Estate beneficiaries and executors can disagree on how the estate should be conducted and when and how it should be distributed. This situation can be exacerbated by the fact that there is no Will or no directions in the Will.
The estate administrator or executor has the final say in estate distribution. When a distribution can be made in more than one way, it is often best to get beneficiaries involved in the decision-making process. This avoids later misunderstandings and even litigation.
The estate administrator or executor is the first person we turn to when attempting to resolve distribution issues. However, all of the administrator/executor’s distributions are subject to the court’s review, and major distributions are subject to the court’s approval. So if an administrator or executor fails to yield to a reasonable request of a beneficiary, the beneficiary should seek court intervention.
We will now go over a few common situations where property distribution can be made in more than one way.
Sell or Keep?
If a substantial item of real estate is left to more then one person, some beneficiaries might want to sell the property, while other beneficiaries might want to continue using the property. We’ve seen this especially when some people think that the real estate market will go up, and some think that it will go down. It’s also a common scenario when one beneficiary is living in the house and the other beneficiaries want to sell it and split the money.
Who Gets What
With different items of similar value, who gets which item? The list of examples is endless – piano or guitar, boat or car, etc. If feasible, it might work to liquidate the items and split the proceeds so that both parties will end up with similar items (i.e., sell the boat, so that both beneficiaries can buy a car). In situations where selling an item is not an option, and a distribution disagreement ensues.
Items with Intangible Value
Personal items and items with intangible value or sentimental value, such as family mementos and jewelry are often subject of distribution disagreements.
Items that are impossible to substitute or are one of a kind can be a subject of disagreement.
Difficult to Valuate Items
Property with value unknown, or value that is volatile, is difficult to distribute. Patents, creative work such as music and art, can go up or down in value with time.
Small businesses are notoriously difficult to valuate. This is because private small businesses are difficult to sell on an open market but present tremendous value to the person who is trying to take over the business and run it. Sales of small businesses are also underreported, so it’s a challenge to find enough “comps” to make an accurate valuation. Let’s say we multiply a profit by seven and that would be the valuation, but the main value of a small business is not the profit but the proprietor’s income. A proprietor’s income times seven wouldn’t be fair because it’s not free money – the proprietor has to work for it. So a valuation is helpful, but even such valuation is not always accurate and varies from one appraiser to another, hence a valuation disagreement.
Works of Art
Choosing works of art is a matter of taste. What happens if both beneficiaries have the same preference, and both of them prefer painting “A” even though it’s valued the same as “painting B”?
At the Law Offices of Albert Goodwin, we take estate disagreements seriously, and are willing to invest the time and effort to achieve the best possible distribution for our clients. Call the Law Offices of Albert Goodwin at (212) 233-1233 and make an appointment to discuss your valuation dispute.