In my practice as an attorney, where I drafted wills and probated the estates of deceased clients, it happened all too often that the elderly parent, in drafting the will, left out important matters of distribution (against my advice), saying, "My children all get along. We're a loving, close family. I know they will be fair. They'll know what to do." But then, when the parent died, the family often fell apart, bickering about who gets what and who got the most.It would seem easy enough if the will provides that the entire estate "be divided equally among my five children, share and share alike," as many wills provide. But what about all the personal belongings - often an entire houseful, accumulated over decades, much of which has sentimental value? Some lawyers advise clients to provide that personal items be distributed according to a written list not in the will, but that list almost never gets actually made. What often happens is that the first child to get to the house after Mother's death simply takes what she wants. In a recent case a rancher was suddenly killed in a farm accident. One of the sons was going through his father's gun collection before his father's still warm body had been retrieved out of the field.
When my mother died, a year after my father, there were five adult children to divide the estate equally. As the oldest, and the executor of the estate, I was determined to divide the personal property fairly and efficiently. We anticipated that there would be about $50,000 from the sale of the house, and the rest was to be divided up or disposed of. But how to divide it?
I asked my siblings to agree to an auction of the personal things, with each item going to the highest bidder. We all had about $10,000 (our share of the $50,000), and this way each item would end up with the one who valued it the most, for personal reasons, and it would not really "cost" anything, but simply become part of their share of the estate. The one who wanted most the rocking chair that Mother liked to sit in would get it by placing a higher value on it, expressed in dollars, but representing true sentimental value.
We held the auction in the house, where all the items were, and it took most of a day.
A few additional rules: Anything that had been actually given by the parents, and everybody knew about it, was not included in the auction and simply given. Anything that had been a gift from one of us to the parents was simply returned to the original giver, outside the auction. Items that had considerable market value, such as jewelry, the piano, the car, had a minimum starting bid, either set by agreement or by an outside informal appraiser. We took Mother's jewelry, for example, to the local jeweler who had sometimes worked on it and knew it well. He gave us a rough idea of the value of each piece. We agreed to set the minimum bid at 3/4 of his appraisal of each item.
Mother had collections of her handiwork - crochet, needlepoint. She had also collected Lenox china. Those were not auctioned. We simply took turns selecting one item for ourselves.
The grandchildren were allowed to pick out one small item each, as a keepsake and without charge, so long as none of the adults wanted it to be in the auction. If some grandchild wanted such an item, it was up to the parent to bid on it as part of the parent's share.
The adults took turns specifying the next item to bid on, so that each would have an early opportunity to get the items most wanted by that person.
I acted as auctioneer, and kept a written record of each item, entering it as it was auctioned. Next to the list of items were five columns, one for each heir, where the winning bid was entered in that heir's column. Thus it was easy, at the end of the auction, to add up the total amount for each person's items.
When there were no items left that anyone wanted, we simply gave them to whoever was willing to take them, and the rest were donated to charity.
The total amount bid by all for all items was added to the cash from the house. That total was then divided by five to determine each heir's share. The total value of each heir's bids was deemed as taken in kind, as illustrated below:
Value of house and other liquid assets: $ 50,000 Total value of personal items, as determined by amounts bid: $ 15,000 Thus, total value of the estate: $ 65,000 Value of each heir's 1/5 (65000 / 5 ): $ 13,000
Distribution Heir Value of each
heir's bidsCash to each heir Jack $ 1,000 $ 12,000 Judy 5,000 8,000 Joe 2,000 11,000 Jim 4,000 9,000 Jill 3,000 10,000 --------------- --------------- Totals: $ 15,000 $ 50,000 If an estate has no liquid assets, then each heir would have to come up with the cash to reimburse the others for any amount over the one-fifth share. Assuming the same auction, but without the $ 50,000:
Heir Value of each
heir's bidsHeir gets or pays cash
(difference between bids
and 1/5 share of $3000)Jack $ 1,000 gets $ 2,000 Judy 5,000 pays 2,000 Joe 2,000 gets 1,000 Jim 4,000 pays 1,000 Jill 3,000 even --------------- --------------- Totals: $ 15,000 The latter situation may still cause some resentment and hard feelings, since those heirs who are well-off will be able to get more of Mother's things than those that are strapped for cash. It also would be more difficult for a poorer heir to decide whether bidding on an item will mean cash out of pocket, since the value of the total estate (and thus of each share) cannot be known until the auction is over, unless a running total is kept.
Comments? Questions? To send a comment or ask a question, e-mail me atpackham@teleport.com.
(Since I am retired and no longer authorized to practice law or give legal advice, please don't ask legal questions.)
© 2010 Richard Packham Permission granted to reproduce for non-commercial purposes, provided text is not changed and this copyright notice is included
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