Mourning the death of a loved one can be a distressing and emotional time, whilst disputes surrounding the Will and distribution of the estate can make it even more difficult.
In times of grief, emotions are often high and therefore it is not uncommon that the process of splitting assets between the friends and family members of someone who has passed, can lead to disagreement and conflict, particularly when they hold sentimental value.
With avoiding potential disagreements very much in mind, we have put together a guide for those involved in the process of dividing the possessions of a loved one between beneficiaries fairly, or indeed, for those looking to write a Will that could minimise the potential for conflict after their passing.
The legality of splitting assets
As it currently stands, there is no law that lays out precisely how assets should be divided between beneficiaries. The only law binding contract that dictates this is the deceased’s Will, provided they have left one.
If the deceased leaves a Will that allocates specific assets to a named beneficiary, it legally entitles that beneficiary to those items. Minor difficulties can arise when another beneficiary challenges the Will, particularly in circumstances where they claim that the deceased promised them something that is assigned to someone else in the Will. However, such issues are generally easy to settle if the Will is proven to be valid.
More serious complications typically arise when the deceased does not outline their wishes for individual assets in the Will and two or more beneficiaries state their claim on them. It is not uncommon for those in the latter stage of their lives to have discussions with friends and family about what those closest to them would like to inherit upon their passing. However, it can cause conflict if the outcomes of such conversations are not validated in the Will and more than one person believes they are entitled to the same asset.
Therefore, when the deceased has a valid Will that offers clear instruction and criteria for how they wish the executor to divide their assets, the distribution process becomes much easier.
Seeking a valuation of assets prior to distribution
As an executor, when you are ready to begin the process of distributing the deceased’s estate, the first thing you should do is break down the estate into assets so that you can calculate what each item is worth. Seeking an appraisal from a qualified and experienced probate valuations expert will ensure that all quotes are given in accordance with HMRC regulations, making it easier to carry out accurate Inheritance Tax calculations when the time comes.
Having received a detailed valuation report of the deceased’s assets, the executor is able to portion the assets amongst beneficiaries in accordance with the Will. Be sure to keep the report as a record in case of any disputes over the values of the assets.
Liquidating assets
The liquidation of assets is the conversion of hard assets into cash. It is often done in probate if the executor needs to distribute funds from the estate to beneficiaries. This is a straightforward way of dividing assets fairly based on their monetary value, if the beneficiaries would prefer the cash to the physical asset bequeathed to them in the Will.
Caution should always be taken when liquidating any asset. We advise that you always receive an appraisal from a reputable valuer, as it is crucial you are given the correct advice from a specialist who understands the market. It would be extremely upsetting to sell an item that had been incorrectly valued at a lesser amount than it’s true market worth, or indeed, to sell an item if it’s value is likely to increase substantially in the future and the beneficiaries do not need the money immediately.
Splitting assets fairly without a Will
The role of an executor can be difficult when the deceased has left no Will, and it is no easy task to determine what is fair when caught in the middle of conflict between beneficiaries. Although the definition of ‘fair’ will vary from case to case, defining it as ‘equal’ offers a simple solution to dividing assets amongst those of close relation to the deceased, such as children or siblings, that would typically receive an equal amount. However, an executor is often also tasked with dividing assets between beneficiaries who are not necessarily entitled to an equal share, it may be worth considering the closeness of their relationship to the deceased and the role they played in their life when calculating shares.
Assets of sentimental value can be much more difficult to divide than assets of monetary value, which is why it is advisable that, where possible, items of sentimental importance and low monetary value are gifted during your lifetime and recorded for Inheritance Tax purposes. For sentimental assets that hold more value, outlining your instructions for them in your Will, will help avoid any conflicts between your beneficiaries further down the line. Being mindful when naming the executor of your Will by selecting someone impartial and without anything to gain, will ensure that negotiations are carried out fairly.
