Last week we discussed some of the pros and cons of giving your Executor the authority to divide your estate. The distribution can be quick and efficient but does always allow input from the beneficiaries, nor are they likely to feel the system is fair if they’re not part of the process. Furthermore, in situations where an estate has a few highly valued items that cannot be split evenly, there might be no fair way to divide them. The Executor’s only option might be to sell the items and divide the funds: a solution no one might want. But equally disappointed is still equal, right? One alternate solution is the auction.
Under an auction system, property is appraised and siblings bid on each item in turn. Highest bidder wins. If an item fails to receive a bid or the highest bid is less than the appraised value, it’s sent to public auction and the siblings divide any sale profits evenly. All funds received from winning bids are split evenly among siblings.
The benefit is that this system is more likely to be perceived as fair by the participants. They’re not being told what their inheritances are, they are an equal part of the process. Each has a fair chance to bid and if one doesn’t win a particular item, he or she at least gets a portion of the funds received from its sale.
The downside is that it’s time consuming. Imagine going through each item in your home right now and bidding on its value to you. It can also be disadvantageous if one sibling is less financially well-off than the others. She runs the risk of leaving the auction with more money but fewer personal items from her parent’s estate. Allotting a predetermined amount of “estate dollars” can remedy this situation – instead of bidding with their own money, siblings each receive a number of credits or “estate bucks” to use in bidding.
An auction system is useful when there are a few, highly valued items in an estate, and each sibling wants a fair chance to receive them. It’s also helpful with moderately sized estates – large enough to be advantageous over allowing the Executor to decide but not so large that the auction process becomes tiresome.
For help in drafting a Will that distributes your property according to your wishes, contact Asurest to set up an appointment now.
Next week . . . the draft.
This material is intended for general information purposes only and does not constitute legal advice. Responses to inquiries, whether by email, telephone, or other means, do not constitute legal advice, nor do they create or imply the existence of an attorney-client relationship.
Disclaimer: This material is intended for general information purposes only and does not constitute legal advice. Responses to inquiries, whether by email, telephone, or other means, do not constitute legal advice, nor do they create or imply the existence of an attorney-client relationship.