In another family, a rocking chair has been passed down in the family since the 1750's. Traditionally, the family with the first child to have a baby got the rocking chair, and then on to the next generation. The last uncle in the line passed away with no children. Somehow he had kept this valuable antique family heirloom. Now, the nieces and nephews are fighting over the Uncle's estate and the rocking chair is a proxy for years of resentments within the family. The fight starts over the rocking chair, but if they don't find a way to agree on how to divide all the personal assets, they will face high legal fees as the conflicts grow and boil over.
If you are handling an estate, tread carefully with how you approach dividing assets. This job usually lands on the Executor of the Will or the Trustee of the Trust. Many times the dollar value is not as much of an issue as the emotional value. Here are a few suggestions on ways to manage passing personal property on to heirs. Each family has its own special personality so think about the particular culture of the family when deciding how to approach this area early in handling an estate.
KISS: A simple method which is best for low conflict families. Coordinate a date for the family to gather and give notice to everyone. When they arrive, give each person a stack of post-it notes - each person with a different color. As each person wanders through the house, each person “stakes a claim” for the items they want to take home. If more than one person wants an item, the process decided in advance rules. The group can decide how to handle the items that are wanted by more than one person. For instance, one family decided to share a prized necklace between the two girls, with each sister switching off having the necklace every other year. In other families, the tie goes to a coin toss. In others, a more formal bidding, based on estimated values works. Keeping it simple.
FAMILY MOVIE NIGHT: Remember when we used take the whole family to the video story to pick out a movie? Everyone chose some, then everyone had 10 votes (10 fingers). The movie with the most overall votes got to come home for the weekend. This method is a little bit like that. It is not perfect, but it can help sort through the stuff rather quickly.
Items are labeled with an A - F for six rounds. The first round “A” includes the most valuable items. Each beneficiary can bid up to 10 votes per round (poker chips work). The items that have more than one person with ten votes goes into the overtime round. Mark each item won with a color coded label for the person who will be taking it home. As you move to the next round, it will soon become obvious what items people would like to keep and what items will be sold or donated later. Get agreement in advance that any items left over can be donated or sold as the Executor or Trustee wishes.
MONOPOLY BIDDING: This method works best for a family that can handle the division of assets with a bit of light-hearted, fun competition. It does not work if there are underlying, unresolved tensions. Give an equal amount of Monopoly money to each heir based upon the percentage of inheritance. For example, if there are four adults with an equal share, each gets an equal amount of Monopoly money. Give everyone a sheet listing items with estimated values. Give them a week or so to come to the house and determine what items they would like to take home. Then select a date for an all family get together. Hold a silent or audible auction for items. Decide in advance if the person taking the item will pay for shipping or the cost of shipping will be paid by the estate. If a family member cannot attend the bidding date, the bids can be accepted in advance.This process also works if the primary heirs have their own children. The Monopoly money can be provided to children and grandchildren who are old enough to understand money concepts and won’t be upset if they don’t get something they wanted due to competition. This can allow everyone in the family to share in the fun. If children are involved, it might be best to only have the adults participate to avoid the tension that can occur if children become upset.
YOU LIKE IT, YOU BUY IT: This method works best when all or most family members are not very emotionally tied to family heirlooms, but prefer to get the most value from the estate. The Executor or Trustee can put all items up for sale, through an estate auction house or through EBAY. Any items that a family member would like to keep, can be 'purchased” at some agreed upon discount. They can either pay for it at the time or use a portion of their inheritance to “pay” the rest of the family for the item.
This method takes more time to prepare and follow-up. Before bringing the family in to select items, prepare a detailed list and obtain estimated values for each item. Take pictures of all items which will be placed on EBAY. You can send the pictures to family members or post on a family website to find out if there is an interest from family members for any items. You can then obtain appraisals (for larger value items) or estimated values for these items only. At time of final distribution, the value of the assets distributed to each beneficiary will reduce the amount of cash. If this method is chosen, be prepared for some bickering over the agreed upon values. Provide notice for all items that will be distributed by agreed upon values.
LIQUIDATION HOUSES: Some families prefer to use estate liquidators or auction houses to provide a bid on the entire set of household items. The advantage is that some will remove all the household items from the home. Some liquidators will only remove some items. It pays to call and find out how they work and whether it is a consignment or auction method. The liquidators know they will find many items that have little or no value. If they are willing to provide an “all-in” bid usually it is because they know they can sell some of the items at a significant mark-up. Many liquidators are actually consignment houses and if the items do not sell, someone must take possession of them. Liquidators consigment rates ususally are lowest (10%) for high value items and highest (39% or more) for lower value items. Liqudators or auctions houses can provide the assurance that you have gotten a current market value for the items without the hassle of having to market and deliver the items yourself. CAUTION: If the estate has known collectibles, make sure to get an appraisal on these and consider selling them to collectors or auction houses that specialize in collectibles.
CHARITABLE DONATIONS: When families' personal assets have little monetary value, a nominal estimated value can be given to the items which are donated. Many charities will pick-up items. Normally, donations are only a tax write-off when claimed on the final decedent's 1040 tax return, not on any 1041's filed for the estate. Always check with your tax advisor for specific tax advice.
If this or the sale option is chosen, always make sure to give sufficient and proper notice to all heirs to avoid prolonged conflict after the assets have been donated or sold.
Finally, since this task is often a pre-cursor to selling or transferring the home, it is important to handle with diplomacy but as quickly as possible. Grief hits people in varying ways and at varying times. For many people, the personal items are a strong trigger. Be sensitive and try to find a method that allows the family to process the loss in a way that fits the family best.
