is that it is absurd to resort to statistical probabilities when you know the fact. But this is due to inaccurate thinking. The estate so far as may be is settled as of the date of the testator's death.... Tempting as it is to correct uncertain probabilities by the now certain fact, we are of opinion that it cannot be done, but that the value of the [wife's] life interest must be estimated by the mortality tables. 13 Id. at 155, 49 S.Ct. at 291. 14 We hold that legally enforceable claims valued by reference to an actuarial table meet the test of certainty for estate tax purposes. Because decedent's spousal support obligation meets that test, it is subject to the Propstra rule. We affirm the tax court's determination that the date of decedent's death was the proper time for valuation of the claim.