How to Fairly Divide Family Heirlooms

June 13,2022 09:57 AM Comment(s) By Pablo

My clients have a wide range of concerns about their estates but one of the most common is what will happen to family heirlooms (or any items of sentimental value).  They want to pass those precious items down to future generations and they don't want their heirs to fight over them.  


Fairly dividing items of high emotional value is tricky.  It is made even more complex by family dynamics and shifting memories ("Mom said I could have it because I reminded her of Aunt Mary!").  There are a few tricks to getting through the process as painlessly and fairly as possible, as long as everyone agrees to certain ground rules.  


Decide Who Gets What, Then Write it Down

The cleanest approach is to make these decisions with a clear head long before any crisis.  Inventory the most important items, list them and clearly note who is to get what.  You don't need to justify or explain your decisions - that can lead to unintended hurt.  Once you have gone through that process, share the list with your heirs.  Your decisions may cause some awkward conversations but far better to do it when everyone is in a stable place than surprising somebody after your death, when they will be emotionally fragile.


Appoint an Independent Trustee

Even with your best intentions, there will likely be some items that are not listed (perhaps you didn't realize the attachment your heirs have to an item or you simply left it off the list).  In that case, it's best to have somebody as objective as possible to adjudicate the distribution of items.  If you have a professional trustee, it is typically that person.  Or it can be a family member or friend who is not part of the group receiving the heirlooms.


Put a Process in Place (and Stick to It)

There are a couple of classic processes that professional fiduciaries use to fairly divide items that have not been specifically designated by their clients for one of their heirs.  They aren't fancy by design and sometimes look like playground techniques for choosing teams, but they tend to work better than more complex schemes.


Pick Out of Hat

Simply inventory all the items and write them down on slips of paper.  You can put them all in the hat at the same time, or roughly categorize them into groups of equal value and have several drawings.  Each heir pulls from the hat and the trustee keeps track of who drew what in a master list.  In some versions, heirs can "trade" heirlooms to accommodate the different values that they may place on the items.


Round Robin (or Draft)

In this version, heirs draw numbers from a hat to determine their picking order.  Then each heir, choosing in order, selects the heirloom of their choice until all of the items are chosen.  A slight variation is for the draft order to "snake."  That is, the last picker gets to choose twice, then it goes to next-to-last and then backwards through the list.  For example, the first three rounds for a group of four heirs would look like this:


First >> Second >> Third >> Fourth


Fourth >> Third >> Second >> First


First >> Second >> Third >> Fourth


Auction

Assign each heir a set number of points (for example, 1,000 pts).  Then present each item and have each heir provide a sealed bid (that is, not public) for that item.  This is somewhat more complex and prone to problems, but has the advantage of allowing each heir to independently value each item.  For example, perhaps Mom's pearl necklace is worth lot to one daughter, while the other daughter places more value on Mom's handwritten recipe book.  This method removes some of the luck element of the other methods and allows each daughter to bid what each item is worth to her.


No matter which method you choose, the most important thing is to be transparent and clear.  Nobody should feel like they have been left out or didn't know what was going on.  Overcommunication and inclusivity are your friends in this process.


Share -