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A certified valuer will listen to your situation and answer any questions you may have, at no cost.
The figure an executor puts on a family company, a trust interest or a loan to a relative is the figure every beneficiary will later test. We fix it independently, at the date that counts, before anything is distributed.
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When someone dies holding a business, private company shares, a trust or partnership interest or a family loan, the executor needs its market value at the date of death, and often again at distribution. A Melbourne estate valuation supplies that figure independently, so the estate can be administered, pre-CGT cost bases set and any Part IV claim answered.
Once the Probate Office of the Supreme Court of Victoria grants probate, the executor holds every asset on trust for the beneficiaries and has to account for all of it. Cash and listed shares carry their own price. The assets that make up most of the value in a Melbourne estate of any size do not: the shares in a family company that owns a Dandenong South factory, the units in a trust that holds a Box Hill medical practice, a loan made years ago to help a daughter buy a house in Northcote, or a half share in a Collins Street professional practice. Each of those needs a market value fixed at the right date by someone who can explain how it was reached.
The risk sits with the executor personally. Divide the estate on a number that turns out to be wrong, let one child buy the business for less than it was worth, or fail to show how a figure was arrived at, and the executor can be asked to make up the shortfall. Beneficiaries who raised no objection during administration tend to find their voice once they learn what the property or the business fetched a year later.
The pressure runs the other way. The family wants the estate closed, the accountant wants figures for the final returns, and a valuation looks like one more delay in a process that already feels slow. Measured against what it prevents, it is the least expensive step in the administration. A valuation fixed at the correct date, before any transfer, costs far less than the amended assessment, the argument between siblings or the Part IV claim that follows a figure nobody can support.
We are engaged by executors, administrators and estate solicitors throughout Melbourne, the Mornington Peninsula and regional Victoria, including matters where State Trustees or a professional executor holds the appointment and needs an arm's length figure on the file. We do not act for any beneficiary. That independence is what lets every beneficiary, and the Court if it comes to that, work from the same number.
A certified valuer will listen to your situation and answer any questions you may have, at no cost.
Not every estate needs a formal valuation and not every asset in one does; whether an asset falls within the estate, and the date at which it must be valued, are questions for the estate solicitor. What the valuer supplies is a market value that can be defended, for the assets that carry no observable price. Almost all of that work arises in one of four situations.
The inventory of the estate, the executor's accounts to the beneficiaries and any later claim all turn on what the estate held and what it was worth on the day of death. Shares in a private company, an interest in a partnership or a trust, a trading business, real property, intellectual property, loans to relatives and collectables each need a figure fixed at that date.
When one beneficiary takes the business or the shares in specie and the others take cash or property, the relative values decide whether each has received what the will intended. If values have shifted since the death, fairness between the beneficiaries is measured at the distribution date rather than the date of death.
When the estate sells an asset to a son, a daughter or a sibling of the deceased, the price has not been tested by the market and cannot stand on its own. A valuation obtained before contracts are exchanged is the executor's answer to a later complaint that the asset was sold cheaply, and it is what the ATO expects to see behind a related-party price.
A claim under Part IV of the Administration and Probate Act 1958 (Vic) asks the Supreme Court of Victoria, or the County Court, whether the deceased made adequate provision for the claimant. Neither court can answer that without knowing the size and make-up of the estate, so the valuation becomes expert evidence and has to be prepared to the standard the court requires.
Settle the CGT position before the valuation is scoped. Death does not usually create a capital gains tax liability, but it fixes the cost base the beneficiaries inherit. Where the deceased bought the asset before 20 September 1985, the beneficiary's cost base becomes its market value on the date of death, and the valuation determines how much gain is taxed when the asset is eventually sold. Where the asset was acquired on or after that date, the deceased's cost base passes across unchanged and the date-of-death figure serves the administration rather than the ATO. The tax adviser decides which rule applies to each asset; we then value it to the depth that rule calls for.
The deceased may have been the appointor, a director of the trustee company and the person everyone regarded as the owner, yet a discretionary beneficiary owns nothing in the trust. What the estate receives may be the trustee company's shares or the power to appoint a new trustee, not the Doncaster property or the business the trust holds. Counting trust assets as estate assets is among the most expensive errors we encounter, and it is one for the estate solicitor to settle before we scope the work.
Market value is the test: the price a willing but not anxious buyer and seller, each properly informed, would settle on at arm's length on the relevant date. For a trading business or a private company the income approach usually carries the most weight, capitalising the earnings the business can sustain once the accounts have been normalised. The market approach checks that result against what comparable businesses have sold for, and the asset approach sets a floor and leads for property-holding entities, investment structures and businesses that will be wound down rather than sold as going concerns.
Estates then add questions of their own. The first is the business that has lost its principal. If the deceased was the specialist behind a Parkville consulting practice, the partner whose name brought in the work at a Collins Street firm or the registered plumber behind a Werribee trade business, part of the earnings went with them. The valuer has to separate the goodwill that survives, in systems, staff, contracts and location, from the goodwill that was personal, and value what remained on the day of death using only what was known or could reasonably have been foreseen then. What happened in the months afterwards is evidence of what was foreseeable; it is not a licence to value with hindsight.
The second is the minority parcel in a family company. Sold to a stranger, a 20 per cent holding with no control and no exit ordinarily takes a discount. Passed to the sibling who already holds the other 80 per cent, it completes their control and the argument for a discount largely falls away. We set out the value on both bases with the reasoning behind each, so the executor and the solicitor can apply the right one. A shareholders agreement that fixes a price on death may govern what the estate actually receives, but that price is not automatically market value for tax purposes, and the executor may need both figures.
The estates that reach us with a problem have usually made one of these mistakes.
How deep the report goes depends on who will read it and how hard they are likely to push back. An executor administering a straightforward estate with beneficiaries who agree needs something different from one defending a Part IV claim in the Supreme Court of Victoria.
Every report records the valuation date, the standard of value, the documents relied on and the assumptions adopted, then sets out the approaches considered, the normalisation adjustments, how personal goodwill was treated, any discount for a minority or unmarketable interest, and the reconciliation to a single conclusion. Where the executor needs two figures, pro rata and discounted, or the agreement price beside market value, both appear with the reasoning for each, so the executor and the solicitor can choose correctly.
If the estate is contested, the report is prepared to the expert witness code of conduct in Form 44A under Order 44 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic): the valuer's paramount duty to the Court, the instructions and material disclosed, the reasoning traceable and the limits acknowledged. The certified valuer who signs it will meet the opposing expert, prepare a joint report and give evidence, concurrently if the Court directs, should the matter go that far. Most estates settle well before then, and an independent figure obtained early is usually why.
If one of the beneficiaries takes this distribution to the Supreme Court of Victoria in three years' time, what will I produce to show how the value was fixed? If the answer is a guess, a council rates notice or a letter from the family accountant, the estate is exposed.
Talk your situation through with a certified valuer before you commit to anything, at no cost.