Making Important Family Decisions

Planning for a family’s transfer of their wealth, plans for incapacity, and executing on those plans can be a significant challenge for both clients and their trusted advisor(s). Clients look to their trusted advisors for guidance when it comes to defining and executing their estate plans for future generations. It is critical that a trustee or directed fiduciary understand each of these variables, including family dynamics, and how they align with one another. What’s even more difficult is that there no clear, repeatable rule when developing an estate plan. Trusted advisors must rely on broad, guiding principles to accomplish one’s most important family responsibilities. After all, each family member is unique and has unique life circumstances.

Why is estate planning so important?

While it is hoped that families will work together to make sure one’s wishes are carried out, more often than not families don’t agree with one another. And, what’s intended to happen and what actually happens are rarely the same. There are many horror stories of families being torn apart by fights over money, property, and possessions after the death of a family member. None of us like to believe that our family could behave so badly but when money and emotions collide, hurtful, irreparable comments can tear a family apart. Estate planning can help mitigate you don’t put your family in a position where they are at risk of ruining relationships.

Anyone can write a will, but a skilled estate planner also understands family dynamics. From the parent who enables a financially irresponsible child to the daughter who wants to tell her mother what to say in her will, family members can make estate planning complicated.

And these dynamics may be so ingrained that the client isn’t even aware of them. Take, for example, the client who wants to leave the family business to a pair of siblings that are barely on speaking terms. The client may be so intent on being fair and keeping the business in the family that he doesn’t see that the plan can never work. A good estate planner must be able to spot these sorts of problems and offer the client more appropriate options.

Another common issue is dealing with blended families. A simple estate plan may lack the foresight to provide for children from a previous marriage. For example, if one’s assets are left to his or her spouse, he or she may not want to leave those assets to their deceased spouse’s children from another marriage. This, in essence, leaves these children disinherited. Therefore, individuals who are in this position need to ensure that their wills and trusts clearly provide protection for these children.

Who will administer your estate when you are gone? People often don’t give much critical thought to this decision. That can be a big mistake. It is recommended that you don’t just choose the eldest child or the child that is living closest to you. Using such arbitrary criteria isn’t in anyone’s best interest. Naming multiple family members as executors because you are afraid someone’s feelings will be hurt is also not a good idea.

Estate Planning Issues to Consider…

  • Make realistic plans. In their eagerness to distribute assets equally among their children, some people devise plans that will never work in practice. A couple might, for example, want to leave the family vacation home to their three children without considering whether all of the children want the home or can cooperate in its use and care.
  • When is a Trust Necessary? Many people don’t think through the consequences of leaving money or property to someone outright. But a small inheritance can cause big problems for a person who receives disability payments. Or, someone who isn’t financially responsible may spend their way through their parent’s money in a short amount of time. By asking questions about the client’s heirs, an estate planner can spot situations where a trust may be a good idea.
  • Disinherited children. Many estate planners caution that disinheriting a child is an invitation to contest a will. To spare the remaining children the turmoil and expense, many professionals recommend leaving some money or property to the child, with a stipulation that the child will forfeit that inheritance if she contests the will.
  • Undue Influence and Competency. Most estate planners are aware of these issues and know how to spot red flags. Among them are the child or caregiver who brings an elderly person in for a significant change to a will. Professionals should take care to establish that the testator, and not his or her family, is the client. They should also meet separately with the testator to make sure the person is competent and not under any duress or undue influence.
  • Family meetings. Many people prepare wills and other estate planning documents and never discuss their assets or their estate plan with their children. The children may be shocked to find out their parents were deeply in debt or left the family home to Johnny when Jenny was the one who wanted it. This can lead to bitterness, resentment, and sometimes even litigation. Professionals can encourage a better outcome by urging their clients to discuss their estate plans with their children.
  • Choosing administrators and powers of attorney. Many people think it’s an honor to be named administrator or executor of an estate, but it’s a difficult responsibility. Make sure your clients choose someone mature, responsible, and able to get along with other family members. Don’t let them pick someone as a reward. The same goes for financial and healthcare powers of attorney. Encourage clients to think carefully about who is most honest, reliable, available, and willing to carry out their wishes.

Minor’s Trusts

Another option to transfer money to a child is through a §2503(c) irrevocable minor’s trust. The primary advantage of a minor’s trust is that contributions qualify for the annual gift tax exclusion even though they are gifts of a future interest. Contributions will also be exempt from the generation-skipping transfer tax. Generally, only gifts of a present interest, where the child receives the gift immediately, qualify for the gift tax exclusion. However, contributions to trusts that conform to IRC §2503(c) rules qualify for the

If the grantor serves as trustee, then the trust may be included in the grantor’s estate if the grantor should die before the child reaches 21. Therefore, neither the grantor nor a spouse should serve as sole trustee. However, they can serve as co-trustees. Trust assets will also be used to determine educational financial aid for the child.

Final Thoughts

It all comes back to the fact that you just can’t know how people will behave. If you have two children and make them co-executors, but one of them has financial problems, a strong personality, or a spouse that calls the shots in their family, you may be setting your children up for hurt feelings and arguments, a lifetime of resentments, or even a permanently shattered relationship.

If your family dynamics are complicated, as so many of ours are these days, it is even more important to make your wishes regarding inheritance known. There is a lot to consider. Is this your second marriage? How will your assets be distributed to your spouse’s children from a previous marriage, to your children from multiple marriages? These issues can be difficult to discuss, even with your spouse. Don’t neglect to have the discussion. An experienced estate attorney can help mediate these discussions and ensure that assets are distributed according to your wishes.

Work with trusted professionals to make these important family decisions. They can help you understand the role your executor plays, the skills they need, and any possible conflicts of interest that may impact their decision-making. If you don’t have a family member who is a suitable executor, a corporate trustee with no financial or emotional attachment to your estate may be the best choice.

This publication contains general information only, and National Advisors Trust Company is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

Choosing the right Executor or Trustee

Selecting the right executor or trustee is a big decision facing everyone creating an estate plan. Putting some thoughtful consideration into the choice can make all the difference in the success or failure of the plan and how the beneficiaries feel about it. Choosing an executor or trustee is often not considered deeply enough, and here we will explore some of the key decision making factors.

Selecting the right executor or trustee to handle your life savings for the most precious people in your life is a big deal. All too often that selection is made with little regard, merely because they are deemed capable and with the notion that naming someone to be an executor or trustee is bestowing an honor upon them. We generally screen the person we choose to spend our life with more carefully than the person who will handle the fruits of that life together. Let’s acknowledge that no qualifications are required to do the job, just a willingness to act. No licensing, no certifications, no educational requirements, no qualifications at all are required to serve as an executor or trustee. Yet would anyone consider those kinds of requirements if they were hiring for an actual job? One would hope so.

First consider the three categories of “applicants”: individual, professional, corporate. Using these three categories we can then apply attributes to each group. There is no one right answer and each person must come to their own appropriate conclusion but hopefully with thoughtful consideration. There are two issues to address in that consideration: What they have to do, and When they have to do it.

Starting with What they have to do, let’s consider three things.

  1. It’s a BIG job. Among other things a trustee or executor must:
Inventory AssetsUnderstand Tax law
Value AssetsFile tax returns
Maintain accurate recordsPrevious income
Communicate with beneficiariesFinal year income
Interpret complete and lengthy legal documentsUnderstand effects of forms of property ownership
Carry out terms of the documentFiduciary income
Invest assetsGift tax
Value assetsEstate tax
Maintain accurate recordsConsider both federal and state
Report to court as required by lawUnderstand state law
Maintain double cash accountingProbate code
Receive requests for distributions and make the decisionPerform all tasks in an unbiased manner
  • It is EXPENSIVE to obtain these services a la carte. Imagine a child (charging nothing) having to go out and hire professionals to help them with many duties and responsibilities of managing the trust. Studies have shown that family members serving for “free” often end up spending more to do it themselves for “free” than they would have spent hiring a professional or corporate executor or
    trustee to handle the process start to finish or even to help with the process in an “agency” capacity.
  • It may “cost” in terms of potential tension among family members, around 3 things: time, money and relationship. Doing it right sometimes means not doing it as fast as some would like. Doing it right sometimes means hiring professional help which others might resent. And third, making tough decisions unfortunately means that someone feels the decisions aren’t in their best interest, putting a family member in that role into a tough position: Do the “right thing” and upset people, or don’t follow the decedent’s wishes to maintain harmony. Even following state law can be tension producing when it doesn’t lean your way. Many a family has been divided over the tension between the other family members and the decision maker family members put in charge at a very emotion filled time, caught between the sadness of losing someone close to them and the analytical “what is my share?” We all love to think this isn’t the case, but see it manifest itself repeatedly.

And that leads us to the second point, which is…WHEN they must do it. Consider this: Do you want to make your children do a big job, for free, at one of the low points of their lives; the loss of a dear, loved one? It isn’t an issue of competence; trust officers are someone’s children too, just not the children of the person who just passed away. Professional and corporate trustees and executors can be truly objective, following the decedent’s wishes to the letter. There is no self-interest, and no conflicted emotions.

Here are a few considerations for each category of trustee or executor:


  • Regulatory Oversight – Chartered to act as a trust company by appropriate regulatory body
  • Court Oversight – Held to the highest standards
  • Internal Oversight – Clearly defined policies & procedures for consistent, accurate, professional execution
  • Specialists – Dedicated full-time to the task
  • Permanent & Consistent – No vacations, incapacity, or death


  • Operate under their professional licenses, generally not chartered as a trust company
  • Held to high standards due to the charging of fees and expertise
  • May not have a policies and procedures manual
  • Generally, only a part of the practice
  • Subject to vacations, incapacity, or death


  • Act as an individual with no charter
  • Held to the lowest standards in a legal action such as the “prudent person” rule
    Generally no defined policies & procedures for consistent, accurate execution
  • Generally, part-time at best and can be busy with family and a job
  • Vacations, incapacity, or death is an issue

And one final set of considerations related to the roles of a trustee or executor: In general, one should lean toward a corporate or professional in the following circumstances:

  • To avoid burdening family with a time-consuming and complex job at an emotional time
  • When family members or spouses don’t get along
  • When family has had financial troubles
  • When more than one marriage is involved
  • When a trust will last a long time

And one should lean toward an individual in the following circumstances:

  • When a family business dominates assets and involved insiders are willing
  • When assets aren’t significant
  • When a close existing network of professionals is already in place
  • When substantial “hand holding” is required

Your client’s decision is rarely easy, but hopefully these considerations give you some information to provide guidance as to which direction they should lean in selecting one of the most important roles in their life: Taking their life work and savings, then sharing it with those they care most about. So, ACTION STEP in your business: Ask each of your clients with a trust WHO have they named as successor trustee and WHY? Really LISTEN to the response and see if it FULLY considers WHAT must be done and WHEN it must be done. By the way 75 % of people have named family members in this capacity. If the client does opt for an individual, you can still approach the family member named and offer to act as “Agent for the Trustee,” a role in which we can do all the functional parts of the job with professional competence and let the family member call the shots on discretionary decisions.

Also watch for two particular situations if you are an INVESTMENT ADVISOR:

Did they name another corporate trustee in the role before they got to know you or knew that you offered trust services? If so, do they realize that you will be fired the minute the successor trustee comes into power? Is that what they desire?

Are they asking if YOU would act in that role? Rather than the standard “no I can’t do that” response, practice the response: “Sure. Many of my clients desire our involvement at this critical point. Here is how we do that in our practice. Our company uses National Advisors Trust Company, which provides the experienced staff and resources necessary, and I can act as the family contact and investment manager on the account.” Many clients desire the ongoing help of their financial advisor, yet do not realize the legal
issues in acting in that role directly.

Copyright owned by Cannon Financial Institute, Inc. All Rights Reserved. This material may be reprinted and distributed
subject to inclusion of this copyright notice.

This publication contains general information only, and National Advisors Trust is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

Taking care of the kids: Creating a trust for minors

One of the greatest feelings for parents or grandparents in life is the ability to share one’s wealth with children or grandchildren. It can also be one of the most important decisions that parents/grandparents face when they gift wealth to minors. Because of this importance, they need to decide whether to title the assets under a state Uniform Transfers to Minors Act (UTMA) or to place them in a trust fund. Both options have advantages and disadvantages. Let’s take a look at both options.

Uniform Transfers to Minors Act (UTMA)

An UTMA is a special type of ownership arrangement established under a state’s Uniform Transfers to Minors Act. First introduced in 1983, an UTMA serves as a way for a minor child to own property. The UTMA is an extension of the Uniform Gifts to Minors Act (UGMA).

Using the UTMA statute, the child is the actual owner of the asset(s) when they are titled.  The gift is irrevocable, meaning that it cannot be undone or reversed. The child has no right to access the funds until they reach the age of majority (18 or 21) as specified in the UTMA documents. The property is held in the name of a custodian for the benefit of the child until they reach that majority age. In the event the majority age is silent in the document, then the age is determined by the governing state law and is usually 18 or 21.

UTMAs can be used for nearly any type of asset, including real estate, intellectual property, precious metals, and ownership in family limited partnerships. But the more common purpose is to facilitate a minor’s ownership of securities and alternative investments.

UTNAs are frequently referred to as the “poor man’s trust fund” because they offer some of the advantages of a trust fund without many of the expenses and upkeep requirements. They’re known for ease of administration, low costs, and low maintenance. UTMA custodianship works well for older children or when there is not much property because they tend to be cheaper, simpler to create, and easier to convey property. Besides, any income that is held at the close of the tax year by a UTMA is taxed less than income in a trust. However, annual income above $5,000 that is retained at the close of tax year is taxed at a higher rate than in a trust

Something to Consider…

UTMA assets belong to the child, not to the custodian. Unlike a college 529 Savings Plan or a bank account with the parent listed as a joint account owner, the assets are not considered part of the estate if the parent or custodian files for bankruptcy.

Using Trusts for a Child’s Benefit

A child’s trust is one which holds specified property for one child. A separate trust can be set up for each individual child. However, all the property can also be put in the family trust, which provides for more than one child. Both trusts are legal in all states.

The trust document lays out the trustee’s responsibilities and the beneficiaries’ rights. It can be established by either will or living trust.

The trustee pays for the health, education, medical needs, and living expenses of the beneficiaries. An advantage of a family trust is that the trustee can spend differing amounts on each beneficiary, depending on their needs.

The main advantage of a trust compared to the UTMA is that the children can be prevented from receiving the trust property until they reach an older age (25, 30, or 40). However, the family trust exists until the youngest child reaches the majority age (18 or 21), depending on state law, in which case, a family trust can be converted into an individual child’s trust. A family trust is less desirable when there’s a large difference in the ages of the children, since the oldest child must wait a long time to receive his remaining entitled property from the trust until the youngest beneficiary reaches majority age.

If the trust only becomes effective after the children are no longer minors, or beyond the age when they were supposed to get the trust property, then the trust is never created and the property will simply pass to them.

Minor’s Trusts

Another option to transfer money to a child is through an §2503(c) irrevocable minor’s trust. The primary advantage of a minor’s trust is that the contributions qualify for the annual gift tax exclusion even though they are gifts of a future interest. Contributions will also be exempt from the generation-skipping transfer tax. Generally, only gifts of a present interest, where the child receives the gift immediately, qualify for the gift tax exclusion. However, contributions to trusts that conform to IRC §2503(c) rules qualify for the annual exclusion. The trust must be irrevocable because gifts made to the trust must be unconditional — the grantor must not retain any right to revoke the gift or have the gift revert to them. Because irrevocable trusts are separate entities, each trust will need a taxpayer identification number to file tax returns. Additionally, a separate trust must be set up for each child.

To qualify for a minor’s trust, the trustee must have unrestricted discretion to either distribute or accumulate trust income. Any restrictions by the trust document on the trustee’s discretion may be disqualified as a minor’s trust. For example, one must mandate that the trustee consider any other assets available to the minor before making distributions. The trustee can also distribute trust principal for reasons specified in the trust document or at the trustee’s discretion. Any distributions of principal or income must be for the benefit of the minor. The minor beneficiary must have an unconditional right to the trust assets when reaching age 21, regardless of state law. This insures that contributions are not treated as gifts of future interests so that they qualify for the annual exclusion. If the child dies before reaching 21, then the trust assets must be transferred to the estate of the child or to whom the child appointed under a general power of appointment.

If the grantor serves as trustee, then the trust may be included in the grantor’s estate if the grantor should die before the child reaches 21. Therefore, neither the grantor nor a spouse should serve as sole trustee. However, they can serve as co-trustees. Trust assets will also be used to determine educational financial aid for the child.

Final Thoughts

Determining whether an UTMA or a trust fund is better in any given situation depends upon a number of factors:

  • The amount of money being set aside for the child: If the amount is smaller, most likely an UTMA will be used.
  • The conditions desired to be placed on the money: An UTMA is not going to be ideal if you want to insist that the funds be used for a specific purpose and within the limits permitted by law.
  • The need for asset protection: Financial planning professionals can use trust funds in creative ways to protect beneficiaries that may not be possible with an UTMA.

Based on what your trying to achieve, there are planning options that can be used for the benefit of children. While we have discussed some options above, there’s many more details and items to consider with each option. Please consult with estate planning attorneys and financial planning professionals to determine the path that is best for your family situation.

This publication contains general information only, and National Advisors Trust Company is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

When Creating a Trust Avoid This Mistake

Planning for a family’s transfer of wealth and ensuring successful execution is a complex process. Clients look to their trusted advisors for guidance when it comes to defining and executing their estate plans for future generations. Too often, individuals and families go through an arduous financial and estate planning process and then fail to finish implementing some of the most important steps: proper titling of assets and accurate beneficiary designations.

As part of a comprehensive estate plan, the trusted advisor must ensure that the trustee or the directed fiduciary understands how assets are intended to be titled and how they align with one another. More importantly, trusted advisors should work with their clients to ensure that all beneficiary designations are up-to-date and that assets are titled correctly.

Failure to title assets appropriately can cause assets to pass in a way the family did not intend. Lack of account titling and beneficiary designations can also lead to increased taxes, frustration, fractured families, and even lawsuits. A good, comprehensive estate plan, coupled with assistance implementing the desired estate plan, can help families avoid these issues.

Why is titling of assets so important?

Titling is a legal term that identifies how and who owns assets. In estate planning, the titling or ownership structure will impact how assets are distributed, whether probate is necessary, and the amount of estate taxes owed.

Probate is the name for the formal court process through which an estate is passed on to heirs after death. Depending on where one lives, it could be a relatively quick process, or it could be long and drawn out — up to 18 months in some states, and perhaps longer. Effective titling of assets helps to ensure that the probate process is skipped entirely. Issues with the probate system include additional costs, delays, and publicity.

Which assets pass through one’s will is often misunderstood. Certain types of ownership allow you to pass control of your assets to a joint owner, such as a spouse, without having to go through probate. These include:

  • Joint tenancy with rights of survivorship (JTWROS)
  • Joint tenancy by the entirety

It is important to note that only individually-owned assets pass through probate – and it can be surprising for surviving spouses how few individually-held assets are owned. A Revocable Trust can be used to avoid the probate system; however, assets must be titled to the Revocable Living Trust to accomplish this.

A revocable trust can also help facilitate the distribution of assets according to one’s wishes. Also known as a “living trust” because it is made in one’s lifetime, a revocable trust can help ensure the continuity of asset management. A revocable trust also allows individuals to maintain financial control of their assets by naming themselves as the trustee. This provides individuals freedom to move assets in and out of the trust by simply retitling them.

Though a revocable trust offers many benefits, it is not a replacement for a will. A will is still required to direct the distribution of personal assets of value which have not been included in the revocable trust, such as vehicles, boats, collections, and other personal property.

Beneficiary Designations

Beneficiary designation allows assets at death to pass through a contract. Examples are life insurance, annuities, IRAs and your 401(k)s. In each case, the owner of the asset has designated a primary beneficiary who receives the asset at death.

An individual can write in a will that they want all assets to go to one’s spouse at death, but if the beneficiary designation on any of these assets names someone other than the spouse, then those assets will not go to the spouse. It is extremely important to remember to update beneficiary designations when getting married or going through a divorce.

Another example: Enrollment in a 401(k) retirement plan requests that a beneficiary is named. At death, the retirement plan assets would automatically be distributed to the named beneficiary, even if the will directs that another party receive the funds. Because there is a designated beneficiary, the retirement assets would not be part of a probated estate, and therefore would not be under the control of a will.

That’s why it is essential to periodically review all the beneficiary designations to ensure they are aligned with the intentions of one’s will. Reviewing beneficiary designations is a key step when crafting a quality estate plan for a family.

Benefits of proper asset titling…

  • Avoids probate
  • Assists with the management of property
  • Gives family members immediate access to assets at death. 

Other types of asset titling to consider…

  • Tenants-in-Common
  • Transfer-on-Death (TOD)
  • Payable-on-Death (POD)

Final Thoughts

While wills are designed to control how and when assets are distributed upon death, they do not control all assets. Only assets that fall within the probated estate are under the direction of a will. This would include property that is titled under an individual name, such as real estate, vehicles, jewelry, or other personal property. Assets with named beneficiaries, such as life insurance, annuities, retirement accounts, bank accounts, and brokerage accounts will be distributed directly to beneficiaries upon death, despite the wishes outlined in a will.

A well-thought-out asset titling strategy allows families to control what happens to assets, minimizes exposure to taxes, and ensures that all wishes are carried out in the simplest and most efficient way possible. How assets should be titled depends on the nature of the asset in question and the desired goal, both while you are living and when it comes time to transfer the asset after death.

Asset titling, beneficiary designation, avoiding probate, and the role of trusts in this process can be tricky and complex. Trusted professionals can help to ensure that titling of assets and beneficiary designations are aligned with estate plans so that all desired wishes are achieved. Bottom line … finish implementing estate plans by ensuring assets are titled properly before death.

This publication contains general information only, and National Advisors Trust Company is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.

6 options for distributing tangible personal property in an estate

Most people are likely to leave behind “tangible personal property” when they die. Tangible personal property typically includes jewelry, clothes, vehicles, furniture, household furnishings, silver, books, art, photos and anything else you can touch. Part of the problem with distributing this property is that you cannot do so exactly equally. In addition, many items may have little or no monetary value but significant sentimental value. It is often not easy to foresee conflicts your family members might face when dealing with your personal property after your death. Sorting through your life’s worth of personal items can be overwhelming, unpleasant and time-consuming. Given the complexities, how can tangible personal property be divided fairly while minimizing conflicts?

Here are some suggestions:

  1. Give away items during your lifetime.

The first thing you can do to help your family members who will eventually be tasked with the overwhelming responsibility of sifting through your personal items is to start giving away your assets during your life. Declutter. Sell. Donate. Give away to friends or family. You can even give away items to your beneficiaries now.

2. Direct the sale in your will or trust.

When the estate includes a few items of significant financial worth that can’t be equally distributed among heirs, the property might be sold and the proceeds distributed equally as cash. Assuming items of sentimental value will be divided by some other method, other items can simply be liquidated.

3. Write down who you want to receive specific items of personal property.

Another thing you can do is spell out who you want to receive what in your will or in a separate written Memorandum of Gifts of Tangible Personal Property, where you list specific items in one column and the recipients in the next column. An important benefit of a side memorandum is that it doesn’t have to involve a lawyer, it does not need to be witnessed, and it can be changed and updated as you wish. It’s best to start by asking your children or other beneficiaries what they may want. That way you can maximize the value of what each person receives, rather than making assumptions that could be inaccurate.

If a side memorandum is revised over time, it’s important that you sign and date it. The most recent list will be followed if more than one list is discovered after your death. Note that for items of high value or other significance, identifying and distributing those items should be done in the will, because the memorandum is not binding.

4. Spell out a procedure for dividing personal property items in your will.

In the absence of any specific direction in the Memorandum of Gifts of Tangible Personal Property, or to the extent this memorandum does not address certain items, the items will be divided among your beneficiaries. If you anticipate conflicts among your family and friends over your personal property, you can spell out a method for distribution in your will or trust. Here are just a few examples:

  • To be divided in your personal representative/executor or trustee’s absolute discretion
  • To be divided equally among your beneficiaries in as equal shares as they agree. To the extent there is disagreement, the Personal Representative/Executor or Trustee shall sell or distribute any items over which there is disagreement.
  • To be divided and distributed as an independent third-party determines, after giving consideration to any preferences of the beneficiaries
  • To be divided and distributed in accordance with a lottery system
  • To be divided by taking turns by drawing lots to see who goes first, second, third, etc., and continuing to circle through the list, or people who went first go last in the second round, or a progression from round to round. These choices look as follows when there are four beneficiaries who we will name A, B, C and D:
  1. A, B, C, D, A, B, C, D, A, B, C, D
  2. A, B, C, D, D, C, B, A, A, B, C, D
  3. A, B, C, D, B, C, D, A, C, D, A, B

It can help to facilitate the process if the personal representative makes a list of the items with their appraised or estimated monetary values.

5. Utilize a bidding system.

Another approach is to give all the beneficiaries a certain number of points which they can apply toward various items on the list. This could be done blindly with each person making bids and the personal representative/executor simply awarding the items at the end. The problem with this approach is that some beneficiaries may be luckier or more astute in their bidding—one person getting most of what she wants and another getting virtually nothing. Another approach would be more like a silent auction, permitting beneficiaries to adjust their bids right up to a set deadline.

6. Implement a financial adjustment after items are distributed.

What happens if one person ends up getting items with a total market value of $10,000 and someone else gets items worth $14,000? You could say that it doesn’t matter, because everyone still was able to maximize what is of most value to him. Or, you could equalize the valuations at the end with the first person receiving an extra $4,000 from the estate. That way, no one keeps choosing items just to get the best market value. It may be that one person really only wants a few items, and someone else is selecting items to give to his children. Should the first person, who may not have children, be compensated in some way? There’s no wrong or right answer that applies in all cases. It’s worth polling the beneficiaries to see if anyone cares.

Whatever methodology is chosen, it’s always a good idea to keep the beneficiaries informed. This can be done by the grantor during life, explicitly in the will, or in a memorandum, to minimize any chance of conflict among the beneficiaries.

This publication contains general information only, and National Advisors Trust Company is not, by this publication, rendering accounting, financial, investment, legal, tax or other professional advice or services.